The Journal The Authority on Global Business in Japan


I feel very fortunate. I work for a major global biotech company, and every time I talk with our scientists about cures and treatments, I am completely blown away. I am convinced that—when it comes to medicine—science fiction is no more. Today, there is only science fact and soon-to-be science fact.

We are seeing breakthroughs in biology, manufacturing, and information technologies come together in such a way that 1+1+1≠3, but rather infinity. Our ability to understand and manipulate the human genome with increasing precision, to miniaturize materials and machines through 3D printing and nanotechnology, and to connect patients, doctors, research centers, devices, and computers from around the planet in real time is resulting in an unprecedented acceleration in medical breakthroughs.

These breakthroughs make a real difference in the lives of real people. Between 1995 and 2013, cancer mortality rates declined more than 20 percent in the United States, the United Kingdom, Germany, and Japan1. From 2000 to 2012, the death rate in Japan from cardiovascular disease dropped 27 percent2. And, globally, the cure rate for hepatitis-C went from 40 percent (2004–2010) to an astonishing 96–100 percent (2015–2016)3.

Stop and reflect. I predict that every reader has personally benefited—or has a family member or close relative who has benefited—from recent advances in diagnoses, treatment, and prevention of illness. You may also know someone who might still be alive had their illness occurred now rather than 5–10 years ago. I do.

But the news is not all good. These breakthroughs do not come cheap. Pharmaceutical, device, and diagnostic manufacturers invest many years and billions of dollars to get just one product successfully through the rigorous testing and regulatory approval processes. Many fail during development. These costs must be recouped if the industry is to retain the capacity to invest in the next generation of treatments and cures. As costs increase, issues of access and affordability do as well—particularly for those with limited income. Governments around the world are struggling to find balance between providing their citizens with access to these new treatments and ensuring the financial sustainability of their healthcare systems.

Over the past 60 years, Japan has developed a healthcare system that, in many ways, is a model for the rest of the world. This system provides universal, high-quality, affordable, and accessible care from Hokkaido to Okinawa—all while controlling costs. Japan also has fostered the adoption of innovative medicines and technologies. During the past decade, Japan accepted the submission of global clinical trial data, shortened regulatory review periods, and improved pricing and reimbursement for innovative drugs. As a result, the number of such drugs approved increased 93 percent from 2009 to 20144.

However, demographics, low economic growth, and an already enormous national debt are putting severe strains on the sustainability of this model. For example, the societal cost of dementia is projected to increase sharply as the population ages. The 2014 cost of ¥14.5 trillion (nearly 3 percent of GDP) could grow to ¥24.3 trillion—a 68 percent rise—by 20265.

The Japanese government is considering changes to how they pay for innovative drugs and technologies, with an aim to introduce cost-cutting measures in April 2018.

Unfortunately, I believe they are proceeding within organizational structures and processes that may not be fully consistent with how healthcare will be delivered in the future. While science and technology are breaking down distinctions between and among drugs, devices, and information technologies, budgets continue to be structured along traditional lines.

As a result, healthcare policy and funding decisions will most likely continue to be set according to an increasingly outdated model, one that focuses predominately on cost-cutting within these narrow categories rather than prioritizing overall cost savings for society. A value-based healthcare approach that focuses not on medical inputs but on patient outcomes relative to total healthcare system costs should be the goal.

No government can cut its way to a sustainable healthcare system. Can Japan—or any government—reorganize itself fast enough to keep pace with the scientific revolution we are seeing? For everyone’s sake, let’s hope so.

The views and opinions set forth herein are the personal views or opinions of the author. They do not necessarily reflect the views or opinions of the firm with which he is associated.

1. WHO Mortality Database (accessed February 2016);
2. WHO Mortality Database (accessed February 2016); 3Kremer, 2008, “COMET’s path, and the new biologicals in rheumatoid arthritis,” Lancet.;
3. PhRMA, 2014, 25 years of progress against hepatitis C; PhRMA, 2015, Biopharmaceutical research industry profile;
4. Ministry of Health, Labour and Welfare, 2015, International Conference on Cognitive Decline and its Economic Consequences;
5. Ministry of Health, Labour and Welfare, 2015, International Conference on Cognitive Decline and its Economic Consequences

R. Byron Sigel, PhD is vice-chair of the ACCJ Healthcare Committee