Japan considers incentive to boost generic drug use

TOKYO, May 13 (Reuters) Japan, in an effort to boost use of generic drugs, is considering cutting insurance coverage for branded medicine when a similar generic version is available, the Nikkei daily reported today.

Japan is the world's second-largest pharmaceutical market but it has one of the world's lowest rates of generics consumption, with generics making up about 16 percent of all prescription drugs by volume in 2004.

The government is aiming to boost the figure in order to cut medical costs for its fast-ageing population and for its own social security scheme.

According to changes under consideration, patients would only receive insurance coverage from the government to cover the cost of a generic drug, even if they used a more expensive branded drug, the Nikkei said.

At present, insurance covers the same percentage of costs for both branded drugs and less costly generic ones.

A change in prescription method in April 2006 required doctors to indicate if a generic version could be substituted for a branded drug, but checks since then have found that only 1 per cent of prescriptions have resulted in a substitution.

The Health Ministry is seeking to adopt new rules next year that require doctors to state a reason when prescribing a branded drug, the Yomiuri newspaper reported last month.

The regulation changes could help companies such as Sawai Pharmaceutical Co Ltd, Japan's top generic drug maker, and main rival Towa Pharmaceutical Co Ltd.

Japan's rapidly ageing population has raised concerns over soaring social security costs and damage to the country's long-term economic growth potential.

The proportion of people over the age of 65 in Japan is now the world's highest at 20 percent. The figure is forecast to hit 40 percent by 2055.

REUTERS RJ VV1020