The Effects of Regulation on Japan's Pharmaceutical Research and Development

Ryuhei Wakasugi () and Harue Wakasugi

Japanese Economy, 2008, vol. 35, issue 4, 107-132

Abstract: In Japan, the research and development (R&D) process of a new drug, from synthesizing new compounds to supplying the drug in the market, is largely affected by the legal regulations under the Pharmaceutical Affairs Law and the drug price standards under the Health Insurance Law. In recent years, the "hollowing-out" of new drug R&D has been observed in Japan, which involves a decrease in new drug development, the lengthening of development periods, and the shifting of development to overseas. This article presents an international comparison and analysis from an economic standpoint on how Japan's regulations affect new drug R&D. The results of the analysis indicate that establishing the infrastructure for clinical trials and drug reviews, improving the efficiency of and adding incentives to clinical trials, and pricing new drugs appropriately relative to generic drugs are necessary conditions for promoting new drug R&D in Japan.

Date: 2008
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DOI: 10.2753/JES1097-203X350404

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