2025.9.5

Industry Opinions on the Upcoming FY 2026 Reimbursement Revisions

As many of you may know, the Japanese reimbursement system is revised every 2 years with changes to the reimbursement price of drugs, devices, and regenerative medicine therapies, establishment of new technical fees, and more. So the Central Social Insurance Medical Council (Chuikyo), Japan's reimbursement advisory group, and its subcommittees are in full gear as discussions proceed for the revisions scheduled to be implemented in April of next year. Discussions normally peak towards the end of the year prior to April revisions. We expect to receive an outline and some details on the revisions in December of this year.

But we are already getting a glimpse of some of the revisions that might be implemented for medical devices and IVDs in April of next year. In early August, the Chuikyo’s Medical Materials Expert Subcommittee released a 5-page document in Japanese outlining their opinion and priorities concerning the reimbursement revisions for reimbursed medical devices and IVDs. This year their priorities seem focused on re-visiting and refining broader reforms that were implemented in April 2024, including some of the following topics:

1. Evaluation of Innovation

• Addressing challenges related to devices for pediatric patients (e.g., size changes with growth, low patient numbers affecting profitability/supply, etc.)

• Consideration of special evaluations or premiums for high-need devices

• Clarification of data collection and evaluation methods for the challenge submission system and review the overall system based on past cases in order to improve its efficiency

• Enhancing the predictability of establishing new procedure (technical) fees related to devices, clarifying the submission criteria, and revisiting the time limits for those applications with patient access in mind

2. Program Medical Devices (SaMD)

• Further refining the evaluation criteria for the program medical device (SaMD) reimbursement system introduced in April 2024

• Analyzing past cases to define expenses that should be included for the cost-based pricing approach for those devices that was established in April 2024

• Consideration of the suitability of patient-operated devices for post-insurance usage (based on patient preference) when the reimbursed usage period is limited

3. Cost Differences Between Japan and Other Countries

• Reviewing the levels and calculation methods for foreign reference pricing in order to balance innovation / supply stability with the need for a reduction in fiscal / patient burden

4. Revision of the Re-Pricing System Based on Market Expansion

• Further clarifying procedures for the re-pricing of medical devices based on market expansion such as how to handle re-pricing of devices that are bundled together with procedure (technical) fees

• Expanding the list of devices targeted for re-pricing if their reimbursement falls below market price with the aim of ensuring stable supply

5. Other Items

• Reviewing subdivisions and definitions for reimbursement functional categories based on clinical positioning, supply stability, market prices / scales and addressing manufacturer requests for category changes or additions

• Aligning the assessment and listing of devices and IVDs that are used to determine the eligibility of use of drug or regenerative medicine therapies so they may be available faster for that use – i.e., to allow for a listing timing that are more in line with the listing timing of the drugs or regenerative medicine therapies that they are meant to support

As part of their preparation for a detailed discussion and planning of the reimbursement revisions, the Chuikyo’s subcommittee invites industry groups to present their opinions in the August and November leading up to the April revisions. Last week, several device and IVD industry groups joined together to formally present their initial opinions and requests concerning the 2026 reimbursement revisions to the Chuikyo’s Medical Materials Expert Subcommittee. Below is a summary of the challenges faced by the medical devices industry and the opinions and requests were submitted:

Some of the key industry challenges mentioned were as follows:

1. Rising Costs and Supply Challenges: Raw material and component prices have increased significantly (e.g., 16% on average from 2019 to 2023). Manufacturers have also been forced to accept supplier price hikes while adhering to fair trade practices.

2. Declining Reimbursement Prices: Insurance reimbursement prices have continuously fallen (e.g., average 4-year decline shown in indices) to a point where it may no longer be profitable to sell some products.

3. Profitability Deterioration: In a 2024 survey of 7,294 device products, 15% (1,064) were unprofitable. However, only 34 out of 79 requests for re-pricing of reimbursement functional categories due to lack of profitability were approved among those submitted for the FY 2024 reimbursement revision.

4. Supply Stability Concerns: Reports of supply issues also increased around the time of the 2024 reimbursement revisions, mainly due to cost of good increases and raw material shortages.

5. Device Loss (Non-Introduction of New Products): Low Japanese reimbursement prices have prevented the introduction of 102 products from 33 companies (e.g., PleurX/PeritX drainage system has been delayed for 20 years; AccuFill BSM for bone marrow lesions has been delayed for 6 years, etc.). This creates a cycle of reduced R&D, stalled improvements, and inability to provide optimal care.

In summary, the industry groups emphasized that a higher costs of goods and supplier costs and declining reimbursement levels have led to a lack of profitability for some products. This, in turn, has led to a situation whereby it is difficult to ensure a stable supply of goods and where there is stagnation in research and development for Japan (i.e., a worsening of the device lag / loss issue).

Due to the issues above, the industry groups endorsed the subcommittees focus on reconsidering pricing for certain categories and a review of the challenge submission program. Moreover, they proposed several specific considerations for the 2026 reimbursement revisions. Some of their proposals are rather detailed and require an understanding of the reimbursement of medical devices and IVDs in Japan, but we provide a summary below:

1. Inflation-Linked Reimbursement: Reimbursement prices for medical devices and IVDs at the time of reimbursement revisions should be adjusted to reflect inflation (e.g., add 2% if inflation is +2%) and allow prices to exceed previous levels.

2. Addressing the Reverse Price Gap and Hospital Burden:

• An investigation should be conducted of the issue whereby the market prices for certain medical devices and IVDs exceed their reimbursement price, which is referred to as the “reverse price gap" (or “gyaku-zaya” in Japanese).

• Re-pricing of those products to bring them more in line with market prices should be allowed, especially if requested by medical societies. Also, for products re-priced due to lack of profitability, their reimbursement price should be maintained for a certain period thereafter without re-pricing to ensure a stable supply.

• If it is difficult to allow an increase for an entire functional category, then allowing a re-pricing based on the actual market price only for products with negative margins should be considered based on requests by relevant medical societies. This could help eliminate product selection based on profit margins, enabling optimal product choices for treatment (patients), reducing wasteful use of medical resources, and allowing medical institutions to purchase products at appropriate prices.

• If reimbursement functional categories are subdivided to allow for the re-pricing of certain products, then prices could be calculated using a weighted average market price fixed-range method, allowing them to exceed the reimbursement price, to reduce the burden on medical institutions.

3. Foreign Price Adjustment Revisions:

• Since distribution costs in Japan are higher than overseas, the use of foreign reference pricing should be reduced. (This request related to the application of foreign reference pricing for devices after listing, but please see our post here for an overview of foreign reference pricing for devices at the time of listing.)

• If elimination of foreign reference pricing or reducing it to just a one-time price adjustment for newly listed products is difficult, then the elimination of the outlier exclusion rule (i.e., the rule that excluded reference markets that are much higher than the others) and maintenance of comparison standards (i.e., the threshold for which reductions are considered) is requested.

• Also, to prevent unprofitability, reductions based on foreign reference pricing should be limited to 15% (down from the current limit of 50%)

4. Revision of the Economic Efficiency Premium: To encourage the development of innovative devices that reduce overall expenses technical fees (e.g., inspections) should be included in the cost-saving calculations for the Economic Efficiency Premium, not just device costs. For example, when calculating the expected cost savings for the Economic Efficiency Premium, reductions in technical fees such as testing fees should also be considered - not just reductions in device-related fees. (Please see our post here for an explanation of the Economics Efficiency Premium which was introduced in 2024)

5. Unique Claims Codes for Challenge Submission: Assign product-specific reimbursement codes for devices that are approved for the challenge submission process to allow for better real-world data analysis (e.g., using claims data for long-term outcomes like re-intervention rates in peripheral vascular interventions). Specifically, when granting challenge submission rights based on an Improvement Premium or Economic Efficiency Premium assigning unique reimbursement codes should be assigned for those products to enable comparison of effectiveness, safety, and economic efficiency even within the same functional category.

6. Evaluation and Usage of Program Medical Devices (SaMD):

• An additional reimbursement amount should be considered for program medical devices (SaMD devices) when, in addition to reducing the working time for healthcare workers, patient benefits are demonstrated, or when the Chuikyo acknowledges the reduction in the working time of healthcare workers promoted by program medical device leads to an improvement in treatment (e.g., when a reduction in prolonged waiting periods for patient examinations or treatment is achieved)

• For program medical devices that have received first-stage (conditional) approval and are designated as therapies for evaluation, if physicians or patients use such devices but subsequent clinical research does not confirm their efficacy and there is no prospect of reimbursement under the medical fee system, and the company does not seek insurance coverage, but patients wish to continue using the device, then consideration of transition of those therapies for further evaluation or patient-selected usage (similar to the case of multifocal intraocular lenses) should be made.

7. Improvement of the Clarity and Predictability of New Technical Fees: Lack of clarity about the criteria for determining eligibility for the C2 (new technical fee) reimbursement category and the method for setting the temporary and new technical fee makes it difficult to judge whether a C2 application is appropriate. So that process should be clarified to increase predictability. Specifically, the criteria for determining eligibility for the C2 application and the method for setting the temporary and new procedure (technical) fee should be clarified.

8. Relaxation of Requirements for Challenge Submissions:

• Use of overseas studies, retrospective observational studies (including real-world data), and physician-led research should be allowed for challenge submission to avoid duplication of studies and reduce the device lag.

• The use of specimens accumulated in biobanks to support with evidence for challenge submissions is hindered by pre-approval hurdles (e.g., restrictive contracts, IRB, protocols, etc.). So, a post-approval analysis of pre-collected stored samples should be allowed. However, the use of that data could be limited to re-evaluations through a challenge submission program with the involvement of the marketing authorization holder.

9. Clarification and Improvement of the Process for Special Evaluation Devices: Criteria for the special evaluation program (e.g., advanced medical treatment) should be clarified, evaluation periods extended until the next reimbursement revision, and hearings from societies/companies and other stakeholders should be conducted.

10. Revision of In-Home Care Fees: The calculation method for fees related to home therapy devices (e.g., ventilators, nebulizers, syringe pumps) should be changed from "once per month" to "n times per n months" (e.g., 3 times in 3 months) to reduce confusion and to improve access during non-visit months (e.g., infection risks). Moreover, use of a uniform standard of “3 times in 3 months” should be considered in the long-run.

11. Reconsideration of the Reimbursement Process for PET Scans: Given that there is a lag in the reimbursement of PET scans for certain new drugs that require a PET scans to determine their eligibility, companies should be allowed to submit for approval of diagnostic PET scans through a framework such as the C2 reimbursement application or for reimbursement as an aid to determining drug eligibility – rather than have to go through the medical society to establish a new or revised technical fee to allow for their use.

12. Establishment of a Premium for Reduction of Surgical Smoke: A special premium should be allowed for devices that include a function for surgical smoke reduction or for facilities that have taken measures (i.e., that meet certain facility criteria) for the establishment and maintenance of a system for addressing surgical smoke.

13. Evaluation of the Quality Control Measures for Diagnostic Displays: As some hospitals have been shown to adopt low quality control measure for displays, quality control for diagnostic displays (monochrome medical image monitors) should evaluated. It was implied that a premium should be established for hospitals that implement standards-based management (e.g., GSDF calibration) by radiologists / technicians, with requirements such as "storing test results and histories demonstrating that displays used for diagnostic imaging meet the standards."

14. Expansion of the Application of Marketability Premium for IVDs: Currently the Marketability premium for IVDs that are for rare diseases is effectively limited to companion diagnostics, making it difficult to apply to other tests for rare disease. This makes development and launch of those tests in Japan unviable. So, expansion of that premium to other tests for rare disease is requested. (Please see our post here for more information on the Marketability premium for IVDs).

15. Economic Evaluation of IVDs should be Considered: Since IVDs can enable optimal diagnosis / treatment and reduce overall medical costs, economic evaluations for IVDs should be introduced and a research group should be established for that. The testing industry could contribute case collection regarding specimen testing technical fees as input for the research group.

16. Establishment of a Premium Fee for Weekend / Holiday Microbiological Testing: Due to capacity issues and low testing rates, a premium fee should established for hospitals that offer weekend / holiday microbiology implementation and reporting to ensure rapid treatment, reduce facility disparities, and curb antimicrobial resistance (AMR).

17. Expansion of Reimbursement for Point-of-Care Testing (POCT): POCT enables immediate diagnostics in clinics, improving care quality, but per-test costs are higher than high-throughput central lab tests (smaller scale, equipment differences). As such, multiple reimbursement claims for testing on the same day should be allowed for emergencies to encourage the use of POCT. Moreover, a "Rapid Testing Premium Fee" should be established as part of the the existing Lifestyle Disease Management Fee, which is used for risk assessment for cardiovascular diseases, to allow for same-day testing and reporting.

18. Revision of the Handling of Malignant Tumor-Related Genetic Tests:

• Since several diverse gene tests for cancer are lumped together into one reimbursement category without distinction of whether the test is a multi-gene test, single-gene test, or comprehensive genomic panel (CGP), the code for malignant tumor gene testing (D004-2-1), should be subdivided by the testing process and the post-analysis process (bioinformatics).

• The restrictions concerning CGPs should be revised to allow for use at "medically appropriate times (including before starting primary treatment)" and operational requirements (e.g., more genome centers, simplified expert panels) should be eased.

• Moreover, in order to improve access to CGP for patients, the number of cancer genome hubs and affiliated hospitals should be increased, and simplification of the expert panel process should be considered, as well as relaxing operational requirements. (Please see our post here for more information on reimbursement of CGPs)

While there is no guarantee that the above opinions and requests will be taken into consideration for the 2026 reimbursement revisions, it is important that industry make their needs and concerns heard by the reimbursement authorities. It is encouraging to see that some of the priorities of the reimbursement authorities mentioned above are in line with those voiced by the industry groups. So we could see some of the items above addressed.

We will keep you posted but please contact us if you have any specific questions or concerns.

Lastly, although procedure fees are mentioned widely in the opinions and requests above it’s important to note that reimbursement revisions for most procedure fees are deliberated and determined by a different Chuikyo subcommittee which takes opinions from the medical societies. So there may be other procedure fees revisions that relate closely to device usage that are under discussion by other Chuikyo subcommittees - particularly the Medical Technology Evaluation Subcommittee of the Chuikyo’s Specialized Organization for Investigation of Medical Fees.

References:

1) Meeting materials for the 129th meeting of the Chuikyo’s Medical Materials Expert Subcommittee: https://www.mhlw.go.jp/content/10808000/001533269.pdf

2) Meeting materials for the 130th meeting of the Chuikyo’s Medical Materials Expert Subcommittee: https://www.mhlw.go.jp/content/10808000/001548669.pdf

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