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Recent Movement Concerning the Recent Movement Concerning the Pharmaceutical Industry in Japan Pharmaceutical Industry in Japan April 16, 2009 Kenshi Kinoshita Director of Economic Affairs Division, Health Policy Bureau Ministry of Health,


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SLIDE 1

Recent Movement Concerning the Pharmaceutical Industry in Japan Recent Movement Concerning the Pharmaceutical Industry in Japan

April 16, 2009 Kenshi Kinoshita

Director of Economic Affairs Division, Health Policy Bureau Ministry of Health, Labour and Welfare

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SLIDE 2

Projected Growth Rate in the 2009 Market based on IMS Health Data Country name Growth rate Country name Growth rate USA 1 - 2% UK 2 - 3% Japan 4 - 5% France 4 - 5% Emerging countries 14 - 15% Germany 3 - 4%

* Emerging countries: 7 countries including China, Brazil, India, South Korea, Mexico, Turkey and Russia

1

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SLIDE 3

Comparison of Drug Cost, etc. between Japan and Western Countries

Medical expense/ GDP Japan USA France Germany Japan USA France Germany Japan USA France Germany 1996 8.1 15.3 11.0 10.6 19.6 12.6 16.4 14.8 81.3 45.8 79.7 76.9 7.0 13.2 10.4 10.4 21.6 9.3 14.8 13.0 82.8 45.4 79.6 82.2 2006 Drug cost/ Medical expense Public spending/ Medical expense

Unit: % (Source: OECD Health Date 2008)

2

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SLIDE 4

6.9 6.7 7.3 7.0 6.7 6.0 6.0 6.1 6.4 6.4 6.9 6.9 7.3 28.5% 26.1% 27.0% 24.5% 23.3% 20.1% 19.6% 20.2% 20.6% 20.6% 21.9% 21.5% 22.1%

0兆 2兆 4兆 6兆 8兆 10兆 93 94 95 96 97 98 99 00 01 02 03 04 05 0% 5% 10% 15% 20% 25% 30%

薬剤費 薬剤比率

(JPY)

Source: Ministry of Health, Labour and Welfare (Prepared on July 9, 2008 based on Drug-3 of the Central Social Insurance Medical Council)

Drug Cost and its Ratio to Total Medical Expenditure

24.4 trillion 25.8 trillion 27.0 trillion 28.5 trillion 28.9 trillion 29.6 trillion 30.7 trillion 30.1 trillion 31.1 trillion 31.0 trillion 31.5 trillion 32.1 trillion 33.1 trillion National medical expenditure (JPY)

  • Recent drug cost remains on the same level at a little over 6 tr

Recent drug cost remains on the same level at a little over 6 trillion yen. illion yen.

  • The ratio of drug cost to total medical expenditure also remains

The ratio of drug cost to total medical expenditure also remains on the same

  • n the same

level after declining from about 30% to about 20%. level after declining from about 30% to about 20%.

3 10 trillion

Drug cost

6 trillion 4 trillion 2 trillion 0 trillion

Ratio of drug cost to total medical expenditure

8 trillion

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SLIDE 5

Pharmaceutical manufacturers

Current Situation of the Pharmaceutical Industry

Pharmaceutical manufacturers Drug wholesalers Medical institutions Dispensing pharmacies

Domestic

M&A/Alliance Intensifying international competition 2010 problem Increase of development cost Entry from other industries Low-cost operation Worsening of business conditions Improvement of distribution Lack of personnel Management issues Stagnation of spread of generics Increase of development cost Tightening of review Streamlining of Research Department Exploitation of markets in emerging countries

Overseas

Slowdown

  • f growth

Improvement of distribution

Exploitation of markets in emerging countries M&A/Alliance M&A M&A

4

Promotion of spread of generics

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SLIDE 6

Note) 14 listed member companies of the JPMA: More than 100 billion yen of the consolidated sales ending in March 2008

5,051 5,987 6,730 7,438 7,724 7,816 8,874 9,858 11,510 13,590 10.1% 11.5% 12.3% 13.3% 13.8% 13.7% 14.7% 15.8% 17.7% 19.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 00期末 01期末 02期末 03期末 04期末 05期末 06期末 07期末 08期末 09予想 ( 億円)

R&D Cost and its Ratio to Sales of 14 Listed Member Companies of the Japan Pharmaceutical Manufacturers Association (JPMA)

5

(100 million yen)

2000 term end 2001 term end 2002 term end 2003 term end 2004 term end 2005 term end 2006 term end 2007 term end 2008 term end 2009 forecast

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SLIDE 7

System Design of Special Exception for Drug Price Control Propos System Design of Special Exception for Drug Price Control Proposed by the ed by the Federation of Pharmaceutical Manufacturers Federation of Pharmaceutical Manufacturers’ ’ Associations of Japan (FPMAJ) Associations of Japan (FPMAJ)

[Coverage of drug price control] [Coverage of drug price control] The drug already listed on the NHI price listing whose weighted The drug already listed on the NHI price listing whose weighted average rate of deviation does not exceed the weighted average rate of deviation does not exceed the weighted average rate of deviation of all items listed on the NHI drug pr average rate of deviation of all items listed on the NHI drug price standard when the drug price is revised and meets the ice standard when the drug price is revised and meets the following requirements: following requirements:

  • Drug during the protection period of substance patent or during

Drug during the protection period of substance patent or during the reexamination period the reexamination period

  • Drug whose generic product is not listed on the NHI drug price s

Drug whose generic product is not listed on the NHI drug price standard tandard

  • Drug that is indispensable for insured medical care

Drug that is indispensable for insured medical care * * Within 15 years after the listing in simulation Within 15 years after the listing in simulation * * It does not exceed the rate of deviation (6.9%) when the drug pr It does not exceed the rate of deviation (6.9%) when the drug price was surveyed in 2007 in simulation ice was surveyed in 2007 in simulation

Time Time Drug price Drug price

The price of an original drug after the The price of an original drug after the launch of a generic is determined launch of a generic is determined depending on the current market depending on the current market price. price.

[2] When drug price drops [2] When drug price drops below the weighted below the weighted average price average price When drug price is revised When drug price is revised [3] When patent [3] When patent term expires term expires Current system Current system After reform After reform [1] When a [1] When a system is applied system is applied

Launch of generics Launch of generics

[Revision of the drug price when the drug will no longer meet th [Revision of the drug price when the drug will no longer meet the requirements for the Special Exception for Drug Price e requirements for the Special Exception for Drug Price Control] Control] At the revision of drug price, the amount of difference between At the revision of drug price, the amount of difference between the price of the relevant drug and the price when the the price of the relevant drug and the price when the Special Exception for Drug Price Control was not applied is accu Special Exception for Drug Price Control was not applied is accumulated and reduced. In the revision of the drug price mulated and reduced. In the revision of the drug price after the listing of generic products, the special reduction ass after the listing of generic products, the special reduction associated with the listing of generic products is further applied.

  • ciated with the listing of generic products is further applied.

[Timing to introduce the Special Exception for Drug Price Contro [Timing to introduce the Special Exception for Drug Price Control] l] The Special Exception for Drug Price Control will be introduced The Special Exception for Drug Price Control will be introduced in 2012 and, among the all listed drugs whose substance in 2012 and, among the all listed drugs whose substance patents are valid as of April 2012, the drugs that meet the abov patents are valid as of April 2012, the drugs that meet the above requirements will become the targets. e requirements will become the targets.

6

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SLIDE 8

Contribution of drugs with regards to treatment Satisfaction with treatment

  • urce:

Japan Health Sciences Foundation: 2005 Report on Survey of Domestic Key Technologies, Prospects for Medical Needs, 2015, partially modified, obtained from Mr. Aoki, Chair of Astellas Pharma Inc.

Satisfaction with Treatment and Contribution of Drugs Satisfaction with Treatment and Contribution of Drugs

7

AIDS Chronic hepatitis B Hepatic cancer Depression Leukaemia Functional dyspepsia Uterine cancer Breast cancer Glaucoma Asthma Endometriosis Multiple sclerosis Vascular dementia Diabetic neuropathic ulcer Hepatic cirrhosis Age-related macular degeneration Diabetic nephropathy Lung cancer Chronic obstructive pulmonary disease Schizophrenia Diabetic retinopathy Stress urinary incontinence Renal failure chronic Cerebral infarction Chronic hepatitis C Sleep apnoea syndrome Cerebral haemorrhage (including subarachnoid haemorrhage)

MRSA

Arthrosis deformans Overactive bladder syndrome Glomerulonephritis chronic Irritable bowel syndrome Psoriasis Parkinson’s disease

SLE

Nephrotic syndrome Decubitus Osteoporosis Dermatitis atopic Rheumatoid arthritis Anxiety neurosis Allergic rhinitis Alzheimer's disease Epilepsy Colorectal cancer Cardiac failure Diabetes Arrhythmia Prostate cancer Prostatic hyperplasia Gastric cancer Myocardial infarction Uterine myoma Hyperlipidaemia Gout Tuberculosis Angina pectoris Hypertension Peptic ulcer

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Inflammatory bowel disease

Trend: Drug price difference is becoming bigger than the average drug price

Drug price difference is relatively smaller than the average drug price

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SLIDE 9

Scheme for Non Scheme for Non-

  • approved Drugs and Non

approved Drugs and Non-

  • approved Indications

approved Indications (Image) (Image)

Request from scientific societies and patient groups, etc.

Selection at review meeting of non-approved drug problem, etc.

MHLW

Pharmaceutical company

Request for a clinical trial Recruit a company and request a clinical trial When a responsive company is defined When there is no responsive company

Request from scientific societies and patient groups, etc.

Selection at review meeting of non- approved drug problem, etc.

MHLW (PMDA) Pharmaceutical companies

Function or organization that provides development support for non-approved drugs/non-approved indications by the pharmaceutical industry

Medical community Provision of funds, know- how, personnel support, etc. Systemic relief measures Support with incentives, etc.

Support

(Current scheme) (Scheme currently under consideration)

8

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SLIDE 10

Central Social Insurance Medical Council

March April or May June December

(Discussed 4 times since last year)

Reach the conclusion

Special Exception for Drug Price Control Proposed by the FPMAJ Recalculation of market expansion Special reduction Calculation method for drug price of generics Others This is the first case of discussion of the proposal by the industry Consolidation of discussions within the industry and adjustment of details are indispensable

Policies to achieve the governmental target of the spread of generics (30% of all drugs on a numerical basis: 2012) and countermeasures if the target is not met. Measures to promote the development of non-approved drugs and non-indicated drugs.

[Central issues of past discussions]

Discussions Surrounding the Future Drug Price System

9

(Hearings with industry representatives to be implemented)

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SLIDE 11

[1] Intensive input of research funds

Prioritize and expand drug and medical device- related budget Establish a coordinating organization for priority development fields, etc. by the industry, government and academia Enrich and strengthen a tax system for R&D Examine the measures for integrated and efficient operation of research funds in the special advanced medical development zones Prioritize and intensively allocate research funds related to the special advanced medical development zones, etc.

[2] Nurture of venture companies, etc.

Expand research funds Share facilities and devices, etc. Improve the support system to transform ventures to companies, utilize personnel of retired employees, improve consultation services, etc. Expand support measures concerning the use of a tax system for angel, etc. Implement support for international development

  • f bio-venture companies

Promote corporate development of new technologies which are important in a nation’s economy Examine to support charges for review Examine measures to vitalize the provision of materials for medical devices

[3] Development of conditions for clinical research and trials Promote the global clinical trials

Improve “Medical Clusters” that promote clinical research with close collaboration among the industry, government and academia, centering on the National Centers Improve the bridge-building research bases, bases for regenerative medicine and clinical research systems Establish bases for clinical trials centering on Medical Clusters and promote the progress of network system and IT for the bases Nurture and secure personnel who support physicians and clinical studies Work to improve the evaluation for clinical performance of physicians, etc. Promote the appropriateness of regulations for clinical research Improve a global clinical research base that can carry out the advanced global clinical trials with the central IRB functions, etc. Establish a place for dual-track discussion between the R&D side and regulatory side in the special advanced medical development zone from the development stage

[6] Appropriate assessment of innovation

Assess innovative products in the drug price system, etc in a more appropriate way, etc.

Outline of 5-year Strategies to Create Innovative Drugs and Medical Devices

[5] Speed-up of review and enhancement of quality

Shorten the period to launch new drugs by 2.5 years (resolution of drug lag) Double the review personnel and enhance the quality (increase personnel by 236 persons over 3 years) Clarify the role and criteria of the review for approval and improve the GCP operation Improve a system that can make timely responses to all consultations for clinical trials Discuss the introduction of consultation for global clinical trials among the review authorities in Japan, the US and Europe Shorten the period to approval of new medical devices by 19 months (resolution of device lag) Increase personnel for review of medical devices and enhance the quality (increase personnel by 69 persons over 5 years) Introduce the 3-track review system for new medica devices, improved medical devices and late medica devices and promote the streamlining of approval process Enhance the quality and quantity of consultation services for medical devices Improve the operation of GCP for medical devices

Provide the public with the world Provide the public with the world’ ’s s highest highest-

  • level drugs and medical

level drugs and medical devices devices Make drug and medical device Make drug and medical device industry serve as an engine for industry serve as an engine for economic growth in Japan economic growth in Japan

Cluster of policies aiming at advanced development in Japan and world’s simultaneous development with participation of Japan

April 2007 May 2008 (revised) February 2009 (revised) Cabinet Office, Ministry of Education, Culture, Sports, Science and Technology

  • Ministry of Health, Labour and

Wealth, Ministry of Economy, Trade and Industry

[7] Dialogue between the public and private sectors Strengthening of collaboration among the related ministries, research institutes and industries Implementation of periodic dialogue between the public and private sectors

10

[4] Collaboration with Asia

Promote joint research on important diseases Joint research on the use of data collected in East Asia

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SLIDE 12

[1] Intensive input of research funds \69.73 billion (\69.64 billion) MEXT: MEXT: \ \43.44 billion ( 43.44 billion (\ \43.67 billion) 43.67 billion)

Innovative protein/cell analysis research initiatives Molecular imaging research Project to realize medical care in response to individual genetic information Project to realize regenerative medicine Program to promote brain science research strategy, etc.

MHLW: MHLW: \ \16.89 billion ( 16.89 billion (\ \16.36 billion) 16.36 billion)

Research for practical application of regenerative medicine Research for promotion of drug discovery infrastructure Research for promotion of development of medical devices, etc.

METI: METI: \ \9.4 billion ( 9.4 billion (\ \9.61 billion) 9.61 billion)

Support of acceleration of genomic drug discovery and development of basic bio technology Development of basic technology for promotion of industrial application of stem cells R&D project for intelligent surgery devices R&D business for assessment of regenerative medicine, etc.

[3] Development of conditions for clinical research and trials \15.62 billion (\14.52 billion)

MEXT: MEXT: \ \4.59 billion ( 4.59 billion (\ \3.66 billion) 3.66 billion)

Program to promote support for bridge-building research Expenses for special educational research Business to promote the fostering of advanced healthcare personnel in cooperation with university hospitals (including the fostering of advanced clinical researchers)

MHLW: MHLW: \ \7.73 billion ( 7.73 billion (\ \8.26 billion) 8.26 billion)

Global clinical research base development business ( Medical Cluster development business) Comprehensive research for practical application of medical technologies Business to vitalize clinical trial base hospitals, etc.

METI: METI: \ \3.3 billion ( 3.3 billion (\ \2.6 billion) 2.6 billion)

Development of bridge-promoting technologies from basic to clinical research (re-presented)

[6] Appropriate assessment of innovation

Draft of FY2009 Budget based on the 5-year Strategies to Create Innovative Drugs and Medical Devices

[5] Speed-up of review and enhancement

  • f its quality

\700 million (\790 million) MHLW: MHLW: \ \700 million ( 700 million (\ \790 million) 790 million)

Regulatory science comprehensive research for drugs and medical devices Speed-up of review and enhancement of its quality,

  • etc. (increase personnel by 236 persons over 3 years)

[7] Dialogue between the public and private sectors

MEXT: MEXT: \ \48 billion ( 48 billion (\ \47.3 billion) 47.3 billion) MHLW: MHLW: \ \27.1 billion ( 27.1 billion (\ \27.4 billion) 27.4 billion) METI: METI: \ \12.7 billion ( 12.7 billion (\ \12.2 billion) 12.2 billion)

[2] Nurture of venture companies, etc. \4.81 billion (\4.5 billion) MHLW: MHLW: \ \1.51 billion ( 1.51 billion (\ \1.9 billion) 1.9 billion)

Consultation business for clinical trials, etc. to support venture companies Ssponsored research by industrial investment Subsidies for development and research of drugs for rare diseases

METI: METI: \ \3.3 billion ( 3.3 billion (\ \2.6 billion) 2.6 billion)

Development of mediation-promoting technologies from basic to clinical research Consultation service business at the Organization for Small & Medium Enterprises and Regional Innovation, Japan (SMRJ) (number of subsidies of SMRJ)

Draft of FY2009 government budget: \87.8 billion (FY2008 budget: \86.9 billion) (101.0%)

Strengthening of collaboration among the related ministries, research institutes and industries Implementation of periodic dialogue between the public and private sectors

11

[4] Collaboration with Asia \230 million (\50 million) MHLW: MHLW: \ \230 million ( 230 million (\ \50 million) 50 million)

Research to promote global healthcare issues (partial)

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SLIDE 13

Base Core

  • To promote clinical trials of non-

approved drugs, etc. to meet medical needs in Japan.

  • To avoid international delay of public

access to drugs, etc. by promoting global clinical trials

Accumulation of subjects by cooperation with related medical institutions

Objectives to vitalize clinical trials Objectives to vitalize clinical trials

Secure quick access from the Secure quick access from the stage of investigational products stage of investigational products

(elimination of unmet needs)

Promote innovation by new drugs Promote innovation by new drugs

Speed up implementation of clinical trials Speed up implementation of clinical trials

Expenses for vitalization business of clinical trial Expenses for vitalization business of clinical trial base hospitals (subsidies) base hospitals (subsidies) FY2009 budget (draft): FY2009 budget (draft): \ \760 million 760 million FY2008 budget: FY2008 budget: \ \760 million (Total) 760 million (Total)

Environmental improvement & expansion Environmental improvement & expansion

Base

Core

Formation of Network of Base Medical Institutions

Expand support staff for Expand support staff for clinical trials, etc. within clinical trials, etc. within medical institutions and medical institutions and promote IT promote IT Form bases and increase Form bases and increase the accumulation of patients the accumulation of patients → → Low cost/speed Low cost/speed-

  • up

up

Core hospitals 10 locations

Base medical institutions - 30 locations

Promotion and research expenses for infrastructure Promotion and research expenses for infrastructure development of clinical research (research expenses) development of clinical research (research expenses) FY2009 budget (draft): FY2009 budget (draft): \ \2.07 billion 2.07 billion FY2008 budget: FY2008 budget: \ \1.48 billion (Total) 1.48 billion (Total)

Infrastructure Development of Clinical Trials and Clinical Research and Promotion of Clinical Research

Medical institutions with the system to implement advanced clinical trials and clinical research Medical institutions with a system to implement clinical trials and clinical research smoothly in cooperation with core hospitals, other base medical institutions and regional medical institutions “5-year Plan for New Vitalization of Clinical Trials” (March 2007 MEXT/MHLW)

12

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SLIDE 14

Development of Global Clinical Research Bases

(world-class clinical research bases)

Development of Global Clinical Research Bases

(world-class clinical research bases)

Core hospitals

(10 locations around the country)

Base medical institutions

(30 locations around the country) Medical institutions with a system to implement advanced clinical trials and clinical research Medical institutions with a system to implement clinical trials and clinical research smoothly in cooperation with core hospitals, other base medical institutions and regional medical institutions

Base Base Core Base Base Base Base

Core and base medical institutions for vitalization of clinical research and clinical trials Network

Core

Global Clinical Research Base (Center) Overseas clinical research network

Joint research & collaboration Joint research & collaboration

Implementation support system

Smooth administrative system for agreements in English, accounting of international standards, etc. Provision of central IRB functions Analysis of plans and data of international research (securing of senior data administrators and computer technicians) System as a domestic explorative clinical research center (securing of physicians, laboratory technicians, radiological technicians, etc.) Fostering (dispatch, etc.) of personnel to support global research such as physicians and supply of personnel to core and base hospitals Securing of personnel for establishment of intellectual property control system and strategy Securing of personnel for regulatory science research such as diagnostic auxiliary substance in the body Accumulation of patient information and adjustment with medical institutions

Providing functions

FY2009 budget (draft): \400 million (new) Implementation of advanced global joint research

13

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SLIDE 15

Outline of Super Special Zone Business

March 2008 Proposal by the Council on Fiscal and Economic Policy

5-year Strategies to Create Innovative Drug Discovery, etc.

Minister of MEXT Minister of MHLW Minister of METI

Director-General

  • f Science and

Technology Agency

Pharmaceutical industry Device industry Dialogue between the public and private sectors Experts

Quickly provide cutting Quickly provide cutting-

  • edge medical care to

edge medical care to the public the public

Development of research implementation system by formation of a body of research institutes (including collaboration with other companies such as ventures) Recruitment fields: iPS cell application, regenerative medicine, innovative medical devices/bio drugs, important disease areas, etc. Development of research implementation system by formation of a body of research institutes (including collaboration with other companies such as ventures) Recruitment fields: iPS cell application, regenerative medicine, innovative medical devices/bio drugs, important disease areas, etc.

Promotion of research and development Promotion of research and development Consultation with regulatory authorities from the development stage Consultation with regulatory authorities from the development stage Efficient operation such as integrated use of research funds Efficient operation such as integrated use of research funds

Demanded FY2009 budget of around \10 - 12 billion for total budgets of 3 ministries

1

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SLIDE 16

Basic research etc. Preclinical Clinical research/ clinical trial Appli- cation Review/ Approval Application

  • f

insurance

Drug Discovery/Clinical Trial Innovation

Us Appropriate assessment of innovative products

Necessary policies and measures

Development stage

Deliver safe and high-quality drugs and medical devices more quickly at reasonable costs

Produc- tion

Provide continuous development support for practical application of technologies

Support for the development of drugs, etc. and development of clinical trial infrastructure in the priority areas such as cancer and pediatric diseases

Accelerate to support excellent R&D by bio-venture companies

It may cost around 60 - 70% of the total R&D expenses

(more than 10 billion to 100 billion yen) 1 / 20,000 1 / 7,000 560,000 chemical compounds

5 - 8 years 3 - 7 years Strengthening of review system and safety measures Conquering of bottlenecks in clinical trials/clinical research such as cost and speed

* Data for drugs

  • nly

1

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SLIDE 17

Aim to shorten the period to launch new drugs by 2.5 years (shorten development and review periods by 1.5 years and 1 year respectively) (5 years from 2007)

Measures

Development period Review period

Expand and strengthen the consultation system for clinical trials

  • Expand personnel
  • Double the personnel for review and consultation for new

drugs over 3 years (increase personnel by 236 persons over 3 years from 2007)

  • Enhance the quality and quantity of consultation for clinical trials
  • Advice to encourage the improvement of development

period, etc.

  • Shorten the preparation period for application by companies,

etc.

Clarify the role and criteria of approval process

  • Prepare the guidelines for global clinical trials and new

technologies, etc.

Expand and strengthen the review system

  • Expand personnel (as stated on the left)
  • Enrich and improve review operations
  • Streamline the post-application operations

by introducing a pre-assessment system prior to application, etc.

  • Strengthen global collaboration
  • Strengthen collaboration with overseas

regulatory authorities such as the FDA

Target

(accomplish by 2011)

  • Shorten the period from

development to application by 1.5 years

Speed Up for Approval Process of New Drugs

Application for approval Approval

1

  • Shorten the period from application

to approval by 1 year

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SLIDE 18

Number of items by classification of items listed on the NHI Drug Price Standard and arket hare

Survey of drug prices in September 2005

Number of items

Quantitative share Share in amounts

Without generics With generics Original products

Generic products

Other items (JP products, natural drugs, etc.)

1,761 21.4% 47.6% 1,430 34.9% 35.4% 6,016 16.8% 5.9% 4,104 27.0% 11.2%

Survey of drug prices in September 2007

Number of items

Quantitative share Share in amounts

Without generics With generics Original products

Generic products

Other items (JP products, natural drugs, etc.)

1,891 22.1% 48.3% 1,502 34.6% 34.8% 6,683 18.7% 6.4% 4,283 24.7% 10.5%

Note 1) “Generic products“ refer to drugs other than those approved as new drugs based on the Pharmaceutical Affairs Law (excluding other items). Note 2) “Other items“ refer to JP products, Kampo extracts, natural drugs and biological agents (vaccines, blood products, etc.) and items approved before 1967.

(based on the MHLW survey)

(Number of items: As of April 2008, quantitative share and share in amounts are based on the quantity and drug prices at the time of survey in September 2007)

Market Share of Generics in Japan

17

(Number of items: As of April 2006, quantitative share and share in amounts are based on the quantity and drug prices at the time of survey in September 2005)

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SLIDE 19

Sometimes it takes time from the placement of

  • rder to delivery, etc.

In order to achieve the government target of “quantitative share of more than 30% (double the current level) for generic products by 2012,” clarify what the government and other parties concerned should do for (1) stable supply, (2) securing of quality, (3) provision of information by generic makers, (4) environmental development for promotion of use, and (5) matters regarding the healthcare insurance system so that patients and healthcare professionals can use generic products at ease.

Action Program for Promotion of Safe Use of Generic Products (Outline)

Voices in medical practice

Govern- ment Generic makers

Thorough administrative guidance for stable supply

Receipt of complaints from healthcare professionals, announcement of administrative guidance and its content to generic makers, etc.

Shortening of time to delivery

100% delivery to wholesalers by the following day (during 2007) When there is no stock at the site of wholesalers, 75% same-day delivery to wholesalers (during 2008)

Securing of inventory

More than 1 month in-house stock/distribution stock (during 2007) Zero out-of-stock items (during 2009)

(1) Stable supply Some generic products seem to have different elution or blood concentration from

  • riginal products, etc.

Voices in medical practice

Govern- ment

Implementation of test/inspection for the quality of generic products and announcement of the results

Implement impurities test for injection products, etc. Collect and sort out research papers, etc. on the quality of generic products. Examine the opinions, etc. regarding the quality

  • f generic products gathered to the “consultation service for generic products” and implement test/inspection as needed.

(Budget on request)

Generic makers

Implementation of quality test and announcement of the result

Implement product tests for each lot (during 2007) Start other tests not required for approval such as a long-term storage test if not performed yet (during 2007)

Survey of related literature, etc.

Related literature on generic products was surveyed and evaluated by the Japan Generic Pharmaceutical Manufacturers Association (JGPMA), an affiliated organization, and necessary responses were taken (during 2007)

(2) Securing of quality Formulated on October 15, 2007

18

Expansion of roundup inspection and guidance, announcement of the results (budget on request)

Administrative guidance based on GMP by prefectural or governmental on-the-spot inspection Expansion of inspected items

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SLIDE 20

Initiatives up till now

Reimbursement evaluation of prescription including generic products (2002 - ) Addition of a check section of “Can be changed to generic products” in the prescription form (2006 - ) Reimbursement evaluation if a generic product is dispensed after providing the patient in writing with information on the difference in drug prices between the original product and generic product in addition to information on the quality of generics, etc. and obtaining consent from the patient (2006 - ) Effective promotional measures for generics, including examination of changes in the prescription form and examination of evaluation of inventory management cost for pharmacies, will be discussed and determined by the Central Social Insurance Medical Council, etc. this year.

(5) Matters regarding healthcare insurance system

Enlighten the spread by posters and pamphlets

Prepare and distribute posters and pamphlets for healthcare professionals and the public (2007 - )

Establishment of a council on a prefectural level (budget on request)

Establish a council composed of healthcare professionals and prefectural staff, etc. to formulate and enlighten the spread of promotional measures to use generics on a prefectural level

Distribution of “Generic Products Q&A” to medical institutions and ads in newspapers

(4) Environmental development for promotion of use There are no visits by MRs. The MR often says, “Please ask an original maker.” It seems that they strongly rely on original makers, etc. regarding information

Guidance for enrichment of package insert

Additives, bioequivalence test data, safety test data and request for literature, etc. must be described in the package insert. The package inserts should be revised by the end of March 2008. → Generic makers voluntarily responded to the revision by December 2007.

Guidance to strengthen the information provision system by generic makers

Strengthen the system that sorts out/evaluates R&D data, collected ADR information and related literature and provides the information to healthcare professionals.

Information provision to healthcare professionals

Quick response to request for materials by posting test data and ADR data on the website (during 2007)

(3) Provision of information by generic makers Initiatives from hereon

19

Voices in medical practice

Govern- ment Generic makers Government Generic makers

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SLIDE 21

Dissemination Measures through Use of Generics at DPC Hospitals

Inpatient

Increase the usage rate of generics for drugs related to inpatient medical care Support for medical treatment fees? DPC hospitals

Now: 718 hospitals ↓

Including hospitals currently in preparation: 1,428 hospitals 50.2% of beds for general patients

Outpatient

Continued use of generics for prescription after discharge Spread to new outpatients

Dispensing pharmacies

Spread to other regional medical institutions

Stable supply Provision of information Continued efforts by manufacturers, etc.

Enhancement of reliability is indispensable

Prescription

2

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SLIDE 22

Original Drug (New Drug) Market and Generic Market

Response to the 2010 problem Role of drug price system

Long-term listing VS. Generic Market differentiation Japanese-type Western-type

Original Generic Generic Original 21

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SLIDE 23

Supply Chain and Information Concerning Drug Supply

Manufacturers Wholesalers Introduction of IT for medical care

Medical institutions Dispensing pharmacies

The delivery of prescriptions is limited in print and information

  • n prescriptions has not

been computerized. Because of this, feedback to medical institutions when prescriptions are changed to generic products, etc. has not been streamlined.

<Deepening of supply chain >

Streamlining of distribution of goods Safety of medical care Quality and utilization

  • f information

Shortening of lead time by supply chain, etc.

(Examples)

  • Sales forecast and production system

by disease and product

  • Clarification of process that causes

defects and countermeasures

  • Clarify the processes from the

placement order to delivery as well as use by patients, and make it clear when and which patient used what drug and by whom

Further traceability Promotion of coded information

Examination of computerized prescription is necessary

Dosing information for each patient Enhancement of quality of clinical trials, clinical research, etc. (contribution to development of new drugs) Speed-up of recall of drugs, etc.

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