Life Sciences 2021

Last Updated March 22, 2021

Japan

Law and Practice

Authors



Nagashima Ohno & Tsunematsu is widely regarded and recognised as one of Japan’s leading international law firms, 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 across all of its practice areas. The pharmaceutical and healthcare team consists of over 14 lawyers, including six partners, based in the Tokyo office. Key areas of the firm’s practice relating to the life sciences sector include pharmaceutical and healthcare, risk and crisis management/compliance, corporate/M&A, data protection and privacy, intellectual property, antitrust/competition, consumer law (consumer litigation), dispute resolution, and labour and employment.

The Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (the "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), which are independent local governments, are primarily responsible for monitoring pharmaceutical and medical device firms (ie, pharmaceutical and medical device marketers, manufacturers and distributors) in their respective jurisdictions on behalf of the MHLW. The Pharmaceuticals and Medical Devices Agency (PMDA), a Japanese independent administrative agency which receives financial support from the Japanese government to cover its operational costs, 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 a 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. 

Japan requires all drugs to be tested through clinical trials and approved for marketing in Japan and even new drugs that have undergone clinical trials and received marketing approval in foreign jurisdictions are required to undergo separate clinical trials in Japan in order to verify such drug’s effectiveness and safety when given to Japanese individuals. For COVID-19 vaccines to be supplied to Japan, the Japanese government requires that a limited number of separate clinical trials be performed in Japan based on this policy.

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 obtained 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 from the Clinical Trials, 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 comply with 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 authorisation 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 authorised 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.

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.

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, and is used for COVID-19 vaccines produced by foreign manufacturers that are supplied for use in Japan.

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 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, the owner of an infringed patent or other IP right can file an application for an importation suspension of counterfeit products with the Japanese customs authorities. 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 manufacturing 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 manufacturing business licence and an 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 marketing 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.

Marketing 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; and
  • 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. Importers of these products are subject to requirements regarding 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 Pharmaceutical and Medical Devices without Marketing Authorisations.

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 online based on an amendment to the Pharmaceuticals Law) must be written in Japanese and satisfy the requirements under the relevant marketing authorisation. Changing 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 January 2021, Japan has signed 21 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 is 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.

As a general principle, the law essentially requires medical diagnosis to be performed by a physician through a face-to-face consultation with a patient. However, a guideline issued by the MHLW provides guidance on the permissible scope of telemedicine services and legitimises the provision of such services in cases where conducting a face-to-face consultation would be practically difficult or where such services are to be provided for a patient with a chronic, yet stable, condition.

Under the MHLW guideline, it is generally required that initial consultations between physicians and patients be conducted in-person. However, due to the COVID-19 pandemic, this requirement has been relaxed temporarily and currently physicians may provide telemedicine services from the initial consultation. It remains to be seen whether this temporary measure will remain in effect after the COVID-19 pandemic situation.

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 associated with transmission of information electronically including unintentional information disclosures or unlawful theft of information.

Almost all OTC pharmaceutical products are marketable online with the exception of certain potent pharmaceuticals and OTC pharmaceuticals that formerly were classified as ethical pharmaceuticals (a classification that typically requires a prescription for products to be obtained).

The use of electronic health records is an accepted practice in Japan and almost all large hospitals 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.

The Patent Act is the primary law that applies to patents. The Patent Act allows for patent term extensions for pharmaceutical patents and whether or not a pharmaceutical patent 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 and other relevant conditions and requirements are satisfied.

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. The Patent Act provides for the granting of compulsory licences to patents in certain situations, including but not limited to patents for 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 or there is a present threat of infringement, 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 includes special provisions intended to facilitate a patent holder's recovery of damages incurred by the infringement of its patent. For example, under the Patent Act a person who infringes a patent is presumed to have acted negligently in relation to the infringement. This presumption shifts the burden of proof from the patent holder to the infringing party, and thus for the infringing party to prevail, it must prove that there was no negligence on its part in relation to the infringement. Invalidity of the subject patent is an available defence and can be asserted in a patent infringement litigation.

In order for the producer of 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 of the relevant brand-name pharmaceutical seeking the court’s determination confirming the non-existence of a patent infringement claim based on the generic market entry. 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 a potential patent infringement claim is taken into account when undergoing the marketing authorisation examination procedure.

The Pharmaceuticals Law prohibits the sale of counterfeit drugs and medical devices, 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 may 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. The same re-examination period rules apply for chemical drugs and biologics.

The MHLW has announced that it will prioritise the review of marketing authorisation applications for medicines and medical devices to be used for the treatment of COVID-19, and that it will consider measures to streamline the process by reducing and facilitating the preparation of application materials for such medicines and medical devices. Amendments were made to relevant Japanese rules broadly abolishing various regulatory filing requirements that mandated submission of documents in hard copy with the company seal affixed thereto.

The MHLW has issued a guidance addressing various special measures that can be taken in relation to clinical trials in light of the COVID-19 pandemic. The MHLW guidance sets out criteria to allow for, among others, delivery of the test drug to the test subject’s residence by mail, alternatives to in-person institutional review board meetings, alternatives to on-site trial monitoring, and use of telemedicine in clinical trials.

The Pharmaceuticals Law provides for a special emergency approval process whereby the MHLW may grant exceptional approval for pharmaceuticals and medical devices:

  • developed to address an urgent need relating to the prevention of the spread of disease or other health hazards that may pose a serious threat to the lives and health of the general public, and for which no suitable alternative is available other than the use of such pharmaceuticals/medical devices; and
  • that are authorised to be marketed in a foreign country (provided the foregoing is limited to foreign countries having a marketing approval system recognised by the MHLW as being substantially equivalent to Japan’s marketing approval system in terms of assessing quality, efficacy, and safety to be secured for the pharmaceuticals/medical devices).

The MHLW has granted marketing authorisation through the exceptional emergency approval process for Remdesivir, a medication that may be used in the treatment of the COVID-19.

During the period of the COVID-19 pandemic, various regulatory filing and inspection processes relating to manufacturing business licenses for pharmaceuticals and medical devices have been revised to allow for electronic processing. Additionally, amendments were made to relevant Japanese rules broadly abolishing various regulatory filing requirements that mandated submission of documents in hard copy with the company seal affixed thereto.

In March 2020, the MHLW announced that it would permit companies to import disinfectant products produced outside of Japan for use within their companies to protect employees from COVID-19. This announcement was made as a measure to address the significant increase in demand for disinfectants due to the COVID-19 pandemic, and allow Japanese companies to procure, from outside of Japan, supplies of disinfectant products necessary for the continuation of their business operations.

The MHLW has taken measures to facilitate the use of telemedicine services in Japan during the period of the COVID-19 pandemic. Initial consultations between physicians and patients were generally not permitted to be conducted online prior to the pandemic, but this prohibition has been temporarily suspended and telemedicine services are permitted from the initial consultation. It remains to be seen whether this temporary measure will remain in effect after the COVID-19 pandemic situation.

The Patent Act allows for compulsory licensing in cases where the implementation of a patented invention is especially necessary for the public interest. In such cases, a person may request the patentee to participate in consultations concerning the granting of a non-exclusive license to use the patented invention and may further request the Minister of Economy, Trade and Industry for an order compulsorily granting a non-exclusive licence to use the invention for a specified purpose. There have been discussions on whether compulsory licences under the Patent Act should be granted to ensure a stable supply of products used for COVID-19 treatments; however, no such compulsory licence has been granted thus far.

In December 2020, the Japanese government enacted an amendment to the Immunization Act, allowing the Japanese government to enter into contracts with vaccine manufacturers and agree to indemnify the manufacturers for losses incurred from compensating victims who sustain harm to their health after receiving the manufacturer’s COVID-19 vaccine in Japan. Based on this provision, the Japanese government has reportedly been negotiating indemnification agreements with pharmaceutical companies that are to supply their COVID-19 vaccines to Japan.

Despite the measures put in place by the government addressing compensation to vaccine recipients who sustain health-related harm and pharmaceutical company indemnification for damages attributable to the COVID-19 vaccinations in Japan, Japanese law does not provide immunity for the pharmaceutical companies supplying the COVID-19 vaccines. Consequently, vaccine recipients are not precluded from asserting claims directly against these pharmaceutical companies for damages they claim are attributable to harm to their health suffered from the vaccine.

In the event that the Japanese government declares a state of emergency in response to COVID-19, the Japanese government can designate individual manufacturers of pharmaceuticals and medical devices and require the designated manufacturers to take necessary measures to ensure continued manufacturing and sales of specified pharmaceuticals and medical devices. It is generally considered that the measures to contemplated be taken by the designated manufacturers would typically include measures necessary for ensuring the prevention of COVID-19 infection and the sufficient supply of pharmaceuticals and medical devices for COVID-19 treatment. The Japanese government declared a state of emergency from April to May 2020, and issued a second state of emergency declaration on 8 January 2021.

As is the case in other countries, the Japanese government has actively sought to procure stocks of COVID-19 vaccines from various vaccine-producing pharmaceutical companies so that administration of vaccines can be implemented in Japan. According to press reports, the Japanese government has entered into agreements with Moderna and Takeda Pharmaceutical, as well as with AstraZeneca and Pfizer, for the procurement of COVID-19 vaccines.

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 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 South-East 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 life cycle and helps clients to navigate a broad range of regulatory matters.

Recently Authorised Medical Devices and Pharmaceuticals

New software as medical devices

General regulatory requirements for marketing medical devices

The Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (the "Pharmaceuticals Act") requires a marketer that intends to sell a medical device in Japan to obtain authorisation or certification from, or provide notification to, the relevant governmental authority with respect to the medical device. The marketer’s obligation to communicate with the authority depends on the statutory classification of the medical device as determined based on the risk to the human body in case of the device’s malfunction (Article 23-2-5, Section 1, Article 23-2-12, Section 1 and Article 23-2-23, Section 1 of the Pharmaceuticals Act).

Definition of medical devices

The Pharmaceuticals Act defines "medical devices" as devices intended to be used for diagnosis, treatment or prevention of human diseases, or to affect the structure or function of the human body (Article 2, Section 4 of the Pharmaceuticals Act). Only devices listed in Appended Table 1 of the Ordinance for Enforcement of the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (the "Enforcement Ordinance") are regarded as medical devices.

In 2014, software for diagnosis, software for treatment and software for prevention of diseases were added to the Enforcement Ordinance. Prior to that time, software was authorised, certified or registered as part of the medical device in which it was installed, but the addition of software to the Enforcement Ordinance enables computer software to be authorised, certified or registered independently from a medical device.

The Enforcement Ordinance explicitly excludes computer software that has almost no risk of affecting human life and health from medical devices, and the Ministry of Health, Labour and Welfare (MHLW) established a guideline that provides the following criteria from which to determine whether software constitutes a medical device:

  • whether the software has an impact on the treatment and diagnosis of a disease, considering the significance of the results obtained by the software; and
  • whether there is a risk of negatively impacting an individual’s life and health if the software malfunctions.

Since 2014, software has been authorised as a medical device in some cases, but in each of those cases, the software was designed to function together with a hardware medical device. Two types of software have generally been recognized as medical devices:

  • software to record, transmit, modify, or analyse the data obtained by a hardware medical device (eg, software to analyse and edit the image obtained by CT); and
  • software to control and operate a hardware medical device.

Japanese law does not further define medical devices, and due to the ambiguity of the term’s definition, the question of whether other types of software, especially software operating on general-purpose devices such as smartphones and wearable devices, would also be regulated as medical devices is unsettled. In 2020, however, two new types of software were authorised as medical devices.

The non-smoking app

In August, 2020, the MHLW authorised the CureApp SC Nicotine Addiction Treatment App with CO checker (the “Non-Smoking App”) as a Class II medical device. Created by Japanese venture firm CureApp, Inc., the Non-Smoking App consists of:

  • an application installed on a patient’s smartphone (the “Patient’s App”);
  • an application installed on a doctor’s computer (the “Doctor’s App”); and
  • an exhaled carbon monoxide concentration measuring device (the “CO Checker”).

A patient registers his or her information on the Patient’s App, including whether the patient smoked, the strength of the patient’s desire to smoke, and medications taken by the patient. The patient information, together with the results obtained from the CO Checker, is shared with the Doctor’s App. The Doctor’s App analyses all of the information and, as configured by the doctor, selects a message such as “drink more water” or “you are doing great,” to be shown on the Patient’s App as encouragement for smoking cessation. The Non-Smoking App is available only with a doctor’s prescription.

The Non-Smoking App is the first software to be authorised as a medical device in Japan that focuses on changing a patient's lifestyle as part of the smoking cessation treatment. In order to enable access to the app, the Patient's App is installed on the patient's smartphone, which is an innovative point of this software. Another key component of the software that distinguishes it from other health-related apps is that the Non-Smoking App will be configured by a doctor especially for each patient, rather than provide general advice that may be applied to multiple patients.

Given the custom configuration, the Non-Smoking App will be provided to the patient based on a doctor’s prescription, making it the first “prescribed” software to be treated as a medical device in Japan. The authorisation of the Non-Smoking App presented the possibility that other apps intended for treating patients through a lifestyle change could be marketed as medical devices.

In December 2020, the MHLW approved coverage under the public national health insurance system of the treatment provided by the Non-Smoking App.

The ECG App

In September 2020, the MHLW granted a Class II medical device marketing authorisation for an ECG App created by Apple, Inc. for a popular general-purpose wearable device, the Apple Watch (the "ECG App”). Unlike previously authorised software, the ECG App analyses the signal obtained from the Apple Watch, rather than a single-purpose electrocardiographic meter, which would also be subject to the Pharmaceuticals Act as a medical device.

The ECG App is innovative in that it detects symptoms of disease and suggests a physician visit. After its authorisation of the ECG App, the MHLW issued guidance titled, “Matters to be Considered in Applying for Marketing Authorisation of a Home Use Medical Device to Detect Disease Symptom and to Suggest a Physician Visit.” In this guidance, the MHLW encourages manufacturers to take steps to mitigate the risk that users of such medical devices, including healthy people, will fail to visit a physician, and reminds those manufacturers that a definitive diagnosis must be made by a physician. The guidance requires the manufacturers to add a cautionary statement to the device, stating, for example, that the medical device is not designed to provide a definitive diagnosis and that, irrespective of any suggestions from the app, the user should visit a physician if he or she experiences any symptoms of disease.

Subsequently, in January 2021, the MHLW issued a notice specific to the ECG App, warning local authorities about some characteristics of the ECG App. The notice pointed out, for example, that the ECG App is a secondary device to detect atrial fibrillation only for a limited heart rate range and cannot detect symptoms of other cardiac dysrhythmia or atrial fibrillation outside of the prescribed heart rate range, and that the app is not designed to be used for a definitive diagnosis or a follow-up with a patient with a cardiac dysrhythmia history.

The authorisation of the ECG App indicates that there may be cases in which a device to collect the vital information and the software to analyse that collected information may be considered separately, and the software may be deemed to be a medical device even when the device is not. The regulatory authority is not yet sufficiently familiar with this novel category of software, so the review process may be prolonged and include broad discussions about each specific feature of the software.

Marketing authorisation under the new authorisation schemes

The breakthrough products authorisation scheme and the conditional early authorisation scheme

In 2019, the Pharmaceuticals Act was amended to include the breakthrough products authorisation scheme, which 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 the development of new pharmaceuticals and medical devices in Japan. Under this scheme, the Pharmaceuticals and Medical Device Agency will preferentially accept pre-application consulting and provide a prior evaluation of the product as a medical device.

In 2019, the Pharmaceuticals Act was amended to include the conditional early authorisation scheme, which expedites 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.

Authorisation of Akalux

In April 2019, the MHLW designated Akalux® IV Infusion 250 mg (cetuximab saratolacan sodium) (“Akalux”), which was created by Rakuten Medical Japan K.K. and is used to treat unresectable locally advanced or recurrent head and neck cancer, as a breakthrough product. This product consists of a drug that combines with the epidermal growth factor receptors of the cancer cells, and a laser device that kills the combined cancer cells using a photochemical reaction caused by laser irradiation. In March 2020, Rakuten Medical Japan K.K. applied for marketing authorisation of Akalux under the conditional early approval system. Authorisation for Akalux was granted in September 2020.

The Expansion of Online Medical Treatment

Outline of the current Online Medical Treatment regulation

The provision of medical diagnoses over the telephone, by video or using other online tools (“Online Medical Treatment”) is becoming more common in Japan. However, the Medical Practitioner’s Act prohibits doctors from providing a diagnosis without examining a patient. Thus, the issues of whether an online examination may be construed as the examination required under the Medical Practitioner’s Act, and of the extent to which an online examination is permitted, are controversial.

The MHLW presented its initial view on this point in 1997 when it accepted Online Medical Treatment as a supplement to face-to-face examination. Since then, the MHLW has updated the guidelines regarding Online Medical Treatment, the latest of which is the Guideline on Adequate Conduct of Online Medical Treatment, updated in September 2019. The main requirements under that guideline are as follows:

  • the initial medical examination must be held face-to-face;
  • based on the diagnosis made during the face-to-face examination, the doctor may provide Online Medical Treatment, which must include a description of the details of the Online Medical Treatment, the treatment schedule, measures to take in case of changes in symptoms, and other matters;
  • online Medical Treatment is possible only when face-to-face counselling for the same or substantially similar medication has occurred in the past;
  • Online Medical Treatment for patients with sudden and acute illness is prohibited;
  • the doctor and the patient must each clearly identify themselves to the other party;
  • subscriptions for Online Medical Treatment for diseases under treatment is possible, but subscriptions for new symptoms or diseases are prohibited;
  • the online communication must include real-time visual and auditory information; chats, photographs and recorded videos may only be used as supplementary information;
  • the doctor must set up a private communication environment and use secure communication systems; privacy risks must be explained to the patient; and
  • providers of Online Medical Treatment must take adequate security measures.

In 2019, the MHLW approved coverage of Online Medical Treatment under the public national health insurance system by adding the following items to the insurance reimbursement payment list:

  • online examination fee;
  • online medical management fee;
  • online home management fee; and
  • psychiatry online home management fee.

As noted above, however, in principle, the MHLW requires an in-person initial visit for both the Medical Practitioner’s Act and the national health insurance system.

Expansion of Online Medical Treatment

In 2020, the MHLW issued Temporary and Exceptional Measures for Medical Treatment Using Telephones and Other Communication Tools Under the Spread of the COVID-19 Infection (the “Temporary Measure”), which temporarily permit the online performance of a patient’s initial medical examination. Now, a patient may receive medical treatment online even if he or she has never been examined at the hospital for the specific disease or symptom.

These measures were taken temporarily to enable patients to safely receive treatment during the spread of COVID-19, but the MHLW is currently preparing permanent rules permitting a patient’s initial medical examination to be conducted online. Therefore, it is likely that online medical examinations, including the initial visit, will be, under certain conditions, permanently permitted in Japan.

Broadened Regulations under the Foreign Exchange and Foreign Trade Act

The Foreign Exchange and Foreign Trade Act (the "FX Act") regulates foreign exchange transactions, foreign trades and in-bound and out-bound investment. Although the FX Act does not directly regulate business in the life science field, investments and trades in the life science business, as well as other fields of business, are subject to the FX Act. Consideration of the FX Act is important when investing in a Japanese company that operates a business in the life science field.

Typically, an in-bound investment by a foreign investor is subject to a post facto report to the Bank of Japan. However, an inbound investment into certain listed industries requires prior notification (in addition to the post-facto report) followed by a 30-day waiting period, during which the government may issue an order to stop or change the investment. Historically, listed industries have been limited to those relating to national security (eg, weaponry, aircraft and aerospace), those relating to social infrastructure (eg, power supply, rail transport and telecommunication), and politically protected industries (eg, agriculture, forestry and fisheries). Most life science businesses, except for businesses relating to vaccines, were excluded from stricter governmental restrictions. 

However, in 2019, against the backdrop of recent international economic conflicts, the Japanese government amended the FX Act and tightened the inbound investment regulations by broadening the definitions of a foreign investor and an inbound investment, and adding some industry fields, such as software, to the listed industries. In June 2020, amid the COVID-19 pandemic, the government also added the pharmaceutical drug manufacturing business in the infectious disease area and the specially controlled medical device (Class IV) manufacturing business to the listed industries. Thus, a 30-day prior notification is required for certain investments into these businesses in Japan as provided below:

Entities listed in securities exchange

If the acquisition of shares is less than 1%, no notification is required. If the acquisition of shares is 1% or more, but less than 10%, prior notification is required if any of the following items are met:

  • the investor appoints him or herself or any person related to him or her as the director or the auditor of the issuing company;
  • the investor, either by him or herself or through another shareholder, proposes important business matters concerning the designated business, such as business transfer, to the shareholders’ meeting of the issuing company;
  • the investor accesses undisclosed technical information pertaining to businesses in the designated industries;
  • the investor attends, or causes any person he or she has designated to attend, the board of directors’ meeting or a meeting of any other important decision-making committee of the issuing company; or
  • the investor makes a proposal in writing or in an electromagnetic record to the board of directors or other important decision-making committee of the issuing company.

If the acquisition of shares is 10% or more, prior notification is required

Entities not listed in securities exchange

If the acquisition of shares is less than 1%, prior notification is required. If the acquisition of shares is 1% or more, but less than 10%, prior notification is required. Finally, if the acquisition of shares is 10% or more, prior notification is required.

After the amendment to the FX Act, the term "foreign investor" includes, among others:

  • non-resident individuals;
  • organisations established under foreign laws and regulations;
  • organisations in which the total of the number of votes held by the following individuals or entities make up at least 50% of the votes of all shareholders or members:
    1. non-resident individuals;
    2. organisations established under foreign laws and regulations; and
    3. companies in which the sum total of the number of votes held by non-resident individuals and organisations established under foreign laws and regulations make up at least 50% of the votes of all shareholders/members and subsidiaries (ie, companies in which the parent company holds at least 50% of the votes, or are managed by the parent company) of such companies; and
  • organisations in which non-resident individuals constitute the majority of the officers (Article 26, Section 1 of the FX Act).

The term "inbound investment" includes:

  • acquisition of shares in a non-listed company;
  • acquisition of 1% or more shares in a listed company;
  • consent for a substantial modification to a company's business purpose;
  • election of a director or auditor;
  • assignment of the entire business;
  • lending of money; and
  • acquisition of business through business transfer, absorption-type split or merger (Article 26, Section 2 of the FX Act and Article 3, Section 1 of the Ordinance on Direct Inbound Investment).
Anderson Mori & Tomotsune

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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

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Nagashima Ohno & Tsunematsu is widely regarded and recognised as one of Japan’s leading international law firms, 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 across all of its practice areas. The pharmaceutical and healthcare team consists of over 14 lawyers, including six partners, based in the Tokyo office. Key areas of the firm’s practice relating to the life sciences sector include pharmaceutical and healthcare, risk and crisis management/compliance, corporate/M&A, data protection and privacy, intellectual property, antitrust/competition, consumer law (consumer litigation), dispute resolution, and labour and employment.

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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 South-East 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 life cycle and helps clients to navigate a broad range of regulatory matters.

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