Pharmaceutical Price Control Policy, Pharmaceutical Innovation, and Health Durability

Tetsuji Yamada*, 1, Chia-Ching Chen2, Tadashi Yamada3, I-Ming Chiu4, John D. Worrall4
1 Department of Economics and Center for Children and Childhood Studies, Rutgers University, the State University of New Jersey, Camden, NJ 08102, USA
2 Department of Epidemiology Community Health, School of Health Sciences and Practice, New York Medical College, Valhalla, New York 10595, USA
3 Graduate School of Humanities and Social Sciences, Institute of Policy and Planning Sciences, University of Tsukuba, Tsukuba, Ibaraki 305-8573, Japan
4 Department of Economics, Rutgers University, the State University of New Jersey, Camden, NJ 08102, USA

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© Yamada et al.;

open-access license: This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 International Public License (CC-BY 4.0), a copy of which is available at: This license permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

* Address correspondence to this author at the Department of Economics, Rutgers University, 311 North Fifth Street, Camden, NJ 08102, USA. Tel: 1-856-225-6025; Fax: 1-856-225-6602; E-mails: and



The increase in R and upward trend of R/pharmaceutical sales has occurred despite government controlled pharmaceutical price reduction in Japan. This paper identifies the effect of the government's price control policy on pharmaceutical innovation and evaluates the influence of new chemical entities (NCE) on health durability.


The study employed pharmaceutical price, government approval, and new pricing adaptation policies to evaluate their influences on NCE. Quantitative and qualitative expressions of pharmaceutical innovation were analyzed to measure health durability.


The results show that the government pharmaceutical price and new pricing adaptation policies may have been effective in increasing NCE in the pharmaceutical industry. In addition, our findings show that the optimum Radjustment rate for NCE (32%) would cause a downward influence of 0.4494 billion yen of NCE in the long run, while a full adjustment (i.e. 100%) of R would bring an increase of 0.709 billion yen in the long run. Finally, the aggregate effects of NCE reduce illness-caused death. The six leading illnesses share a 65.95% decrease in death caused by illness of those aged 65 years or older.


Pharmaceutical price control is not intended to hamper the pharmaceutical industry. It is a price reduction of the government's approved-list of pharmaceutical drugs under the national healthcare system geared toward controlling rapid and excessive growth of pharmaceutical expenditures.

Keywords: Pharmaceutical price control policy, pharmaceutical innovation, health durability.