TOKYO – Japan will lower the price of Ono Pharmaceutical Inc.'s Opdivo (nivolumab) and reform the guidelines on its usage as the country looks to a future in which the price of drugs add billions in government spending.

The health ministry said that the drug's wide variety of uses and possible future applications meant that the traditional way of pricing pharmaceuticals – by the cost of production – was not applicable to some of the new innovative drugs reaching the market.

"Many of the products that are expensive today are expected to take exceedingly large shares of future medicine markets," the Central Social Insurance Medical Council said, according to minutes released by the government. "Effects and guidelines for the use of these drugs, as well as pricing, need to be considered in a new framework."

In recent weeks, Ono's drug, which is a first of its kind, came under scrutiny after an analyst said that it could cost Japan up to 20 percent of its health budget if the price was left unchecked. The treatment, a PD-1 inhibitor, helps the immune system to fight cancer.

After gaining approval more than two years ago, Opdivo has been used as a drug of last resort in Japan, given to those for whom chemotherapy and other more traditional treatments have failed. However, the drug still has plenty of possible other ways it can be used. Today, it is available only for people that are afflicted with malignant melanoma and non-small-cell lung cancer, but is in trial phases for a number of other diseases.

"We are currently seeking approval for its use in Japan to treat a variety of other types of [cancer]," Ono Pharmaceutical spokesman Yukio Tani told BioWorld Today last month. "Opdivo is currently in clinical trials for use in more than 20 different types of cancer. We expect that a lot of cancer patients will come to use the drug in the future."

The analyst who reported to Japan's government said that if Opdivo remained at its current price of ¥730,000 (US$7,148) for a 100-mg bottle, about ¥2.6 million (US$25,460) a month for a patient with a body weight of 60 kg, then it would cost ¥1.5 trillion annually to treat 50,000 patients.

Ono disputed the estimate, pointing out that current prescription rates would mean the number of patients treated would reach about a third of the 50,000 cited. The company also said dosages would be much lower than estimated.

Japan, though, sees a bright future for drugs such as Opdivo, and that has it worried about budgetary problems.

"Drugs that are effective against serious diseases, can treat lifestyle illnesses or improve longevity should be considered in a different light," the council announced. "If these medicines have a significant impact then their prices should be reconsidered at that point."

MAKE THEM MORE ACCESSIBLE

The government's logic is that if these medicines have a significant impact on society, and change the lifestyle of the population in a meaningful way, then their prices will have to be reconsidered as they will need to be made accessible to a larger portion of society.

The council will look at forming a study group to decide on the future price of Opdivo and to come up with a pricing method for innovative drugs. The Japanese government has made the development of cutting-edge medicines a pillar of its growth policy, but needs to find a way of making sure that these can reach Japanese patients without placing too much pressure on the nation's public health insurance system.

Guidelines and trials for new drugs in Japan are formulated under the watch of the Pharmaceuticals and Medical Devices Agency, and after that moved to the health ministry, where a decision is made on whether the product should be covered under the public insurance system. "We need to look within this [fiscal] year at the issue surrounding National Health Insurance drug prices reform" with Opdivo in mind, the council said.

Shares in Ono Pharmaceutical have been largely unaffected by the news of the coming reforms, and closed at ¥3,811 on Aug. 1, down slightly from ¥3,950 at close on the same day a week earlier. The shares dipped at the end of last week, but rose by ¥108 in Aug. 1 trading.

The Central Social Insurance Medical Council also said it would explore new guidelines for Repatha, a treatment for cholesterol from Astellas Pharma Inc. of Japan.