Value-based healthcare in Japan

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Value-based healthcare in Japan
An evolving concept
A report from The Economist Intelligence Unit

1© The Economist Intelligence Unit Limited 2016
Value-based healthcare in Japan An evolving concept
Contents
About this report 2
Introduction3
Chapter 1: Good value for money? 4
Chapter 2: Shaping a nascent HTA process 8
Conclusion12

2 © The Economist Intelligence Unit Limited 2016
Value-based healthcare in Japan is an Economist Intelligence
Unit (EIU) report, commissioned by Gilead Sciences. Value-
based healthcare looks at health outcomes of treatment
relative to cost. In this particular report The EIU examines
whether Japan’s healthcare system delivers good value for
money, its approach to pricing and reimbursement, and
the evolution of a nascent system for health technology
assessment (HTA).
In June and July 2016 The EIU conducted three interviews
with experts on value-based healthcare in Japan. The insights
from these in-depth interviews appear throughout the report.
The EIU would like to thank the following individuals (listed
alphabetically) for sharing their insight and experience:
l Isao Kamae, project professor, HTA and Public Policy Project,
Graduate School of Public Policy, University of Tokyo
l Hiroaki Miyata, professor, Department of Health Policy and
Management, School of Medicine, Keio University
l Kenji Shibuya, professor, Department of Global Health
Policy, Graduate School of Medicine, University of Tokyo
The EIU bears sole responsibility for the content of this
report. The findings and views expressed in the report do not
necessarily reflect the views of the sponsor. Andrea Chipman
was the author of the report, and Martin Koehring was the
editor.
July 2016
About this
report

Introduction
Value-based healthcare (VBH)—achieving the
best value for patients at the lowest possible
cost—is increasingly gaining traction as cash-
strapped governments attempt to ensure better
healthcare outcomes. As a concept, VBH has
been making inroads in many European health
systems,1
and Japan’s health system is also
starting to integrate elements of VBH.
Although the adoption of broader concepts of
value is in its infancy in Japan, there are a number
of signs that policymakers and other leaders are
recognising its importance. In 2015 a Ministry
of Health, Labour and Welfare (MHLW) advisory
panel published “Japan Vision: Healthcare 2035”,
in which it identified VBH as one of the three
central components of its vision.2
The paper
committed to a “paradigm shift” in the country’s
healthcare principles, emphasising quality over
quantity, autonomy over government regulation,
care over cure, and a shift from fragmentation
to integration. In particular, the MHLW’s panel
underlined that its view for the future of the
Japanese healthcare system envisioned “a
healthcare system that evaluated health care on
the value it provides to patients and society, not
on the inputs it demands”.3
This paper will examine to what extent Japan’s
universal healthcare system provides good value
for money, including the level of autonomy given
to healthcare providers, the system’s approach
to pricing and reimbursement, and the evolution
of a nascent system for health technology
assessment (HTA).
1
The Economist Intelligence
Unit, Value-based
healthcare in Europe: Laying
the foundation, 2016.
Available at: https://www.
eiuperspectives.economist.
com/healthcare/value-
based-healthcare-europe-
laying-foundation
2
Ministry of Health, Labour
and Welfare, Health Care
2035 Advisory Panel,
Japan 2035: Leading the
World through Health,
Executive Summary,
June 2015. Available at:
http://www.mhlw.go.jp/
seisakunitsuite/bunya/
hokabunya/shakaihoshou/
hokeniryou2035/future/
en/
3
Ibid., p. 3.

Chapter 1: Good value for money?1
Japan’s approach to value-based healthcare
(VBH) needs to be looked at in the context of its
existing healthcare system, which emphasises
access to health for all and close co-operation
between health providers and regulators.
Almost 1,800 municipalities operate parts of
Japan’s public health insurance, with universal
health coverage available since 1961. The whole
Japanese population is covered by either public
or association-managed health insurance, with
membership in one of the public health insurance
plans—National Health Insurance (NHI) and
Employees’ Health Insurance (EHI)—compulsory
for all citizens, with the exception of those on
public assistance, who receive medical care for
free. Although Japanese citizens are able to
purchase private insurance to cover non-medical
expenses such as extra hospital room charges,
the NHI system prohibits private insurance in
principle.4
Under the EHI, individuals and dependents
are enrolled automatically with an insurer
according to their occupation and age, with
premiums graded in proportion to their income.
There is considerable inequity in the share of
income levied as premiums: contributions range
from 3.12% to 9.62% of monthly wages, with
employers paying half the premium. Subsidies
from general revenue mitigate insurance plans
covering people on low incomes or whose
monthly payments exceed predetermined
amounts based on individual annual income
ranges, and there is cross-subsidisation among
plans to pay for the healthcare costs of elderly
people aged over 75 years.5
Positive health outcomes—but how
sustainable is the system?
On the face of it, Japan’s healthcare system
appears to provide good value for money.
Healthcare spending is moderate by international
4
Goddard Health, Japan
Market Information, 2012.
Available at: http://
goddardhealth.com/
general.html
5
Ikegami, N, Yoo,
B et al, “Japanese
universal health
coverage: evolution,
achievements, and
challenges”, Lancet
2011; 378: 1106–15.
Percentage of population aged over 65
(%)
Chart 1
0
5
10
15
20
25
30
0
5
10
15
20
25
30
201820132008
JapanGermanyUKUSRussiaChinaBrazilIndia
Source: The Economist Intelligence Unit.

standards. According to World Bank data, Japan
spent 10.2% of its GDP on healthcare in 2014,
slightly below the OECD average of 12.4%.
However, Japan’s ratio has increased much more
rapidly in recent years (from just 6.6% of GDP
in 1995) than the OECD average (9.2% of GDP in
1995) because the share of elderly people in the
total population has risen—and will continue to
rise—much more rapidly in Japan than in many
other countries (see chart 1). OECD data show
that pharmaceutical spending made up 21% of
total health spending in 2011 (latest available
data)—the tenth-highest share out of the 32
OECD countries surveyed in that year.
Japan’s healthcare spending translates into
positive health outcomes. A 2014 study by The
Economist Intelligence Unit (EIU) compared
health spending and outcomes in 166 countries.6
The study divided the countries into six tiers
(with Tier 1 the best and Tier 6 the worst)
according to their overall population-health
outcomes. Japan was placed in Tier 1. The country
topped the outcomes index and also scored
comparatively well on value for money, keeping
healthcare spending relatively low for a wealthy
OECD country. Among Tier 1 countries Japan was
ranked more highly for healthcare outcomes than
for spending (see chart 2).
The EIU report found that this positive result was
partly attributable to the relatively healthy diets
and lifestyles of its people. Japan’s healthcare
system can also take a large portion of the credit
for its high ranking for outcomes and relatively
low costs, including strong central pressures on
pricing for health services and pharmaceuticals
and very flexible access to high-quality
healthcare solutions, with virtually limitless
access to medical services. Additionally, a long-
term care insurance system, to which people
have to contribute from the age of 40 onwards,
has ensured that many elderly Japanese have
received long-term care at relatively reasonable
costs to date.7
However, the success of the system has also
created challenges. Life expectancy at birth,
at 83.6 years in 2014 (World Bank data), is the
second-highest in the world (after Hong Kong’s
84.1 years) and well above the OECD average of
80.2 years. But population ageing, rising rates
of chronic diseases (such as hypertension and
diabetes) and advances in health technology are
putting upward pressure on health spending. And
the lack of a fixed healthcare budget in Japan,
while creating flexibility for providers, helps to
fuel rising expenditure, according to Isao Kamae,
project professor for the HTA and Public Policy
6
The Economist Intelligence
Unit, Health outcomes
and cost: A 166-country
comparison, 2014. Available
at: http://www.eiu.
com/public/thankyou_
download.aspx?activity=do
wnloadcampaignid=Healt
houtcome2014
7
Ibid., p. 12.
EIU Health Outcomes Index, Tier 1 countries, 2014
Ranking differences: Outcomes versus spending
Chart 2
-15
-10
-5
0
5
10
15
20
25
-15
-10
-5
0
5
10
15
20
25
Luxembourg
Norway
Belgium
Netherlands
Germany
Austria
Finland
Canada
UK
Ireland
Greece
Switzerland
Sweden
France
Australia
Portugal
NewZealand
Malta
Chile
Japan
Israel
Spain
Italy
Iceland
SouthKorea
CostaRica
Cyprus
Singapore
Rank higher for outcomes
than for spending
Rank higher for spending
than for outcomes
Sources: The Economist Intelligence Unit, World Health Organisation.

Project at the University of Tokyo’s Graduate
School of Public Policy.
The Japanese approach to pricing and
reimbursement
The reimbursement of medical services to
healthcare providers in Japan is primarily
made on a fee-for-service basis, with few
attempts made so far to introduce outcome-
based payments or pay-for-performance
models (which are core elements of systems
driven by value-based healthcare) that are
gaining traction in the US and Europe.8
This
could undermine the healthcare system’s
continued ability to offer good value for money,
particularly against a backdrop of population
ageing and rising healthcare spending that will
continue to outstrip GDP growth in the coming
years, according to EIU forecasts.9
Unless the
healthcare system’s financing mechanisms adapt
to these new realities, the system faces a funding
gap of around ¥19.2trn (US$189bn) by 2020
and ¥44.2trn by 2035, according to a McKinsey
report.10
The Japanese system includes a number of
elements designed to help to contain costs,
among them supply-side price regulation, which
allows for a review of prices of medical products
every two years;11
guidelines for physicians
regarding medical treatment, which are among
the strictest in any region; and co-payments,
whereby service users pay around 30% of the
government-set price of medical costs (10%
for long-term care), with the remaining 70%
reimbursed by insurance.12
The 30% co-payment
applies to all medical fees, regardless of whether
they are inpatient, outpatient or prescription
drugs. However, in cases where the total cost
of care exceeds a given threshold amount, the
co-payment is decreased to 1%, with insurance
covering the rest.13
Japan often uses cuts in fees to physicians
and hospitals and reductions in the prices
it pays for drugs and equipment to manage
expenditure. However, this approach does
little to cut healthcare demand and threatens
to create shortages in treatments and worse
quality of care. As the McKinsey report notes:
“The country typically applies fee cuts across the
board—a politically expedient approach that
fails to account for the relative value of services
delivered, so there is no way to reward best
practices or to discourage inefficient or poor-
quality care.”14
Efforts to increase the consumption tax to
10% from 8% in order to expand financing
capabilities for social and healthcare spending
have been postponed twice within the past two
years. However, if the government is unable to
improve its financing capability, it will become
increasingly difficult to finance a healthcare
system for a rapidly ageing population.
The government has also encouraged the use
of generics. Generic penetration has risen
significantly in Japan, from 17% of the whole
pharmaceutical market in 2005 (in volume
terms) to almost 28% in 2013 (latest available
data).15
However, this is still well below the
OECD average of 48%.16
Although policymakers
have been pressing for greater use of generic
drugs to cut costs, doctors retain the right to
prescribe medicines as they see fit. Moreover,
such policy measures on their own are unlikely
to be sufficient to provide the savings necessary
to maintain or even improve Japan’s healthcare
system, especially given the rising demand from
its ageing population.
The fact that healthcare providers lack any
accountability regarding costs is a clear part
of the problem, according to Professor Kamae.
“Governments like to respect the professional
responsibility of physicians but are trying to make
them use more generics. Still, [the physicians]
have their own autonomy to select brands and
also play a limited role in the procurement
of medical technology and drugs in Japan. It
seems that most physicians don’t have their own
opinions on cost-effectiveness. Every decision is
taken by government.”
12
Ikegami et al, “Japanese
universal health coverage”.
13
Ibid.
14
Henke et al, “Improving
Japan’s health care
system”.
15
Japan Generic Medicines
Association, Generic Share
(%) by MHLW Drug Price
Survey, http://www.jga.
gr.jp/english/country-
overview/genric-share-by-
mhlw/
16
OECD, OECD Health
Statistics 2015.
8
Henke, N, Kadonaga, S
and L Kanzler, “Improving
system”, McKinsey Quarterly,
March 2009. Available at:
http://www.mckinsey.com/
industries/healthcare-
systems-and-services/our-
insights/improving-japans-
health-care-system
9
EIU, Health outcomes and
cost, p. 13.
10
system”.
11
Goddard Health, Japan
Market Information.

These systemic weaknesses lead to inefficiencies
in the delivery of care, which are most glaring in
the inpatient sector, according to Hiroaki Miyata,
a professor in the Department of Health Policy
and Management at Keio University’s School of
Medicine. He says that the average length of
stay for coronary-bypass procedures is 28 days
in Japan, compared with just seven days in the
US. Both extremes can be harmful for patients,
he observes. “We think we could save US$10bn
a year by evaluating the length of stay by value,
looking at costs and outcomes. There is too much
overtreatment, overstay and overdiagnosis.” On
average, the Japanese make nearly 14 visits to
physicians a year, three times the number of visits
in other developed countries, thus adding to the
financial pressures on the system.17
In the next chapter we will look at the prospects
for reform of the system’s funding mechanisms,
notably the introduction of HTA elements in
an effort to consider cost-effectiveness in
the decision-making process for pricing and
reimbursing healthcare solutions.
17
system”.

Japan currently has no official body for health
technology assessment, although there are
several institutions within the country’s
healthcare system that use a process similar to
HTA. The system used for reimbursement and
pricing decisions includes the assessment of
efficacy, safety and social benefits.
Japan’s Ministry of Health, Labour and Welfare
(MHLW) is the primary body that creates and
implements standards for medical devices
and drugs, with approved products ending up
on the NHI list. The MHLW is also in charge of
determining coverage policy and the final pricing
of products used for treatment.
The Pharmaceutical and Medical Devices Agency
(PMDA), which is similar to the European
Medicines Agency (EMA) and the US Food and
Drug Administration (FDA), is an independent
regulatory agency within the MHLW that reviews
applications for new drug licenses for their safety
and efficacy.
Lack of transparency and scientific
basis
The Central Social Insurance Medical Council,
known as Chuikyo, is a separate body within
the MHLW that provides recommendations
for the pricing of medical products and
includes representatives of health insurers,
medical professionals (physicians, dentists
and pharmacists), academics and some other
representatives from local governments,
nurses, laboratory technicians and industry.
However, it is questionable how objective these
recommendations can be. “They have their own
equations and a formula to assess the value of
medical technology, but those kinds of equations
and formulas were not developed based on a
scientific method in an objective way,” says
Professor Kamae. “So eventually the committee
members make their decisions based on their own
judgments.”
An external body, the Drug Pricing Organisation
(DPO) is responsible for the pricing and repricing
of products on the NHI list. Companies cannot
decide prices for drugs and medical devices on
their own. If the MHLW and Chuikyo agree with
the price, it is listed on the NHI price list within
60 to 90 days.
The NHI uses a so-called “similar product efficacy
comparison method” to match the proposed
price for a new product with that of the existing
standard of care. If the new product is seen to
be an improvement on existing treatments, the
agreed price will be higher, with an adjustment
for the average foreign price.18
For products with no comparators, the final
NHI price consists of a combination of the
Chapter 2: Shaping a nascent HTA
process2
18
Pacific Bridge Medical,
Japan Drug Regulatory
Overview, 2014, p. 58.
Available at: http://www.
pacificbridgemedical.
com/wp-content/
uploads/2015/04/
Japan-Drug-Regulatory-
Overview-2014.pdf

manufacturing (or import) cost, the selling
cost or research expenses, the business profit,
the distribution cost and a consumption tax,
known as the “cost-calculation method”.19
The
NHI drug price is the reimbursement price paid
to medical institutions and is fixed for each
prescription drug approved by the MHLW. This
means that unlike in some European countries,
there is no difference between the NHI price
and the reimbursement level in individual
medical institutions. Prices are also consistent
across the country, with no regional pricing or
reimbursement disparities, as is the case in other
health systems, for example in Europe.20
Drugs that are notable for their innovativeness,
usefulness, marketability and paediatric use are
given additional premiums, with the first two
categories receiving the largest premiums of up
to 120% and 70%, respectively, over the basic
price.21
However, a lack of a scientific basis for
evaluating pricing or repricing decisions makes
the process less transparent to the public, while
inner-circle players understand the process and
pricing rules, according to Professor Kamae.
Redefining value
The process of integrating outcomes-based
evidence and cost considerations in the decision-
making process is still in its infancy in Japan.
“Until 2015 the country defined value questions
as clinical outcomes and efficacy,” says Professor
Kamae. “Pharmacoeconomic requirements were
introduced on a trial basis in April 2016, and that
is a basic change regarding the definition of value
in Japan.”
Data on outcomes are readily available. The
health system has more than 15 years of data
on 90-day outcomes for a range of medical
conditions, according to Professor Miyata. He
says that this should provide evidence that
physicians can use as guidance for treatment.
“Evidence-based medicine is updating itself
globally. When a physician enters data, the cloud
can quickly answer what is the appropriate best
practice.”
The MHLW is currently in the early stages of
looking at the adoption of HTA focused on cost-
effectiveness in order to reprice a number of
existing pharmaceutical treatments. In 2014 the
government launched trial HTA evaluations of
the cost-effectiveness of five listed treatments,
according to Kenji Shibuya, a professor in
the department of Global Health Policy at the
Graduate School of Medicine at the University of
Tokyo.
Professor Shibuya adds that a full HTA system is
due to be rolled out in 2018. Its framework has
been discussed in a working group, but there are
some technical and logistical issues to work out,
including how to find the human resources to
carry out such assessments, as well as a need for
strong political commitment.
Meanwhile, it remains unclear which performance
indicators the system will use, and how it will
quantify the value of incentives to encourage
further efficiency. For example, quality of life is
one criterion of value used by the government
for the reassessment of medical products and
treatments, and it allows pharmaceutical
companies to submit evidence of improvement
based on this criterion. However, Professor
Kamae notes that there are no public guidelines
in place for defining what constitutes improved
quality of life. “The government also increasingly
defines broader social benefits for [Chuikyo’s]
discussion of central pricing decisions; their
discussions are not very transparent with respect
to objective standards, so we don’t know what
kind of evidence is already considered in terms
of broader social benefits.” And when it comes
to evaluating economic evidence for new drugs
or medical technology, it is also unclear which
method will be applied.
“The guidelines say companies have to submit
cost-effectiveness analysis primarily using QALYs
[quality-adjusted life years], but an incremental
cost-effectiveness ratio also has to be proposed
to the committee,” Professor Kamae says. He
also notes that although Japanese policymakers
have said they would not impose a threshold
19
Ibid., p. 62.
20
EIU, Value-based
healthcare in Europe.
21
Kamae, I and M
Kobayashi, “Value-based
Pricing and the Principle
of the Incremental Cost-
Effectiveness Ratio: The
Case and Potential in
Japan”, ISPOR Connections,
October 2010.

for evaluating health outcome, such as the
UK’s official refusal to pay for drugs that exceed
£20,000-30,000 per QALY, this exclusion cannot
necessarily be taken at face value. “It means
they aren’t going to use [a threshold] exclusively
or officially. They don’t forbid the Chuikyo
committee members from using an implicit
threshold in their minds.”
The pricing system will need to be overhauled,
according to Professor Shibuya. Instead of
“political negotiations under a macro cap”,
there is a need for a transparent, rational and
evidence-based process for determining pricing.
In addition, he says, the methods used to contain
costs—including item-by-item revisions and
auditing of claims forms—are no longer suitable
to most inpatient care settings, where acute care
beds are generally paid for by a combination of a
fee-for-service system and a per-diem inclusive
rate set by the so-called Diagnosis Procedure
Combination (DPC) approach. DPC is similar to
the Diagnosis-Related Group (DRG) system used
in a number of developed countries and was
introduced by Japan’s government for inpatient
care more than a decade ago. The government is
looking to extend it to outpatient care.
Professor Shibuya says that distortions to the
system must be addressed, such as the fact
that outpatient services and pharmaceutical
prescriptions attract a higher profit margin than
inpatient acute services. The focus should be
shifted from cure to care and prevention, from
quantity to quality and from fragmentation to
integration, he adds.
“Now the Japanese healthcare system is in a
transitional process from a fee-for-service system
to a flat-rate payment system for inpatient and
outpatient care,” Professor Kamae says. “In a
flat-rate payment system doctors have to be
sensitive to cost. Physicians have to accept
it, even though they don’t like it because it’s
centrally [imposed].”
In the case of cutting-edge but costly drugs,
policymakers will have to make greater use of
data to help decide which patient populations
are most likely to benefit, Professor Miyata
says, noting that one cancer drug currently
costs Japan’s health system US$20bn a year.
“It could change the world, but it could also
change the financial situation [in Japan].” He
adds that a database is collecting information
on which physicians use the drug and for which
patients they prescribe it, giving policymakers
the possibility in the future to set guidelines on
appropriate prescriptions and usage. “We put so
much money into each patient that we have to
balance the quality of care and Japan’s finances.”
Under the proposed new HTA system
pharmaceutical companies will be required to
submit an HTA dossier for treatments selected
according to predetermined criteria that have yet
to be announced. The MHLW, a dedicated body
within an existing organisation or a new, yet-to-
be-identified entity are among the prospective
bodies that have been identified to analyse
company data to make sure they are robust. The
HTA agency will include healthcare professionals,
insurers, patient representatives and health
economists, with Chuikyo representatives
potentially also included with a specific focus on
drug costs.
Although the planned HTA system is currently
focused on the repricing of listed medicines and
devices, it could also be used to evaluate the
pricing of procedures and care pathways in the
future. Given the government’s new emphasis
on pharmacoeconomic requirements, Professor
Kamae believes it is only a matter of time before
cost-effectiveness is applied to this element of
healthcare provision, although he estimates that
it is likely to be at least four to six years before
this happens.
Financing innovation
The main goal of the introduction of value- and
outcome-oriented health measures in Japan is
helping the system to direct more of its resources
towards the most innovative and promising
interventions and funding them in a sustainable
manner.

The “Japan Vision: Healthcare 2035” report
recommended three target actions towards
this goal to be accomplished by 2020: the
systematic implementation of HTA; improvement
in the quality of healthcare services through
professional initiatives; and the development
of a general-practice system that co-ordinates
a “community-based, integrated healthcare
system accessible throughout Japan”. By 2035,
the report suggests, Japan’s healthcare system
should be assessing health technology for value-
based measures and setting reimbursement
rates according to these criteria, as well
as benchmarking performance to compare
outcomes.22
One important element of this process involves
ensuring that Japanese health professionals are
integrated into the process of emphasising value.
As we have noted, Japanese health providers
adhere closely to clinical guidelines, most of
which are drawn up by professional societies with
a “substantial variation in quality”, according
to Professor Shibuya. While some employ
criteria such as those proposed by the Grading
of Recommendations Assessment, Development
and Evaluation (GRADE) Working Group—an
international body founded in 2000 with the aim
of addressing the shortcomings of healthcare
grading systems, including a lack of evidence-
based measures—others do not. Meanwhile,
very few Japanese professional societies
consider comparative effectiveness when setting
guidelines.
The system is complicated by what Professor
Shibuya says are two conflicting features, a
“laissez-faire approach” to the way in which
services are organised and delivered on the
one hand, and a “tight, supply-side control”
of payment under the single-fee schedule on
the other. “Aligning the service provision and
payment mechanisms around the patients’ value
is critical.”
Given the existing demands on the system,
the government will have to find new ways of
financing healthcare spending or free up funds
using other methods to ensure access to the
most innovative new healthcare solutions. One
approach, for which a functioning HTA system will
be crucial, is to identify lower-value treatments
that can be discontinued or products that can be
delisted from the National Formulary, Professor
Kamae says, although he notes that this is likely
to attract vocal opposition from some patients
and doctors. “In Japan, only the government
cares about financial matters,” adds Professor
Miyata. “Now the physicians have started to think
about that, but on the patient side they haven’t
thought about it.”
In addition to improving the assessment of
innovative drugs and devices, Japan will need to
improve healthcare delivery to make the system
more cost-effective, the experts interviewed
for this study say. Professor Miyata notes that
following a pilot regional collaboration project
in Hiroshima Prefecture, which included the
development of a phased system for providing
diagnosis and treatment and the streamlining
of hospitals, the region’s cancer survival rate is
now the highest in the country. “We can improve
quality and cost, it’s not a trade-off. It should
be accomplished through a bottom-up process—
not by the government but by healthcare
professionals.”
22
MHLW, Japan 2035, pp.
4/5.

living with chronic diseases, there is increasing
scrutiny of how well the health system is directing
resources towards the innovative interventions
that provide the greatest value.
As part of this process, policymakers need to
address the limited incentives for physicians to
control costs. The country needs to continue
to develop its nascent HTA system, create a
more balanced and transparent pricing and
reimbursement system for innovative health
technologies and services, and look more closely
at the bodies issuing clinical guidelines, as these
have a strong influence on health providers
and are likely to be the most effective way of
implementing comparative effectiveness models.
Finally, given the increasing demands on the
healthcare system, policymakers are likely to
need to revisit the way the system is financed in
the future.
The adoption of broader concepts of value in
healthcare is still in its infancy in Japan. In 2015
the MHLW advisory panel recognised value-based
healthcare as a central component of its vision
for healthcare in Japan to the year 2035.
But while policymakers are now embracing the
notion of cost-effectiveness in principle, the
methodology for evaluating treatments and
healthcare delivery remains underdeveloped, and
the system for setting prices and reimbursement
must be more transparent to bring other
stakeholders in the system on board. In
particular, physicians, long protected from cost
considerations, are only just beginning to be
exposed to the concept of outcome-oriented
decision-making and cost considerations. And
much work remains to be done before patients
and payers can be brought around to a new way of
thinking. At the same time, given Japan’s ageing
population and the growing number of patients
Conclusion

While every effort has been taken to verify the
accuracy of this information, The Economist
Intelligence Unit Ltd. cannot accept any
responsibility or liability for reliance by any person
on this report or any of the information, opinions
or conclusions set out in this report.

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