The Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (the Pharmaceuticals Law), and related cabinet and ministerial orders are the primary legislative instruments that govern pharmaceuticals and medical devices.
The Ministry of Health, Labour and Welfare (MHLW) is the principal regulatory body for pharmaceuticals and medical devices. The MHLW is the national governmental body that issues most of the Pharmaceuticals Law-related ministerial orders and administrative guidelines, and drafts relevant cabinet orders. Prefectural governments (such as the Tokyo Metropolitan Government, having jurisdiction over pharmaceutical and medical device manufacturers and distributors located in Tokyo) are primarily responsible for monitoring pharmaceutical and medical device firms on behalf of the MHLW. The Pharmaceuticals and Medical Devices Agency (PMDA), a Japanese independent administrative agency, also plays a key role in reviewing marketing authorisation applications for new pharmaceutical and medical devices.
If a pharmaceutical or medical device firm violates the Pharmaceuticals Law or any related regulation, the MHLW or a prefectural government may issue an administrative order to that firm. The recipient may challenge the order against the regulatory body itself through an administrative complaint review process in accordance with the Administrative Complaint Review Act. A pharmaceutical or medical device firm may also commence legal action for the revocation of the administrative order with a competent court in accordance with the Administrative Case Litigation Act. These challenge procedures are also generally applicable in the case of other regulated products, such as food products.
The Pharmaceuticals Law covers four kinds of life science products, namely pharmaceuticals, quasi-pharmaceuticals, cosmetics and medical devices. Definitions of these products are provided under the Pharmaceuticals Law and its related cabinet orders. For example, pharmaceuticals are essentially those listed in the Japanese Pharmacopoeia and medical devices are those products that are listed in the Cabinet Order of the Pharmaceuticals Law. The Pharmaceuticals Law does not provide an official procedure for obtaining official classification from the competent authority; however, in practice, informal consultation is conducted with the PMDA or prefectural government to determine the demarcation between life sciences products and other products.
An entity that wishes to publicise a special function or the nutraceutical nature of a food product is required to satisfy one of the following:
For the Tokuho, the Consumer Affairs Agency evaluates the claimed effects and safety of a food product by reviewing the relevant application filed by the applicant.
The three categories mentioned above are intermediate categories between pharmaceuticals and general foods. Certain medicated food that has pharmaceutical specifications or effectiveness claims that are characteristic of pharmaceuticals shall be categorised as pharmaceuticals and regulated under the Pharmaceuticals Law. Whether a food product is categorised as a pharmaceutical may depend upon its claim or advertisement, even if the ingredient is the same.
Pharmaceuticals are categorised into two classes: prescription pharmaceuticals and OTC pharmaceuticals. Prescription pharmaceuticals can only be used by doctors or used in accordance with a doctor’s prescription. OTC pharmaceuticals can be purchased by a patient at a drug store or other establishments. OTC pharmaceuticals are further classified into a few sub-categories and, depending on such sub-categories, can be sold with or without the presence of a pharmacist or other licensed personnel.
Medical devices are categorised into three classes:
Depending on the relevant class of medical devices, a marketer and a distributor will need to obtain different business licences as appropriate.
The Pharmaceuticals Law and the Good Clinical Practice (GCP) ministerial order issued by the MHLW are the principal legislative instruments that regulate clinical trials. The MHLW and the PMDA are the main regulatory authorities that oversee clinical trials.
To conduct a clinical trial, an applicant (a pharmaceutical or medical device marketer) must prepare a protocol and receive acceptance from an institutional review board (IRB). The applicant is also required to register the protocol with the MHLW through the PMDA. In practice, the applicant consults informally with the PMDA about its draft protocol before formally registering the protocol with the MHLW.
The website of the National Institute of Public Health discloses clinical trials conducted in Japan. Basic information such as the title of the study, investigational material, a brief summary, information about the IRB, organisations, monetary sponsor, contact information and summary result is publicly available.
There is no prohibition on using online tools to support clinical trials. However, it is generally expected that clinical trials are conducted by doctors or hospitals with physical interviews with, and written informed consent from, clinical trial subjects. Recruiting clinical trial subjects can be conducted online; however, under a guideline from the MHLW, only limited information may be disclosed if recruitment is conducted in this way.
Data from the clinical trials is considered to be sensitive data of the clinical trial subjects. Therefore, usually, data obtained by a doctor or hospitals (investigators) is converted into anonymous information and only such anonymous information data is provided to the sponsor of the clinical trial. Also, upon commencement of a clinical trial, investigators must obtain an informed consent letter from each trial subject regarding the use and treatment of such sensitive personal data.
Under the Personal Information Protection Law, the personal data of clinical trial subjects is categorised as sensitive data and its disclosure is heavily restricted. Based on the informed consent letter obtained from clinical trial subjects, the resulting data may be transferred to the sponsor of the clinical trial. However, this is usually only permissible once the data has been anonymised. The sponsor may transfer such anonymised resulting data to a third party or affiliate.
As mentioned above, it is common practice for resulting data to be anonymised and it is not heavily regulated as sensitive data. Disclosure of original non-anonymous data is heavily regulated as sensitive information under the Personal Information Protection Law.
A pharmaceutical is defined as (i) items listed in the Japanese Pharmacopoeia; (ii) items that are intended for use in the diagnosis, treatment or prevention of disease in humans or animals; and (iii) items that are intended to affect the structure and functioning of a human or animal's body. However, quasi-pharmaceutical products and cosmetics are excluded from the definition of a pharmaceutical.
A medical device is defined as appliances, instruments or similar that are intended for use in the diagnosis, treatment or prevention of disease in humans or animals, or intended to affect the structure or functioning of the bodies of humans or animals and that are specified by cabinet order. The cabinet order is so comprehensive that almost all medical appliances, instruments or similar can be covered by it and thereby classified as a medical device. Software that is intended for use in the diagnosis, treatment or prevention of disease in humans or animals can also be classified as a medical device.
To market a pharmaceutical or a medical device, the initial marketer is required to obtain marketing authorisation. Marketing authorisation for a pharmaceutical is governed by the MHLW. Marketing authorisation for a medical device depends on the class of the device. For medical devices with a GHTF classification of class III or IV, marketing authorisation from the MHLW is basically required. For medical devices with a GHTF classification of class II, marketing certification from a registered certification body is basically required. For medical devices with a GHTF classification of class I, mere registration with the MHLW is basically required.
Key factors that are taken into account when reviewing an application for marketing authorisation or marketing certification are:
To obtain marketing authorisation for a biological pharmaceutical, certain additional requirements must be fulfilled. For example, a manufacturer of a biological pharmaceutical must fulfil more stringent management and safety requirements, and packaging and packaging inserts of a biological pharmaceutical must indicate that it is a biological product.
The period of validity of a marketing authorisation is not permanent. Depending on the type of medical product, an approval for a new pharmaceutical is generally subject to re-examination after four to ten years having passed since the initial authorisation. Additionally, the MHLW occasionally conducts a re-evaluation of pharmaceuticals based on the recommendation of its advisory board.
A marketing authorisation can be revoked by the MHLW and other competent authorities. For example, a marketing authorisation can be revoked when the pharmaceuticals pertaining to the application are not found to have the efficacy or effects indicated in the application or when the pharmaceuticals pertaining to the application are found to have no value as a pharmaceutical as they have harmful effects that outweigh their efficacy or beneficial effects. Additionally, a marketing authorisation can be revoked if a party has not marketed the pharmaceuticals or medical devices approved for three consecutive years without any reasonable ground. The MHLW may vary parts of a marketing authorisation for pharmaceuticals and medical devices if it deems it necessary to do so having regard to matters of health and hygiene.
An application for marketing authorisation must be submitted to the MHLW or, for certain pharmaceuticals and all medical devices (other than medical devices with a GHTF classification of class IV), to the relevant prefectural government or a certain registered certification body. With regard to an application for a pharmaceutical or medical device that must be submitted to the MHLW, the application must be submitted through the PMDA. The MHLW’s review of applications for marketing authorisation for new medicinal products is substantially outsourced to the PMDA. Once the PMDA is satisfied with the application, the application is forwarded to the MHLW, which then obtains a recommendation from the Council of Pharmaceutical and Food Sanitation before approving the application.
An applicant for marketing authorisation must make an application by attaching data concerning the results of clinical trials and other pertinent data. Clinical trials of the paediatric population are required for a marketing authorisation application for pharmaceuticals intended for paediatric population use. In Japan, development of pharmaceuticals for the paediatric population is not mandatorily required for pharmaceutical firms. However, pharmaceuticals for the paediatric population are treated favourably with respect to the pharmaceutical price listing on the drug tariff, which is used to calculate the amount of reimbursement of the cost of a prescription pharmaceutical.
Variation of a marketing authorisation – such as changes in the therapeutic indication, formulation, posology, patient population, packaging or labelling – requires marketing authorisation-holders to complete a formal process. Depending on the materiality of the changes, such variation may require approval from the relevant authority or the mere submission of a report.
It is permissible to transfer a market authorisation from one marketing authorisation-holder to another. A transferee of a marketing authorisation must notify the relevant authority one month prior to the transfer thereof. However, the status of an applicant for the marketing authorisation is not transferable; therefore, a transferee of a pharmaceutical business is essentially required to resubmit the transferor’s pending application in the case of a business transfer.
The Pharmaceuticals Law provides for an exceptional procedure to allow the importation of a pharmaceutical or medical device that has received a foreign marketing authorisation for compassionate use, if:
This special procedure has been used to import a flu vaccine produced by a foreign manufacturer.
Pharmacovigilance is defined here as the pharmacological science relating to the detection, assessment, understanding and prevention of adverse effects, particularly long-term and short-term side effects of medicines. Technovigilance is defined here as the science relating to the detection, assessment, understanding and prevention of adverse incidents, particularly long-term and short-term side effects of medical devices.
After the marketing of a pharmaceutical or a medical device starts, the marketing authorisation holder is required to conduct post-marketing pharmacovigilance and technovigilance. If any issue relating to the effectiveness or safety of the marketed pharmaceutical is discovered during the post-marketing surveillance, the marketer must conduct a pharmaceutical recall campaign, report the discovery to the PMDA, issue public notices and take other appropriate measures to prevent further damage or losses suffered by consumers.
An applicant for a marketing authorisation must submit its application with complete accompanying data. However, amendments to the Pharmaceuticals Law are being discussed to accept a conditional early approval for market authorisation for an innovative product with requirements in post marketing phase IV trials.
A third party can access information about applications for marketing authorisations. Under the Act on Access to Information Held by Administrative Organs, any party may request the disclosure of administrative documents held by an administrative organ. The MHLW is essentially required to disclose an application for marketing authorisation if requested. However, the application may include IP or confidential information of an applicant, disclosure of which may cause serious damage to an applicant’s rights and competitiveness. Therefore, disclosure of an application is usually made partially, masking sensitive parts of the application.
To market a pharmaceutical or a medical device, the initial marketing entity is required to obtain marketing authorisation. Falsified or illegally distributed pharmaceuticals or medical devices, which are initially distributed by a party without marketing authorisation, are in violation of this regulation. The MHLW may order the party to recall such falsified or illegal products from the market, impose administrative sanctions or even refer the violation to the public prosecutor for criminal sanctions.
For counterfeited pharmaceuticals and medical devices, a party that has patent or other IP rights may file an application for an importation suspension with a customs house. The IP rights holder may also file an application for an import ban, provisional disposition order or file a lawsuit thereof with a court.
Prices for the majority of medical services provided and prescription pharmaceuticals sold in Japan are covered by the Japanese universal healthcare system, under which the substantial majority of legal residents are covered by the health insurance system. Prices for prescription pharmaceuticals are reimbursed at a price listed on the drug tariff. Listing on the drug tariff is based on the Health Insurance Act and is a separate procedure from the marketing authorisation procedure provided under the Pharmaceuticals Law.
The listing of pharmaceuticals on the drug tariff, and the price designated for each of the pharmaceuticals listed, is determined by the MHLW after reviewing applications submitted by each market authorisation holder of such pharmaceuticals. The drug tariff is reviewed and updated approximately once every two years; however, the review and update frequency is currently planned to change in 2021 to once a year or more frequently.
An initial price negotiation occurs for newly launched pharmaceuticals. Innovative pharmaceuticals that show high cost-effectiveness may receive higher prices under the drug tariff. Additionally, costs for manufacturing and developing the new pharmaceuticals and off-shore market prices for the new pharmaceuticals are also considered when evaluating prices for new pharmaceuticals.
A substantial part of the costs of pharmaceuticals and medical treatment are covered by the health insurance scheme. For the majority of Japanese residents, 70% of such costs are covered by health insurance.
In recent years, the MHLW has considered cost-benefit analysis as a key factor when evaluating new pharmaceuticals.
Historically, Japanese hospitals prescribed and dispensed pharmaceuticals themselves. However, in order to curb pharmaceutical spending, the MHLW began providing an incentive to separate prescription and dispensing of pharmaceuticals so that hospitals do not prescribe them unnecessarily.
The promotion and advertising of pharmaceuticals and medical devices is governed by the Pharmaceuticals Law. The MHLW’s Guideline for Adequate Advertisement of Pharmaceuticals, Etc and its official commentary on the guideline, which provides detailed examples of advertisements that the MHLW considers to be false, excessive or misleading, are also important to understanding how the MHLW interprets the Pharmaceuticals Law. Advertisements in relation to prescription pharmaceuticals can be presented directly to healthcare professionals but not to the general public.
It is not required to obtain an authorisation or to file a notification for the promotion and advertising of pharmaceuticals and medical devices, as long as the promotion and advertising complies with applicable regulations.
The MHLW is the ultimate regulatory body governing the promotion of pharmaceuticals and medical devices. Prefectural governments are primarily responsible for overseeing compliance by marketers, manufacturers and distributors with the advertising regulations concerning pharmaceuticals and medical devices. The Japan Pharmaceutical Manufacturers Association (JPMA), a voluntary organisation formed by pharmaceutical companies, issues a guideline regarding the promotion of pharmaceuticals and medical devices.
The Pharmaceuticals Law entitles the MHLW and prefectural governments to issue administrative orders against marketing authorisation-holders, manufacturers and repairers to take necessary measures for the improvement of their operations. The scope of this power extends to marketing authorisation-holders if promotion and advertising regulations have been breached. Additionally, violation of the promotion and advertising regulations can result in criminal sanctions.
If an advertisement is in breach of fair trade regulations governed by the Japanese Fair Trade Commission (JFTC), sanctions related thereto may be enforced by the JFTC. The Fair Trade Council of the Ethical Pharmaceutical Drugs Marketing Industry, a private organisation formed among pharmaceutical companies, issues warnings to member companies in respect of violations of advertising and promotion regulations.
If the MHLW or a prefectural government identifies a violation of the advertising and promotion regulations, a request is often issued to the violating entity to investigate and report on its advertisements itself. If such regulatory authorities confirm a violation, they usually issue an administrative order within one or two months. If the violation is malicious, the regulatory authorities may refer the violation to the public prosecution office. If a public prosecutor elects to indict the violation, the matter will be heard in a criminal court.
The Act against Unjustifiable Premiums and Misleading Representations prohibits the wrongful inducement of customers, which includes healthcare professionals, through offering excessive gifts, incentives and so on. If an act of bribery (for example, payment of money or the offer of excessive gifts) occurs in Japan and the bribe is offered to a public servant, which includes healthcare professionals at publicly owned hospitals, the party offering the bribe can be subject to criminal sanctions.
Under the Clinical Research Act, pharmaceutical companies are required publicly to disclose information on the gifts and sponsorships that they, or their affiliated parties, provide to healthcare professionals in connection with certain clinical research, such as clinical research of a pharmaceutical for which marketing authorisation has not yet been obtained, and clinical research funded by the marketer of the product. In addition, the JPMA has issued a guideline for the disclosure of certain payments made to physicians, recommending that each JPMA member publicly disclose all such payments on an annual basis.
Certain properties described in the advertisements and promotions of pharmaceuticals and medical devices – such as efficacy, effect, volume and the type of disease that is susceptible to treatment – must accurately correspond with those approved under the relevant marketing authorisation. A pharmaceutical or medical device may not be promoted or advertised for a particular disease that is not covered under official use provided under the marketing authorisation, even if there is supporting medical data.
The Act against Unjustifiable Premiums and Misleading Representations prohibits the wrongful inducement of customers through the provision of excessive gifts, incentives and so on. The Fair Trade Council of the Ethical Pharmaceutical Drug Marketing Industry has prepared, and the JFTC has authorised, the Fair Competition Code of the Ethical Pharmaceutical Drug Marketing Industry.
The parts of software in medical hardware devices used for data processing are categorised as medical devices. Depending on its function, purpose, data processing results and other factors, a part of the application software used in a smartphone could be categorised as a medical device if it is intended for use in the diagnosis, treatment or prevention of disease in humans.
Medical diagnosis is essentially required to be provided by a physician through a face-to-face consultation with a patient. In particular, the initial consultation by a physician of a patient and consultation of a patient in an acute phase must be conducted in person. Historically, telemedicine services are accepted only for patients living in remote islands or other similarly remote places. However, the MHLW recently issued a new guideline that deregulates the scope of telemedicine services and accepts the legitimacy of such service if a face-to-face consultation is practically difficult or such a service is provided for a patient with a chronic yet stable condition.
Regulations for the promotion or advertising of pharmaceuticals and medical devices apply equally to online promotion and advertising, such as through online portals, company webpages and social networks. Webpages of advertisers containing hyperlinks to other webpages can be considered together as a single advertisement and may violate the advertisement regulations as a whole, although each internet webpage on its own would not violate these regulations.
In 2016, the MHLW issued a guideline on the operation of electronic prescriptions. While the guideline emphasised the merit of electronic prescriptions, the issuance of electronic prescription through e-mail is prohibited given the risk of information leakage and other electronic misuse.
Almost all OTC pharmaceuticals are marketable online, except for certain potent pharmaceuticals and OTC pharmaceuticals that have recently been re-classified from ethical pharmaceuticals (most of which required a prescription) to OTC pharmaceuticals.
Electronic health records are accepted in Japan and are used at almost all large hospitals with in-patient facilities with smaller hospitals following.
A manufacturing business licence is required to manufacture pharmaceuticals. If a manufacturer of an imported product is located outside Japan, an accreditation as a foreign manufacturer is required. This business licence is granted by the relevant prefectural government and the accreditation is granted by the MHLW. Before formal submission of an application for the business licence, an applicant usually submits a draft of the application to the relevant prefectural government for informal discussions. Once the application is formally submitted, the prefectural government reviews the application and, in most cases, conducts an on-site inspection of the applicant's manufacturing premises. The period of validity of the licence and accreditation is five years.
Differently from a pharmaceutical manufacturer, a medical device manufacturer (either located in Japan or outside Japan) is only required to satisfy a prior registration requirement with the MHLW. Such a registration must be renewed every five years.
To market pharmaceuticals or medical devices, the initial marketing entity is required to hold a marketing business licence and a marketing authorisation for each of the relevant products. That business licence is granted by the relevant prefectural government. Before formal submission of an application for the business licence, an applicant usually submits a draft of the application to the relevant prefectural government for informal discussions. Once the application is formally submitted, the prefectural government reviews the application and, in most cases, conducts an on-site inspection of the applicant's office or factory. Depending on the applicant's business and the type of pharmaceutical or medical device, business licences are generally valid for five years. Wholesalers and retailers of pharmaceuticals and medical devices are also required to obtain a distribution business licence.
There are two types of marketing business licences for pharmaceuticals. A type 1 marketing business licence is required for marketing prescription pharmaceuticals. A type 2 marketing business licence is required for marketing other pharmaceuticals (ie, non-prescription ethical pharmaceuticals and OTC pharmaceuticals).
There are three types of marketing business licences for medical devices. A type 1 medical device marketing business licence is required for marketing medical devices with a GHTF classification of class III or IV. A type 2 medical device marketing business licence is required for marketing medical devices with a GHTF classification of class II. A type 3 medical device marketing business licence is required for marketing medical devices with a GHTF classification of class I.
The Pharmaceutical Law governs the import and export of pharmaceuticals and medical devices.
Imports of pharmaceuticals and medical devices from outside Japan are, in principle, subject to the same marketing regulations applicable to products manufactured in Japan. Imports of these products are subject to marketing authorisation, marketing business licence and accreditation as a foreign manufacturer.
A manufacturing business licence is required for the manufacture of pharmaceuticals or medical devices for the purpose of export from Japan. Although marketing authorisation is not required, a separate registration for manufacturing pharmaceutical or medical device for export is required.
The relevant prefectural government regulates marketing business licences and the MHLW regulates the accreditation as a foreign manufacturer.
An importer of record of pharmaceuticals or medical devices is required to obtain a marketing business licence, except in the case of the importation of small amounts of these products by an individual person for personal use. Such importer must present certificates of the marketing business licence and the marketing authorisation for a particular imported product to the relevant customs house.
Importation of pharmaceuticals or medical devices is not accepted without a marketing business licence and a marketing authorisation for a particular imported product except in the case of the importation of small amounts of these products by an individual person for personal use.
In addition to the marketing business licence and the marketing authorisation, when importing pharmaceuticals or medical devices, changing of the packaging to conform to product description provided under the relevant marketing authorisation may be required. For example, packaging and product labelling, and the explanation letter of the products must be written in Japanese and cover the requirements under the relevant marketing authorisation. This packaging change is considered as a part of the manufacturing of the product and therefore requires a manufacturing business licence.
Certain software for medical devices, which is intended for use in the diagnosis, treatment or prevention of disease in humans, is categorised as a medical device and exportation thereof can be subject to the regulation for exporting medical devices mentioned above.
In limited circumstances dual-use pharmaceuticals or medical devices may be regulated under the Foreign Exchange and Foreign Trade Act. For example, the exportation of products that can be used as weapons of mass destruction may require permission from the Minister of Economy, Trade and Industry.
As of August 2018, Japan has signed 18 Economic Partnership Agreements/Free Trade Agreements with other countries. Among others, Japan is a signatory to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Japan applies economic sanctions (embargoes) to North Korea and several other countries. Such embargoes apply to pharmaceuticals and medical devices.
The Patent Act is the primary law that applies to patents. The Patent Act allows for patent term extensions for pharmaceuticals and it often becomes an issue whether or not a patent term extension is available for a certain pharmaceutical product, as well as the extent to which the protection under the patent term extension applies. There is no patentability requirement specific to pharmaceuticals or medical devices.
It is generally considered that the novelty of a pharmaceutical invention is judged by the following two points: (i) a compound having a specific attribute and (ii) a medicinal use based on such attribute. Accordingly, second and subsequent medical uses of a known pharmaceutical product can still be patented if the usage is considered novel. Medicinal use includes new dosage regimes and new or selected patient populations, and can therefore be patented if considered novel. Second and subsequent patents of pharmaceutical products can be infringed if the patented invention is exploited during the term of the patent; for example, by selling a patented product for the patented use.
For pharmaceuticals, the term of the patent can be extended on request by the patent holder. The term of the extension, which cannot exceed five years, is generally equivalent to the period of time during which the patent holder, while awaiting medicinal product approval under the Pharmaceuticals Law, was prevented from exploiting the invention. Patent term extensions can be challenged by third parties by; for example, filing a request for trial for invalidation of patent term extension registration.
A registered pharmaceutical or medical device patent is infringed when a person exploits the patented invention during the term of the patent without the patent holder's permission. This includes, for example, producing, using, selling, importing or exporting a patented product. The Patent Act provides for injunctive relief that can be invoked where there is the threat of infringement, as opposed to actual infringement. In order to be actionable, the threat of infringement needs to be present from an objective standpoint.
Protection of a patent does not extend to exploitation of the patented invention for experimental or research purposes. Accordingly, experimental use can be asserted as a defence to patent infringement in relation to pharmaceuticals and medical devices. There is a compulsory licence system provided under the Patent Act, which is not specific to pharmaceutical products and medical devices. A compulsory licence can be granted by the Commissioner of the Japan Patent Office in prescribed cases, such as where a patented invention has not been exploited in Japan for three years.
If a patent is infringed, the patent-holder can seek injunctive relief through a civil court proceeding to force the infringing party to cease and desist, and to destroy infringing articles. The patent-holder can also assert a monetary compensation claim in a civil court proceeding against the infringing party for damages that it incurred from the infringement. The Patent Act provides special measures to facilitate the patent-holder's ability to seek damages based on an infringement. For example, a person who infringes a patent is presumed to have acted negligently in relation to the infringement. This shifts the burden of proof from the patent-holder to the infringing party and the infringing party must prove that there was no negligence on its part relating to the infringement. Invalidity of the patent that is alleged to have been infringed is an available defence and can be asserted in patent infringement litigation.
In order for a potential generic entrant to establish whether what it proposes to do is lawful under patent law, it may initiate litigation against the patent-holder for the court to confirm the non-existence of a patent infringement claim against it. This lawsuit is not a requirement for generic market entry under the Japanese pharmaceutical regulations. It is generally considered that the existence of potential patent infringement is taken into account during the course of the marketing authorisation examination procedure.
The Pharmaceuticals Law prohibits the sale of counterfeit drugs and a violation is punishable by criminal penalties. In addition, counterfeit drugs and medical devices may infringe registered trade marks and possibly registered patents. The import and export of goods infringing IP rights are also punishable by criminal penalties. Criminal investigations of possible violations are typically conducted by the police. Further, the import and export of infringing goods are policed by the Japanese customs authorities.
There is no specific restriction on the trade marks that can be used for pharmaceuticals or medical devices under the Trade Mark Act. A medicinal product brand can generally be registered as a trade mark. There are a number of excluded categories that cannot be protected as a trade mark, for example, a sign that:
The owner of an infringed IP right, including a trade mark-owner, can seek to suspend the import or export of counterfeits that infringe its IP right by filing an application for suspension with the Japanese customs authorities.
IP protection is available for trade dress and design of pharmaceuticals and medical devices and their packaging. Trade dress and design can be protected as a trade mark under the Trade Mark Act. The Trade Mark Act stipulates a number of legal criteria to be met to register a trade mark, including that a sign is capable of distinguishing the subject goods or services from those of other manufacturers or merchants.
There is no data exclusivity available under Japanese law for pharmaceuticals and/or medical devices. The abridged procedure for obtaining marketing authorisation for generic drugs is not available until the re-examination period for the original drug has expired. This effectively operates as a time barrier, before which a generic product cannot be approved for marketing.
The Japanese competition law framework is set out in the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (the Anti-monopoly Act). The Anti-monopoly Act sets out strict prohibitions on private monopolisation, cartels and bid-rigging, and unfair trade practices, as well as merger control provisions. These provisions pose various practical issues for pharmaceutical businesses. As an example, the prohibition on resale price maintenance often becomes an issue for manufacturers of prescription drugs. The Anti-monopoly Act prohibits a business entity from supplying goods to another party while, without justifiable grounds, causing the recipient to maintain the selling price of the goods as determined by the supplier, or otherwise restricting the recipient’s ability to decide freely on the sales price of the goods. In the case where a prescription drug is supplied from a drug manufacturer to a distributor and then to a wholesaler, the respective sales price of the drug is generally determined based on the price of the drug specified on the price list, which is reviewed periodically. To prevent the drug price in the price list from being lowered, drug manufacturers have an interest in maintaining the price at which wholesalers purchase and sell their drugs. In addition, the JFTC has established guidelines setting out its views on anti-trust aspects of joint R&D activities and the use of IP such as patents. It is important to be mindful of the provisions in these guidelines when conducting licensing and collaboration transactions relating to medicinal products in Japan.
Pay-for-delay agreements can potentially constitute a cartel or unfair trade practice prohibited under the Anti-monopoly Act.
The JFTC previously reported that there were incidents where original drug manufacturers were providing hospitals with inaccurate information concerning generic drugs. For example, there was a report of an incident where a medical representative of an original drug manufacturer made a reference to manufacturing defects found in a generic drug product and explained that generic drugs in general have many manufacturing defects. The JFTC stated that obstructing the sales activities of generic drug manufacturers through such means is an unfair trade practice prohibited under the Anti-monopoly Act.
The JFTC is responsible for the administration and enforcement of the Anti-monopoly Act. The JFTC has authority to conduct investigations and issue cease-and-desist orders (and/or impose administrative monetary penalties against certain violators) with respect to violations of the Anti-monopoly Act. Investigations and enforcement proceedings by the JFTC have been carried out in a wide variety of industry sectors, including the pharmaceutical industry. A damaged party can file litigation in the Japanese civil courts against a violator of the Anti-monopoly Act seeking damages and/or injunctive relief.
The Japanese competition authorities have previously investigated allegations of cartel and price-fixing activities in the pharmaceutical industry. In Japan, the pricing of original drugs is strictly regulated under the reimbursement system of the national health insurance scheme, whereas the pricing of generic drugs and OTC drugs in Japan are comparatively less strictly regulated and thus subject to more severe pricing competition. With the increasing use of generics and OTCs in Japan, it is becoming increasing important to be mindful of anti-competitive pricing behaviours in the Japanese pharmaceutical industry.
The Companies Act, the Civil Code and the Commercial Code are the primary Japanese statutes that are important for share deals, asset deals, joint ventures, licence agreements and commercial agreements. The Companies Act is the Japanese corporations law that provides for rules regarding share transfers, corporate governance and corporate procedures. The Civil Code and the Commercial Code provide for the basic rules concerning contractual and other legal relationships in the private business sector.
In the case where there is an unresolved valuation gap between buyer and seller, there are a variety of measures (such as earn-out clauses, go shop and matching rights) used in practice to bridge the valuation gap, which are determined on a case-by-case basis based on negotiations between the parties.
In the event that a purchase price adjustment mechanism needs to be incorporated in the agreement, there are a variety of purchase price adjustment measures (such as completion accounts, locked boxes and retentions) used in practice, which are determined on a case-by-case basis, based on negotiations between the parties.
In the case where a deal protection agreement is required, there are a variety of deal protection measures (such as exclusivity, break fees and deferred consideration) used in practice, which are determined on a case-by-case basis, based on negotiations between the parties.
The Japanese merger control rules under the Anti-monopoly Act require an advance notification filing to be made for certain prescribed corporate transactions. The thresholds for this notification requirement differ depending on the transaction scheme. In the case of an acquisition of shares, notification is generally required if:
Generally speaking, corporate tax may potentially be payable on any gains of the corporate seller in the case of asset deals and on any capital gains of the corporate seller in the case of share deals.
The Patent Act provides that patent licences can be asserted against third parties that subsequently acquire the patent. It is generally considered that this effectively protects patent licences in the case of insolvency of a licensor. The extent to which contractual provisions in the patent licence agreement can be asserted by the licensee in the event of insolvency would need to be determined on a case-by-case basis based on the specific details of the contractual provisions.
With regard to investigations in the pharmaceutical and medical devices industry, prosecutors and authorities lay emphasis not just on the outcome (ie, the alleged violation and the entailing risk of health hazard), but also focus on the process leading to the outcome (ie, the internal control systems of the company relevant to the alleged violation). An investigation would usually be made to uncover who within the company knew what at each given time, how reporting was made and each decision-making process made within the company. It is becoming increasingly important to ensure that internal procedures and manuals are established properly to detect, elevate and take action if an incident occurs.
As is the case for other industries, it is important for an investigation in the pharmaceutical and medical device sector in Japan to ensure that the information and answers provided to the investigator accurately reflect the facts and are responsive to the request of the investigator. As the MHLW enjoys a strong supervisory authority over the regulated entities, it is important carefully to examine each inquiry and the responses to be made, to make sure that there is no miscommunication with the regulator and the regulatory inquiry is not unreasonably excessive.
In the past several years, the Japanese authorities have taken enforcement actions against pharmaceutical companies alleging improper involvement in investigator-initiated clinical research. These allegations led to the enactment of the new Clinical Research Act effected on 1 April 2018, which introduced a new regulatory framework for clinical research and the respective roles of the investigators and pharmaceutical companies in relation to clinical research conducted in Japan.
There are many ways in which investigations in the pharmaceutical and medical device sector differ from investigations in other industries. One important difference is that the pharmaceutical and medical device sector is regulated and supervised by the MHLW and therefore any investigation can lead not only to a criminal investigation but also an administrative investigation. Unlike criminal investigations, where the subject has various defence rights (such as the right to an attorney and the right to remain silent) ensured by the Japanese Constitution, the MHLW has strong powers as it conducts an administrative investigation to elicit responses to its inquiry.
There is no specific legal regime for claims for civil liability for pharmaceuticals and medical devices in Japan. Product liability claims relating to pharmaceuticals and medical devices are typically based on (i) the Product Liability Act, (ii) tort principles under the Civil Code and (iii) contractual provisions.
The general prerequisites for a potential liability for pharmaceuticals and medical devices differ depending on the legal basis of the claim. In the case of the Product Liability Act, the claimant bears the burden of proving:
In the case of a tort claim, the claimant bears the burden of proving:
In the case of a contractual claim, the claimant bears the burden of proving:
Who is potentially liable also differs depending on the legal basis of the claim. In the case of the Product Liability Act, claims can be asserted against manufacturers or importers, which include persons who represent or misrepresent themselves as a manufacturer by putting their name, trade mark or other similar proprietary markings on the product. In the case of a tort claim, there is no limitation on who can be liable, as long as the necessary prerequisites are met. Tort claims for a defective product are typically made against manufacturers, importers and sellers. In the case of a contractual claim, a claim can only be made against a party that has a contractual relationship with the claimant, so a consumer or patient is not usually able to claim for breach of contract against the manufacturer or importer, due to the lack of such contractual relationship.
The burden and standard of proof differ depending on the legal basis of the claim. The Product Liability Act reduces the claimant's burden of proof by imposing strict liability on manufacturers and importers. For tort claims, some case law has adopted a presumption of negligence standard, which shifts the burden of proof from the consumer to the manufacturer. In these cases, the manufacturer will not be held liable for damages if it can prove that it was not negligent in its actions.
Under the Product Liability Act, manufacturers are not liable for damages if they can prove either of the following: (i) it was impossible for the manufacturer to detect the defect in the product, based on the level of scientific or technical knowledge available at the time of delivery by the manufacturer; or (ii) for a product (component product) used as a component or part of another product (final product), the defect was only created after the manufacturer of the component product strictly complied with instructions for the component product's design or specifications given by the manufacturer of the final product and the component product manufacturer was not negligent in creating the defect.
The mere fact that regulatory requirements, such as the approval process by national and international authorities, have been complied with in respect of a product does not exclude product liability for that product.
Generally speaking, the claimant bears the burden of proving a reasonable connection in a product liability suit. Accordingly, if it cannot be established which of several possible pharmaceuticals taken by the claimant caused the alleged medical condition, it would generally be considered that the claimant has failed to prove a reasonable connection, although, depending on the factual circumstances, a Japanese court may find that there was joint tort and allocate liability among the joint tort-feasors.
The general statute of limitation period for product liability claims for pharmaceuticals and medical devices differs depending on the legal basis of the claim. In the case of the Product Liability Act, the limitation period to bring a claim is the earlier of (i) three years from the date when the injured party became aware of both the damage and the identity of the party liable for the damage, and (ii) ten years from the date of delivery of the product by the manufacturer or importer. For latent injuries or damages, evidence of which is only detected after a certain period, the starting date for the ten-year limitation period is the date on which the damages first appeared. In the case of a tort claim, the limitation period is the earlier of (i) three years from the date when the injured party became aware of both the damage and the identity of the party liable for the damage, and (ii) 20 years from the date when the tortious act was committed. In the case of a contractual claim, the limitation period is ten years (five years for a business contract claim) from the date when the injured party is first able to make a claim.
There is no provision under Japanese law that allows for a general claim for information against manufacturers of pharmaceuticals or medical devices. For public authorities, the Act on Access to Information Held by Administrative Organs stipulates the rules by which a person may request the disclosure of information held by a Japanese government agency; similar to the Freedom of Information Act in the USA. The Act on Access to Information Held by Administrative Organs includes various carve-outs from the disclosure obligation of the relevant government agency. Such carved-out information includes information concerning a company that, when disclosed, is likely to cause harm to the rights, competitive position, or other legitimate interests of the company. It is generally considered that “other legitimate interests” broadly encompasses interests that deserve legal protection from the viewpoint of the business operation of the relevant company, and includes manufacturing and other business operation know-how. Whether certain information falls within this carve-out is determined on a case-by-case basis.
A claimant can request monetary compensation for damages that would ordinarily arise from the defect. Damages that would not ordinarily arise but have in fact arisen through special circumstances can also be awarded if the parties foresaw, or could have reasonably foreseen, these special circumstances. Subject to reasonable causation relating to the damage sustained, the scope of possible damages could include actual damage, mental suffering, and prospective and consequential damage. Punitive damages are not allowed under Japanese law.
There is no specific maximum limit of damages available for one claimant and/or available from one manufacturer.
In 2013, the Japanese Supreme Court made a ruling on a product liability claim alleging that there was improper disclosure of adverse event information in the package insert of an anti-cancer drug. The Supreme Court ruling indicated that whether a package insert disclosure is appropriate should be determined by taking into consideration various factors such as the frequency and seriousness of the side-effect, and the knowledge and capability of the person who is ordinarily contemplated to prescribe or use that specific drug. While this ruling calls for pharmaceutical companies properly to update adverse event information disclosed in package inserts in a timely manner, it is also considered to allow for a certain amount of flexibility in differentiating disclosures targeted for physicians and those targeted for patients.
In Japan, a trial for a product liability claim is presided over by a judge. There is no jury system for civil liability.
Japanese civil procedures do not provide for pre trial discovery procedures pursuant to which each litigant party will be required to disclose evidence for the purpose of enabling all litigant parties properly to prepare for trial. Under Japanese civil procedure, the evidence that is produced and submitted to the court is, as a general principle, within the discretion of each party. Accordingly, a party is not required to disclose evidence that may prove unfavourable and there is no duty to submit all evidence to the court. However, the Code of Civil Procedure imposes an obligation to produce documents during the course of the proceedings in limited circumstances, such as where a party to the litigation is in possession of a document that it has referred to in the litigation, and if a motion demanding such document production is brought by a party and granted by the court, persons in possession of the subject document will be required to produce it.
The Patent Act has recently been amended to introduce an enhanced in-camera process for patent litigation to allow for enhanced disclosure of information held by the counterparty to the patent litigation. This new process does not currently apply to product liability litigation, but may potentially lead to a discussion on enhanced information disclosure for product liability litigation, which is a practical issue that has long been discussed in the context of pharmaceutical product liability litigation.
The Act on the Protection of Personal Information (the Personal Information Act) is the main legislative instrument that governs privacy and data protection in Japan.
The Personal Information Protection Commission (PPC) is the main regulatory body that administers and enforces the Personal Information Act. The PPC provides various guidelines and FAQs that elaborate on the details of the regulatory requirements under the Personal Information Act.
Health-related information generally falls within sensitive data as defined under the Personal Information Act and is subject to stricter regulations. In principle, a person will not be allowed to obtain sensitive data unless the subject individual’s consent has been obtained.
Violation of the Personal Information Act may be subjected to a recommendation for remedial measures issued by the PPC, which may be followed by a remedial order if the recommendation is not complied with. Failure to comply with a remedial order may result in criminal penalties.
The Personal Information Act requires appropriate security measures to be implemented in handling private data. A specific guideline has been published regarding the use of cloud platforms in relation to medical data and security measures to be implemented for such cloud platforms. Transferring and storing sensitive data of patients in cloud platforms is generally not prohibited, provided that the cloud platform should comply with the various requirements set out in the specific guideline.