Japan’s Ministry of Health, Labor and Welfare is expected this month to agree to recommendations that prescription drug prices should be cut by at least 4.5% next year.

The proposals, put forward by a Ministry panel for the next round of across-the-board price cuts which are imposed by the government every two years, would reduce reimbursements paid to physicians and pharmacists by approximately 620 million yen in the two years from next April 1. The proposed reductions are based on the findings of an official survey of sales by Japanese drug purchasers and the nation’s largest pharmaceutical wholesalers, conducted in September.

The across-the-board price cut for the two-year period starting April 2006 was 6%, and averaged out at 6.7% with the inclusion of bigger cuts for big-selling and patent-expired drugs. The new round is also expected to include more severe price reductions on certain products, such as patent-expired treatments and those whose actual sales have been 100% higher than their manufacturers had forecast. It is also expected that, from next year, all products in the same categories as these top-selling drugs will be subjected to a higher-than-average price cut. However, it is not yet clear which products will be affected, although analysts quoted by Bloomberg believe they will include antidepressants and angiotensin receptor blockers.

The Japanese pharmaceutical market is the world’s second-largest, after the USA, and accounts for around 10% of the global total, with estimated sales of just under $58 billion in 2006. For a number of years, Japan has grown far more slowly than other major markets, initially because of the country’s troubled economy but now also because of the biennial price cuts and government encouragement of the use of generics – these are central tools in the government’s strategy of tackling the nation’s drugs bill, which currently stands at 6.9 trillion yen.

The latest figures available from IMS Health show that the Japanese pharmaceutical market grew 4.8% to just under 2 trillion yen during second-quarter 2007, and that the fastest-growing products in this period were those acting on the renin-angiotensin system, whose sales rose 13.8% to 138.3 billion yen, and lipid regulators, with sales advancing 8.8% to 94.7 billion yen. The market research company also believes that the national market will grow by no more than 2% in 2008, less than half the rate of rise which it is forecasting for this year.