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Deeper price cuts for generics eyed

TOKYO -- The Japanese government is considering further slashing mandated prices of generic drugs as part of a campaign to broaden their use and curb ballooning health care costs.

      Japan currently sets prices of first-time generics at 60% of name-brand drugs, but the health ministry is looking at lowering that to 50%. The government aims to raise the generics usage rate to 80% by fiscal 2020.

     The country revises reimbursement fees every two years, with the last occurring in fiscal 2014. Back then, the government cut prices of first-generation generics from 70% of the original drugs to 60%. For fiscal 2016's changes, the health ministry's Central Social Insurance Medical Council is discussing further reduction. The ministry will reveal the threshold as soon as the end of the year based on those conclusions.

     Generic drugs are cheaper than name-brand drugs due to the lack of development costs. But their use in Japan stood at 46.9% as of 2013, well short of Western countries, which have rates hovering around 80%. The health ministry estimates medical expenses can be reduced by 1.3 trillion yen ($10.5 billion) annually if the generics usage rate reaches 80%. Patients, who pay 30% of prescription fees out-of-pocket, would also find relief.

     The government is also considering significantly lowering prices of drugs with expired patents but no available generic versions.

(Nikkei)

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