Japan's Plan to Cut EU Pharmaceutical Prices Is Harmful

Europeans will soon be swapping cabernets for Corollas. A nearly finalised free-trade pact between the European Union and Japan removes tariffs on European wines and cheeses and Japanese passenger cars.

But Japanese officials aren't following this spirit of free-trade when it comes to other traded goods. Specifically, they're planning to re-evaluate - and likely reduce - the amount that they reimburse pharmaceutical companies for medicines distributed through the nation's health insurance system. Policymakers also are considering dramatic changes to a programme that helps foster the development of breakthrough medicines.

These measures would harm European drug companies and their workers. They also would deprive Japanese patients of lifesaving medicines.

Japan's population is aging more rapidly than any other country's. The island nation faces staggering health costs as a result. By 2030, it's estimated that Japan could spend 32 trillion yen, about 250 billion euros ($298bn), on non-communicable diseases like arthritis or cancer.

Today, Japanese regulators review the prices of medicines once every two years. During those reviews, they decide to cut reimbursement levels if sales of a drug have been higher than anticipated. For instance, Japanese officials recently announced a plan to reduce the reimbursement rate for Plavix, the blood thinner, by up to 25 percent after sales exceeded projections.