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Economy

Japan logs biggest jump in medical costs in 5 years

Surging drug costs are causing Japan's health care spending to balloon.

TOKYO -- Japanese health care spending climbed 3.8% in fiscal 2015 on surging drug prices and demand for new treatments.

Expenditures hit 41.5 trillion yen ($404 billion), the health ministry said Tuesday. They rose for a 13th straight fiscal year and at the fastest pace in five years. Pharmaceutical costs, comprising drug charges and fees paid to pharmacists, climbed 9.4% -- the most in 12 years -- and made up 19% of the total.

Consumption of such new drugs as the Sovaldi and Harvoni hepatitis C treatments, whose government-mandated prices range from 60,000 yen to 80,000 yen per tablet, is thought to have risen from autumn onward. These expensive treatments lifted medical costs around 1%.

The Ministry of Health, Labor and Welfare has promoted generic drugs to help curb rising medical costs. At the end of fiscal 2015, 63.1% of pharmaceuticals consumed in Japan were generics, up 4.7 points from a year earlier. But the growth failed to offset upward pressure from expensive new treatments.

The ministry is now working to address these high prices directly. Standard prices on certain drugs, including Sovaldi, were reduced this fiscal year under a system of special exceptions. But costly new treatments continue to hit the market, including the notoriously pricey Opdivo cancer drug. Treating 50,000 people with it for a year would cost an estimated 1.75 trillion yen. The government is crafting guidelines on the drug's appropriate use and is weighing temporary price cuts.

Bringing medical costs under control will require a broader overhaul of the government's drug-pricing system. As a general rule, prices are now reviewed once every two years. This should be changed to allow annual price adjustments, according to Takuya Shinohara of the NLI Research Institute.

As the overall population continues to shrink and age, many argue that seniors should shoulder a bigger financial burden. Premium rates at large companies' health insurance societies exceed 9% -- near the limit, according to Shuji Shirawaka, deputy chairman of the National Federation of Health Insurance Societies, or Kenporen.

(Nikkei)

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