Price differences between Japan and the US for medical materials and how to reduce them

Previous reports (1996, 1997) have revealed that the market prices of medical materials in Japan were two to four times higher than those in the US. The Japanese government introduced the foreign price adjustment rule (FPA) in 2002 to reduce reimbursement prices in Japan. We aimed to investigate the current price differences between Japan and the US in the first half of 2005 and to evaluate the effectiveness of the FPA.

The investigation was performed at two joint purchasing organizations (JPO) and a hospital group in the US, and at a university hospital in Japan. Forty-one items in 14 categories were selected in advance.

The price ratio (Japanese price/US price) was largest at 4.5-6.8 for percutaneous transluminal coronary angioplasty (PTCA) balloon catheters and 1.4-6.0 for vascular grafts. The price ratio was smallest at 1.2-2.4 for automatic sutures, 1.4-1.6 for Swan-Ganz catheters, and 1.5-2.3 for mechanical valves.

The price differences between Japan and the United States were found to have rather widened with the exception of the pacemaker, because their market prices decreased more markedly in the United States. The investigation suggests several problems with the FPA: (1) the determination process of reimbursement prices is inappropriate, which has made the Japanese market less competitive, (2) the FPA needs too much time for the resolution of price differences, and (3) price data collected according to the FPA lacks strictness.

The high prices of medical material in Japan need to be adjusted down with more appropriate measures such as the full cost or cost inclusion methods.