Determinants of market prices for drugs under Japan’s national health insurance

Abstract

Aims

The Japanese government reimburses patients for drugs at prices specified in the Drug Price Standard (DPS) published by the National Health Insurance (NHI) scheme. It revises reimbursements for most drugs on the basis of their market prices. This study thereby identifies factors related to drugs or disease that impact market prices for drugs using the DPS list.

Materials and methods

This study first examined the 2018 DPS list to identify all listed drugs, their prices, and their stipulated reimbursements. We then excluded from this study all the drugs for which prices are set per alternate rules. We calculated the percentage divergence between market prices and DPS prices and designated it our dependent variable. We performed descriptive and a univariate analysis on each variable and constructed multivariate regression models featuring independent variables for drug characteristics that might affect market prices.

Results

We identified 1,775 drugs with prices revised only by the market. We observed higher percentage divergences between DPS and market prices for drugs with generic alternatives (p < 0.001), drugs listed in the Japanese Pharmacopoeia (p < 0.001), and drugs for which at least two new drugs entered the same therapeutic category (p < 0.001). Injectable drugs exhibited a more significant and negative correlation with percentage divergences (p = 0.009) than ingestible drugs. Drugs that treat specific organs (p < 0.001), affect metabolism (p = 0.001), and those prescribed for non-therapeutic purposes (p < 0.001) display significantly higher percentage divergence than drugs affecting the nervous system and sensory organs. Divergences are less for narcotics (p < 0.001) and drugs that counter pathologic microorganisms and parasites (p = 0.004).

Conclusions

Factors that elevate competition among pharmaceutical companies likely lower market prices for drugs, and the direction of prices under NHI in Japan is affected by the category of diseases a drug treats.

Keywords:

• Drug price standard
• national health insurance
• reimbursement policy
• market price
• Japan

JEL Classification CODES:

• I18
• I1
• I11
• I

Transparency

Declaration of funding

No funding was received to produce this article.

Declaration of financial/other relationships

No potential conflict of interest was reported by the author.

Peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Acknowledgements

None reported.

Data availability statement

All necessary data used for this study are included in the manuscript.