Life Sciences 2020

Last Updated March 18, 2020

Japan

Law and Practice

Authors



Nagashima Ohno & Tsunematsu is widely regarded and recognised as one of Japans leading international law firm and provider of legal services, specialising in all aspects of business and commercial law. The firm represents domestic and foreign clients involved in every major industry sector, including many of the largest and most influential companies, funds and organisations in Japan. The firm has structured and negotiated many of Japan’s largest and most significant corporate and finance transactions, and has extensive expertise in litigation and arbitration, particularly cases involving commercial disputes. Our pharmaceutical and healthcare team consists of over 14 lawyers, including four partners, based in the Tokyo office. Key areas of practice relating to the life sciences sector include: pharmaceutical, medical device, food, medical and healthcare regulations; risk and crisis management; compliance; corporate/M&A; data protection; patent and intellectual property; antitrust/competition; consumer claims; dispute resolution; labour; and employment.

The Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (Pharmaceuticals Law), together with related cabinet and ministerial orders, is the primary law that governs 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) are primarily responsible for monitoring pharmaceutical and medical device firms (ie, pharmaceutical and medical device marketers, manufacturers and distributors) in their respective jurisdiction 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 administrative order through an administrative complaint review process provided under the Administrative Complaint Review Act. A pharmaceutical or medical device firm served with an administrative order may also commence a 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 cases involving issuance of administrative orders for violations of laws concerning other regulated products such as certain food products.

Pharmaceuticals are categorised into two classes: prescription pharmaceuticals and over-the-counter (OTC) pharmaceuticals. Prescription pharmaceuticals may only be used by doctors or used in accordance with the doctor’s prescription. OTC pharmaceuticals can be purchased at drug stores or other establishments where such items are sold. OTC pharmaceuticals are further classified into several sub-categories and, depending on the relevant sub-category, may have certain sales restrictions such as a requirement that they be sold only at establishments at which a pharmacist, or other designated licensed personnel, is present.

Medical devices are categorised into three classes:

  • specially controlled medical devices (classes III and IV of the Global Harmonisation Task Force (GHTF) international classification structure);
  • controlled medical devices (class II of the same); and
  • ordinary medical devices (class I of the same). 

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, together with the Good Clinical Practice (GCP) ministerial order issued by the MHLW, is the principal law regulating 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 approval for such protocol 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 with the PMDA informally about its draft protocol before formally registering the protocol with the MHLW.

The website of the National Institute of Public Health discloses certain basic information regarding clinical trials conducted in Japan, such as the title of the study, the subject material of the study, a brief summary of the study, information about the relevant IRB, relevant organisations, monetary sponsor, contact information of the relevant parties and a summary of the results.

There is no prohibition on using online tools to support clinical trials. However, it is generally required that clinical trials are to be conducted by doctors or hospitals with in-person interviews with, and written informed consents from, clinical trial subjects. Recruiting clinical trial subjects can be conducted online. This being said, under a guideline from the MHLW, only limited information may be received via online communications and additional information is to be obtain through a process involving in-person interviews and written informed consents.

Raw data obtained from clinical trials is considered to be sensitive data of the clinical trial subjects. Therefore, clinical trial data obtained by a doctor or hospitals (investigators) is usually compiled or converted into a form that prevents the identities of clinical trial subjects from being discoverable and only such anonymised information or data is provided to the sponsor of the clinical trial. Further, upon commencement of a clinical trial, investigators must obtain an executed informed consent letter from each trial subject regarding the use and treatment of such subject’s sensitive personal data.

As mentioned in 2.5 Use of Resulting Data, it is common practice for resulting data to be anonymised and in such form the data is not regulated as strictly as sensitive data. Disclosure of original, non-anonymised data (raw data) is heavily regulated as sensitive information under the Personal Information Protection Law.

The term “pharmaceutical” is defined under the Pharmaceutical Law as items listed in the Japanese Pharmacopoeia; items that are intended for use in the diagnosis, medical treatment or prevention of disease in humans or animals; or 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 pharmaceutical.

The term “medical device” is defined under the Pharmaceutical Law as appliances, instruments or similar items that are intended for use in the diagnosis, medical 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 relevant cabinet order specifying medical devices is so broadly worded that almost all medical appliances, instruments or similar items can be considered to be covered by it and thereby classified as a medical device. Software that is intended for use in the diagnosis, medical 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. Key factors that are taken into account when reviewing an application for marketing authorisation or marketing certification are: the quality, effectiveness and safety of the pharmaceutical or medical device; the applicant’s marketing business licence; the manufacturer’s manufacturing business licence; and the manufacturer’s compliance with the good manufacturing practice (GMP) regulation.

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/packaging inserts of a biological pharmaceutical must indicate that it is a biological product.

The period of validity of a marketing authorisation is not indefinite. Depending on the type of medical product, an approval for a new pharmaceutical is generally subject to re-examination four to ten years after 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 it is determined that the relevant pharmaceutical does not have the efficacy or produce the effects indicated in the application or when the relevant pharmaceutical is found to have no value as the harmful effects associated with such product outweigh the efficacy or beneficial effects.

Additionally, a marketing authorisation can be revoked if the responsible party has not marketed the relevant approved pharmaceutical or medical device for three consecutive years without any reasonable justification. The MHLW may vary parts of a marketing authorisation for pharmaceuticals and medical devices if, in the MHLW’s determination, it is necessary to do so in light of health or hygiene consideration.

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.

A marketing authorisation application must include, as an attachment, data concerning the results of clinical trials and other pertinent data, except in the case where the application is for a medicine that is subject to a conditional early approval for market authorisation, an expedited process to be introduced by a recent reform of the Pharmaceuticals Law.

Variation of a marketing authorisation – such as a change in the therapeutic indication, formulation, posology, patient population, packaging or labelling – requires the marketing authorisation holder to complete a formal process. Depending on the materiality of the change, a variation may require approval from the relevant authority or the mere submission of a report.

It is permissible for market authorisation to be transferred from the current marketing authorisation holder to a transferee. A transferee of a marketing authorisation must notify the relevant authority of the transfer basically one month prior to the date of transfer. However, the status of an applicant for a marketing authorisation is not basically transferable, unless the applicant transfers its business, relevant to the marketing authorisation application, through a merger or a certain other corporate transaction.

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 the foreign marketing authorisation was obtained in a country with a marketing authorisation system equivalent to the system in Japan; immediate use of the pharmaceutical or medical device is necessary to prevent a pandemic spread of a disease that can cause death or serious harm to the health of Japanese citizens; and the pharmaceutical or medical device is specifically designated under an administrative order. This special procedure was once used to import a flu vaccine produced by a foreign manufacturer.

After the marketing of a pharmaceutical or a medical device commences, 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 or medical device is discovered during the post-marketing authorisation surveillance period, the marketer must conduct a pharmaceutical or medical device recall campaign, report the discovery to the PMDA, issue public notices and take other appropriate measures to prevent further damage or losses suffered by patients.

An applicant for a marketing authorisation basically must complete all clinical trials first and then submit its application with complete accompanying data. However, in the case of conditional early approval for market authorisation for an innovative product exempted for a part of its clinical trials, post marketing phase IV clinical trials are required to be performed.

In general, third parties can access information about applications for marketing authorisations by making a request under Japan’s information disclosure law. Under the Act on Access to Information Held by Administrative Organs, anyone may request the disclosure of administrative documents held by an administrative organ. Under this law, the MHLW essentially is required to disclose an application for marketing authorisation if properly requested. However, the application may include or reference IP or confidential information of an applicant, and the disclosure of such information to a third party may result in serious damage to an applicant’s rights and competitiveness. Therefore, disclosure of an application is usually made after the relevant sensitive information contained has been redacted or masked.

To market a pharmaceutical or a medical device, the initial marketing entity is required to obtain marketing authorisation for the pharmaceutical or a medical device under the relevant regulation. Falsification or illegal distribution of pharmaceuticals or medical devices (including distribution of pharmaceuticals or medical devices by a party without first having obtained marketing authorisation), are violations of this regulation. The MHLW may order the responsible party to recall all such falsified or illegal products from the market, impose administrative sanctions against such responsible party, and even refer the violation to the public prosecutor for investigation and potential prosecution for criminal sanctions.

In regard to counterfeit pharmaceuticals and medical devices, a party that possesses patent or other IP rights to the original products may file an application for an importation suspension of counterfeit products with a customs house. The IP rights holder may also file an application for an import ban or provisional disposition order or file a lawsuit with a court in Japan seeking similar relief.

A manufacturing business licence is required to manufacture pharmaceuticals in Japan. If a manufacturer of an imported product is located outside Japan, that manufacturer will be required to obtain accreditation as a foreign manufacturer. A business licence is granted by the relevant prefectural government and such accreditation is granted by the MHLW. Once an application for manufacturing business licence 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 a business licence and accreditation is five years.

Different from a pharmaceutical manufacturer, a medical device manufacturer (either located in Japan or outside Japan) is only required to satisfy a prior registration requirement (ie, registration with the MHLW as a medical device manufacturer). The 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. A business licence is granted by the relevant prefectural government. Once an application for marketing business licence 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.

Business licences are generally valid for five years although the actual validity period will depend on, among other things, the applicant's business and the type of pharmaceutical or medical device to be distributed. Wholesalers and retailers of pharmaceuticals and medical devices are required to obtain a distribution business licence.

There are two types of marketing business licences for pharmaceuticals: Type 1 and Type 2. 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: Type 1, Type 2 and Type 3. 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 that are to be exported from Japan. Although marketing authorisation is not required, a separate registration for manufacturing of pharmaceuticals or medical devices for export is required.

The relevant prefectural government regulates marketing business licences, and the MHLW regulates accreditations 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 for personal use. An importer of record must present certificates of the marketing business licence and the marketing authorisation for each particular imported product, to the relevant customs house.

Importation of pharmaceuticals or medical devices is not permitted unless the importer of record possesses a marketing business licence and a marketing authorisation for each particular imported product except in the case of the importation of small amounts of these products by an individual for personal use. Regarding permitted exceptions in the case of emergency situations, see 3.5 Access to Unauthorised Products.

In addition to the marketing business licence and the marketing authorisation, when importing pharmaceuticals or medical devices, changing of the product’s packaging to conform to product description information and requirements provided under the relevant marketing authorisation may be required. For example, packaging and product labelling, and the explanatory written material provided with the products (such explanatory information is to be made available via the internet upon enforcement of recently amended Pharmaceuticals Law), must be written in Japanese and satisfy the requirements under the relevant marketing authorisation. Changing of a product’s packaging is considered to be part of the manufacturing of the product and, therefore, the entity responsible for performing such changes is required to possess a manufacturing business licence.

As of December 2019, 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.

Prices for the majority of medical services provided and prescription pharmaceuticals sold in Japan are reimbursed by the Japanese universal healthcare system, and the substantial majority of legal residents of Japan participate in and are covered by Japan’s national health insurance system. The cost of prescription pharmaceuticals to be paid through the national health insurance system corresponds to the prices for the relevant pharmaceuticals listed on the drug tariff.

Listing of a prescription pharmaceutical’s price 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 profit margin of the wholesalers and the pharmacies is usually the difference between the prices at which the pharmaceuticals are purchased by hospitals (such price is usually lower than the price listed on the drug tariff) and the prices at which the products are sold by the marketer of the prescription pharmaceuticals.

The listing of pharmaceuticals on the drug tariff, and the price designated for each of the pharmaceuticals listed, are determined by the MHLW after reviewing the applications submitted by the market authorisation holders of such pharmaceuticals. The prices for the same product in other countries is one element of background information considered when determining the listing price. The drug tariff is reviewed and updated approximately once every two years; however, the review and update frequency is scheduled to change in 2021 to once a year at a minimum.

A substantial part of the costs of pharmaceuticals and medical treatments are covered by the health insurance scheme. For the majority of Japanese residents, 70% of these 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 an effort to address excessive pharmaceutical-related spending, the MHLW began incentivising hospitals to separate prescription and dispensing of pharmaceuticals functions so that hospitals do not prescribe pharmaceuticals unnecessarily.

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, an application software (or relevant parts thereof) designed to run on a smartphone, tablet or other similar device may be categorised as a medical device if it is intended for use in the diagnosis, treatment or prevention of disease in humans.

The law essentially requires medical diagnosis to be performed by a physician through a face-to-face consultation with a patient. In particular, the initial consultation between physician and patient and a physician’s consultation of a patient at an acute or critical stage of illness or phase of treatment must be conducted in-person. Historically, telemedicine services were deemed acceptable only for patients living in remote islands or other similarly remote places. However, the MHLW recently issued a new guideline that expands the permissible scope of telemedicine services and legitimises the provision of such services if a face-to-face consultation is practically difficult or such services are provided for a patient with a chronic, yet stable, condition.

Regulations addressing 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 networking websites. An advertiser’s webpage containing hyperlinks to other webpages may be considered collectively as a single advertisement and, as a whole, may violate regulations addressing advertisements even if each internet webpage on its own would not violate these regulations.

In 2016, the MHLW issued a guideline addressing electronic prescriptions. While the guideline emphasised the merits of electronic prescriptions, the issuance of electronic prescriptions through email is prohibited given the risks surrounding information leakage and other electronic misuse.

Almost all OTC pharmaceutical products are marketable online with the exception of certain potent pharmaceuticals and OTC pharmaceuticals that recently have been re-classified from ethical pharmaceuticals (most of which required a prescription) to OTC pharmaceuticals.

The use of electronic health records is an accepted practice in Japan and almost all large hospitals with in-patient facilities have adopted the use of electronic health records with smaller hospitals following their lead. Health-related information generally falls within the scope of “sensitive data” as defined under the Act on the Protection of Personal Information (the Personal Information Act) and is subject to stricter regulations. In principle, a person will not be allowed to obtain sensitive data regarding or concerning an individual unless the subject individual’s consent has been obtained.

The Personal Information Act requires appropriate security measures to be implemented for the handling of personal 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 the protection of medical data stored on such cloud platforms. The transferring and storing of sensitive data of patients in cloud platforms is generally not prohibited, provided the relevant cloud platform meets and complies with the various requirements set out in the specific guideline.

There are a variety of licensing deal structures used in practice (including, among others, an option to enter into a licence agreement based on the satisfaction of relevant conditions or achievement of milestones, and co-development and co-commercialisation agreements, designating the relevant licensed territories or fields). Licensing deal structures are determined on a case-by-case basis and based on negotiations between the relevant parties.

There are a variety of dispute resolution arrangements adopted in licence agreements in practice (including, among others, mechanisms to resolve disputes prior to litigation, procedures involving arbitrators or mediators with technical knowledge of the relevant matters in dispute and compelled mediation), and the particular arrangement to be adopted is determined on a case-by-case basis, based on negotiations between the relevant parties. Limitation on the scope of permitted discovery typically is not an issue in respect of Japanese civil litigation cases, as Japanese civil procedure rules do not provide for pre-trial discovery procedures through which the relevant parties may seek to obtain information from their counterparties for the purpose of establishing their cases and preparing for trial.

In respect of the parties’ diligence obligations under licence agreements, there is a variety of approaches taken in practice (including whether or not particular diligence obligations should be included and how such obligations are to be defined, as well as how milestones, timelines and tasks are to be set out) and the particular approach to be taken is determined on a case-by-case basis and based on negotiations between the relevant parties.

There is a variety of change of control provisions used for licence agreements in practice (including, among others, provisions establishing termination rights upon the occurrence of change of control events); and the provisions to be adopted are determined on a case-by-case basis and based on negotiations between the relevant parties. The Patent Act provides that a licensee under a patent licence can assert its rights under such licence against third parties that subsequently acquire the relevant patent. It is generally considered that this provision of the Patent Act effectively protects patent licensees in cases where a licensed patent is transferred pursuant to a change in control of the licensor.

The extent to which a licensee’s rights under a patent licence agreement can be asserted vis-à-vis a new patent owner in the event of a patent transfer would need to be determined on a case-by-case basis considering the specific contractual provisions of the relevant patent licence agreement.

In respect of the consequences of termination of licence agreements, there are a variety of approaches taken in practice (including to what extent each party will have rights to the clinical data and IP generated prior to termination) and the particular approach to be taken is determined on a case-by-case basis and based on negotiations between the relevant parties.

The Patent Act is the primary law that applies to patents. The Patent Act allows for patent term extensions for pharmaceuticals and whether or not a pharmaceutical product qualifies for a patent term extension, including the extent to which protections under the Patent Act continue to apply in the case of a patent term extension, are commonly encountered issues. In relation to the issuance of patents, there are no requirements that relate specifically or exclusively to pharmaceuticals or medical devices.

It is generally considered that the novelty of a pharmaceutical invention (a requirement for a patent to be granted for such invention) is judged by the following two points: a compound having a specific attribute; and a medicinal use based on such attribute. Accordingly, second and subsequent medical uses of a known pharmaceutical product can be granted patents if the relevant usage is considered novel.

In this regard, medicinal use includes new dosage regimes and new or selected patient populations and, therefore, can be patented if considered novel. Second and subsequent patents of pharmaceutical products can be infringed if the patented invention is exploited by a third party without authorisation during the term of the patent, for example, if a patented product is sold for the patented use without authorisation from the relevant patent holder.

For patented pharmaceuticals, the term of the patent can be extended upon request by the patent holder to the Japan Patent Office and fulfilment of relevant procedures. 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 in accordance with the Pharmaceuticals Law, was prevented from exploiting the invention. Patent term extensions can be challenged by third parties; for example, a third party may commence a legal proceeding with the relevant court seeking invalidation of a patent term extension registration.

Infringement of a registered pharmaceutical or medical device patent occurs when a person exploits the patented invention during the term of the patent without the patent holder's permission. This includes, for example, the unauthorised production, usage, sale, import or export of a patented product. The Patent Act provides for injunctive relief as a remedy that can be sought where there is an imminent threat of infringement, as opposed to the occurrence of actual infringement. In order for injunctive relief to be granted by a court, the threat of infringement needs to be present from an objective standpoint.

Protections established by a patent do not restrict exploitation of the patented invention for experimental or research purposes. Accordingly, experimental use can be asserted as a defence to a claim of 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 that the action it proposes to take is lawful under patent law, it may initiate litigation against the patent holder seeking the court’s determination confirming the non-existence of a patent infringement claim relating to such action. Obtaining a court order through this type of 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 violators will be subject to criminal penalties. In addition, counterfeit drugs and medical devices may infringe registered trade marks and possibly registered patents. Further, the import and export of IP-infringing goods can also be illegal, and violators will be subject to criminal penalties. Criminal investigations of possible violations are typically conducted by the police. Further, the import and export of infringing goods is policed by the Japanese customs authorities.

There are no specific restrictions on the trade marks that can be used for pharmaceuticals or medical devices under the Trade Mark Act. In general, a medicinal product brand can be registered as a trade mark. There are a number of excluded categories of marks that cannot be granted trade mark rights or protections; for example, a sign that:

  • is the same as, or similar to, a national flag;
  • is deceptive or contrary to public policy; or
  • is not legally distinguishable from signs or marks used to identify widely-recognised brands, or from other trade marks that were filed earlier.

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 designs of pharmaceuticals and medical devices and their packaging. Trade dress and designs can be registered and protected as trade marks under the Trade Mark Act. The Trade Mark Act stipulates a number of legal criteria to be met to register a trade mark, including the requirement that the relevant mark or sign is capable of distinguishing the subject goods or services from those of other manufacturers or merchants or service providers.

There is no data exclusivity available under Japanese law for pharmaceuticals and/or medical devices. An 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, preventing a generic drug product from receiving marketing approval until such re-examination period for the original drug has expired.

Nagashima Ohno & Tsunematsu

JP Tower
2-7-2 Marunouchi
Chiyoda-ku
Tokyo 100-7036
Japan

+81 3 6889 7000

+81 3 6889 8000

info@noandt.com http://www.noandt.com/en/index.html
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Trends and Developments


Authors



Anderson Mori & Tomotsune is a large, international Japanese law firm. The firm is known for its long history of advising overseas companies doing business in Japan and in cross-border transactions. The main office in Tokyo is supported by offices across Japan, China and the Southeast Asian region. Anderson Mori & Tomotsune has considerable experience in matters relating to the life science field, including expertise in licensing, regulatory, intellectual property and corporate transactions such as mergers and acquisitions and venture investments. The firm works with increasingly diversified international and Japanese-based healthcare companies, including pharmaceutical manufacturers, medical device manufacturers, distributors and e-health providers. The team, which consists of about ten partners and 20 associates, provides comprehensive advice from set-up of a Japanese entity to all stages of the product lifecycle and helps clients to navigate a broad range of regulatory matters.

Amendments to the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices

The Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (the “Act”) regulates the manufacture, labelling, marketing, distribution and advertisement of pharmaceuticals, quasi-pharmaceutical products, cosmetics, medical devices and regenerative medicine products for the purpose of securing the quality, efficacy and safety of pharmaceuticals and medical devices, etc. Amendments to this act were promulgated in November 2019, and will be enforced within one to three years depending on the amendment.

Introduction of New Marketing Authorisation Review Schemes to Expedite the Authorisation Process

Current authorisation process

To distribute pharmaceuticals and medical devices in Japan, a seller must obtain a marketing licence for its business and an authorisation (or certification or notification for certain classes of medical devices) for each pharmaceutical or medical device for sale. The Pharmaceuticals and Medical Devices Agency (PMDA), an independent administrative institution, grants authorisations for each pharmaceutical and medical device.

The regular authorisation process consists of: non-clinical tests; clinical trials (exploratory clinical trial and confirmatory clinical trial); application filing; review by PMDA; and authorisation. The standard processing period for the review by the PMDA is 12 months.

There is a preferential examination scheme for orphan drugs and similar medical devices, which allows prioritisation of the review process over other reviews. In this case, the standard processing time for the PMDA’s review is shortened to nine months. However, this preferential examination scheme is available for a very limited categories of pharmaceuticals and medical devices.

Japan has experienced substantial drug lags and device lags, in which certain new pharmaceuticals and medical devices are approved for use in other countries, but are not available for Japanese patients. In order to supply necessary pharmaceuticals and medical devices to the market faster and to eliminate drug and device lags, the Ministry of Health, Labour and Welfare (MHLW) introduced two additional schemes on a trial basis. The amended Act contains these two schemes.

Conditional early authorisation scheme

MHLW introduced the conditional early authorisation scheme to expedite the review process for marketing authorisations for pharmaceuticals and medical devices used to treat rare diseases for which it is difficult to collect the required number of cases to conduct confirmatory clinical trials. 

This scheme applies to pharmaceuticals and medical devices specified by the MHLW as: having particularly high medical needs; and requiring extensive time or difficulty for confirmatory clinical trials. Under this scheme, the MHLW may allow the applicant to forego the submission of certain required documents regarding test results from confirmatory clinical trials under the condition that the applicant confirms safety and efficacy by other means. The MHLW may grant a marketing authorisation under the condition that the applicant will submit the results of post-marketing surveillance and other necessary measures to ensure that the device will be properly used.

The MHLW will conduct inspections as to quality, efficacy and safety after marketing, and may require that necessary measures for securing safe usage of the product be taken based on the results of the inspection.

Breakthrough products authorisation scheme

The breakthrough products authorisation scheme applies to pharmaceuticals and medical devices that the MHLW has specified as: having obviously different mechanisms of action than existing pharmaceuticals and medical devices already authorised in Japan or any other country; and having especially high usage value. This scheme aims to enable the usage of the latest products in Japan ahead of other countries and to promote development of new pharmaceuticals and medical devices in Japan.

Under this scheme, the PMDA will preferentially accept pre-application consulting and give prior evaluation. The standard period of the review process is shortened to six months.

In determining the national health insurance reimbursement price, the drug pricing rules established by the MHLW award higher reimbursement rate to pharmaceuticals for which a marketing authorisation is granted under this scheme.

Similarly, under the specific usage products authorisation scheme, the MHLW can specify pharmaceuticals and medical devices as specific usage pharmaceuticals/medical devices if: the products are used for treating certain specific areas of disease; there is significant unmet medical need for products in that area of disease; and the products have especially high usage value. The shortened review standard period of six months also applies to the specific usage products scheme.

Introduction of a New Marketing Authorisation Scheme for Constantly Improving Medical Device

The holder of a marketing authorisation for a medical device may improve the medical device by either: obtaining an approval for the change with or without additional clinical trials, depending upon the nature of the change; or notifying the PMDA of the change, if the change is minor, for each improvement.

The recent appearance of medical devices using artificial intelligence technology, programmed so that the performance of the medical device constantly improves, caused an increase in the demand for a new authorisation scheme that does not require approval for each improvement.

Under the new scheme, the MHLW may approve a plan that describes expected changes to the performance and/or manufacturing method of a medical device (“Alteration Plan”) in connection with the authorisation of that medical device. Thereafter, the holder of the marketing authorisation may make changes to the manufacturing method and other items prescribed in the MHLW ministry ordinance (to be enacted) of the authorised medical device without additional approval as long as the change is in accordance with the approved Alteration Plan and notification is made prior to the application of the change. In addition, if the proposed change does not relate to the manufacturing method or any item prescribed in the MHLW ordinance, and the contemplated change requires an authorisation, the MHLW will conduct a review of whether the change is in accordance with the approved alteration plan rather than a general review of the quality, efficacy and safety of the device.

Development of Compliance Systems

The amended Act requires holders of marketing authorisations and manufacturers of pharmaceuticals and medical devices to: appoint a director responsible for regulatory affairs; provide compliance guidelines to employees; establish a compliance system; appoint a general marketing manager; and respect the opinions stated by the general marketing managers and production managers and take necessary measures to improve the compliance system. The MHLW may order the holders of marketing authorisations and manufacturers of pharmaceuticals and medical devices to improve their compliance systems if the systems are ineffective.

Introduction of Administrative Fine

The amended Act also contains provisions for administrative fines against false or extravagant advertisements. The previously applicable criminal fine of up to JPY2 million for making false or extravagant advertisements was generally considered to be insignificant compared to the profit gained by the advertisers. Further, a criminal fine requires strict prosecution and judgement procedures. Other administrative measures, including business suspension orders and business licence nullifications, were not effective against serious cases in which the advertiser does not have the required business license.

Therefore, the amended Act introduced an administrative monetary penalty of 4.5% of the sales of the product during the period in which false or extravagant advertisements were made relating to the name, manufacturing method, efficacy, effect or performance of the pharmaceutical or medical device. 

Other Amendments

Notification of changes to manufacturing methods

Previously, the Act required approval for any substantial change to manufacturing methods. The amendment to the Act allows a change through a simple notification procedure if the post-approval change management protocol was submitted to the MHLW in advance and the MHLW confirmed that the change does not affect the safety or efficacy of the relevant products.

Inspections on production and quality control

The Act requires performance of a GMP/GCTP audit of the manufacturing process every five years from the date of the grant of the marketing authorisation for the relevant pharmaceutical. If, for example, marketing authorisations for four different pharmaceuticals sharing the same manufacturing process are granted in four consecutive years, the GMP/GCTP audits on the manufacturing process must be conducted every year. The amendment to the Act allows a standard compliance certificate to be issued to the manufacturer based on each manufacturing process. If a factory has a standard compliance certificate, the manufacturer need not undergo periodic GMP/GCTP audits for each pharmaceutical using the manufacturing process.

Electronisation of package inserts

Package inserts (other than those for over-the-counter drugs and medical devices intended for use by general consumers) must be electronised under the amended Act. In particular, a package insert must be disclosed online and an access code to disclosure site must be printed on the package of the pharmaceutical.

Barcode display

To ensure traceability, the amended Act requires a barcode to be printed on the packages of pharmaceuticals and medical devices.

The Enforcement of the Guideline on Provision of Information for Sales Promotion of Ethical Pharmaceuticals

Backgrounds

The Act and subordinate rules regulate advertisements of pharmaceuticals, but the regulations are somewhat general and ambiguous. Although the Japan Pharmaceutical Manufacturers Association, a Japanese equivalent of PhRMA and EFPIA, has a self-regulatory guideline, there are often reports on promotions that were not clearly illegal, but were considered inappropriate. Examples of inappropriate promotions include

  • an oral presentation or a presentation on a mobile computer by a representative, which does not leave any evidence of what was communicated;
  • communication not obviously illegal, but considered to encourage inappropriate use of pharmaceuticals; and
  • provision of a research article for which the involvement of a pharmaceutical company is difficult to determine.

The MHLW additionally published a guideline on provision of information for sales promotion of ethical pharmaceuticals (the “Information Provision Guideline”) in September 2018, to be effective from April 2019. Detailed FAQs were also published.

The Information Provision Guideline applies to all activities, either passive or active, involving information provision for sales promotion of ethical pharmaceuticals (“Information Provision Activity”) conducted by any employee (regardless of their position; including medical representatives (MR) and medical science liaisons (MSL)) of the marketing authorisation holder of pharmaceuticals, their consignees and partners, and wholesale distributors (collectively “Sellers”). If promotional activities are conducted through a distributor or a partner by way of co-promotion, the Information Provision Guideline applies and the marketing authorisation holder is responsible for the promotional activities conducted by the representatives of the distributor and partner.

Principles of information provision activities

Most requirements of the Information Provision Guideline are based in common sense.Requirements include:

  • that the information about effect-efficacy and dosage and administration should be in accordance with the marketing authorisation;
  • that the communication should not be focused only on the effectiveness, but safety information, including side effects, should also be provided;
  • that the information should be based on scientific and objective grounds, such as a peer-reviewed article; and
  • that when a promotional material cites other information, the reference source should be specified.

The Information Provision Guideline prohibits, for example, false, extravagant or misleading representations, and suggestions of off-label use even if authorised in another country.

However, the Information Provision Guideline recommends pro-active information provision in certain situations. When providing a study result, the testing method should be disclosed. When providing a result of a controlled study, the study design, including whether it was a superiority trial or a non-inferiority trial, and the result should be precisely presented and negative information, such as failure to show superiority, should also be disclosed.

Governance structure

The Information Provision Guideline requires the management of the Sellers to take necessary measures to secure the appropriateness of the Information Provision Activities. The measures are detailed in the following.

The management shall establish a department that supervises information provision activities (“Supervisory Department”) independent from the department(s) that conduct the Information Provision Activities (“Information Provision Department”). Management must also establish a reviewing and supervising committee that includes a member independent from the company. The Information Provision Department includes not only sales divisions, but also a medical affairs division in most cases, as the MSLs are usually regarded is being engaged in Information Provision Activities.

The Supervision Department shall review the materials used for Information Provision Activities in advance, monitor activities of the Information Provision Department, and give necessary instructions to the employees as well as offer opinions to the management. The management shall take necessary measures reflecting those opinions.

The management shall also educate its employees, supervise the Information Provision Activities conducted by its employees, and reflect the appropriateness of the activities to the evaluation of the employees. The MHLW suggests that the sales achievement bonus should not weigh heavily in the employee compensation system.

The Information Provision Department shall, under the direction of the management, prepare a standard operating procedure for appropriate Information Provision Activities, take records of its activities, and keep those records. Required records of Information Provision Activities include a record of an oral presentation.

A complaints counter must be established, and in the event of recognition of any inappropriate Information Provision Activity, the management shall take necessary measures.

The Information Provision Guideline also sets out requirements for the employees of Sellers involved in the Information Provision Activity, such as usage of appropriate materials and adequate explanations, and details of information provision about pre-approved pharmaceuticals and off-label use.

Initiation of the Next Generation Medical Infrastructure Act

Purpose

The Next Generation Medical Infrastructure Act was established following the rising demand for utilisation of medical information. Utilisation of “big data” and “real world data” is expected to facilitate and streamline research and development of innovative pharmaceuticals and medical devices. Nevertheless, since the medical information is often held by individual hospitals and entities, and provision/usage of the original data, that in many cases constitutes Personal Information (as defined hereunder), is restricted by the law, it has been difficult to accumulate medical information and build a data base. The Next Generation Medical Infrastructure Act intends to make the accumulation of medical information easier, and to promote usage of big data for the development of medical technologies, while protecting patients’ privacy and Personal Information.

Restrictions under the Personal Information Protection Acts

The provision of personal information is restricted by the Act on the Protection of Personal Information, the Act on the Protection of Personal Information Held by Independent Administrative Agencies, ordinances enforced by the local governments or other laws, (collectively, the "Personal Information Protection Acts") according to the nature of the holder of such information. For example, private hospitals, data processing entities, and companies handling personal information are restricted by the Act on the Protection of Personal Information, but public hospitals are restricted by the Act on the Protection of Personal Information Held by Independent Administrative Agencies, ordinances, or other laws. The Personal Information Protection Acts define “Personal Information” as information that makes it possible to identify a specific individual, and restrict provision/usage of Personal Information.

Within Personal Information, information which may lead to discrimination or other disadvantage of the individual (information regarding race, religion, social status, medical history, criminal history, etc) is defined as "Personal Information Requiring Special Consideration", and provision/usage of such information is especially strictly restricted. Medical records typically constitute Personal Information Requiring Special Consideration.

For ordinary Personal Information that is not Personal Information Requiring Special Consideration, a subject’s consent for disclosure of Personal Information to a third party can be obtained through an opt-out procedure, ie, by informing the individual (or making it possible for the individual to acknowledge) that his or her Personal Information will be provided to a third party and giving opportunities to the individual to refuse such disclosure. However, an explicit (“opt-in”) consent is required to provide/use Personal Information Requiring Special Consideration. Even in cases in which Personal Information is de-identified before being added to a database, if the medical institution holding the original data provides medical data to a data processing entity that de-identifies the data, the medical institution must obtain explicit consents from the individuals. Consent shall include consent as to the transfer of Personal Information to a third party and purpose of transfer.

The Next Generation Medical Infrastructure Act

The Next Generation Medical Infrastructure Act allows medical information to be provided to entities authorised as data processing entities that collect, de-identify and then provide medical information to third parties (“Authorised De-identified Medical Information Preparer”). When medical institutions provide a patient’s data to the Authorised De-identified Medical Information Preparer, the patient’s explicit consent is not required. The Authorised De-identified Medical Information Preparer collects data from a number of medical institutions, picks up and links the same patient’s data from different medical institutions, adjusts the data format, and integrates the data into a database. When a third party, typically a healthcare company or a research institution, requests data, the Authorised De-identified Medical Information Preparer selects the relevant data, de-identifies it and provides an anonymised data set for a fee.

The Authorised De-identified Medical Information Preparer is the centre of the data flow contemplated under the Next Generation Medical Infrastructure Act. Since the adoption of the Next Generation Medical Infrastructure Act in May 2018, however, there had been no entity authorised as an Authorised De-identified Medical Information Preparer until December 2019.  In December 2019, an organisation called Life Data Initiative, incorporated by researchers at Kyoto University, was authorised as the first Authorised De-identified Medical Information Preparer, partnering with NTT Data Corporation as a de-identification processing outsourcee. The de-identification and data accumulation process under Next Generation Medical Infrastructure Act is now expected to proceed.

Anderson Mori & Tomotsune

Otemachi Park Building
1-1-1 Otemachi Chiyoda-ku
Tokyo 100-8136
Japan

+81 3 6775 1041

+81 3 6775 2041

junichi.kondo@amt-law.com www.amt-law.com/en/
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Law and Practice

Authors



Nagashima Ohno & Tsunematsu is widely regarded and recognised as one of Japans leading international law firm and provider of legal services, specialising in all aspects of business and commercial law. The firm represents domestic and foreign clients involved in every major industry sector, including many of the largest and most influential companies, funds and organisations in Japan. The firm has structured and negotiated many of Japan’s largest and most significant corporate and finance transactions, and has extensive expertise in litigation and arbitration, particularly cases involving commercial disputes. Our pharmaceutical and healthcare team consists of over 14 lawyers, including four partners, based in the Tokyo office. Key areas of practice relating to the life sciences sector include: pharmaceutical, medical device, food, medical and healthcare regulations; risk and crisis management; compliance; corporate/M&A; data protection; patent and intellectual property; antitrust/competition; consumer claims; dispute resolution; labour; and employment.

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Authors



Anderson Mori & Tomotsune is a large, international Japanese law firm. The firm is known for its long history of advising overseas companies doing business in Japan and in cross-border transactions. The main office in Tokyo is supported by offices across Japan, China and the Southeast Asian region. Anderson Mori & Tomotsune has considerable experience in matters relating to the life science field, including expertise in licensing, regulatory, intellectual property and corporate transactions such as mergers and acquisitions and venture investments. The firm works with increasingly diversified international and Japanese-based healthcare companies, including pharmaceutical manufacturers, medical device manufacturers, distributors and e-health providers. The team, which consists of about ten partners and 20 associates, provides comprehensive advice from set-up of a Japanese entity to all stages of the product lifecycle and helps clients to navigate a broad range of regulatory matters.

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