Japan Plans Generic Drug Incentives to Cut Down Medical Costs

Japan plans to offer financial incentives to pharmacists who dispense generic drugs, aiming to reduce the country's snowballing medical costs, an official said Thursday.

Japan is one of the largest drug markets in the world, with 6.9 trillion yen (62.2 billion dollars) spent on medication in the fiscal year to March 2005, according to an official at the health ministry.

The health ministry "has decided on a plan reviewing the whole medical service fee system for the next fiscal year" starting in April, the official said on customary condition of anonymity.

Under the plan, pharmacists would receive preferential renumeration through Japan's national health programme if 30 percent or more of the drugs they dispense are generics, the official said.

"We want to offer incentives for them to prescribe more generics as part of our efforts to cut down on the increasing medical costs as we have limited revenue," he said.

The target is in line with existing trends in Japan. A nationwide survey of pharmacists conducted in June showed that an average of 31.0 percent of the drugs they dispensed were generics.

"But there are still some pharmacists who don't make any efforts at all to promote generics. If they did, the ratio of generics to the total consumption of drugs would increase," he said.

The ministry estimates Japan's health-care spending will swell 74 percent to 56 trillion yen by 2025 from 32.1 trillion yen in 2004 as the population is rapidly ageing and the birth rate is dwindling.