Japan's medical device regulatory regime undergoing changes

WASHINGTON — Japan's demanding medical device regulatory system may deny Japanese patients the latest medical technologies while forcing deep, unjustified price cuts on foreign companies' products, industry representatives said at a trade conference here.

But a representative of Japan's regulatory system said the government there has instituted reforms to the system, and more are on the way.

Japanese price-setting rules have long been a sensitive issue for industry leaders, who claim that the government's approach squelches innovation and unfairly depresses prices for new technology. Under the system, all devices that meet a similar need, no matter how low-tech or high-tech, are considered to be in one "functional category." Officials then calculate the average price of the whole group and apply that single price to every device in the group.

The Japanese regulations do not account for differing production costs or the medical benefits of individual products, critics contend. One result of this policy is that older, less expensive, low-tech products can drag down prices for newer technologies in the same category, even when the newer devices may provide a better medical value.

At Boston Scientific, "We have seen as much as 50% price cuts in our product lines," said Paul Barry, the company's director for international health policy, at the Globalization of Medical Device Policies international conference hosted by AdvaMed, an industry trade group. His comments came during a question-and-answer session that followed a presentation by a Yukiko Nakatani, MD, deputy director of the economic affairs division in Japan's Medical Policy Bureau.

Dr. Nakatani's presentation outlined details of the Japanese medical device reimbursement and price-setting procedures. Those processes have been undergoing revisions, as regulators attempt to streamline and promote innovative devices, said Dr. Nakatani, a pediatrician. Her group plans to institute further streamlining revisions, she noted.

But if the purpose of the Japanese medical device regulation regime is to reduce health-care costs, Mr. Barry said, the government should consider cost-cutting targets that have more savings potential than medical devices.

"Why not take on something more dramatic - the cost of hospitalization, your true cost driver," Mr. Barry said. Japan has more hospitals per capita than most leading industrialized countries and notoriously long lengths of stay, he said.

Dr. Nakatani responded, through an interpreter, by noting that Japan plans to reduce the number of hospital beds — about 900,000 today — by about half over the next 4 to 5 years. She also said the government is considering changes to the price-setting system.

"We would like to create a new system in which new technology can be properly evaluated," she said.