HTA in Japan: Failing to Meet International Good Practice?

Article by: Adrian Towse

The Japanese Government recently announced plans for health technology assessment (HTA) to be implemented from April 2019. At a meeting organised by PhRMA, I set out my concerns about the proposals, putting them in the context of the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) Task Force Report on Good Practices in HTA, published in Value in Health in January 2019.

The proposals follow a pilot project begun by the Central Social Insurance Medical Council (Chuikyo) in April 2016. Japan has a complex drug pricing system which includes criteria under which a drug can get a price premium for its innovative contribution to patients and to the health system. HTA is to be used to retrospectively assess whether the premium element of the price is justified. The premium can be cut by up to 90% depending on the outcome of the HTA assessment. In addition, certain imported products priced by a cost calculation method can have their operating profit margin cut by up to 50%.

We can note that the HTA for drugs is aimed primarily at innovative new medicines notably imported products (although medical devices are also included in the HTA remit). An expected budget impact criterion will be used, and drugs with a high unit price or which are otherwise deemed by the Chuikyo to require cost-effectiveness analysis (CEA) will be included. Products used only for rare diseases with no current treatment, or used only in paediatric diseases will be exempt from HTA.

The ISPOR HTA Task Force report identifies four aspects of HTA process: (i) governance, framing and scoping; (ii) assessment; (iii) contextualisation; and (iv) implementation and monitoring. Assessment in Japan follows a standard methods approach and the premium adjustment to the Japanese price does not have much impact on product use in Japan, so I focus my comments on (i) and (iii).

Governance, framing and scoping

The governance arrangements do not yet follow good practice. The ISPOR Task Force notes the WHO TAPIC (Transparency, Accountability, Participation; Integrity; Capacity) model. The ISPOR HTA Task Force describes “the desired outcome of a good scoping process is dependent on designing one or more clear questions with an assessed feasibility of identifying and interpreting the research that could be utilized to provide answer(s) to the questions posed.” The new process in Japan includes a framing and scoping meeting, but guidelines are needed for this pre-assessment meeting in order to ensure it is effective in achieving an understanding of what evidence is relevant.

Whilst the Methods Guide sets out recognised methods it lacks clarity for companies submitting evidence. A Submission Guide is needed that explains how to submit evidence. It is also not clear from pilots and proposal how evidence will be used and how reanalysis will be sufficiently shared with companies to ensure any errors or misunderstandings are identified and resolved quickly. One confusion, around the non-standard calculation of weighted incremental cost-effectiveness ratios (ICERs) was discussed in Kamae (2018) and a new method proposed.

Contextualisation: from evidence to decisions

The ISPOR HTA Task Force notes that “The complexity of considering different [social] values simultaneously and the need for fairness and consistency has led to more systematic and transparent approaches to incorporating what is considered to key societal decision makers. These include deliberative processes, multi-criteria decision analytic processes, and other forms of contextualising evidence that informs decisions… Specific recent attention has been paid to how to engage patients, who have been traditionally removed from the process of expert consultation.”

However, the proposed Japan HTA process has no opportunity for patient engagement, and uses only a cost per quality-adjusted life year (QALY) threshold rule of JPY5million ($45,000) in decision making based on a 2009 study. If the ICER exceeds this, price premiums are progressively reduced using a stepwise reduction until at JPY10million the maximum reduction of 90% is applied. For drugs with rare disease indications, paediatric indications, or which are anti-cancer agents the threshold range is 50% higher, i.e. JPY7.5million to 90% reduction at JPY15million. Although it was reported that “other outcomes are allowed to be used, depending on the characteristics of the technology” (Shiroiwa et al. 2017) this does not happen in practice. Long term care costs and productivity loss can both be calculated “but should not be included in the base case” and there is no mechanism by which they can be taken into account. 

Two arguments are made against using a broader contextualisation or appraisal process in Japan. The first is that this only affects the industry and not patient access to products. By implication the industry could live with rough justice on its price premiums (and operating profit margins). Leaving aside the potential negative implications for future R&D, one hopes that the methods adopted and the initial use proposed for HTA are only the start and not the end point for how HTA will be used in Japan. In which case, learning how to take a more comprehensive and sophisticated approach would make sense. In other words, if getting it wrong has limited consequences, all the more case for using this as an opportunity to experiment and reflect on the best approaches.

The second argument was that a deliberative process is not acceptable in Japan, and that formulas are needed which do not allow for discretion. Hence the attraction of reliance on a rigid cost-per-QALY threshold formula using only different thresholds for priority categories of products. Yet the ISPOR HTA Task Force notes “an increased focus on the need for HTA processes to be fair” referencing the “accountability for reasonableness” framework. Japan could take the lead in operationalising multi-criteria decision analysis type approaches, scoring relevant attributes that were deemed relevant. PhRMA has proposed such an approach at a Chuikyo hearing which could provide a starting point for dialogue. Indeed the premium price setting approach uses a form of deliberation looking at different elements, leading to a score being given.

In short, Japan’s processes fall short of HTA good practice. This can be remedied, notably by documenting process, and by involving other stakeholders, notably patients. Japan’s particular focus on a formulaic approach to price setting has limitations. It provides it, however, with an opportunity to explore whether forms of structured decision making, based on MCDA, can systematically capture non-QALY attributes and relevant social values and combine them within a QALY-based system. It could lead the world in doing this.

Funding declaration and disclaimer: Adrian Towse’s participation in the PhRMA press conference was funded by PhRMA. The views expressed in this blog are personal and do not represent those of any institution.


Health Labor Sciences Research Grant (Research on Policy Planning and Evaluation) Team. Central Social Insurance Medical Council Analysis Guidelines for Cost-Effectiveness Assessment, Version 2 (draft) 12. 27. 2018 version.

Kamae, I. Trial Implementation of Quasi Value-based Pricing for Pharmaceuticals and Medical Devices in Japan: Issues in Dispute. RFAS - 2018 - N° 3: 227-248. Available at:

Kristensen et al. (2019). Identifying the Need for Good Practices in Health Technology Assessment: Summary of the ISPOR HTA Council Working Group Report on Good Practices in HTA. Available at:

Kristensen et al. (2019). Identifying the Need for Good Practices in Health Technology Assessment: Summary of the ISPOR HTA Council Working Group Report on Good Practices in HTA (Online Appendix). Available at

PhRMA, EFPIA Pitch Enhanced Appraisal Model for Japan HTA Plan; Chuikyo Reps Acknowledge ICER Limitations. December 20, 2018. Available at

Shiroiwa, T et al. (2017). Development of an Official Guideline for the Economic Evaluation of Drugs/Medical Devices in Japan. Value in Health 20 (2017) 372-378. Available at

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