The Economics of Pharmaceutical Pricing and Physician Prescribing in Japan

13 Pages Posted: 7 Jul 2008

Date Written: July 2, 2008


A country's pharmaceutical policy is unique, just like its culture. Japan is no exception. Japan has employed a unique dynamic price-control rule that updates regulated retail prices based on the previous period's transaction prices. At the same time, separation of prescribing and dispensing has historically been weak, and the doctor can both purchase and sell a drug to his patient. These policies allowed the physician to earn the price-cost markup, and this appears to have affected physician prescribing. After discussing these features in more detail, I review two recent studies that empirically investigated their impacts on physician prescribing. Ongoing changes in pharmaceutical policy and their expected impacts are also discussed.

Keywords: pharmaceutical policy, agency problem, drug pricing

JEL Classification: L140, D820, L800, I11

Suggested Citation

Iizuka, Toshiaki, The Economics of Pharmaceutical Pricing and Physician Prescribing in Japan (July 2, 2008). Available at SSRN: or

Toshiaki Iizuka (Contact Author)

University of Tokyo ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033

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