health

Generic drugs: The best medicine for Japan’s economy?

20 Comments
By Martin Foster for EURObiZ Japan

Japan has a health-spending problem, and part of the cure could be generic drugs. However, the big name brand makers, including some European companies, are fighting to protect their turf.

Drug costs account for more than 20% of the country’s total medical expenses (21.1% out of ¥37.4 trillion in 2010), and reducing this burden has become a cornerstone of Japan’s health administration policy. With forecasts of a shrinking tax base — supporting the 40% of the Japanese population that will be 65 or older by 2060 — the task for the Ministry of Health, Labour and Welfare takes on new urgency.

“We are pursuing measures to reduce drug costs and promote the use of generic drugs in order to [more] effectively use limited medical funds,” says Naoki Masukawa, specialist in the ministry’s Health Policy Bureau.

In April 2013, the ministry released a five-year plan to expand the use of generic medicines to 60% by 2018. Called the “Roadmap for the further promotion of the use of generic medicines”, the plan aims to bring Japan’s use of generics in line with that of European countries such as France and Spain. However, levels would still pale in comparison with the United States, which has already achieved a 90% substitution of generic drugs.

Shuhei Hosokawa, secretary general of the Japan Society of Generic Medicines, believes that the move towards no-brand medicines is inevitable in Japan, where average per-capita medical costs of around ¥300,000 could balloon to as much as ¥1 million by 2025.

“At that stage, there would no longer be any reason for not introducing generics,” he says, noting that no-brand medicines can cost up to 50% less than the original patented drugs.

According to the ministry, generic drug usage had jumped to 46.9% as of September 2013, compared with 39.9% in 2011. In an industry where drug sales are expected to rise by ¥1.4 trillion by 2022, many predict that generics will contribute the lion’s share.

Sanofi is one foreign company aiming to seize upon that business opportunity. This despite initial hiccups in 2010, when Sanofi entered into a joint venture with Nichi-iko Pharmaceutical, a leading Toyama-based generic drug-maker. “We didn’t understand the market,” admits Minoru Inabayashi, corporate officer and Key Account Business Unit head.

Inabayashi and his colleagues have worked out their problems and are now aiming to expand the generic drug business. It’s part of the Paris-based head office’s global diversification strategy, which also targets areas such as rare diseases and vaccines, as well as consumer health products and animal healthcare. Sanofi has established manufacturing and development bases for original patented drugs, but is also looking to take advantage of its strengths in distribution. When dealing in generics, for example, Sanofi possesses the resources to provide information to physicians and pharmacists through an established network of medical representatives (MRs).

Some generics firms have a very limited number of MRs. But Sanofi’s ability to exploit an existing and knowledgeable workforce is proving to be an advantage in an industry where market growth can be impeded by concerns about a stable supply, quality control and access to information.

Among the Japanese population, some people remain hesitant about using no-brand medications. One survey of Japanese pharmacists reveals that only 32% of their patients would be fine with using generic drugs, 15% would not — and 42% are undecided.

Sanofi collaborated with Nichi-Iko to create generic medicines to protect against strokes and Alzheimer’s disease. But the 2013 launch of the antihistamine fexofenadine SANIK® illustrated Sanofi’s business credibility. The drug projected the most significant implications for generics’ future in Japan. In creating the product, Sanofi had pursued a generic for the original drug Allegra® while its patent was still valid.

Fexofenadine SANIK® was the first Japanese example of what is referred to as “authorized generics”, and other companies are expected to follow in Sanofi’s footsteps by releasing similarly developed drugs. Authorized generics are seen as one way for an original drug maker to control the quality and availability of its generic replacements as patents expire.

Sanofi expects its generic business to grow to ¥300 billion in the next five years, in part due to this strategy.

Lingering doubts about generic drugs are seen as good news for major manufacturers such as Boehringer Ingelheim (BI) Japan, a company not looking to enter the generics market. The firm promotes a vision of “value through innovation”, and views generics as a discount-driven market.

“We like to control our destiny and serve patients,” says Masao Torii, BI’s representative director and Japan president. “That is our basic philosophy.”

The development of drugs and other treatments do not come cheaply or easily. Some estimates cite development costs of around ¥100 billion per new drug and a success rate of only one in 30,000 compounds.

Torii estimates that his company is typical in spending around 20% of sales revenue on R&D. Innovation clearly costs money, but the pay-off is that a company can continue to influence the market for an original drug during the life of the patent.

Torii cites the case of Prazaxa®, approved in 2011 in Japan, as the first oral anticoagulant alternative in over 50 years. “We have not only been helping stroke prevention in elderly patients, but also rewrote the market paradigm with this innovatory drug,” says Torii.

For now, Japanese patients gain by choosing from amongst the competition promoted by these two different business models. But the government really has no choice — healthcare is becoming overwhelmingly expensive. The Health Ministry has already tilted in favour of generics and wants more non-Japanese firms to get involved.

“We want non-Japanese generics makers to actively enter the market, especially if they can maintain the high-quality levels demanded by Japanese users,” says Masukawa.

That means generic drugs are here to stay, and likely to take an increasingly larger share of Japan’s lucrative medical market.

© Japan Today

©2019 GPlusMedia Inc.


20 Comments
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According to the ministry, generic drug usage had jumped to 46.9% as of September 2013, compared with 39.9% in 2011.

However, levels would still pale in comparison with the United States, which has already achieved a 90% substitution of generic drugs.

Another example of J-Inc. screwing over the consumer. One of the things I could never understand during my time in Japan was the ridiculous cost of drugs, even simple ones like Aspirin.

-3 ( +3 / -7 )

If Japan joins the TPP, there would be NO generic drugs. That's one of the things they stipulate.

-2 ( +4 / -6 )

I think what we have here i japan wanting generic drugs but at the same time they must be from a japanese company. Yep the tax payer is being squeezed,but japan loves its brands and they don't want foreign drug makers coming over and destroying the japanese drug makers..If it isn't brought under control the costs are going to rocket.

3 ( +3 / -0 )

The real problem is that most foreign drugs are hit with a MASSIVE import tariff. Want an aspirin? Be prepared to pay 10 time more than anywhere else in the world, because the Japanese equivalents like Bufferin are so stupidly expensive that they can't compete without protection.

The problem with food prices? Tariffs. The problem with medicine prices? Tariffs. The thing is that these tariffs go straight into government coffers, making them effectively an additional tax. It would be an interesting exercise, but if one factored in tariffs I'm sure Japan would be the most heavily taxed country in the world.

6 ( +7 / -1 )

Drugs are too expensive, there's no doubt about that. However, using generics isn't so simple. Most generic medicines are not the same as the more expensive branded versions. Many of the constituent parts, especially for delivery of the drug, are different and don't work for many people. I switched to a generic version of a medicine I take and found it didn't work. Everybody, including the doctor, kept saying, 'It's the same drug, it must be your imagination', but in fact I subsequently found out that the generic form wasn't working for more than half of the people who were taking it. This is especially a problem for those with epilepsy, and it can have serious consequences.

-5 ( +2 / -7 )

@hackney maybe it depends on the drug, but I switched to cvs-brand tension headache pills after excedrin gave me broken ones (they had a massive recall and stopped manufacturing them for a while). Haven't looked back since. May depend on the brand also? I doubt a major brand would sell them if it they didn't work.

1 ( +1 / -0 )

As someone who pays taxes here, I am pleased to hear that Japanese government is looking at area of opportunity to save on it's outlays. I only wish this trend will take off like cool biz did :-)

3 ( +4 / -1 )

The Govt should raise the Drug co-payment and also push for more inexpensive Generic drugs. Drugs are over prescribed in Japan.... and many of the antibiotics are too weak.

1 ( +1 / -0 )

Be prepared to pay 10 time more than anywhere else in the world, because the Japanese equivalents like Bufferin are so stupidly expensive that they can't compete without protection.

Make that 20 times more. On top of that Bufferin often seems to be ineffective in treating even a simple headache. I have made people happy with distributing Paracetamol to relieve their pains, effective instantly where Bufferin failed. Paracetamol, widely available in generic form in western Europe, for peanuts, so to speak.

The price of this over the counter remedy [Bufferin], a product which is no longer manufactured for sale in Canada by the way, is utterly ridiculous and a major rip-off. It is my estimate that even at one-tenth of the current price for consumers it is a huge profit raiser for the industry. It's not that it needs protection, it's just unreasonably overpriced.

3 ( +3 / -0 )

@Hackney, I work in a pharmacy and that is completely untrue (unless you're outside the US). Precious few medications I dispense require "brand only" prescriptions due to the brand actually having a different strength or mixture than a generic alternative. The majority of medications are 100% identical between brand and generic, but pharmaceutical manufacturers usually come out with a "new" slightly altered strength and combination of their brand in order to keep their rights to the brand even though all their doing is tweaking the amount of medication available.

Generics are always much cheaper than the brand, and just recently Cymbalta went generic to plain duloxetine and Lovaza went to omega-3 ethyl and shaved a hundred+ off the brand name.

When people who work in pharmacy go shopping for meds, we always go for the generic. The best way to do that for the best price is to check the ingredients on the back of the manufacturers bottle of the brand and generic and pay specific attention to the measurements. I.E If a brand drug says 81mg of aspirin for 3.99 and a generic says 81mg of aspirin for 2.99 you are getting the exact same drug just different prices/coloring/shape.

But then again this pretty much only applies in the US due to the Pure Food and Drug act along with many other federal laws that require all similar medications to be of the same strength and purity between manufacturers no matter where they're from. I don't know if Japan has such laws, but if they don't they should. Without them, manufacturers will cut corners to get as much money as they can for the least amount of quality work necessary.

2 ( +2 / -0 )

hackneySep. 23, 2014 - 07:41PM JST Drugs are too expensive, there's no doubt about that. However, using generics isn't so simple. Most generic medicines are not the same as the more expensive branded versions.

I'm sorry, but you're incorrect.

There are some drugs where the generic manufacturer opts for a cheaper ingredient, but normally for patent reasons e.g. the patent on the drug as a whole has gone generic, but the patents on some component chemical compounds are still valid, so they substitute that component for a cheaper, generic, one.

However for the overwhelming majority of medications the generic is just an exact copy. The reason for this is simply, "Why reinvent the wheel?". You have a formula for a medication that works and has been tested, and all you have to do is set up your manufacturing process and go. Why unnecessarily go through the entire R&D and testing cycle again?

So, while I acknowledge that in a very, very small number of cases your statement may be true it is by no means "many" generic drugs.

This is especially a problem for those with epilepsy, and it can have serious consequences.

Ahhh, epilepsy. With anything to do with the brain I'd say that if you've found something that works then never, ever change it. The amount that neurologists and psychiatrist still don't know about the brain could fill several libraries, and prescribing anything that alters brain chemistry is at least 50% trial and error.

If you've found an anti-depressant, anti-anxiety, or anti-convulsive medication that works with your individual biochemistry then don't change it unless it stops working.

A final note here: Manufacturers also change the formulation or manufacturing method of their drugs, or shift it to a different factory where environmental changes can produce tiny changes in the drug. The issue of medications "stopping" working is not just limited to generic vs branded.

-1 ( +0 / -1 )

Worked on a JETRO funded study on the pharmaceutical industry in grad school. Don't know that this has changed since I last lived there, but until they ban doctors from selling drugs or owning stakes in local pharmacies, the increase use of generics will only do so much to reduce the cost of prescribed medicine in Japan. Japanese doctors have been over prescribing everything, except for the "good stuff," for years.

danalawton1@yahoo.comSEP. 23, 2014 - 11:11PM JST - Drugs are over prescribed in Japan.... and many of the antibiotics are too weak.

Drugs are not over-prescribed and antibiotics are not "too weak." Antibiotics have been over-prescribed in Japan for over 30 years. Japanese doctors are responsible for reducing the effectiveness of many antibiotics because they over-prescribe them and under dose them.

While it seems there is new thinking here in the U.S on the necessity of finishing all antibiotic prescriptions, over prescribing them for, perhaps, unrelated or even antibiotic resistant maladies mean that they begin to lose their effectiveness. They have helped create "super bugs" that develope immunities. We have done the same thing here in the States by commonly dosing livestock, whether sick or not. Antibiotics are never to be used prophylactically, only as needed.

Google this and you will find numerous articles about rampant infections in Japanese hospitals because of this.

The other really problem in Japan, and far more costly than prescription spending, is that they make you stay in the hospital for too long or don't do out-patient surgery when a hospital stay isn't necessary in the first place.

2 ( +2 / -0 )

@HonestDictator,

Thanks you for clarifying some of the confusion which is parroted around to protect the pharmaceutical corps.

0 ( +0 / -0 )

There are many ways the drug companies put their foot in the generic door. One big one is the OTC meds. When you want a generic ibuprophen or asprin, it's not available without a doctor's prescription. Another thing is the education of theJapanese patient who has a brand mentally. I take a generic bp drug that works fine and my Japanese wife takes the same brand drug. She switched back to brand from generic because she said it worked better. Why can't we even buy Alka-Seltzers? This subject is too hard to debate.

1 ( +1 / -0 )

HonestDictator: @Hackney is correct. Delivery mechanisms for certain pharmaceuticals vary significantly between branded products manufactured under license and generic products compounded as chemical equivalents. The term delivery mechanisms covers a wide range of important issues from sustained duration release to transfer buffering to compound stabilizing agents and many more complex factors. There are certain classes of drugs for which a generic "equivalent" is functionally indistinguishable - but saying that this is true across the board is a brash and scientifically unsupportable claim. It is the kind of thing said in advertisements by a spokesmodel who announces at the start "I'm not a doctor, but I play one in a TV show". When it comes to generic drugs most M.D. are open minded to the consumer cost issues but rightfully suspect when it comes to claims of an identical substitution in all cases. Generics have an important role to play in the international marketplace for medications but consumers should be wary. The U.S., Japan, EU, and U.K. have vastly different policies for approving generic medications sold to the public by prescription. Yakuzaishi in Japan are taught (educated and obliged by their licensing association conduct rules) to say generics are the same - and to sternly challenge any customers who insist on a branded option. They do this is in order to control aggregate national health care costs under their public health care system. If you can afford (and want) the branded item don't allow yourself to be bullied about what you put in your body. You have the right to ask who makes this generic substitute (what country is the company from?) where was it manufactured (where's the lab?) what is the price variation from the branded prescription on a percentage basis per unit (more than half?). If you are still not convinced that branded medication and generics are (not-identical) go to the cold beer section of your local supermarket and pick any can (or case) with your eyes closed (that's your generic brand). The generic drug industry is an industry just as much as the big pharma companies that chase and market new medications for profit. Don't think for a minute that these generic manufacturers are not in it for the money.

0 ( +0 / -0 )

@Jeff Huffman.... You contradicted your rebuff to my statement. You said "drugs are not over subscribed and antibiotics are not too week"... to contradict me... then you said right after that "Antibiotics have been oversubscribed in Japan for over 30 years". So which is it? In addition... you go to just about any Japanese home... they've got envelopes upon envelopes of unused drugs. Now either a lot of people died.... or those drugs were not needed.

0 ( +0 / -0 )

had a friend who was using Viagra a few years ago.. very expensive back then.. but it gave him headaches and faster heartbeat. tried a generic version worked just as well without the side affects.. point is theres more than one type of drug available, try them and see which type suits you best.

0 ( +0 / -0 )

Bufferin often seems to be ineffective in treating even a simple headache. I have made people happy with distributing Paracetamol to relieve their pains, effective instantly where Bufferin failed.

I don't know anything about drugs, but when I showed my OTC Bufferin to a doctor student and asked why it didn't seem to be working well, he said dismissively "you should be taking four, not two, of those tablets." I tried doing that, and it worked.

-3 ( +0 / -3 )

I have made people happy with distributing Paracetamol to relieve their pains, effective instantly where Bufferin failed

I used to do the same thing! Mostly with OTC stuff from the UK like junior paracetomol, that banana flavored teething gel (name I forget), simethecone (for colic) and sudocrem (nappy rash). They went nuts for savlon too, and Vics for the kids. And then the pain meds for adults. The pediatrician downstairs in our building was half-laughing about it when he saw me with my kids and said he is getting a steady parade of people through this office saying their nappy rash cleared up and they can breathe at night thanks to "Nathalies stuff" and could I please stop because Im crapping up his business!

0 ( +0 / -0 )

Abe234Sep. 23, 2014 - 08:49AM JST

I think what we have here i japan wanting generic drugs but at the same time they must be from a japanese company. Yep the tax payer is being squeezed,but japan loves its brands and they don't want foreign drug makers coming over and destroying the japanese drug makers..If it isn't brought under control the costs are going to rocket.

Well, Japan's thinking ahead and smart for safety reason. US drugs are taken over by Chinese suppliers and manufactures, and we are having some safety issues here in USA

I believe TPP has a monumental safety issues it needs to solve first especially on food, medicine.

How do we control GMO food products sold in global market place? Look at a global epidemic on growing cancer in medicine, it is just insane. There is a solid scientific link between GMO food and cancer.

Well going back to your post, Japan not giving free access to foreign drug makers, I believe it is reasonable unless foreign drug makers improve the products safety. Genetic drugs need to be evaluated very carefully.

0 ( +0 / -0 )

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