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Overview

Healthcare funding

In general terms, how is healthcare, including access to medicines and medical devices, funded in your jurisdiction? Outline the roles of the public and private sectors.

In Japan, under the universal healthcare insurance system designed by the government, all Japanese citizens are covered by public health insurance. Under this system, Japanese citizens can have high-quality medical treatments at relatively low prices, from healthcare providers and facilities of their choice. While there are several types of public health insurance systems, the Employees’ Health Insurance (EHI) and the National Health Insurance (NHI) are the most common systems. The EHI covers employees employed by the public sector and private entities. On the other hand, the NHI covers individual businesses (including those who are self-employed) and the unemployed.

The universal healthcare insurance system is funded by insurance premiums, subsidies from central and local governments, and co-­payment from patients. Patients generally pay 10 per cent to 30 per cent of medical costs.

Delivery

In general terms, how is healthcare delivered in your jurisdiction? Outline the roles of the public and private sectors.

Healthcare for Japanese residents is provided by both public hospitals and private hospitals. Under the universal health insurance system, Japanese citizens are free to choose their healthcare providers and facilities. In other words, the type of healthcare insurance system or the health insurers a resident uses does not limit the choice of healthcare provider.

Key legislation

Identify the key legislation governing the delivery of healthcare and establishing the regulatory framework.

The Health Insurance Act and the Mutual Aid Association Act govern EHI, while the National Health Insurance Act governs NHI. The Minister of Health, Labour and Welfare has the authority to decide the Uniform Fee Schedule, which provides for the fees that the health insurance system will pay to a healthcare provider for each healthcare service. The Minister, in consultation with the Central Social Insurance Medical Council, revises the Uniform Fee Schedule every two years.

The Medical Practitioners’ Act and the Medical Care Act are the two key pieces of legislation that regulate the provision of healthcare. The Rules for Professionals in Charge of Healthcare Services under the Health Insurance Programs are also relevant, as they provide for the rules applicable to healthcare providers who are covered by the health insurance system.

Responsible agencies

Which agencies are principally responsible for the enforcement of laws and rules applicable to the delivery of healthcare?

The Ministry of Health, Labour and Welfare (MHLW), is responsible for the enforcement of the laws and rules applicable to the delivery of healthcare. The public health centres established by local governments also play an important role in maintaining public health and in regulating on the provision of healthcare.

Scope of enforcement

What is the scope of their enforcement and regulatory responsibilities?

Generally speaking, MHLW deals with nationwide issues, and while public health centres deal with regional and local public issues.

Regulation of pharmaceutical products and medical devices

Which agencies are principally responsible for the regulation of pharmaceutical products and medical devices?

The MHLW is responsible for the regulation of pharmaceutical products and medical devices. Some of its power and activities have been delegated to the local governments (such as prefecture governors) and the Pharmaceuticals and Medical Devices Agency (PMDA).

Scope of enforcement

What is the scope of their enforcement and regulatory responsibilities?

Generally speaking, the MHLW deals with nationwide issues, and the local governments deal with regional and local issues, relating to pharmaceutical products and medical devices. The PMDA deals with, or assists the MHLW in:

  • the review of applications for marketing approval for drugs, medical devices, and cellular and tissue-based products;
  • implementing post-marketing safety measures; and
  • providing relief services for adverse health effects that were caused by reactions to pharmaceuticals.

Local governments are also given authority over certain matters, for example, licensing and supervision of pharmacies, and monitoring of compliance with regulations on drugs and devices (please see question 10 below).

Other agencies

Which other agencies have jurisdiction over healthcare, pharmaceutical and medical device cases?

The Act on Securing the Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (PMD Act) provides for criminal penalties for certain violations. Therefore, prosecutors have the primary authority in deciding whether to prosecute criminal cases for violations of this Act.

Competition or securities regulators also have jurisdiction over business activities related to pharmaceuticals and medical devices, to the extent that these business activities violate relevant competition laws and other relevant laws.

Simultaneous investigations

Can multiple government agencies simultaneously conduct an investigation of the same subject? Does a completed investigation bar another agency from investigating the same facts and circumstances?

The answer to this question depends on each case. Generally speaking, in Japan, various government agencies typically act in close consultation and cooperation with each other.

Regulation of pharmaceutical products and medical devices

Monitoring powers

What powers do the authorities have to monitor compliance with the rules on drugs and devices?

The PMD Act authorises the MHLW, itself or through the PMDA, to require marketing authorisation holders and manufacturers to submit reports and, more importantly, issue inspection orders to marketing authorisation holders and manufacturers. The MHLW (or the PMDA) carries out inspections of marketing authorisation holders and manufacturers’ facilities, offices and other sites where the companies carry out business, interview employees, inspect books and records and test drug samples in order to monitor compliance with the laws and regulations.

The MHLW also has the power to issue orders to marketing authorisation holders and manufacturers to improve their manufacturing control, quality control or post-marketing safety control, or to suspend their operations until a required improvement is implemented.

In certain cases, local governments, such as prefectural governors and city or ward mayors, have the authority to require certain marketing authorisation holders, manufacturers, sellers of drugs and devices (such as pharmacies and store-based distributors) and clinics and hospitals to submit reports, and to conduct site inspections, interview employees, inspect books, and test drug samples. In certain cases, the prefectural governors may issue orders for these entities to improve their facilities if those facilities fail to meet certain standards.

Investigation time frames

How long do investigations typically take from initiation to completion? How are investigations started?

There is no typical length of time for investigations as they depend on the facts of each case. Investigations usually start upon the initiative of the regulators, especially in areas which are considered important to Japanese society or government priorities, or when regulators receive information of wrongdoing from whistleblowers or complaints from consumers.

Access to investigation materials

What rights or access does the subject of an investigation have to the government investigation files and materials?

As a general rule, under the Act on Access to Information Held by Administrative Organisations, the subject of an investigation has the right to access administrative documents, such as documents relating to an administrative investigation. The administrative authority that receives a request for disclosure of administrative documents is obligated to disclose those documents, unless they fall within information specifically excluded by Article 5 of the Act. Excluded information includes personal information concerning individuals, and information which if made public may pose a threat or risk to state security, prevention or investigation of crimes, maintenance of prosecutions and other matters concerning public safety and public order.

Investigations abroad

If pharmaceutical products or medical devices are made in a foreign country, may the authorities conduct investigations of the manufacturing processes in that other country?

Yes, the MHLW has the authority to conduct the same investigations it can conduct on domestic authorisation holders, as described in question 10 above, and the MHLW conducts investigations outside Japan from time to time.

Enforcement proceedings

Through what proceedings do agencies enforce the rules?

The regulators hold their own proceedings and investigations, which are administrative in nature. They do not need to apply to the courts before initiating and carrying out those investigations.

However, with respect to certain violations that are punishable by criminal penalties, then investigations are initiated by a prosecutor’s office as they are criminal in nature. Generally, prosecutors do not need to apply to the courts to conduct their investigations, although they need to apply to the courts for warrants to conduct searches.

Sanctions

What sanctions and other measures can the authorities impose or seek in enforcement actions against drug and device manufacturers and their distributors?

As discussed in question 10 above, the MHLW and the local governments have the authority in certain cases to issue orders to improve manufacturing control, quality control or facilities, and to suspend business operations of, or the use of facilities by, manufacturers and distributors until the necessary improvement is made. They also have the authority to order manufacturers and distributors to dispose of, recall or take other measures to prevent hazards to public health and hygiene caused by drugs and devices which do not meet the required standards. More importantly, they have the power to cancel the authorisation given to manufacturers and distributors to provide pharmaceuticals, quasi-drugs, cosmetics, medical devices or regenerative medicine products.

The PMD Act imposes penalties consisting of fines or imprisonment, or both, on certain violations of the PMD Act and its regulations by manufacturers and distributors.

Actions against employees

Can the authorities pursue actions against employees as well as the company itself?

An officer or employee who directly violates the PMD Act is subject to fines or imprisonment, or both. Furthermore, the representative and employees of the company may also be subject to fines along with the company.

Additionally, under the PMD Act, the MHLW may order manufacturers and distributors to change certain supervisor-level employees if they are found to be inappropriate as supervisors or technical supervisors or if they are found to have violated the PMD Act. These super­visors include the marketing supervisor-general of pharmaceuticals or medical devices, manufacturing supervisors of pharmaceuticals, and technical supervisors of medical devices.

The MHLW may order pharmacies, or proprietors, sellers or leasers of drugs or devices to change the supervisors of pharmacies or certain managerial level employees of these establishments if these employees are found to be inappropriate or if they are found to have violated the PMD Act.

Defences and appeals

What defences and appeals are available to drug and device company defendants in an enforcement action?

If a person is dissatisfied with an agency’s decision, that person may file a request for a review or re-examination of this decision with that agency in accordance with the Administrative Complaint Review Act. If such a filing is made, the relevant agency will examine its decision-making process and whether any error was made in the process or in its decision.

If a person wishes to cancel an agency’s decision, that person may file a suit in court against the agency to ask the court to cancel the decision in accordance with the Administrative Case Litigation Act.

Minimising exposure

What strategies should companies adopt to minimise their exposure to enforcement actions and reduce their liability once an enforcement action is under way?

One recommendation is for companies to establish and implement internal policies and systems on regulatory compliance, and to have a robust system of regular checks and audits to make sure that these policies and systems are being complied with by everyone in the company. Companies are encouraged to have a more open working environment to encourage employees and officers to report irregularities or possible violations of the standards and requirements of the PMD Act, any other laws and regulations.

Recent enforcement activities

What have the authorities focused on in their recent drugs and devices enforcement activity and what sanctions have been imposed?

Regulators have issued orders for improvements, and have suspended certain business operations for failure to comply with these improvement orders in a timely manner.

Self-governing bodies

Are there self-governing bodies for the companies that sell pharmaceutical products and medical devices? How do those organisations police members’ conduct?

The major self-governing bodies include the Japan Pharmaceutical Manufacturers Association (JPMA) and the Japan Federation of Medical Devices Associations (JFMDA). These self-governing bodies and associations have issued practice standards, compliance guidelines, codes of practice, promotion codes, and transparency guidelines that the members are expected to follow.

JPMA consists of around 70 companies, and is a member of the Federation of Pharmaceutical Manufacturers’ Associations of Japan which consists of 15 industrial organisations and 16 regional organisations. It deals with inquiries and complaints and imposes improvement measures on violating members in accordance with its internal regulations.

JFMDA consists of 21 associations (which represent about 4,280 companies), associate members’ organisations and individual companies. If JFMDA receives complaints of possible violations of one of its codes by a member, it will investigate and examine whether a violation exists. If JFMDA determines that such a violation exists, it will notify the violating member to comply with the code. JFMDA’s members are obliged to cooperate with investigations conducted by JFMDA’s committees.

Relationships between healthcare professionals and suppliers

Relationship rules

What are the rules prohibiting or controlling the financial relationships between healthcare professionals and suppliers of products and services?

There are fair competition codes for drugs as well as for medical devices that aim to prevent unfair inducement of customers by restricting unjustifiable premium offers, and to ensure fair competition and order within the industry. As examples, the Japan Fair Trade Council of the Medical Devices Industry has issued the Fair Competition Code of the Medical Devices Industry in Japan; and for the pharmaceutical industry, the Japan Fair Trade Council of the Ethical Pharmaceutical Drugs Marketing Industry has issued the Fair Competition Code concerning Restrictions on Premium Offers in the Ethical Pharmaceutical Drugs Marketing Industry.

In addition, industrial groups, such as JPMA, also issue their own guidelines or codes of ethics and practice to guide their members. For example, JPMA has its Code of Practice, which provides the principal rules which pharmaceutical manufacturers must comply with in their activities, including the promotion of drugs. JPMA also issues ‘Transparency Guidelines’ which require pharmaceutical manufacturers to disclose certain financial relationships in R&D activities with medical institutions.

Enforcement

How are the rules enforced?

Each industry’s Fair Trade Council operates the relevant fair competition codes. The relevant industrial group enforces industry guidelines or best practice standards.

Reporting requirements

What are the reporting requirements on such financial relationships? Is the reported information publicly available?

The Transparency Guidelines of JPMA require pharmaceutical companies to disclose financial relationships with medical institutions. In addition, it is notable that under the new Clinical Research Law, which was enacted on 1 April 2018, pharmaceutical and medical device companies are required to disclose if they provide funding to clinical researches conducted on their products by medical institutions.

Regulation of healthcare delivery

Authority powers

What powers do the authorities have to monitor compliance with the rules on delivery of healthcare?

Under the Medical Practitioners’ Act, when the Minister of Health, Labour and Welfare finds that it is necessary to investigate whether a disposition should be made regarding a medical practitioner under the Act, he or she may seek the opinion of and collect reports from persons who are connected with the circumstances in question or from witnesses, may order owners of medical records or other articles to submit those records and articles, and may have its officials enter the hospital or any other location that is connected with the relevant circumstances and inspect medical records and other articles.

Investigation time frames

How long do investigations of healthcare providers typically take from initiation to completion? How are investigations started?

There is no typical length of time for investigations as they depend on the facts of each case. Investigations usually start upon the initiative of the regulators, especially in areas which are considered important to Japanese society or government priorities, or when regulators receive information of wrongdoing from whistleblowers or complaints from consumers.

Access to investigation materials

What rights or access does the subject of an investigation have to the government investigation files and materials?

Please refer to question 12, since similar regulations and procedures apply to healthcare providers.

Enforcement agencies

Through what proceedings do agencies enforce the rules?

Please refer to question 14, since similar regulations and procedures apply to healthcare providers.

Sanctions

What sanctions and other measures can the authorities impose or seek in enforcement actions against healthcare providers?

Under the Medical Practitioners’ Act, if a medical practitioner acted in a way that damages his or her respectability as a medical practitioner, the MHLW may issue an order admonishing the medical practitioner, suspending him or her from medical practice for up to three years, or revoking his or her licence.

Additionally, it is necessary for healthcare providers to obtain insurance authorisation from the MHLW because healthcare insurance held by each patient only applies to services provided by healthcare providers who have that insurance authorisation. If a healthcare provider violates the Health Insurance Act and other laws and regulations related to insurance, the MHLW has the authority to cancel its insurance authorisation.

Criminal penalties consisting of fines or imprisonment may be imposed in the case of violation of certain provisions of the relevant laws.

Defences and appeals

What defences and appeals are available to healthcare providers in an enforcement action?

Please refer to question 17 above.

Minimising exposure

What strategies should healthcare providers adopt to minimise their exposure to enforcement actions and reduce their liability once an enforcement action is under way?

Please refer to question 18 above.

Recent enforcement activities

What have the authorities focused on in their recent enforcement activity and what sanctions have been imposed on healthcare providers?

The authorities have focused on improper billing and false claims under health care insurance, which are among the most common misconduct by healthcare providers.

Self-governing bodies

Are there self-governing bodies for healthcare providers? How do those organisations police members’ conduct?

Yes, the Japan Medical Association (JMA), which is the largest physicians’ organisation in Japan. It has about 167,000 members or about 60 per cent of all licensed physicians in Japan. Under its internal regulations, JMA may expel any member who violates JMA’s ethical standards or internal regulations.

Remedies for poor performance

What remedies for poor performance does the government typically include in its contracts with healthcare providers?

Not applicable.

Private enforcement

Causes of action

What private causes of action may citizens or other private bodies bring to enforce a healthcare regulation or law?

Enforcement actions in case of breach of healthcare regulations are generally conducted by either the MHLW or the prosecutor’s office. Citizens or other private bodies may file civil actions against healthcare providers only in accordance with the framework of tort or a breach of contract if they are directly affected by the healthcare providers’ acts, negligence, or decisions.

Framework for claims

What is the framework for claims of clinical negligence against healthcare providers?

Civil actions for medical injury against healthcare professionals may be based on either tort or non-performance of contract, both of which are provided for under the Civil Code. In order to prove liability, a patient must establish the doctor’s negligence, the damage to the patient’s life, body or property, and the causation between the negligence and the damage.

The applicable standards are essentially the same under either theory, and Japanese courts generally consider as the standard of care that is expected of a healthcare professional, the standard prevailing in clinical medical practice at the time of the treatment, considering various circumstances such as the specialisation, size, functions or resources of the relevant medical facility and its personnel.

Damages awarded in medical injury cases are standardised in accordance with levels of severity of injuries, out-of-pocket medical expenses incurred or will be incurred, the present amount of expected earnings of the injured person, and a standardised amount for mental suffering. Punitive damages are not available under Japanese law.

Seeking recourse

How and on what grounds may purchasers or users of pharmaceuticals or devices seek recourse for regulatory and legal infringements?

Purchasers or users of pharmaceuticals or medical devices may seek liability against any person who manufactured, processed or imported the pharmaceuticals or the devices if they can establish the defect in the product, the damage to their life, body or property, and the causation between the defect and the damage. The injured person is not required to prove negligence with respect to the defect. ‘Defect’ is defined under the Product Liability Act as a lack of safety that the product ordinarily should provide, taking into account the nature of the product, the ordinarily foreseeable manner of use of the product, the time when the product was delivered and other circumstances concerning the product. There are three categories of defects, namely defect in manufacture, defect in design and defect in instructions or warnings.

Compensation

Are there any compensation schemes in place?

The PMDA has drawn up a compensation scheme called the Relief System for Adverse Drug Reactions, which provides for relief benefits and compensation relating to damage to one’s health, body and life, such as diseases and disabilities requiring hospitalisation that were caused by adverse reactions to prescription drugs, OTC drugs and certain other products, even if the drugs were properly used. This scheme started in May 1980 and covers medical expenses and allowances, disability pensions, funeral expenses and bereaved family compensation.

Class and collective actions

Are class actions or other collective claims available in cases related to drugs, devices and provision of care?

In Japan, the concept of class litigation does not have a long history. However, in October 2016, the Act on Special Measures concerning Civil Court Proceedings for the Collective Redress for Property Damage Incurred by Consumers came into force. This Act introduced a new type of litigation that allows for the filing of certain collective consumer actions to seek damages.

Under this Act, a specified qualified consumer organisation (SQCO) may file a lawsuit that demands the declaration of payment obligations commonly owed by a business operator to consumers in particular categories of cases. If the SQCO prevails, then the SQCO may file a petition for a special proceeding to obtain an order from the court regarding the substance and amount of each claim of target consumers. However, damage to property other than the subject matter of the consumer contract, lost profits, personal injury, and mental suffering are expressly excluded from the scope of claim that can be brought by an SQCO. Therefore, this collective action will have limited influence on the practice of bringing legal actions in cases related to drugs, medical devices and the provision of care.

Review

Are acts, omissions or decisions of public and private institutions active in the healthcare sphere subject to judicial or administrative review following a complaint from interested parties?

Not applicable.

Whistleblowers

Are there any legal protections for whistleblowers?

The Whistleblower Protection Act protects persons who expose information pertaining to certain criminal conduct or statutory violations from unfair treatment as a result of their disclosure. Under this Act, whistleblowers who uncover information of criminal or unlawful acts at their place of employment and inform their employers of the information are protected from retribution in the form of dismissals, demotions, salary cuts, termination of dispatch arrangement and other disadvantages. If whistleblowers expose such information to a third party, they may enjoy statutory protection only if they meet certain conditions, such as where evidence is likely to be destroyed or when the employer fails to notify the whistleblower within 20 days that it will investigate the complaint.

Does the country have a reward mechanism for whistleblowers?

There is no reward mechanism for whistleblowers.

Are mechanisms allowing whistleblowers to report infringements required?

There are no legal requirements for the establishment and implementation of such mechanisms. However, the Whistleblower Protection Act imposes certain mandatory obligations upon private and public organisations upon receipt of a report from a whistleblower. Employers must notify the whistleblower in writing, without delay, what steps it will take to remedy the problem or whether there is insufficient evidence to support the complaint. Government agencies must respond by investigating the whistleblower’s complaint and taking any necessary remedial action.

Cross-border enforcement and extraterritoriality

Cooperation with foreign counterparts

Do prosecutors and law enforcement authorities in your country cooperate with their foreign counterparts in healthcare cases?

The MHLW and PMDA collaborate with foreign authorities, such as the US Food and Drugs Administration and the European Medicines Agency, on various activities such as Good Manufacturing Practice inspections.

Triggering investigations

In what circumstances will enforcement activities by foreign authorities trigger an investigation in your country?

The MHLW and PMDA collaborate with foreign authorities when necessary. Memorandums and confidentiality arrangements have been executed by Japan with certain countries for effective collaboration. This collaboration includes the exchange of information between the Japanese authorities and their foreign counterparts.

Pursuing foreign entities for infringement

In what circumstances will foreign companies and foreign nationals be pursued for infringements of your country’s healthcare laws?

The PMD Act, in principle, does not apply outside Japan. However, if a foreign company is a holder of a marketing approval or authorisation in Japan, such approval or authorisation may be cancelled and it or its distributor can no longer manufacture or distribute its products in Japan.

Update and trends

Current developments

What are the authorities’ enforcement priorities likely to be in the coming year? Are there any noteworthy cases pending? Are there any current developments or emerging policy or enforcement trends that should be noted?

There have been recent legislation and reforms relating to healthcare, and new legislation and reforms are expected. The most recent important new law, the Clinical Research Law, was enacted on 1 April 2018. It regulates certain clinical researches on drugs and medical devices that were not regulated under the PMD Act. Amendments to the PMD Act are also under discussion, and the PMD Act is expected to be revised in 2019, about five years since the last major sets of reform which were enacted in 2014.