Structural reforms are required to make Japan’s healthcare system sustainable

Generics/General | Posted 09/10/2020 post-comment0 Post your comment

Japan’s healthcare system provides universal coverage and high-quality healthcare delivery. With relatively minor changes for nearly six decades, it has kept the country remarkably healthy. However, a recent study has highlighted that significant changes may be necessary to maintain long-term sustainability.  

Health Budget 2

‘Health System Sustainability in Japan’ is a report by The Economist Intelligence Unit that examines the challenges and opportunities faced by Japan’s healthcare system and the sustainability of the system. Sustainable healthcare systems not only have appropriate resources to function effectively, but also can address challenges required to explore and implement innovative designs for health services. The research uses a scorecard to compare Japan's health system with those of the UK, US, South Korea, France and Germany across five domains: long-term strategic perspective; disease prevention and health infrastructure; existence of integrated healthcare models; accountability and patient-centredness; and research readiness.

Overall, Japan ranked in the lower tier of the six countries. The research found that pressures of an ageing population, a lack of regulation of demand for medical services and an underdeveloped system for evaluating efficiency and effectiveness of health products and services could paralyse Japan’s healthcare system as the cost of treatments rises. Without changes to the current incentives, Japan will struggle to take advantage of medical innovation and maintain its ability to deliver high-quality, accessible care in the future.

The key findings of the report are summarized below:

  • Japan’s health financing system is becoming increasingly unsustainable. While the current system provides extensive coverage, insurance premiums cover less than half of the cost of operating the system and government subsidies fill the gap. Providing innovative interventions that address the needs of Japan’s ageing population is increasingly expensive and enabling universal access to such innovation requires strategic balancing of innovation, quality and spending.
  • Japan’s existing price review process blocks structural health system reform. Although the biannual price review has kept Japan’s healthcare system remarkably stable, it has made it difficult to implement any significant reforms. The inclusion of value-based healthcare concepts is necessary to balance access, quality and cost.
  • Different incentives are needed to efficiently use the medical workforce and hospital resources. Under the current system, prices are kept low, but there is no limit on the demand for health services. This creates warped incentives for health providers and leads to an overburdened workforce that threatens to undermine the quality of care. Additionally, use of existing cost-saving generics and particularly biosimilars could be optimised [1].
  • Japan’s long-term care system needs better integration with primary care. With the world’s oldest population, Japan’s long-term care system provides a model of how to care for older people. Yet, as the number of older citizens living with disabilities increases, better integration of primary and long-term care systems is required to conserve resources.
  • Japan conducts less proprietary research than many other industrialised countries. This makes it difficult to identify which treatments are worth greater investment.

Jesse Quigley Jones, editor of the report, said, ‘The Covid-19 pandemic has highlighted vulnerabilities of the system with experts warning of the collapse of the emergency medicine system, and potential knock-on effects for the broader health system and even overall economy. Our research has highlighted some positive steps towards reform and an emerging long-term vision, but further political commitment is needed to make evidence-based decisions and ensure Japan's health system is sustainable for generations to come’.

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1. GaBI Online - Generics and Biosimilars Initiative. Japanese opportunity for biosimilars []. Mol, Belgium: Pro Pharma Communications International; [cited 2020 Oct 9]. Available from:

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Source: The Economist Intelligence Unit

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