Reimbursement of Medical Devices and In Vitro Diagnostics- Summary Ver.

*Please note that the majority of references are in Japanese. This is due to accuracy and a significant lack of official documents available in English.
*Communication with regulatory authorities and other organizations is mostly in Japanese. Also, given the subtle nuances and business customs that are hard for non-Japanese to grasp, I recommend you to secure a local Japanese resident (even on a part-time or contract basis).
  • Japan's Medical Insurance & Device Reimbursement
  • Two-Step Process for Market Launch
  • Step 1 vs. Step 2
    • STEP 1: Marketing Approval
      • Purpose: To review the "quality, efficacy, and safety" of a product and obtain permission for manufacturing and marketing.
      • Jurisdiction: Pharmaceuticals and Medical Devices Agency (PMDA)
    • STEP 2: Insurance Reimbursement
      • Purpose: To evaluate the "clinical usefulness and cost-effectiveness" of a product and determine the appropriateness of insurance coverage and its price.
      • Jurisdiction: Ministry of Health, Labour and Welfare (MHLW)
  • The Insurance Reimbursement Process
    • Obtain Marketing Approval (Prerequisite)
      • The "intended use" from the approval application directly impacts reimbursement.
      • Must be an integrated strategy.
    • Pre-consultation and Strategy Development
      • Arguably the most important stage; can be done before marketing approval.
      • Determine the likely category and differences from existing products.
      • Utilize MHLW's pre-consultation system (Industrial Affairs Division), ideally before clinical trials.
    • Submit Application for Insurance Coverage
      • After approval, submit the application to the MHLW (Medical Economics Division).
    • Deliberation by Expert Panels
      • Reviewed by the "Expert Panel on Medical Materials."
    • Final Decision & Notification (Chuikyo)
      • The Central Social Insurance Medical Council (Chuikyo) makes the final decision on coverage and price.
  • Device Insurance Categories
  • What is a "Functional Category"?
    • Definition: A "group" or "category" used to determine the price of a medical device.
    • Major Difference from Pharmaceuticals:
      • Pharma: Price set for each product (e.g., "Loxonin Tablets").
      • Devices: Price set for the functional category (e.g., "cardiac pacemaker"), not individual products.
    • Why?
      • Vast number of device types with frequent minor improvements.
      • Grouping similar products allows for fair and efficient pricing.
    • B vs. C:
      • Category B (Existing): Price is the standard price for that group.
      • Category C (New): If highly innovative, you can apply to create a new category, potentially achieving a new price commensurate with its value.
  • IVD Insurance Categories
    • Category E (Testing Fees)
      • The value of the testing procedure is evaluated as a testing fee.
      • (E1) Existing Item, (E2) Existing Item (New Method), (E3) New Item / Improved Item.
    • Category D (Interpretation Fees)
      • For complex tests requiring specialized medical judgment to interpret results.
      • (e.g., Gene-related tests, companion diagnostics).
  • Common Misconceptions
    • "Not all devices get an individual price."
      • Many are included in the "technical fee" (Category A).
      • This provides little incentive for hospitals to use a specific device if it's in Category A.
    • "Price is set for the 'functional category,' not the 'product.'"
      • Unlike pharma, products in the same functional category (Category B) have the same price.
      • Differentiation based on reimbursement points is not possible within the same category.
  • Aiming for C2 Category (New Innovative Device)
    • C2 offers the potential for high reimbursement for innovative devices with no corresponding existing procedure.
    • Key Tasks:
      • Information Gathering: Thoroughly research marketing and insurance info for your product vs. existing ones.
      • Clarify Differences: Crucial for C2. Objectively prove to authorities that your product/procedure is innovative and superior. Create comparison tables (product, technology, workflow, etc.).
      • MHLW Pre-consultation: Based on the comparison, consult the MHLW (Industrial Affairs Division) on the target category before starting clinical trials.
  • Points to Note
    • C2 is Difficult: Approval is very hard (avg. ~25 cases/year). Carefully weigh costs vs. benefits.
    • Data is Key: For Category C, you must systematically acquire data on clinical and cost-effectiveness starting from the clinical trial stage.
    • Integrated Strategy: Develop marketing approval and insurance reimbursement as one unified strategy from the early stages.
    • Regulatory Focus: Authorities (PMDA, MHLW) only evaluate:
      • Marketing: Quality, Efficacy, Safety
      • Insurance: Clinical and Cost-Effectiveness
    • Use Direct Consultations: PMDA (RS consultation) and MHLW (pre-consultation) systems are available.

@K.Kamitani
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