Material Evaluated

The medical material will also be evaluated under such a political environment. In considering the diversity of international trade and a tough financial situation of the medical economy, the MHLW evaluates the price of medical material based on the actual market price and adjusts the price in comparison with the major international market. MHLW conducts the domestic price surveillance of medical materials in October against 5,900 medical device distributors and randomly picked 2,300 hospitals and 1,200 clinics. The foreign reference price will also be assessed mainly in the U.S. and Europe, and reflect its outcome onto the repricing of medical materials in April 2006.

Even today many leading and influential physicians, who experienced U.S. or European practices, express the strong complaints that the foreign-made medical devices are too expensive in comparison with the prices in the U.S. or Europe from his own experience.

The public media also pays attention to this story in a big way. Actually many in the media and public express the opinion that foreign-made medical devices are too expensive, and apparently it pushes back the MHLW.

Therefore in thinking over the situation, a sizable reduction of the reimbursement price on the foreign made medical materials, such as pacemakers, PTCA balloon catheters, orthopedic implants and so on, seems unavoidable this time.

The question is how big? The industry obviously wishes the reduction to be as small as possible, so serious and heated negotiations with the MHLW will be ongoing behind the scenes and toward the end of fiscal year.

In late September, testimony was delivered by a representative of Advanced Medical Technology Association (AdvaMed) before the U.S. Senate Foreign Relations Committee about the Japanese medical device policy in terms of trade concerns. This represents how the U.S. medical industry is concerned about Japanese pricing policy. The U.S. government is paying serious attention to this problem as one of the important trade issues between the two countries. In the price decision-making process, the Central Social Insurance & Medical Council (CHUIKYO), advisory board to the MHLW, is very influential and wheels political power. However due to the bribery scandal accusations last year, the government decided to minimize the authoritative power of CHUIKYO, and the final decision of repricing becomes the matter of Cabinet resolution.

Bearing in mind the renewed power of Koizumi, the MHLW and the Ministry of Finance will soon be investigating the repricing by taking into consideration the National GDP, Price Index and other economical factors.

The Economic and Financial Advisory Council to Koizumi, which consists of private wise men, will propose a quantitative management system to control the medical expenditures for the future. The actual investigation of medical reform has just begun and takes considerable time to complete the most consensual, realistic and feasible plan.  Toward this end, there will be hot and serious negotiations and discussions among politicians, bureaucrats, physicians, patient representatives and industry people.

Yoshio Mitsumori is the president and CEO for Tokyo-based ADMIS, a consultant specializing in the medical device industry. He has more than 25 years of experience in the medical industry, including positions with the Itochu Corp., U.S. Surgical, National Medical Enterprises and Century Medical. A member of RAPS, he has spoken at many industry events and worked extensively in international trade of medical products and technologies. He can be reached at [email protected]