Shifts in Japan's Life Science and Health Care Policy

Interview with Yuji Yamamoto
June 10, 2015

Japan is a world leader in technology innovation and R&D spending, trailing only the United States in the number of new patents filed. For the past 20 years, Japan has also been a global leader in the discovery and development of new medicines. For new chemical entities—the core to drug advancement—Japan ranks third after the United States and United Kingdom. In addition, Japan offers universal health coverage, making its healthcare system one of the best in the world.

In this expert interview, Yuji Yamamoto (MinaCare) discusses Japan’s revised policies toward its life science sector and assesses the government’s new efforts to leverage the sector as a key driver of economic growth. He argues that Japan’s recent regulatory reforms are a step in the right direction. However, a long-term consideration of Japan’s healthcare system, along with maintaining a balance between markets and safety, is necessary for the sector’s successful transformation.

Despite its global leadership in life science innovation, the Japanese government has not always seen the life sciences and healthcare as a critical part of the country’s continued economic development. Why is this the case, and has this attitude changed?

Japan’s achievements as a world leader in life science and healthcare R&D should be praised, but the country still has a way to go before it can realize its true potential of translating the ocean of innovation that already exists through the domestic R&D bench into products on the market. The life science sectors in China and India, as well as a number of other Asian countries, are growing rapidly. Japan’s current position as third in the sector’s innovation leadership worldwide may not hold. As a result, innovative technology development in this sector and competitive regulatory support within Japan are more important than ever.

Some positive and powerful shifts have begun. From about 2000 onward, the government started to consider the life science and healthcare sector as a key engine for Japan’s economic growth. Prime Minister Shinzo Abe’s 2013 Economic Revitalization Strategy, popularly known as “Abenomics,” and its 2014 revision prioritize the sector as a “strategic market” and focus on preventative services, regenerative medicine, pharmaceutical products, and medical devices and equipment. Following this strategy, legal revision was made and organizational reform such as the launch of a new funding agency for scientific research—the Japan Agency for Medical Research and Development (AMED)—was initiated on April 2015.

Of course, while such changes are essential, they are not sufficient to spur growth. The domestic life science and healthcare industry has long been domestically focused. This is primarily because the Japanese market has been big enough to support the industry, and domestic regulations worked as a barrier to sound competition with global players. Now that changes in policy and regulation have been made, the industry must begin an aggressive expansion into foreign markets and start taking more risks.

Why is the establishment of AMED significant? Why has it been controversial?

AMED was established on April 2015 as an independent agency that facilitates scientific research and development using governmental funding. During its conception, some nicknamed the new organization “Japan’s NIH” without understanding the U.S. National Health Institute’s function and roles. The resulting confusion about what roles AMED should play and what outcomes it should be responsible for caused some initial debate and controversy.

AMED is an overarching body that streamlines governmental funding for scientific research. This funding was previously divided among different ministries, such as the Ministry of Health, Labor and Welfare; the Ministry of Economics, Trade and Industry; and the Ministry of Education, Culture, Sports, Science and Technology. Such fragmentation has resulted in a lack of consistent financial support throughout the R&D process, which is referred to as the “valley of death,” a metaphor often used to describe the gap between early-stage research and the commercialization of products. AMED integrates funding from these ministries with an aim toward building a bridge across the valley and also catalyzes and helps manage collaboration between research institutions, universities, and industry.

The agency’s strategic focus covers a wide array of research, including on cancer, diabetes, orphan diseases, neuroscience, and emerging infectious diseases. Makoto Suematsu, former dean of the Keio University School of Medicine, is AMED’s first president and shows the strong leadership needed to fulfil its expectations.

Japanese health professionals have voiced strong concerns over maintaining the quality of health services amid an attempt to expand healthcare markets. Are regulations for healthcare and the life sciences in Japan keeping up with this policy?

We need to keep in mind that no technological innovation will drive economic growth without regulatory and organizational innovation. Currently, the Japanese healthcare market is starting to show an upsurge of new entrants. This is mainly caused by the shift of the governmental perspective on healthcare and the life science industry. While such dynamism will evolve innovation in this sector, the country has to maintain the highest standards of safety, effectiveness, and value for the money spent on new healthcare services and products. Some professionals worry whether new regulations are timed appropriately to ensure accountability. In fact, personal genetic testing companies in Japan, for example, continue to do business without any regulation, such as the Genetic Information Nondiscrimination Act in the United States. This may harm not only patients and their families but also eventually the industry more broadly.

In the life sciences, on the other hand, we are at a good starting point in terms of keeping up with the policy shift and the industry upsurge. Epoch-making reform has been achieved for regenerative medicine, where a new law for safety assurance has been enacted and the pharmaceutical affairs law was revised to maintain the safety and quality of products while accelerating R&D and industrialization.

What other broader policy changes (in practice or in thinking) will be critical to the future success of Japan’s life science sector?

No matter how deregulation may clear the path for innovation, without an overall vision for the role and meaning of healthcare in Japanese society and a blueprint of a system that can fulfill this vision, the life science and healthcare industry cannot thrive. In my opinion, current policies in Japan do not sufficiently take into account the role and meaning of healthcare in the 21st century—of the rapid technology advancements that are shifting healthcare and the demographic changes that are driving it.

The Japanese life science and healthcare industry is undergoing a paradigm shift from treating illnesses with products toward maintaining health through services. We must start viewing health spending as an investment toward social growth instead of considering the health sector as only a cost center for sickness. Recent national policy shifts are certainly moving Japan in this direction, but I don’t think we have gone far enough because the legacy regulations still focus more on maintaining the status quo rather than developing a new system and strategy of healthcare more broadly.

One piece of good news is that the current minister of health, labor and welfare, Mr. Shiozaki, has initiated a new advisory panel, “Health Care 2035” (of which I am a member), which is tasked with developing a vision and feasible action plans for achieving an accountable and sustainable healthcare future. We will issue the final report this June.

Considering the fact that all healthcare services and products should be subject to global standards for development, manufacturing, and inspection, it is essential for Japan to harmonize its domestic regulations with these global standards. Global regulatory harmonization is a goal shared by many, but the realization and implementation of this vision has been slow. Japan must take a lead in this process in order to continue playing a leadership role in global health innovation.

What does the international community need to understand about the developments you noted above? What do observers often get wrong when interpreting these kinds of shifts in Japan?

Japan has accelerated its efforts to reform the system and regulations and fight against complacency in our legacy system. This is long overdue and there is no guarantee that Japan’s reputation for longevity and comparatively low-priced medical care will continue in the next decade. We are searching for solutions to these challenges with a sense of urgency, reminded that implementation is always key to success and arguably more important than just discussion and planning.

Our major challenges, such as increasing healthcare costs, a rapidly aging population, and stagnant economic growth, are now common to all developed countries; they have just risen to the surface more rapidly in Japan. These challenges, however, are too big for one country to solve. The international community should not only expect to see new visions and models for healthcare emerge from Japan but must learn from other countries as well. There are many examples of successful and failed policies in the world, such as those that focused on short-term healthcare cost reduction without considering long-term health quality, or the over- or under-evaluation of new technologies. We can all benefit from sharing and examining these past successes and failures, and Japan should play a central role in this effort to invent a new way forward that balances health outcomes with concerns about cost.

This interview was conducted by Sara Itagaki, a Project Associate at NBR, and Claire Topal, a Senior Advisor for International Health.