US trade negotiators and industry leaders have applauded recent moves by Japan to open its markets, foster new business opportunities, stimulate competition and continue its programme of regulatory reform across a range of sectors.

This progress is outlined in the sixth annual report of the US-Japan Regulatory Reform and Competition Policy Initiative, which is produced jointly by the two governments to detail progress made on the recommendations for reform which they have exchanged each year since the Initiative began six years ago.

Highlights of this year’s report include new measures by Japan to increase the transparency of regulatory and policy decision-making in sectors ranging from health care to information technology, and implementation of plans to substantially speed new drug introductions.

Specifically, in the area of pharmaceutical pricing, the report notes that Japan’s Ministry of Health, Labour and Welfare (MHLW) has pledged to “consider rewarding” the development of innovative medicines during fiscal 2007 by:

– continuing to select suitable candidates, irrespective of nationality, to serve as members of the Central Social Insurance Medical Council (Chuikyo) Drug Pricing Expert Subcommittee;

– ensuring that, ahead of meetings with the Drug Pricing Organization (DPO), the MHLW’s Economic Affairs Division discusses fully with drugmakers the issues being considered by the Health Insurance Bureau;

– providing industry with opportunities to express its views on proposals to reform Japan’s drug pricing system, and to consider those views; and

– discussing with industry how to improve rewards for innovation.

The MHLW notes the US government’s strong opposition to annual revisions of drug reimbursement prices, and says it will ensure that drugmakers have the opportunity to contribute to any official discussions on the frequency of reimbursement price revisions. It will also continue to discuss with industry the issue of re-pricing criteria for market expansion.

The Ministry also points out, that by extending the standard length of the reexamination period for medicines with new active ingredients from six to eight years on April 1 this year, it has, in effect, extended the data protection period.

The report acknowledges that innovative medicines are often introduced into Japan years after the USA and Europe, and the government says it intends to eliminate these lags by strengthening R&D, stimulating clinical trials and streamlining reviews. Also, the MHLW has pledged to ensure that the Pharmaceuticals and Medical Devices Agency (PMDA) achieves its target of increasing the number of its reviewers by 236 by March 31, 2010, through hiring 58 new reviewers in FY2007, 80 in FY2008 and 98 in FY2009, funded by the user-fee increases which took effect last April 1. The MHLW and PMDA will continue to exchange views on PMDA’s performance status with interested parties, including US drugmakers, it says.

Also in April, the MHLW published draft guidelines clarifying Japan’s regulations for global clinical trials and announced a five-year plan to stimulate clinical trials in the country. In addition, it established plans to reduce, by end-FY2011, the pre-application drug lag by 1.5 years and the application review period by one year, thus reducing the total development-to- approval period by 2.5 years. Moreover, the PMDA has pledged, by March 31, 2009, to cut consultation waiting times from approximately three months to around two months.

The PMDA says it has reduced its New Drug Application backlog from 139 when it was set up in April 2004 to 20 at March 31, 2007, and that it is, with the MHLW, making “all possible efforts to ensure reviews are carried out properly and promptly and to attain the mid-term target of completing 80% of applications in 12 months of administrative time by March 31, 2009.”

For its part, the US government pledges that the Food and Drug Administration (FDA) will continue to provide opportunities to meet with Japanese companies operating in the USA, with appropriate experts being made available for such meetings. Also, the Department of Commerce will continue to encourage US drugmakers to work with Japanese regulators to facilitate the simultaneous development of drugs worldwide, it says.

Moreover, US industry representatives will continue to take part in the meetings of Japan’s Government-Private Sector Dialogue for Innovative Drug Discovery, which was set up last January to look at ways of enhancing industry competitiveness.

These developments have been welcomed by US Trade Representative Susan Schwab, who said that recent regulatory reforms have contributed significantly to Japan’s overall economic growth. She also applauded Prime Minster Shinzo Abe for staying the course on creating new business opportunities, and urged further opening of the Japanese economy in the year ahead.

US drugmakers have also noted with approval the special focus placed by the report on regulatory and market access issues related to pharmaceuticals. “In particular, we welcome steps taken by the Japanese government to ensure it establishes drug prices in a manner that considers the value of innovation and the need for timely access to pharmaceuticals,” said Billy Tauzin, chief executive of the Pharmaceutical Research and Manufacturers of America.

The industry group also applauded the US government’s strong statement in opposition to an annual price revision system, which, said Mr Tauzin, “would be inconsistent with Japan’s assurances to consider the value of innovation and ensure timely access to life-saving medicines for Japanese patients.”

“The report specifically notes that Japan will provide meaningful opportunities for the US pharmaceutical industry to consult with the government on the government’s pricing rules and regulatory procedures and will allow for more transparency in the government price-setting process. These assurances are both timely and necessary as Japan continues to develop short-term and long-term health care reform proposals over the coming months,” he added.