Japan's Foreign Price Adjustment Mechanism Faces Scrutiny Amid US Most Favoured-Nation Pricing Pressure

The Federation of Pharmaceutical Manufacturers' Associations of Japan (FPMAJ) has called for a fundamental review of the foreign average price adjustment mechanism used within Japan's National Health Insurance (NHI) system, framing the proposal as an emergency response to the US government's most-favoured-nation (MFN) pricing policy. The intervention, led by Naoya Fujihara, Chair of FPMAJ's Drug Pricing Research Committee, signals that Japan's domestic pricing architecture is increasingly being shaped by external policy developments rather than by domestic health-economic considerations alone¹.

Under the current mechanism, NHI reimbursement prices are benchmarked against a reference basket comprising the United States, the United Kingdom, Germany, and France, with a minimum of two countries required to trigger an upward price adjustment. Prices set above 1.25 times the foreign average are reduced, while those at 0.75 times or below may be increased, subject to a ceiling of twice the original NHI price². Fujihara's proposal would alter this architecture substantially, permitting the price adjustment to be triggered based on US pricing alone, removing the existing ceiling on upward adjustments, and establishing a mechanism intended to prevent Japanese prices for innovative medicines from diverging unfavourably from those of other developed markets¹.

Three concerns underpin FPMAJ's position, as outlined in industry reporting:

• MFN-related pricing risk is contributing to the delay or deprioritisation of Japan launches independent of any market-specific factors
• Japanese health authorities have observed multiple products failing to meet the standard 90-day reimbursement-listing timeline^3,4, suggesting increasing caution in launch sequencing decisions
• The combination of rising costs and wage growth renders continued reliance on price reduction policy unsustainable without further discouraging innovation

first, that MFN-related pricing risk is contributing to the delay or deprioritisation of Japan launches independent of any market-specific factors; second, that Japanese health authorities have observed multiple products failing to meet the standard 90-day reimbursement-listing timeline³, suggesting increasing caution in launch sequencing decisions; and third, that the combination of rising costs and wage growth renders continued reliance on price reduction policy unsustainable without further discouraging innovation.

Whether Fujihara's proposals are adopted by Chuikyo remains to be seen. What is evident, however, is that the relationship between Japan's domestic pricing policy and US pricing strategy can no longer be treated as unidirectional or sequentialas strategically separate. For organisations engaged in global launch planning, this suggests that Japan pricing strategy may warrants integration into the global commercial framework at an earlier stage of development.

Article by Priya Toor

Sources:

1. Navlin. June 2026. FPMAJ Urges Review of Japan's Pricing Rules Amid U.S. MFN & Inflation Concerns

2. Ministry of Health, Labour and Welfare of Japan (MHLW). 20230. Japan’s NHI Drug Price System: 11th Joint Conference of Taiwan and Japan on Medical Products Regulationm

3. PharmaJapan. June 2026. Japan on Alert over US MFN Drug Pricing Policy: Health Minister

4. Navlin. April 2026. 6 Meds Added to Japan’s NHI List as Reimbursement Delays Creep Up

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