From incident response to system design: Japan's 2025 PMD Act drug-shortage reform

Drug shortages have become a systems problem in Japan; as of January 2025, about one in five prescription drugs were facing limited shipments or supply disruptions. Policymakers concluded that voluntary notices and ad hoc coordination were insufficient in a fragmented, low-margin generics market.

A May 2025 partial amendment to the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (PMD Act) codifies three pillars. (1) Governance within marketing authorization holders (MAHs): a cross-functional Stable Supply Management Supervisor with authority to escalate risks and document decisions. (2) Standardized shortage reporting and market-level coordination: mandatory advance and real-time notifications to the Ministry of Health, Labour and Welfare (MHLW), with the ability to request surge production/imports, inventory release, distribution adjustments, and targeted clinical accommodations; secondary use of e-prescription data enables nowcasting of demand and substitution patterns. (3) Pre-emptive safeguards focused on designated "stable supply" and "critical stable-supply" pharmaceuticals, including shortage-prevention plans and proportionate obligations.

The expected outcome is a sustained reduction in the number and duration of limited shipments and supply disruptions. Evaluation should track standardized reporting indicators, dispensing-data signals of substitution, and market-structure metrics (e.g., active suppliers per molecule) to detect unintended consolidation risks or hoarding.

Japan's reform moves shortage management from incident response to system design. The model emphasizes firm-level accountability, early warning with transparent reporting, and proportionate safeguards for the most consequential products. Its design choices and evaluation framework are relevant to other high-income health systems facing chronic shortages.