Reimbursement pricing for new medical devices in Japan: Is the evaluation of innovation appropriate?

OBJECTIVES: In Japan, strong reimbursement pricing control measures for existing medical device products have rendered new medical device reimbursement pricing critical for manufacturers. Few studies have been conducted on this aspect; therefore, this paper (1) clarifies whether evaluation of innovation is appropriate or not and (2), if not, investigates its background. METHODS: In this research, 319 C1/C2 government decisions for new medical devices in the 10 years from April 2008 to March 2018 were analyzed. Evaluation of innovation was considered in terms of the reimbursement price, as well as the foreign average price ratio. RESULTS: Considering the degree of evaluation of innovation, the average premium rate for the similar function category comparison method was 10.2% during 2008 to 2010 (this means the newly set reimbursement price was 10.2% higher than that of corresponded exiting categories); it declined consistently thereafter, to 3.2% during 2016 to 2018. Moreover, evaluation of innovation by the foreign average price (FAP) ratio was 1.04 in 2008 to 2010, consistently decreasing to 0.88 in 2016 to 2018. The period from product approval to the non‐Special Designated Treatment Material (non‐STM) (a part of technical fee) price listing is much longer than that of the STM (own reimbursement price) listing. CONCLUSION: Several reasons were considered for the decline in innovation evaluation: (1) the lowering of the FAP upper limit ratio, (2) the possibility that there was not enough evidence at the time of price listing, (3) and the more rigorous standards to create a new separate functional category. However, some aspects were attributable to reimbursement system reform.