I INTRODUCTION

The life sciences sector is strictly controlled in Japan in terms of regulation and intellectual property.

Drugs, medical devices, cosmetics and other medical or medicine-related products, including computer programs, are primarily regulated by the Act on Securing Quality, Efficacy and Safety of Pharmaceuticals, Medical Devices, etc. (the PMD Act). Supplemental information regarding pharmaceutical regulations is provided in cabinet orders and ministerial orders relating to the PMD Act, as well as in other related administrative orders, notifications and guidelines.

In order to manufacture, import and market medical products, the following are required in terms of licences and approvals: marketing business licences; manufacturing business licences (or manufacturing business registration, in the case of medical devices); accreditation as a foreign manufacturer, for products manufactured outside Japan; and marketing authorisation, required for each medical product.

The Ministry of Health, Labour and Welfare (MHLW)2 is the principal regulatory authority for medical products. With respect to substantive examination, the Pharmaceuticals and Medical Devices Agency (PMDA), a Japanese regulatory body, will perform the regulatory check procedures instead of the main ministry. Additionally, local governments (i.e., prefectural governments, such as the Tokyo metropolitan government) are primarily responsible for overseeing pharmaceutical companies, on behalf of the MHLW, with regard to conventional medical products.

Foods including health-promoting or functional foods are less strictly regulated and are mainly regulated by the Food Sanitation Act, with specialised regulations under the Health Promotion Act and the Food Labelling Act.

Protection of intellectual property rights is effected through the Patent Act, the Utility Model Act, the Design Act and the Trademark Act (administered by the Commissioner of the Japan Patent Office). The Patent Act grants a 20-year term of protection against the manufacture, use, sale, import or export of a patented invention without the patentee's permission. The Trademark Act provides a registration framework for brand names, three-dimensional marks, logos and, in certain cases, sounds and other types of non-classical marks. Pharmaceutical products, including regenerative medical products, are subject to patent term extension, which is also effected by the Patent Act, under certain circumstances; the patent term may be extended by five years at most, in addition to the normal 20-year term. There is also the Orange Book,3 which lists information about drug approval; however, this is not US-style patent linkage under Japanese practice but substantially speaking, the Japanese practice has an effect of patent linkage practised in the US.4

Additionally, recent law amendments have introduced some regulation and protection of valuable data including clinical trial data and real world data.

II THE REGULATORY REGIME

i Classification

Types of products

Medical products

Medical products subject to the PMD Act5 are categorised into the following five product categories:

  1. drug or medicines;6
  2. quasi-drugs or quasi-medicines;7
  3. cosmetics;
  4. medical devices; and
  5. regenerative medical products.8
Food products

Foods are categorised into the following categories according to relevant acts (note that foods with health claims are currently classified into three categories):

  1. foods in general; and
  2. foods with health claims:
    • foods for specified health uses;9
    • foods with nutrient function claims;10 and
    • foods with function claims.11

Foods in general are regulated by the Food Sanitation Act, whereas 'foods for specified health use' and 'foods with nutrient function claims' are regulated by the Health Promotion Act under the supervision of the MHLW, and 'foods with function claims' are regulated by the Food Labelling Act under the supervision of the Consumer Affairs Agency.

There are also approximately 1,000 ingredients on the Food and Drug Classification List that may be distributed as drugs if their effects and efficacy are labelled, and distributed as foods if their effects and efficacy are not labelled.12

Particulars

Drugs, quasi-drugs and regenerative medical products

Drugs are defined as the products that are listed in the Japanese pharmacopoeia [current version is Supplement I, the 17th Edition, issued on 1 December 2017], in addition to certain other materials that are specifically used for the diagnosis, treatment or prevention of disease (excluding medical devices, cosmetics and regenerative medical products). Under the definition of the PMD Act, drugs include those for veterinary use. Distinguishing between drugs, quasi-drugs, regenerative medical products, cosmetics, medical devices and foods is sometimes a practical issue that depends not only on the ingredients of the product but also the labelling, advertising and promotion methods utilised for the relevant product, including statements of the product's virtues and its historical background.

'Quasi-drug' is defined as an item for the purpose of: (1) preventing nausea and other discomfort; (2) preventing heat rash, soreness, etc.; (3) encouraging hair growth or removing hair; or (4) exterminating and preventing mice, flies, mosquitoes, fleas, etc. Quasi-drugs include, but are not limited to: deodorants, depilatories, hair growth treatments, hair dyes, perm and straightening products, as well as medicated cosmetics, such as whitening products, anti-ageing products, and oily skin or acne treatment products. Care must be taken for products used for aesthetic purposes, which are often classified as quasi-drugs under Japanese practice.

Regenerative medical products are categorised separately (a requirement introduced in the 2014 Amendment to the PMD Act (the 2014 Amendment)), and the expeditious and conditional authorisation of these products is the aim to meet the high expectations for innovative medicines in this category. Regenerative medical products are defined as processed cells that are intended to be used for:

  1. the reconstruction, repair or formation of structures or functions of the human body, or the treatment or prevention of human diseases; or
  2. gene therapy.13

Drugs are further classified into ethical drugs and over-the-counter (OTC) drugs. Most ethical drugs require a prescription. In vitro diagnostics are usually classified as drugs rather than medical devices according to Japanese practice.

Medical devices

Medical devices are devices for treatment, prevention or diagnosis, which are listed in the Cabinet Order of the PMD Act. Medical devices are divided into classes I, II, III and IV, in order of strictness of control. Class I devices are ordinary medical devices, substantially corresponding to Class I devices under the international task force. Class II devices are controlled medical devices, substantially corresponding to Class II devices under the international task force. Classes III and IV are strictly controlled medical devices, which are basically equivalent to Class III and IV devices under international classification by the Global Harmonisation Task Force. These classes depend on the magnitude of the risk to human health and life posed by the subject device. The type of business licence that is required for manufacturing, marketing or distributing a medical device depends on which of the four classes the subject device falls under. Software or computer programs used for data processing for MRI, CT, X-ray, PET-CT and other medical device hardware are also categorised as medical devices, according to the 2014 Amendment.

Cosmetics

Cosmetics are defined as substances that have a mild action on the human body, and that are intended to be used on the human body by rubbing, sprinkling or another method, with the aim of cleaning, beautifying and increasing the attractiveness, altering the appearance or keeping the skin or hair in good condition (excluding drugs and quasi-drugs). Cosmetics generally correspond to their counterparts in other jurisdictions; however, there are a number of discrepancies among various countries and categories. As such, certain products require practitioners' advice before being introduced into the Japanese market. In particular, products that have medical functions are often classified as quasi-drugs.

ii Non-clinical studies

A non-clinical (or preclinical) study of a drug to be authorised shall be included in the application form for obtaining market authorisation, and as such must be in compliance with the Ministerial Order for Good Laboratory Practice (the GLP Order).14 Requirements stipulated in the GLP Order particularly include requirements for trial facilities, equipment and trial plans, as well as rules for animal care and breeding in relation to experimentation on animals. Non-clinical studies can refer to the guidelines published by the PMDA.15

iii Clinical trials

Clinical trials are mainly regulated by the PMD Act and the Ministerial Order for Good Clinical Practice (the GCP Order).16 Clinical trials are regulated by the governmental organisations (i.e., the MHLW and the PMDA). Drugs for clinical trials are strictly controlled under the Notice from the MHLW.17 The Centre for Clinical Trials, Japan Medical Association, also provides guidelines for GCP, etc.18 Clinical trials specifically for marketing approval are called chiken under the Japanese practice, and are different from other types of clinical trial. Some clinical trials other than chiken, classified as 'specified clinical research', are controlled under the Act on Clinical Research, which was enacted on 7 April 2017, and will come into effect within one year from that date.19

Prior registration with the authority

Prior registration documents must be prepared and submitted to the authority before performing a clinical trial for market authorisation. A sponsor should prepare a protocol, which shall be reviewed by the institutional review board (IRB) of a hospital. The IRB must include at least one member who is independent and has no conflict of interest with the product at issue. The reviewed protocol shall be registered and reviewed by the MHLW. There is some difference in terms of the order of procedure between conventional clinical trial and investigator-initiated studies. To assist preparation of the prior registration documents, before the formal registration process with the MHLC, applicants can informally consult with the PMDA by presenting a draft protocol. The sponsor can only request pertinent investigators for the clinical trials after the 30-day period for the PMDA's review has passed.

Compensation and insurance for injuries

If any adverse effects are observed in a clinical trial, the sponsor shall ensure that the trial subject is compensated for any damage and losses suffered by the subject. It is therefore mandatory that sponsors engaging in clinical trials always obtain insurance cover before a trial commences, since there is a potential risk associated with this type of liability. In addition, if applicable, remedies for damages under the general civil procedures are also available.

Informed consent/assent

Informed consents, or alternatively informed assents in specific cases, must be obtained from a trial subject before participating in a clinical trial, in a written format. Upon obtaining informed consents, a written explanation must be presented to all trial subjects describing the details of the clinical trial. Hospitals and doctors in charge of the trials must present explanation that includes the expected benefits and adverse effects of the trial drug, and, importantly, the trial subject's right to terminate participating in the trial. Regarding infant patients and those who are not capable of consenting, informed assent may be obtained from the patients in addition to the guardian's informed consent. There is currently no legal binding to this type of consent.

Safety reporting

Any records of clinical trial results must be maintained at the hospitals at which the clinical trial is being performed. Any party relating to the clinical trials must inform the MHLW of all serious adverse effects from the drug subject to clinical trials.

Investigator-initiated studies

In Japan, investigator-initiated studies (IIS) have been accepted since 2004, as a result of the amendment to the Pharmaceutical Affairs Act in 2003 (now the PMD Act). The GCP requirements are mostly applicable with some modification, and therefore the requirements for IIS are different from those applicable to marketer-initiated studies. IIS are typically used for drugs that are now commercially interested but medically important, such as those for rare diseases (i.e., orphan drugs) or those with extremely advanced medical technologies such as regenerative medicines. In the past, IIS have been conducted for those drugs that have already been authorised in another country but have not been subject to a clinical study in Japan for cost reasons.

iv Named-patient and compassionate use procedures

General prohibition against marketing without authorisation

In principle, drugs, quasi-drugs, regenerative medical products and medical devices cannot be distributed without a marketing authorisation.20 However, there is an exception to this rule that allows for compassionate use, as explained below.

Special procedure for importing drugs or medical devices

With respect to a drug or medical device that has only received a foreign (i.e., outside Japan) marketing authorisation, special conditions and procedures are provided. The requirements for obtaining approval under such special conditions are:

  1. marketing authorisation has been obtained in another country that has a marketing authorisation system equivalent to that in Japan;
  2. immediate use of the drug or medical device is necessary to prevent a disease that can cause death or serious harm to the health of citizens in Japan from rising to the level of a pandemic; and
  3. the drug or medical device is specifically designated through an administrative order.

Any disease, disorder or death that is supposedly related to the drug, regenerative medical product or medical device subject to these special conditions and procedures must be reported to the MHLW.

There was one case in which this special procedure was applied, which involved the importation of an influenza vaccine produced by non-Japanese manufacturers.

v Pre-market clearance

To market drugs, regenerative medical products or medical devices, an entity must have a marketing business licence, which makes it an initial marketing entity. Such a marketing authorisation must be obtained for the respective drugs, regenerative medical products or medical devices it intends to market.21 Some products, such as regenerative medical products, may be approved for marketing authorisation in an accelerated manner under special conditions. However, such conditional marketing authorisation requires additional clinical data and must be resubmitted for a 'conventional' marketing authorisation.

Application

An applicant must file an application for marketing authorisation with the MHLW. Alternatively, for some limited drugs and medical devices other than Class IV medical devices, applications may have to be filed with the relevant local government (prefectural government) or a registered non-governmental certifying agency. Generally speaking, an application for a medical product generally must be filed with the PMDA in the first place, although the application must be addressed to the MHLW or a prefectural government in writing.

Authorisation conditions

In reviewing an application, key consideration is given to the following:22

  1. quality;
  2. efficacy/effectiveness;
  3. safety;
  4. the applicant's marketing business licence;23 and
  5. the proposed manufacturer's manufacturing business licence or accreditation as a foreign manufacturer24 in which good manufacturing practice (GMP) is also checked.

Other conditions

To market drugs, a party must obtain both the appropriate authorisation to market the drug and a marketing business licence. It is possible for wholesalers or retailers to distribute the drug that has been approved. Sometimes, such wholesalers or retailers are important, particularly for foreign enterprises that have little experience in Japanese marketing. In such cases, the wholesalers and retailers taking part in the distribution must also obtain business licences in their respective relevant categories.

Applicants located outside Japan

Japan has no 'foreign marketing authorisations' per se. If a foreign manufacturer is interested in exporting a medical product to Japan, the manufacturer must, in principle, obtain marketing authorisation for a foreign-manufactured medical product or let its distributor or licensee in Japan obtain a marketing authorisation. In such a case, the foreign manufacturer must file an application through an agent located in Japan that has a marketing business licence to obtain an appropriate marketing authorisation.

Fee

The application fees for marketing authorisation vary, depending on the type of medical product. The fee for a marketing authorisation for a novel drug ranges from approximately ¥2 million to ¥30 million (note that travel expenses for investigation in a foreign country should also be paid).25 GMP, GLP and GCP examination fees are also incurred, which together range from ¥3 million to ¥7 million (note that travel expenses for investigation in a foreign country have to be borne by the applicant if the applicant is a foreign entity). For applications for marketing business licences and manufacturer's licences, additional fees shall be incurred, ranging from ¥50,000 to ¥150,000. Thus, in total, the maximum fee may go up to approximately ¥50 million.

Standard review time, special procedures and conditioned procedures

The Japanese government announced that it aims to shorten the standard period for reviewing an application for a novel drug approval to 12 months, commencing from the date of the official acceptance of the filed application, and over the past couple of years this has been achieved for 80 per cent of the newly approved drugs. For prioritised examination, the period for the review is set down to nine months, and 70 per cent of the newly approved drugs so far have achieved this goal. It is of course that the actual period of review time depends on factors such as the type of medical product.

With respect to generic drugs, an abridged procedure is provided. The examination of an application for generic drugs mainly focuses on: (1) the equality of the original drug and the generic drug, including bioequivalence, chemical equivalence of active pharmaceutical ingredients (APIs) and stability; (2) the adequacy of the data attached to the application; and (3) the proposed manufacturing facility's compliance with GMP.

To obtain an authorisation through the abridged procedure for generic drugs, all the following conditions (among others) must be met:

  1. the re-examination period for the original drug must have expired;
  2. bioequivalence – in which the quality, effectiveness and safety of the generic drug are to be equal to those of the original drug;
  3. API equivalence – in which the generic drug is capable of being a substitute for the original drug;
  4. stability; and
  5. the patent for the original drug must have expired. In this regard, there is no equivalent to US-style patent linkage in Japan.

With respect to a 'use' patent, carve-out approvals are possible under current Japanese practice.

With respect to an orphan drug that is being used to cure a rare but serious disease, there is a special rule. Specifically, the review thereof can be expedited and prioritised over applications for novel drugs if the orphan drug is found to contribute to an apparent improvement in the quality of medical care for the subject disease.26 The conditions for a drug to be qualified as an orphan drug include the number of patients that have the particular disease and whether the particular drug is expected to have significant value if approved. The critical number of patients is currently designated as 50,000 by the Notification from the Director of the Department of Pharmaceuticals and Food No. 0401-11 of 1 April 2015.

No US-style patent linkage

A request form for a market authorisation shall include the relevant patent information. The PMDA is said to stop or suspend a market authorisation if it recognises a patent in issue. However, there is no abbreviated new drug application system, such as in the United States, and thus there is no US-style patent linkage in Japanese practice. Practically speaking, the Japanese practice has an effect of patent linkage practised in the United States. Specifically, the innovator drug company may request suspension of drug approval for which the innovator company believes that the third-party company requested for marketing authorisation. The PMDA shall make an inquiry to the third party regarding the concerns relating to the potential infringement, and the third party must respond to the inquiry. If the response is not reasonable enough, the PMDA shall substantially stay the authorisation process. This is all administrative process, but the parties can file an infringement suit to the relevant court. Patent cases are heard before the special instance courts, which are the Tokyo and Osaka District Courts. The court of second instance is consolidated to the Intellectual Property High Court of Japan (IPHC-J) located in Tokyo.

Procedures for conditional and time-limited approval

Oncology drugs and orphan drugs may be subject to a conditional approval system. Additionally, with respect to regenerative medical products, a new process called the 'conditional and time-limited approval system' has been introduced by means of the 2014 Amendment. Under the new regime, after the safety is confirmed and the results predict 'likely' efficacy, the product may be given conditional, time-limited marketing authorisation to enable timely provision of the products to patients. Applicants can, of course, take a 'normal' authorisation path. In the conditional and time-limited authorisation path, the initial approval is time-limited and post-marketing safety measures must be taken, including priori-informed consent of risk to patients and obtaining 'normal' authorisation by collecting confirmation data of efficacy and safety within a maximum of seven years.

vi Regulatory incentives

Patent protection

Medical products, and the technologies related thereto, can be protected by substance patents (also known as compound patents), medical-use patents, formulation patents and manufacture method patents.27 Patent protection lasts for 20 years from the filing date of the application. Payment of an annual fee is required to maintain the patent registration. Methods of medical acts per se, such as methods of treatment, diagnosis and surgery, are not patentable subject matter under Japanese patent practice. Note that second medical use and dosage regimen inventions are patentable under Japanese patent practice. However, this requires a special claim format and it is therefore strongly recommended that a local patent attorney with special knowledge and experience is consulted.

Extending term of patent protection

For medical products, the term of a patent can be extended at the request of the patent owner under certain conditions.28 It is important to note that it is only the patentee who can file a patent term extension application, which may be different from the one who has received a market authorisation. Further, it is also important that the patentee can only file such a patent term extension (PTE) application only after a market authorisation pertinent to the patent is obtained, and more importantly, within three months from the authorisation date. The term of the extension, which may not exceed five years, is generally equivalent to the period during which the patent owner, including its licensees, was prevented from implementing the patented product while waiting for the medical product registration required under the PMD Act. PTE applications may be filed for drugs and regenerative medical products but PTE applications are not allowable for medical devices. It is also important to note that it is NOT possible to file a PTE application on or after the six months from the patent expiry date. Instead, in such a case, the patentee must file prior notice before the six-months due date comes.

According to recent developments before the Supreme Court of Japan, practically speaking, the scope of the claims for a patent to be extended by a patent term extension request is currently substantially limited to the scope of the market authorisation in issue.29 More recently, the Grand Panel of the Intellectual Property High Court of Japan held that the fact a later approved drug is generic does not necessarily mean that the generic drug infringes a patent covering the original innovator drug, if another ingredient other than an API is different in terms of the scope of the claims.30

Protection under the PMD Act

Japan has no explicit data exclusivity or data protection system in an independent format. However, the re-examination period plays a substantially similar role to that of data exclusivity. Specifically speaking, when a novel drug is approved, the new drug is subject to a re-examination. The re-examination period is generally eight years after the initial authorisation for a regular novel drug. As a matter of practice, an applicant for a generic product cannot apply for a marketing authorisation under the PMD Act until the re-examination period for the original (innovator) drug expires (see generic drug requirements above), since such an applicant cannot rely upon the original drug's clinical data. As such, in substance, this re-examination system has an effect that is equivalent to that of data exclusivity. To encourage new orphan drug development, the re-examination period for an orphan drug is extended to a maximum of 10 years. For novel usage for drugs already approved for different uses, the re-examination period is shortened since some of the regulatory data are considered for the same APIs. For example, regarding novel efficacy, for novel dosage and application and other applications that are different from the original innovator's drug, a re-examination period of four years is currently granted, and regarding new combination and novel administration, a six-year re-examination period is granted. For novel formulation or similar that is deemed to be identical to the original innovator's drug, only the remaining period of the original innovator's drug is granted.

vii Post-approval controls

Post-marketing commitments and pharmacovigilance obligations (Phase IV)

After the launch of a drug onto the market, the marketer holding authorisation must conduct post-marketing surveillance regarding quality control, safety and observing adverse effects, etc.31 If a marketer becomes aware of any issue relating to the effectiveness or safety of the marketed drug during the post-marketing surveillance, the marketer must:

  1. conduct a drug recall campaign;
  2. report the discovery to the PMDA;
  3. issue public notices if the issue is important; and
  4. take other appropriate measures to prevent further damage or loss to patients.

Period of authorisation and renewals

There is another type of checking system under current law and practice, which is called re-evaluation. As the evaluation process is developed gradually according to the time, the prior approval may not be appropriate after certain period of time. Specifically, although approval for a novel drug is generally subject to re-examination eight years after its initial authorisation, there may be cases where, subject to the type of medical product, the approval period may be shortened. In this regard, the MHLW occasionally conducts re-evaluations of drugs. In the late 1990s, a general re-evaluation was conducted and a number of cerebral ameliorator drugs were cancelled from authorisation.

Amendment to, transfer of and cancellation of marketing authorisations

Any amendment to a product subject to marketing authorisation (except for minor amendments) generally requires approval from the MHLW, while a minor amendment can be made by notifying the MHLW.32 The transfer of marketing authorisations to another marketer is generally permissible, as long as the new marketer holds an adequate marketing business licence, and after prior notice of the transfer has been submitted to the MHLW. Any amendment to the medical packaging insert accompanying a medicinal product must be reported to the MHLW, and the amended insert must also be uploaded to the marketer's website. This regulation has been introduced only recently.

Additionally, criminal and administrative sanctions may be imposed. With respect to criminal sanctions, a pecuniary offence or imprisonment involving hard labour, or both, may be imposed. Regarding administrative sanctions, the authorities may issue a product recall administrative order, or an order cancelling a marketing authorisation or marketing business licence in response to a violation of a marketing authorisation.

viii Manufacturing controls

Application

There are two types of business licence related to the manufacture of medical products:

  1. a marketing business licence, which is required for the initial marketing of a manufactured or imported medical product in Japan; and
  2. a manufacturing business licence,33 which is required to manufacture a medical product. (If a manufacturer of an imported product is located outside Japan, accreditation as a foreign manufacturer is also required).

The type of licence can affect the nature of the business being carried out. For example, a business entity that has obtained a manufacturing business licence but not a marketing business licence cannot distribute medical products (manufactured or imported by the company) to others (e.g., a wholesaler). A transferee of a medical product manufacturing facility, such as an entity that acquires and takes over a drug manufacturing business, is also required to apply for its own manufacturing business licence to succeed in such a manufacturing business. This is because it is not permitted to transfer a manufacturing business licence.

Conditions

The conditions required for obtaining a manufacturing business licence include certain facility, staffing and other standards, as set out under a ministerial order of the MHLW.34 Medical devices have specific conditions.35 The manufacturer must comply with the GMP regulations stipulated in the relevant MHLW order.

In addition, an applicant for a marketing business licence must satisfy:

  1. standards for maintaining quality assurances, as provided under the GQP regulations stipulated in the Ministerial Ordinance relating to standards for quality assurance of drugs, quasi-drugs, cosmetics and medical devices;
  2. standards for post-marketing safety management, as provided under the good vigilance practice regulations stipulated in the Ministerial Ordinance relating to standards of post-marketing vigilance practice of drugs, quasi-drugs, cosmetics, medical devices and regenerative medical products;
  3. standards for the good post-marketing surveillance practice regulations, which are stipulated in the Ministerial Ordinance relating to standards of post-marketing study practice of drugs, quasi-drugs, cosmetics, medical devices and regenerative medical products; and
  4. standards provided under the Ministerial Ordinance relating to GMP (for drugs), the Ministerial Ordinance relating to quality management systems (for medical devices and in vitro diagnostics) and the Ministerial Ordinance relating to good cell and tissue practice (for regenerative medical products).

With respect to medical devices, manufacturers have to obtain a certificate of ISO standard (i.e., ISO13485). In vitro diagnostic products, which fall within the category of drugs, may require conditions similar to those for medical devices.

Restrictions on foreign applicants

A foreign manufacturer of medical products cannot distribute their products directly in Japan, but must arrange distribution through a licensed marketing business operating entity. In principle, accreditation requirements for a foreign manufacturer are basically the same as those to acquire a Japanese manufacturing business licence. An application for accreditation as a foreign manufacturer can be filed with a marketing business operating entity in Japan.

ix Advertising and promotion

Restrictions

False, excessive or misleading advertisements are prohibited by the PMD Act in relation to the name, manufacturing method, effectiveness, etc., of medical products, regardless of explicit or implicit communication.36 In this regard, the MHLW has issued Guidelines for the Adequate Advertisement of Drugs, with official commentary, which provide detailed explanations, including examples of adverts that the MHLW considers to be false, excessive or misleading. Advertising ethical drugs to the general public is generally prohibited. The Manufacturers Association has also issued standards, called promotion codes for drugs for prescription.

Internet advertising

These advertisement-related regulations apply equally to advertising over the internet. Websites and other channels such as the social networking sites of advertisers that contain hyperlinks to other websites are considered together as a single advertisement in determining whether a violation of the advertisement-related regulations exists (even where each website on its own may not explicitly violate these regulations).

x Distributors and wholesalers

Wholesaler and retailer business licences

An entity that intends to market drugs, regenerative medical products and medical devices must hold both a marketing authorisation and a marketing business licence.37 There are differences between business licences for wholesalers and those for retailers; in other words, there are two types of licence and one party can apply for both types.38 As such, wholesalers and retailers of drugs, regenerative medical products or medical devices are subject to separate business licence requirements.

Marketing through the internet or mail order

Over-the-counter (OTC) drugs can be generally marketed through the internet and by mail order. However, there are some exceptions and certain potent drugs and OTC drugs that were previously classified as ethical drugs (most of which require a prescription, as described below) cannot be sold on the internet or requested by mail order, and require face-to-face communication with a pharmacist before being sold. Under the current practice, such internet or mail order retailers are required to have at least one 'real-world' store where they can receive orders from consumers via the internet or mail.

xi Classification of products

Prescription drug and OTC drug

In addition to the classifications of drugs, quasi-drugs, cosmetics, medical devices and regenerative medical products, drugs are further classified as either ethical drugs (most of which require a prescription) or OTC drugs. In other words, of the drugs authorised in the market, the MHLW designates certain drugs that may not be distributed or sold without a prescription (ethical drugs). The MHLW designates prescription drugs on a case-by-case basis when granting the relevant marketing authorisation in consideration of its prescription drug designation standard. A marketer is required to obtain a marketing business licence to market a prescription drug.

OTC drugs are further classified as either pharmacist's intervention required medicines (PIRMs) or general OTC drugs. PIRMs were introduced in the 2013 Amendment to the PMD Act, wherein PIRMs cannot be sold without a pharmacist's intervention and purchasers are strictly limited and controlled to those patients in need of such drugs.39 PIRMs include 'switch OTC drugs' and 'direct OTC drugs'. General OTC drugs are categorised as first, second or third class, mainly according to the associated risk factors. First-class OTC drugs must be sold by a pharmacist, whereas second-class and third-class OTC drugs may be sold by a pharmacist or a registered sales clerk. First-class and second-class OTC drugs must only be sold with the appropriate information about the drugs.

Prescription drug designation standard

Prescription drug are designated by the MHLW, which includes the following types:40

  1. drugs that cannot be used effectively or safely without proper selection based on a doctor's diagnosis;
  2. drugs that require periodic medical checks to avoid serious adverse effects; and
  3. drugs that can be used for other improper purposes (e.g., recreational addictive use).

Prescription drugs include (1) radioactive drugs; (2) narcotics; (3) psychotropics; (4) analeptics; (5) analeptics raw materials; (6) specific biological products; (7) injectables (excluding (1) to (6) aforementioned); (8) specific substances designated by the MHLW (currently 974 substances) and the derivatives and hydrates thereof, and salts thereof (excluding (1) to (7)); and (9) oxytocin, serum gonadotropin and placental gonadotropin.41

xii Imports and exports

Licences and authorisation for imports

To import and sell a drug, regenerative medical product or medical device in Japan, it is generally required to have the following business licences and authorisation:

  1. accreditation as a foreign manufacturer by an offshore manufacturing factory for the products being imported;
  2. a manufacturing business licence held by a domestic factory (if part of the manufacturing process, such as packaging of the imported products, is conducted in Japan before marketing);
  3. a marketing business licence held by a marketer, for marketing the imported products;
  4. a marketing authorisation held by a marketer, for marketing the imported products; and
  5. an import report from a marketer, for customs clearance.

Licences and authorisation for exports

The following business licences and authorisations must be obtained to export a drug, regenerative medical product or medical device from Japan:

  1. a manufacturing business licence held by a domestic factory for manufacturing products for export; and
  2. an export report from a domestic factory for product export.

Even if the products are solely for export and distribution outside Japan, factory manufacturing products for export located in Japan must be subject to a GMP compliance review by the MHLW.

Exportation of medical products from Japan to other countries can be categorised as follows:42

  1. when exporting products on the Japanese market that are already approved and licensed or authorised under the PDM Act for domestic markets, without any changes (no further licences are required for such exports);
  2. when exporting products on the Japanese market that are already approved and licensed or authorised under the PDM Act for domestic markets with changes (including changing package designs and attaching further labels with translations, etc), it would be regarded as having produced medical products for export. Therefore, in such a case, it would be necessary to obtain authorisation as mentioned above; and
  3. when exporting products without having obtained authorisation under the PMD Act, it would be necessary to obtain a manufacturing business licence and an export report.

Additionally, when exporting products manufactured in Japan, the country which is importing the products may require a GMP conformance certificate.

xiii Controlled substances

Certain substances are designated as controlled substances in Japan; for example, narcotics and psychotropic drugs are heavily controlled by the Narcotics and Psychotropic Control Act. This act regulates the import, export, manufacture, sale and purchase, possession, use and disposition of narcotics and psychotropic drugs. Doctors, importers, exporters, manufacturers, wholesalers, retailers, hospitals and research institutions are required to obtain special permission to handle narcotics or psychotropic drugs. The MHLW often provides notifications, which are available from its website.43 Other acts for the control of substances are the Stimulants Control Act, which mainly focuses on (meth)amphetamine, the Cannabis Control Act, the Opium Act, and the Ministry Ordinance for manufacture and handling of radioactive drugs.

Furthermore, certain drugs falling within the scope of substances are controlled by the Poisonous and Deleterious Substances Control Act. This act defines poisonous substances, deleterious substances and special poisonous substances, all of which are high on the list. These substances can be searched for using the database search tool provided by the National Institute of Health Sciences.44

xiv Special remarks on traditional medicines

There are some issues regarding 'Western herbs', for which there is no clear definition under Japanese pharmaceutical practice. In terms of 'food', Western herbs are subject to laws and regulations relating to food control, such as the Food Sanitation Act and the like. In terms of agricultural products, they are subject to the Act on Standardisation and Proper Quality Labelling of Agricultural and Forestry Products (JAS Act). Regarding labelling, they are subject to the Act against Unjustifiable Premiums and Misleading Representations. If Western herbs are intended to be used with health claims, they are subject to laws and regulations relating to foods with health claims. Even if a Western herb of interest is already approved in a country outside Japan, that herb must be subject to general procedures for obtaining marketing approval. However, when submitting an application for marketing approval, some of the required documents can be omitted by relying on documents relating to clinical trials conducted outside Japan. Specifically, clinical trial results submitted to a non-Japanese examination authority as exhibits for obtaining marketing authorisation, such as comparative clinical trials using a substantially equivalent formulation to show effects or efficacy, dosages, regimens, or an academic article submitted and published by an internationally recognised medical journal including such results, it is only necessary to submit safety results using Japanese subjects.45 Some Western herbs previously marketed in Europe have already been approved in Japan.

With respect to Japanese traditional medicine (Kampo), the MHLW has legislated a specific list naming products that satisfy approval criteria as a general OTC drug stipulated by the Japanese government, which require the least documentation of all the OTC categories. As of September 2016, 15 categories are specifically defined, such as analgesics, etc., and types of active pharmaceutical ingredients, formulation types, dosages, administration routes and regimens, effects and efficacies, and packages units.46 As of April 2017, some Kampo drugs are handled by local administration offices.47 With respect to Kampo drugs other than the general OTC drugs, it is not possible to rely on 'historical' knowledge and it is therefore necessary to conduct new clinical trials, as either PRIMS or ethical Kampo drugs.

xv Enforcement

Monitoring compliance

The MHLW is recognised to be the main regulator, but in practical terms, it is the PMDA and local prefectural governments that are delegated to conduct a substantial amount of its authority.48 The regulator can monitor a licensed business operating entity's business operations, to ensure compliance with the rules and regulations provided under the PMD Act. The regulator can monitor and oversee medical products that are subject to marketing authorisation. Novel drugs are subject to re-examination after a certain period. In addition, an applicant that receives authorisation must have its medical product re-evaluated upon receipt of an MHLW order.

Imposing penalties

The regulator can take actions against licensed business operating entities, which include:

  1. inspecting offices and factories;
  2. ordering the disposal, recall or other appropriate treatment necessary to protect public health;
  3. requiring that access be granted to the inspector designated by the regulator, who is responsible for the subject investigation;
  4. temporarily suspending pharmaceutical business operations;
  5. ordering the replacement of certain key personnel relevant to the pharmaceutical business;
  6. cancelling a business licence or accreditation it had previously granted; and
  7. demanding a report that includes data about adverse reactions to the medical product, recall information, etc.

Further, criminal sanctions can be imposed in response to violations of certain regulations applicable to pharmaceutical business operating entities.

III PRICING AND REIMBURSEMENT

A universal healthcare system was introduced in Japan in 1961 and has been well organised thus far, although some financial problems still exist and could become more serious in the future. Under the universal healthcare system, most legal residents are covered. Costs for a substantial number of the medical services provided and prescription drugs sold, as well as certain medical supplies, are covered by this system.

In this regard, the national health insurance price list has an important role in Japan. For example, the costs for drugs prescribed by a doctor may only be reimbursed if the subject drugs are listed on the national health insurance price list. As such, this list is deemed to be very important for running businesses in the medical field.

Costs for medical services provided using a medical device are reimbursed if those services are covered by the national health insurance. Additionally, costs for certain expendable medical supplies can also be reimbursed if they fall within one of the classifications of the medical supplies that are listed on the price list. In the case of large pieces of medical equipment and non-expendable medical devices, however, the costs of the devices themselves are not reimbursed; only the cost for utilisation may be subject to reimbursement.

The scope of the medical services, drugs and medical supplies covered by national health insurance, and the prices designated for each, are determined by the MHLW in consultation with a specialists' committee. Usually, there is a 10–30 per cent rule for patients to pay; however, there is an upper limit cap, which prevents patients from paying too much. As such, the actual costs for patients are limited and controlled.

Reimbursement under the national health insurance system is generally made through a benefit-in-kind system. A large portion of the cost of the medical services, drugs and medical supplies covered by the health insurance is directly paid to the hospitals, doctors or pharmacists providing the services, drugs or supplies to patients.

The amount of reimbursement is based on the price of the medical services, drugs or medical supplies specified on the respective price list. The patient is required to pay the hospital, doctor or pharmacist a designated portion of the cost of such services, drugs or supplies, which is not reimbursed under this system.

Discussion is continuing as to whether price alteration should be conducted every year instead of every two years to more closely reflect changes in the market.

With respect to pricing reform, the Japanese government has introduced drastic policy changes in the pricing system. Instead of a drug price revision every two years, Japan has introduced an annual revision system. In addition to the re-establishment of the evaluation system for innovation drugs, Japan has introduced a use of health technology assessment (HTA), including a cost-effectiveness evaluation system, when setting drug prices, particularly blockbusters. With respect to reference pricing lists overseas, currently those of the United States, France, the United Kingdom and Germany are considered, including Red Book. In 2018, Red Book will be excluded from consideration and, instead, ASP and NADAC will be considered.

IV ADMINISTRATIVE AND JUDICIAL REMEDIES

Generally speaking, an administrative disposition made by an administrative agency, such as an administrative remedial order or a revocation of a licence, may in principle be subject to an appeal to an administrative agency, in accordance with the Administrative Appeal Act; or a Japanese court, in accordance with the Administrative Case Litigation Act. Special provisions are provided by the PMD Act.49

The Administrative Appeal Act, enacted on 1 April 2016 and currently in force, is a result of renovation during the past 50 years. Under the new system stipulated by the amended Administrative Appeal Act, a person affected by an administrative disposition may file an application for review with the administrative agency that is superior to the agency that made the disposition, or, if no such superior agency exists, with the administrative agency that made the disposition. This type of appeal must be filed within three months of the day that the affected person became aware of the subject disposition (note that the date of the recognition is excluded and thus the calculation is made from the following date). Extensions are allowable only if there are reasonable grounds to justify such an extension. Generally speaking, extensions are not permitted, and it is therefore advisable to file an appeal as early as possible. In cases where an administrative agency renders a written disposition that is subject to such an appeal, the agency responsible for the disposition must inform the recipient, in writing, of the agency to which an appeal may be filed and the time limit for filing an appeal.

Additionally, a person affected by an administrative disposition may also dispute the disposition by bringing suit in a Japanese court pursuant to the Administrative Case Litigation Act. There are a number of types of administrative litigations under the Administrative Case Litigation Act, including an action for a revocation of disposition and an action for a declaration of nullity. An action for a revocation of disposition must, in principle, be filed within six months of the day that the affected person became aware of the subject disposition or within one year of the day of the subject disposition, whichever comes first, in the absence of reasonable grounds.

Generally speaking, the trial procedures resulting from an appeal are stipulated in the Administrative Appeal Act and are not as complicated as court proceedings performed in a litigation case before the court pursuant to the Administrative Case Litigation Act.

With respect to intellectual property examination, specific acts such as the Patent Act supersede the above-mentioned general procedure, and examination results of patent, utility model, industrial design and trademark applications shall be appealed to the Trial and Appeal Boards within the Japan Patent Office. If an applicant is not satisfied with the decisions made by the Trial and Appeal Boards, an appeal can be made to the Intellectual Property High Court of Japan, in Tokyo.

V FINANCIAL RELATIONSHIPS WITH PRESCRIBERS AND PAYERS

The financial relationship between prescribers and payers is very restricted in Japan. The Act against Unjustifiable Premiums and Misleading Representations (the Premiums Act) controls the relationship, including wrongful inducement of customers through the provision of excessive premiums, incentives and other benefits; these acts are prohibited and controlled by the Premium Act. There are a couple of guidelines and codes established in accordance with the authority's order. In this regard, the Japan Fair Trade Commission (JFTC) and the secretary general of the Consumer Affairs Agency (CAA) has power to control trade in terms of medical products. With respect to pharmaceutical drugs, the Fair Competition Code Concerning Restriction on Premium Offers in the Ethical Pharmaceutical Drugs Marketing Industry has been established by the Fair Trade Council of the Ethical Pharmaceutical Drugs Marketing Industry (the Drugs FTC), and with respect to medical devices, the Fair Competition Code Concerning Restriction on Premium Offers in the Medical Devices Industry has been established by the Japan Fair Trade Council of the Medical Devices Industry (the Devices FTC). These codes set guidelines in relation to premiums or incentives provided not only to individual physicians but also to medical institutions. If a premium or incentive is offered to physicians or medical institutions in violation of these rules, the JFTC and CAA would be likely to consider such an offer to be in violation of the Premiums Act.

In this regard, the Drugs FTC and the Devices FTC include detailed descriptions of the standards on permissible premiums and incentives, giving specific upper-limit amounts for entertainment expenses. Additionally, a number of examples of excessive premiums or incentives that are unacceptable under the Premiums Act are exemplified in these codes.

With respect to public sectors, there are additional and specific regulations with respect to financial relationships. If a public servant, who may be a physician at a hospital managed by national or local government, receives excessive premiums, incentives or other benefits in relation to his or her official function and capacity, he or she can be criminally prosecuted for bribery and the party offering the bribe may also face criminal penalties for the violation. The above-mentioned financial relationships are not necessarily direct, but even an indirect relationship may be a problem; therefore care must be taken when dealing with a public servant. The relationship may be cross-border. For example, if an act of bribery such as an offer of excessive premiums or payment of money occurs in Japan, and the bribe is offered to a public servant of another country, the party offering the bribe may also face criminal penalties under the Japanese Unfair Competition Act, among others. The Act also stipulates a number of categories that fall within the scope of criminal penalties.

Payments made to physicians and medical institutions beyond certain criteria must be disclosed in principle, and that disclosure is regulated by industry rules established for the pharmaceutical industry and the medical devices industry. Specifically, each Japan Pharmaceutical Manufacturers Association (JPMA) member is encouraged to publicly disclose all such payments made for each fiscal year according to guidelines issued by the JPMA, a voluntary organisation formed by pharmaceutical companies. With respect to medical devices, the Japan Federation of Medical Devices Association, a voluntary organisation formed by medical device companies, issues similar guidelines.

VI SPECIAL LIABILITY OR COMPENSATION SYSTEMS

Since medical products such as drugs and medical devices generally fall within the category of 'products', general rules relating to product liability under the Product Liability Act also apply with respect to tort principles or non-performance of contractual duties with some modification.

Specifically, adverse health effects arising from medical products are of note with respect to medical products, and the PMDA provides several relief services therefor. The pharmaceutical industry funds these services and the Japanese government subsidises the services. Relief benefits provided by the PMDA relating to health damage include those related to diseases and disabilities requiring hospitalisation that were caused by adverse reactions to prescription drugs prescribed at medical institutions, such as hospitals or clinics. Additionally, OTC drugs purchased at pharmacies or drug stores are also covered by the same system.

Certain anti-cancer and immunosuppressant drugs, however, are exceptions and health damage caused thereby may not be eligible for these benefits. Damage to health, including diseases, disorders and disabilities, caused by infections because of biological products are also covered by the relief benefits provided by the PMDA. These types of benefits are only applicable when the relevant medical products were used appropriately. Damages that are the result of inappropriate use of the medical products are not covered by these relief benefits.

It should be noted that any damages awarded under civil liability are, in principle, considered the main source of remedy, and thus the above-mentioned relief benefits are supplementary. That is, if a pharmaceutical business is held liable for the injuries caused by the use of a drug or biological product, the PMDA will not provide relief benefits, or the benefits will be reduced by the amount of the damages award.

With respect to adverse health effects resulting from statutory vaccinations, a different public relief system is available and thus the PMDA does not provide relief benefits therefor.

In addition to the relief services, there are certain special considerations for particular circumstances. Specifically, the PMDA provides the following relief benefits:

  1. SUMON: healthcare allowances and nursing-care expenses for subacute myelo-optico-neuropathy patients with respect to whom a settlement has been reached in court;
  2. HIV: healthcare expenses or healthcare allowances for patients who have become infected with HIV because of treatment with blood products; and
  3. HCV: financial assistance in accordance with the Act on special measures concerning the payment of benefits to assist individuals affected by hepatitis C through specified fibrinogen products and specified blood coagulation factor IX products contaminated by the hepatitis C virus.

These kinds of special remedies may be added in accordance with the updated adverse effects information.

VII TRANSACTIONAL AND COMPETITION ISSUES

i Competition law

The Antimonopoly Act provides a number of restrictions for promoting appropriate competition. Among others, in terms of the pharmaceutical industry, prohibition against maintaining resale prices often becomes an issue for drug manufacturers of prescription drugs. Specifically, in cases where a prescription drug is supplied by a drug manufacturer to a distributor, and then to a wholesaler, the sale price of the drug is officially determined based on the price of the drug specified on the national health insurance price list. The price list is reviewed periodically. The frequency of the periodic review was every two years until 2017; however, this has been proposed to be changed to every year, as mentioned in Section IV. Between 2018 and 2020, the government will monitor the actual price for all the drugs and will decide whether revision of the price list should be every year or not. The price for a prescription drug may be lowered in view of a number of circumstances; for example, if the price at which wholesalers purchase and sell the drug decreases during the two-year period. To prevent the drug price in the price list from being lowered, drug manufacturers are advised to maintain the price at which wholesalers actually purchase and sell their drugs. In addition, if the drug is protected under a patent, the price is generally maintained or the amount of reduction is minimised at the next review.

Additionally, the Antimonopoly Act prohibits a business entity from supplying goods or any other premiums to another party while, without justifiable grounds, causing said party to maintain the sale price of the goods as determined by the business entity, or otherwise restricting said party's ability to freely decide on the sale price of the goods.

Although indicating a non-binding reference price is generally considered not to violate this prohibition if the manufacturer intends to restrict the resale price of the distributors by causing them to comply with the reference price, the manufacturer may be regarded as having violated the Antimonopoly Act. Generally speaking, whether resale prices have been restricted or not is determined based upon whether any unnatural or artificial measures have been taken to substantially ensure that the distributors will comply with the sales price indicated by the manufacturer. For example, such measures include imposing, or suggesting the imposition of, an economic disadvantage if sales are not made at the manufacturer's indicated price, but are not limited thereto.

Price indications by a manufacturer are also strictly controlled: such indications may be made not only by indicating a specific (single) price, but also by indicating a specific price range or by requiring that a resale price be approved in advance by the manufacturer.

ii Transactional issues

It is important to proceed with much caution if any interested parties intend to conduct licensing and collaboration transactions in respect of drugs and medical devices in Japan. In this regard, the JFTC has established guidelines setting out its views on antitrust aspects relating to joint research and development (R&D), and the use of intellectual property, such as patents and clinical data.

There are two main sets of guidelines that pertain to transactional issues regarding R&D and intellectual property with respect to the Antimonopoly Act.

First, any transaction that may affect the Japanese market is subject to the Guidelines concerning Joint Research and Development under the Antimonopoly Act (the Joint R&D Guidelines). Such transactions are not limited and the Guidelines are applicable irrespective of whether the participants are Japanese or foreign (non-Japanese) business entities. The Joint R&D Guidelines stipulate that, if an arrangement made in respect of the implementation of a joint R&D project unjustly restricts the business activities of a participant, which may thereby impede fair competition, the arrangement may constitute an unfair trade practice prohibited under the Antimonopoly Act. In this regard, for example, in the case of contractual arrangements imposing restrictions on R&D with third parties, it is generally not considered to be an unfair trade practice to restrict R&D with third parties on the same theme as the joint R&D project during the implementation period of that project. On the other hand, restrictions on R&D after completion of the joint R&D project are, in principle, considered impermissible under the Antimonopoly Act. This is because they would unjustly restrict the R&D activities of the participants and may significantly impede fair competition. In this regard, such restrictions may be permissible if the subject restriction is imposed on the same theme only for a reasonable period of time after completion of the joint R&D project, provided that the restriction is necessary to prevent a breach of faith or to ensure acquisition of rights.

Second, with respect to intellectual property rights, which are usually deemed an exception to the antitrust concept, there is a special measure. Specifically, there are the Guidelines concerning Use of Intellectual Property under the Antimonopoly Act, which are applicable to intellectual property related to technology, such as those technologies protected by patents, designs and copyrights under Japanese acts relating to intellectual property. These Guidelines define and state the principles by which the Antimonopoly Act is applied to restrictions pertaining to the use of technology. Particularly grant-back and assignment-back arrangements under licensing agreements are strictly controlled.

VIII Clinical TRIALS Act

The Clinical Trials Act was enacted and promulgated on 14 April 2017, and was enforced on 1 April 2018. It is, however, still in the transition period until the end of March 2019. Any trials conducted before the end of March 2019 will be processed according to the old regulation, in which no strict rules are applied. The Act controls any specific clinical studies, trials and research, which are not necessarily limited to those submitted to the PMDA for market authorisation. The types of clinical research at issue are classified as either (1) any clinical studies funded by a pharmaceutical company or the like, or (2) clinical studies on compassionate use of an approved drug, such as drugs marketed in Japan but for use other than the approved indications, and drugs that are not yet approved in Japan but marketed in a certain country outside Japan. Under the Act, monitoring and audit will be made compulsory.

Since 2015, when the current international standards in accordance with IHC were implemented for clinical research conducted in Japan, it is expected that foreign researchers and practitioners will conduct clinical research in a more internationally harmonised manner, which may be easier for non-Japanese entities.

Additionally, amendments to the Act on Protection of Personal Information, which stipulates privacy under the Japanese practice, was promulgated in September 2015 and was enacted on 30 May 2017. This amendment is the first in the past half century to 'replace' existing legislation.

The amendment provides for various substantial reforms to the current legal framework, many of which will materially affect activities that involve personal information, such as clinical studies and the handling of patient information. In terms of clinical trials and data obtained therefrom, a new regulatory system will be introduced for anonymised data, which is currently not regulated under the previous law before the amendment. Under the new rules, anonymisation of personal information will need to be conducted in accordance with a designated method, and anonymised data cannot be provided to a third party without first publicly disclosing the type of personal information contained in the anonymised data and information, as well as the method of providing the anonymised data.

From an international point of view, it is important to note that a new provision and requirements will be introduced for cross-border transfers of personal data. The new rule will prohibit personal information from being transferred out of Japan without the consent of the relevant individual, unless the transfer is made either to a jurisdiction designated under the subordinate ordinance as having an equivalent level of protection for personal information, or to a third party that has established protective measures satisfying the prescribed criteria. It is expected that under the new rules in Japan, more regulations will be required with respect to a number of activities involving personal information.

In view of the above two major aspects of updates in Japanese law, clinical trials and studies in relation to Japan and the Japanese market will see a drastic change in the next couple of years.

IX BIG DATA and DATA PROTECTION

The Act Regarding Anonymised Medical Data to Contribute to R&D in the Medical Field (the Medical Big Data Act) was enacted on 11 May 2018. This act is intended to implement the necessary policies to enhance medical research using anonymised medical data, and to introduce a system in which only 'certified anonymised medical data agents' shall be entrusted with the medical information or medical big data. The agents shall be checked whether they have high security measures, and high technical and management abilities to anonymise the data for optimal use.

Before the Medical Big Data Act came into effect in 2018, revisions to the Act on the Protection of Personal Information came into effect in 2017. The amendment introduced legislation in which the use of clinical records for research can be performed without asking for a patient's consent. However, to use such data, each hospital and clinic is responsible for making its data anonymous by deleting patients' names and other privacy information, which is seen as cumbersome when their primary job is providing healthcare. The Medical Big Data Act facilitates the anonymisation. Further, the Big Data Act will allow hospitals and clinics to provide patient data to certified anonymised medical data agents to be accredited by the state. Such agents will be responsible for making the data anonymous and searchable. All clinical records, including a summary of conditions, prescriptions written by doctors and visual data such as MRI scans, are to be covered by the Medical Big Data Act.

X LIMITED PROVISION DATA

The Amendment to the Unfair Competition Prevention Act was enacted and promulgated in June 2018. In the Amendment, a new framework to protect 'valuable' data was introduced. This valuable data is called 'limited provision data'. In the new framework, the wrongful acquisition, use or provision of data that is protected by a management system (e.g., IDs and passwords) and provided to limited users is an act of unfair competition. The Act will provide civil remedies to victims; for example, rights to file a demand for an injunction or enjoy special treatments for compensation. It is, however, unclear as to what extent medical data will be covered by this regime.

XI Expected Amendment to the PMD Act

In 2018, the PMD Act was scheduled for review as the Amendment, which was introduced in November 2013, stipulated that a review must be scheduled within five years. The government has published results of such an initial review of the PMD Act. The publication proposed to introduce:

  1. a rational market authorisation examination regime to expedite new drugs, allowing rapid access by patients in need of them;
  2. internationally harmonised quality control measures including GMP and good gene, cellular and tissue-based products manufacturing practice (GCTP);
  3. review of the quality management system adaptation;
  4. modification of management measures for marketing authorisation relating to the quality according to risk; and
  5. improvement of safety measures including provision of package inserts or labels by means of electronic form that updates any relevant information in real time, and improvements in traceability – for example, by means of barcodes.50

Footnotes

1 Takeshi S Komatani is a principal at Shusaku Yamamoto.

2 Known in Japan as Kôseirôdôshô or Kôrôshô.

3 Approved Drug Products with Therapeutic Equivalence Evaluations (the list commonly known as the Orange Book) identifies drug products approved by the US Food and Drug Administration on the basis of safety and effectiveness.

4 See Notification No. 0605001 of the Economic Affairs Division, Health Policy Bureau dated 5 June 2009, and Notification No. 0605014 of the Evaluation and Licensing Division, Pharmaceutical and Food Safety Bureau (PFSB) of the Ministry of Health, Welfare and Labour, dated 5 June 2009.

5 Article 2 of the PMD Act.

6 'Medicines' and 'quasi-medicines' are often translated as 'drugs' and 'quasi-drugs', respectively, and these have the same meaning.

7 Iyakubugaihin.

8 Introduced in the 2014 Amendment to the PMD Act; products that enable skin, cartilage, etc., to be produced through the cultivation of cells (usually the patient's own cells).

9 Tokutei Hoken'yô Shokuhin or Tokuho.

10 Eiyô Kinô Shokuhin.

11 Kinôsei Hyôji Shokuhin.

12 Pharmaceutical practice director notification, Pharmaceutical Affairs Bureau No. 476 dated 1 June 1971 www.ffcr.or.jp/zaidan/FFCRHOME.nsf/pages/syokuyakukubun.

13 Defined in Article 2(9) of the PMD Act.

14 See also Article 14(3) of the PMD Act.

16 See also Articles 2 and 80 bis of the PMD Act; Article 268 of the Rule for implementing the PMD Act.

17 Pharmaceutical practice director notification, Pharmaceutical Affairs Bureau No. 480 dated 31 March 1997, regarding the standard for manufacture control and quality control of drugs for clinical trials, and the standard for good manufacturing practice regarding facilities for the manufacture of drugs for clinical trials (GMP for drugs for clinical trials).

20 Pharmaceutical practice director notification, Pharmaceutical Affairs Bureau No. 0828014, 28 August 2002. See also, Notification from Compliance and Narcotics Division, Pharmaceutical Safety and Environmental Health Bureau of the MHLW, 6 July 2016; and Notification from the director of the Pharmaceutical Safety and Environmental Health Bureau No. 1130-1, 30 November 2015.

21 Articles 14, 14 bis, 14 octies, 74, 80 and 81 of the PMD Act; Articles 27, 74 and 80(2) of the PMD Act Enforcement Ordinance; Articles 40(1), 43 and 50 of the PMD Act Implementing Rule; and Pharmaceutical practice director notification, Pharmaceutical Affairs Bureau No. 331015, 31 March 2005.

22 With respect to the standard, GLP standard, GCP standard and other assurance standards stipulated in Article 43(i), (ii), (iii) of the PMD Act Implementing Regulation.

23 Article 12 of the PMD Act, and both good manufacturing practice (GMP) and good quality practice (GQP) standards must be satisfied; the licence must be renewed every five years. The GMP standard is defined in Ministerial Ordinance for Standard for the manufacture and quality control of drugs and quasi-drugs (the GMP Order), and the GQP standard is defined in Ministerial Ordinance for Standard for the quality control of drugs, quasi-drugs, cosmetics or regenerative medical products and the like (the GQP Order).

24 Article 13, 13-ter of the PMD Act.

25 See www.pmda.go.jp/files/000214630.pdf, which has been updated as of 25 November 2014.

26 Article 14(7) of the PMD Act.

27 Article 68 of the Japanese Patent Act.

28 Articles 67(2) and 67 bis of the Japanese Patent Act, Articles 14, 14 quater and 77 bis of the PMD Act; see also, Notification from the Director of Division of Economy, Health Policy Bureau No. 0605001, 5 June 2009.

29 Genentech v. the Commissioner of the Japan Patent Office, Supreme Court of Japan, 17 November 2015 (Heisei 26 (gyo-hi) 356).

30 Debiopharm International SA v. Towa Pharmaceutical Co Ltd, the Grand Panel of the Intellectual Property High Court of Japan, 20 January 2017, (Heisei 28 (ne) 10046).

31 Quality control, etc.: Articles 17, 42, 43, 56 and 57 of the PMD Act; Ministerial Ordinance relating to the Standard of manufacture and quality control of drugs and quasi-drugs; and Ministerial Ordinance relating to the Standard of quality control of drugs, quasi-drugs, cosmetics and medical devices.

Post-marketingsafety measures: Articles 12 bis, 68 bis to 68 quindecies, and 79 of the PMD Act; Article 228 vicies of the PMD Act Implementing Rule; Ministry Ordinance relating to the Standard of post-marketing safety management of drugs, quasi-drugs, cosmetics, medical devices and regenerative medical products (GVP Ministerial Ordinance); Notification from Department of Environmental Health and Food Safety No. 1031-1, 31 October 2014.

Adverse Effects and Malfunctions Report: Articles 68 decies(2) and 68 terdecies(3) of the PMD Act; and Articles 16(3)(i) and 23(1)(i) of the Personal Information Protection Act.

32 Articles 74 bis and 80(2) of the PMD Act.

33 A manufacturer of a medical device is subject to a prior registration requirement, and is not required to obtain a manufacturing business licence.

34 Regarding Drugs: Articles 5(iii), 12 and 12 bis of the PMD Act; Article 3 of the Cabinet Order for implementing the PMD Act; Article 8 of the PMD Act Implementing Rule; Ministerial Ordinance relating to the Standard for quality control of drugs, quasi-drugs, cosmetics and regenerative medical products and the like; and Ministerial Ordinance relating to the Standard for post-marketing safety control of drugs, quasi-drugs, cosmetics and regenerative medical products and the like.

35 Regarding medical devices: Articles 5(iii), 23 bis and 145 of the PMD Act; Article 36 of the Cabinet Order for implementing the PMD Act; Article 8 of the PMD Act Implementing Rule; Ministerial Ordinance relating to the Standard for systems performing affairs regarding manufacture or quality control of medical devices or drugs for in vitro diagnosis; and Ministerial Ordinance relating to the Standard for post-marketing safety control of drugs, quasi-drugs, medical devices, cosmetics and regenerative medical products.

36 Articles 66 to 68, 72 quinquies, 85, 86 and 90 of the PMD Act; Article 64 of the Cabinet Order for implementing the PMD Act; Article 228 decies of the PMD Act Implementing Rule; Promotion Codes for drugs for prescription, JPMA Code of Practice (www.jpma.or.jp/english/policies_guidelines/pdf/code_practice.pdf); and Fair Competition Code relating to the restriction of provision of premiums in the sales of drugs for prescription.

37 For wholesalers: Articles 25, 34 and 35 of the PMD Act; Regulations for Buildings and Facilities for Pharmacies and the like; Articles 138 and 158 bis of the PMD Act Implementing Rule; Regulations for Buildings and Facilities for Pharmacies and the like. For retailers: (store-based distribution) Articles 4, 5 and 26 of the PMD Act; Articles 1(2)(iv) and 1(5) of the PMD Act Implementing Rule; Article 19 of the Pharmacists Act; Ministerial Ordinance for systems performing affairs of pharmacy and items relating to store-based distribution and placement and sales. For placement and sales: Articles 30, 31, 33 and 37 of the PMD Act; and Notification of MHLW No. 26, 6 February 2009.

38 Additionally, the leasing of strictly controlled medical devices requires a leasing business licence.

39 Articles 3, 4(5), 14, 14 quater, 36 septies, 44, 46, 47, 49, 74, 74 quater, 79 and 80 of the PMD Act; Articles 1(3), 7, 62 and 159 bis of the PMD Act Implementing Regulation; first-class and second-class drugs as designated by the Minister of the MHLW based on the provision set forth under Article 36 ter (1)(i), (ii) of the PMD Act; Notification from the director of the Department of Pharmaceuticals and Food No. 0331015, 31 March 2005; and Notification from the director of Evaluation and Licensing Division, Department of Pharmaceuticals and Food No. 0210001, 10 February 2005.

40 Notification from the director of Evaluation and Licensing Division, Department of Pharmaceuticals and Food No. 0210001, 10 February 2005.

41 Notification from the MHLW No. 24.

42 Article 80 of the PMD Act, Articles 71 and 74 of the PMD Act Implementing Ordinance, and Article 265 of the PMD Act Implementing Regulation.

45 Notification from the director of Evaluation and Licensing Division, Department of Pharmaceuticals and Food No. 322001, 22 March 2007.

46 Notification from the director of Evaluation and Licensing Division, Department of Pharmaceuticals and Food No. 0830-1, 30 August 2014; Notification from the director of Evaluation and Licensing Division, Department of Pharmaceuticals and Food No. 0626-1, 26 June 2014; and Notification from the director of Evaluation and Licensing Division, Department of Pharmaceuticals and Food No. 062-6, 26 June 2014.

47 Notification from the director of the Pharmaceutical Safety and Environmental Health Bureau No. 0328-1, 28 March 2017.

48 Section 13 of the PMD Act.

49 Articles 13 bis (5), 13 bis-7 (6), 14-bis (6), 23 viciester (5) and 80 decies (5) of the PMD Act.