FOCUS: OTC-Like Prescription Drug Co-Payment to Reach 50 Pct in Japan

Tokyo, May 15 (Jiji Press)–Japan’s health ministry plans to start requiring individuals in March 2027 to bear additional costs out of pocket for OTC-equivalent prescription drugs, which are similar to over-the-counter nonprescription medicines in terms of active ingredients and effects. Under the system, aimed at curbing medical spending, the co-payment rate for working-age people will effectively rise to 50 pct of the costs of such medicines. The ministry will work out details of the system, including the scope of patients to be exempt from the additional burden. Careful explanation will be needed to avoid confusion among medical service providers and patients. Medications for Mild Symptoms The Ministry of Health, Labor and Welfare is currently looking at about 1,100 drugs containing 77 ingredients as candidates for additional charges for patients. Many of the products are intended for the treatment of relatively mild symptoms. The current system has been criticized, however, because, amid rising medical costs, it allows drugs that could be replaced by OTC alternatives to be supplied at lower prices through public health insurance. For this reason, the government has decided to impose a special fee equal to 25 pct of the drug cost outside the insurance system. The remainder will still be covered by public health insurance, with patients paying 10 pct to 30 pct out of pocket. With these measures, the ministry expects to reduce medical expenses by 90 billion yen annually. To this end, the government hopes for enactment during the current session of parliament of amendments to the Health Insurance Law, including a new mechanism that would exceptionally allow a combination of ordinary insured medical treatment and uninsured medical treatment. Consumption Tax Medical treatment fees billed through public health insurance are not subject to the 10 pct consumption tax, but a senior health ministry official explained that special charges outside insurance coverage are expected to be taxable. If a working-age individual with a co-payment rate of 30 pct is prescribed an OTC-like drug priced at 1,000 yen, 525 yen–equivalent to 70 pct of 750 yen, or the price minus the special charge of 250 yen–will be covered by insurance. The patient will be charged a total of 500 yen at the counter–the remaining 30 pct, or 225 yen, plus the special charge of 275 yen including consumption tax. This means the patient’s effective burden for the drug cost will stand at 50 pct. For people such as the elderly with a co-payment rate of 20 pct, the out-of-pocket payment will come to 425 yen, while for those paying 10 pct, the burden will be 350 yen. Refinement Patients who need special consideration will be exempt from the additional out-of-pocket burden. Specifically, they include children, patients with cancer or intractable diseases, low-income individuals, hospitalized patients and people with chronic illnesses. The health ministry plans to discuss the scope of those eligible for special consideration and operational guidelines at an expert panel to be established as early as this summer. The government plans to present uniform criteria to prevent disparities in physicians’ judgments. Candidate drugs likely to require the additional out-of-pocketburden include many familiar products, such as the antipyretic analgesic Loxonin and the anti-allergy drug Allegra, used to treat hay fever. Meanwhile, “kanpo” Chinese herbal medicines available at convenience stores are currently excluded from the list of candidates. Dissatisfaction has therefore emerged from the pharmaceutical industry, with complaints that the basis for drawing the line is unclear. The expert panel will once again examine the list of drugs subject to the additional out-of-pocket costs, ministry officials said. The Japan Innovation Party, which formed a coalition government with the ruling Liberal Democratic Party last October, demands that OTC-like drugs should be excluded in principle from insurance coverage so that the insurance premium burden on the working-age population can be reduced. There are also concerns, however, that increased out-of-pocket costs may discourage people from seeking medical care, resulting in worsening symptoms and, in turn, higher medical expenses. To lower medical costs in an effective way, the government will also need to promote greater public awareness of health care and encourage cuts in prices for OTC drugs, which can be purchased without a doctor’s prescription. END [Copyright The Jiji Press, Ltd.]