X.  SHORT-RUN STRATEGY  

The preferred outcome of this strategy is to enable medical equipment manufacturers to introduce new medical equipment more quickly and without unnecessary bureaucratic procedures.  The two objectives of the short-run strategy are:

1.   To change the Pharmaceutical Affairs Law in order to:

• shorten application approval times from one year to six month for new products and from four months to two months for “me-too” products;
• prohibit the redundant examination of “me-too” products conducted by both JAAME and PMDEC; and
• increase the number of medical products that do not require MHW approval before being introduced on the market.

2.   To increase the number of personnel who review applications for approval of new medical equipment.

JMEA can employ both domestic and international strategies to help achieve these goals. JMEA does not have enough financial or political resources to build significant alliances internationally. However JMEA can and should take advantage of international institutions that have offices in Japan in order to build support outside of Japan.  
    

1. Domestic Strategy

1a. Research

JMEA will need to be able to put forth research that demonstrates how the Pharmaceutical Affairs Law is overly burdensome. Specifically, JMEA should be able to show:

• how current regulations negatively impact medical equipment companies (this information can be gleaned from JMEA member companies);
• that products are still safe after the law changes (this information will need to be collected by clinical experts); and
• that the law is much more burdensome than comparable regulatory laws in the United States and European countries.

In order to collect information, JMEA needs to build a coalition with JMEA member companies, academics and clinical experts, and international institutions.

1b. Coalition Building Strategy

In order to increase its influence with policymakers, JMEA should build a coalition including all stakeholders that would benefit from a revised Pharmaceutical Law. JMEA should solicit support from allies within MHW and  MITI, as well as ask for direct support from JMEA member companies. Other potential supporters are business associations in Japan, subsidiaries of foreign medical equipment companies, foreign trade associations, and hospitals and doctors.

JMEA members: In order to gain support from its members, JMEA should:

• distribute a white paper (see Exhibit 1);
• send letters (see Exhibit 2) and make phone calls to all member companies to ask for their support;
• hold meetings to explain how deregulating the law will benefit the members;
• conduct research on how current regulation negatively impacts business; and
• make a fact sheet based on information gathered by the research. 
  

MHW: Although MHW does not have the authority to change the Pharmaceuticals Law, it can submit a proposal for changing the law to the Diet.  In order to persuade MHW to submit such a proposal, JMEA should:

• send letters with attachments (fact sheet and white paper) asking MHW to propose a change;
• meet with members of MHW to inform them of the facts regarding the disadvantages of the current law;
• submit a research report on product safety conducted by academics and clinical expertise; and
• ask MHW to cooperate with MITI regarding deregulation.

   
The main target persons and organizations within MHW are:

• Mr. Niwa, Minister of MHW;
• PMDSB of MHW;
• PMDEC of MHW;
• Mr. Shioya, Chairman of the Council on Health Insurance.

MITI: In order to gain MITI’s support, JMEA should:

• send letters (with attachments) soliciting MITI’s support for changing the law and its assistance in persuading MHW to do so;
• meet with members of MITI to explain how deregulation will benefit MITI in trade negotiations with other governments; and
• ask MITI to pressure MHW to improve its approval procedures for medical equipment.

The main target persons within MITI are:

• Ms. Araki, the Medical and Welfare Equipment Industries Office; and
• Mr. Konno, Director of the International Trade Policy Bureau.

Business associations in Japan: Business associations, such as the Keidanren and the Japan Chamber of Commerce and Industry do not have very much influence with MHW. However, these organizations should be enlisted to push MITI toward a dialogue with MHW.  JMEA should:

• send letters with attachments (fact sheet and white paper) asking that these associations bring up the issue with their MITI contacts; and
• hold a meeting to inform business associations of the importance of deregulating the medical industry.

Since Mr. Kanai (Hitachi, Ltd.) and Mr. Nishimuro (Toshiba Corp.) are executive officers in the Keidanren, JMEA can ask them to persuade the other Keidanren executives to support JMEA’s position.  Another target is Mr. Inaba, the Chairman of the Japan Chamber of Commerce and Industry.

Subsidiaries of foreign medical equipment companies: Foreign medical equipment companies have as much to gain from reform of the Pharmaceutical Law as domestic companies do. Accordingly, they should be willing to support reforms and should be included in JMEA’s coalition. Foreign business associations that also should be invited to join the coalition include HIMA, ACCJ, and EBC.  JMEA should:

• send letters and make phone calls to subsidiaries to ask for support of JMEA’s position.  Target companies are:

  Þ                Johnson and Johnson Medical

  Þ                Baxter Ltd.

  Þ                Guidant Japan

  Þ                Medtronic Japan Co., Ltd.

  Þ                Bard Japan Ltd.

  Þ                Boston Scientific Japan

• hold meetings with business associations to explain how the deregulation of the law is beneficial to their members.  Targets are:

  Þ                Mr. Vaughan, Director of HIMA in Tokyo office

  Þ                Mr. Grondine, President of ACCJ

  Þ                Mr. Coine, Chairman of EBC of Japan

• issue a questionnaire to learn how the current regulation negatively impacts business;
• ask foreign company subsidiaries to provide information about the regulatory system of their own governments;
• ask foreign company subsidiaries to request that their headquarters and governments pressure the Japanese government to change the regulatory system.

Hospitals and doctors: Besides building support from suppliers of medical equipment, it will also be beneficial to build support from the demand side, such as hospitals and doctors.  In order to obtain support from doctors for deregulation, it is necessary to show them how deregulation will be beneficial for hospitals and patients.  With over 150,000 members, the Japan Medical Association (JMA) is the most influential organization among doctors. JMEA should:

• send letters with attachments (fact sheet and white paper) to ask for JMA’s support for changes in the Pharmaceutical Law.  Target hospitals and doctors are:

  Þ                Directors of national hospitals;

  Þ                Directors of the top 100 private hospitals;

  Þ                Executives of JMA;

• hold a meeting to inform JMA of the facts regarding how hospitals and doctors would benefit from changes in the law;
• submit a research report completed by academics and clinical experts to show the effects of changes in the law on product safety; and
• request speaking opportunities at JMA’s national conferences.

Academic authorities: Without any clinical or scientific data showing that product safety will not suffer under shortened approval procedures, MHW will not support any changes in the law.  In order to gather such a data, JMEA should ask clinical experts to conduct research on product safety.  Target experts are:

Þ                JAAME researchers;

Þ                doctors who work at the more prestigious hospital; and

Þ                medical professors who teach at the more prestigious universities.

1c. Legislative Strategy  

Compared to other manufacturing industries such as the automobile industry, Japan’s medical equipment industry is a relatively young. Moreover, its impact on the Japanese economy is not large, partly it is not internationally competitive. Accordingly, the medical industry has not had any real influence with the legislative branch or political parties. Building such influence now will take a great deal of effort.

The first step in the legislative strategy should be to identify supporters among the legislators.  JMEA should ask these supporters, including the ten Diet members of the Advisory Council on Social Security (see Appendix 14), to introduce a new bill for changing the law, or at least to support a bill if MHW is persuaded to introduced one. In order to gain legislators’ support, JMEA should:

• send letters (see Exhibit 3);
• hold meetings to explain how changes to the Pharmaceutical Law will benefit the government and the public by reducing health care expenditures (white paper and fact sheet).

The coming months will be a particularly good time to solicit legislators’ support because a House of Representatives election will be held in October. In order to take advantage of this opportunity, JMEA should send letters and/or visit all political parties as their political campaigns heat up. The letters should explain how changing the law will benefit legislators’ constituencies by reducing the cost of medical treatment and improving its quality. JMEA should also lobby candidates from the districts that are home to major medical equipment manufacturing plants.

Mr. Niwa, the present Minister of MHW, and previous ministers, such as Mr. Koizumi, are other potential supporters.  JMEA should send letters to and visit with them to gain their support for changing the law.  

Although the House of Councilors (the other house of the Diet) will not have an election anytime soon, it should be another lobbying target because support from its Committee on Health and Welfare will be crucial to the success of any reform effort (see Appendices 15 and 16).  It is this Committee that reviews bills concerning medical matters.

1d. Media Strategy
  

The objectives of the media strategy are to:

• educate all stakeholders, including the public, how deregulation will benefit them;

• inform various stakeholders of JMEA’s activities and positions; and
• expand support for JMEA. 

   

To achieve these objectives, JMEA should:

• print articles that support deregulation in “JMEA News,” JMEA’s Journal;
• write op-ed pieces (see Exhibit 4) for major Japanese newspapers such as Nikkei, Asahi, Mainichi, and Yomiuri, and major international newspapers such as the Japan Times;

• pitch an article that articulates the importance of reforming the Pharmaceuticals law to editors of major business magazines/journals such as Nikkei business, the Economist (Japanese version), Asahi Weekly, Diamond Weekly, and The Weekly Toyo Keizai, as well as major medical journals such as the Japan Medical Association Journal, Nikkei Medical and Asahi Medical;
• attach opinions from medical and clinical authorities to all articles that JMEA sends to the newspapers and magazines mentioned above.  The opinions should support JMEA’s position from the point of view of medical safety.

2. International Strategy

Due to its market size and high dependency on imports, Japan is one of the most attractive markets for foreign medical equipment manufacturers. Accordingly, many foreign companies and governments can be expected to support JMEA’s proposal regarding reform of the medical equipment regulatory system. 

The United States accounts for over 60 percent and the European Union accounts for 15 percent of total imports of medical equipment into Japan.[64]   Therefore, as an international strategy, JMEA should focus on the United States and the European Union.  However, it does not need to conduct an intensive international strategy for two reasons. 

First, major exporting countries have already engaged in negotiations with the Japanese government over deregulation of the Pharmaceutical Affairs Law. The United States, for example, has negotiated with Japan on this issue under the U.S.-Japan MOSS talks. Other governments have already realized the problems with Japan’s regulatory system for the medical sector and are eager to change it. JMEA should capitalize on these past efforts by informing foreign government officials of JMEA’s efforts to change the law and asking them to pressure the Japanese government.   

Second, trade associations such as ACCJ, HIMA and EBC already have offices in Japan and actively participate in discussions on deregulation. ACCJ, for example, has a subcommittee on medical equipment and works closely with HIMA. These associations, as well as foreign company subsidiaries in Japan, are already pushing their own governments to take action on their behalf, and they are surely in a better position to push their own governments than JMEA is. JMEA, however, should hold a meeting for these associations and subsidiaries in order to explain JMEA’s own efforts and to explore how foreign associations and subsidiaries can help.  

Some media activities can help back up JMEA’s actions internationally. Such activities might include sending press releases concerning JMEA’s efforts to the Washington Post, Wall Street Journal, New York Times, Financial Times and Inside U.S. Trade.

XI.  LONG-RUN STRATEGY

The goal of the long-run strategy is to eliminate any obstacles such as distribution practices and medical insurance reimbursement policies that make it difficult for medical equipment manufacturers to introduce new medical products into the market.  The long-run preferred outcomes for JMEA are to:

• reform the distribution system;
• reform the insurance reimbursement system;
• change MHW’s policies which are too cautious in approving new medical equipment; and
• improve the international competitiveness of Japan’s medical industry.

It will not be easy to make such large changes. However, faced with increasing health care expenditures, the Japanese government has begun to realize the problems of the current system and has already launched debates and studies over these problems. 

JMEA should not attempt to pursue a strategy for directly solving these problems. Rather, JMEA’s role should be to foster increased public debate concerning solutions and to ensure that resolution of these problems remains on legislators’ and government officials’ agendas. This will also expedite achievement of JMEA’s short-run goals.   

At the same time, JMEA has to consider the impact of deregulation and distribution reforms on its own members. Simplification of Japan’s distribution system in particular is likely to expose Japanese medical equipment manufacturers to increased international competition. JMEA should take action to bolster the industry’s currently weak competitive position.  
    

1. Domestic Strategy  

1a. Research

In order to build consensus concerning the problems caused by the current distribution system, the reimbursement system, and MHW’s approval policies, JMEA should collect accurate and detailed data on these problems and compose reports and fact sheets articulating the results.

In conducting the research, JMEA should cooperate with the Council on Health Insurance, an advisory body to MHW (see Institutional Analysis), and the Council on Social Security, an advisory body to the Prime Minister (see Institutional Analysis).  

Additionally, information concerning waste caused by MHW’s policies should be compiled. The study conducted by Bain & Company Japan has already made some calculations of how much could be saved and how much medical care could be improved if MHW were to more readily recognizes the significance of advanced medical technology and quickly accept its use (see Appendix 8).  JMEA should cooperate with Hiroshi Uchida, the president of the Bain & Company Japan, to develop further calculations of this sort.

1b. Coalition Building Strategy

There is already general agreement among the Council on Health Insurance, the Committee on Review of the Reimbursement System, and the Advisory Council on Social Security that structural reform of Japan’s health care system is needed.  However there is plenty of room for building greater consensus among a broader group, including all stakeholders, concerning the details of what, precisely, needs to be reformed. 

JMEA members: Except for distributors, JMEA members are potential supporters for reform of the distribution and reimbursement systems and of MHW’s polices.  In order to make an alliance with members, JMEA can:

• send letters with fact sheets and make phone calls to all member companies to ask for support of JMEA’s position;
• have meetings to explain how these reforms are indispensable to creating a sound business climate. 

MHW / The Council on Health Insurance / The Council on Social Security: These three groups are already aware of the importance of reforming the distribution and reimbursement systems.  Nonetheless, JMEA can encourage these organizations to take stronger stands on reform by:

• providing research results about how more cost-effective medical equipment will contribute to the long-run reduction of the health care expenditures;
• providing research results concerning how MHW’s policies cause medical expenditure waste; and
• proposing an ideal reimbursement system for the medical equipment industry.

Foreign medical companies and trade associations: Foreign companies and associations have already asked their governments to pursue reform with the Japanese government. JMEA can use foreigners’ assistance by

• asking for support of JMEA’s position;
• asking them to provide information about how their own countries’ regulatory systems work; and
• asking foreign subsidiaries in Japan to request that their headquarters and governments pressure the Japanese government to change its regulatory system.

MITI: There are two primary reasons for including MITI in the coalition. One is to gain its support for promoting deregulation and reform of the medical equipment industry.  The other, which is especially important, is to gain MITI’s support for reform of the distribution system.  JMEA should:

• send letters and meet with MITI officials to ask for their support for deregulation;
• convince them that deregulation will benefit MITI in future trade negotiations with other governments;
• express JMEA’s support for MITI’s “Millennium Project” for the senior services market (see Policy Analysis “MITI’s Millennium Projects”);
• persuade them that reform of the distribution system is essential to the success of the Millennium Project;
• request their support and funding for reform of the distribution system. 

A third reason for including MITI in JMEA’s coalition is to gain MITI’s assistance in improving the international competitiveness of the medical equipment industry.  JMEA could request that MITI make this a priority of the Millennium Project.

1c. Neutralizing the Opposition

A major obstacle to reform will be distributors’ opposition to any change in the distribution system. Reform of the distribution system directly impacts distributors, some of which are JMEA members. Showing distributors how reform can increase overall medical equipment business and therefore benefit them will be important to overall success of any reform effort. JMEA should hold a meeting for JMEA member distributors to:

• explain to JMEA member distributors how reform of the distribution system will increase business opportunities;
• discuss the vast potential of the market for medical equipment that serves elderly and disabled people and persuade distributors to shift some of their business toward these new markets.

Because MITI has already announced its intention to help create jobs in the senior services market, it’s support for the reform effort will be important to distributors. MITI should be asked to work with JMEA on its efforts to convince distributors of the benefits of reform.

1d. Media Strategy  

The purpose of the media strategy is to inform the public of the importance of reforming the medical reimbursement system and to gain public support for the reform.  JMEA should write op-ed articles, pitch articles to magazines, ask TV broadcasters to pick up this topic for special programs, and distribute posters and pamphlets.

Op-ed articles and pitches to magazines
   
Both of these can be used to explain how reforms will reduce health care costs and increase access to cost-effective medical treatment.  The target is the general public for national newspapers, policymakers for political magazines, and the medical community for medical magazines.

National Newspapers

• Nikkei
• Asahi
• Mainichi
• Yomiuri

Political Magazines

• Weekly Gendai
• Asahi Weekly
• Diamond Weekly
• Voice
  

Medical Magazines

• Nikkei Medical
• Asahi Medical
• JMA Journal

• Medical Equipment Journal of Japan

Special topic TV programs

TV coverage of an issue is the best way to influence the general public. The following TV programs focus on social and political issues:

• News Station (Radical News Program, daily)
• Special Report (Intensive research and report regarding hot issues, weekly)
• Close-up Gendai (Commentary for hot issues, daily)

Posters and pamphlets

JMEA should print posters and pamphlets explaining the importance of the reform and urging citizens to make reform a priority topic in the upcoming elections. These PR pieces should be distributed, among other places, at national hospitals and major private hospitals.

2. International Strategy

For the long-run strategy (like the short-run strategy), JMEA should enlist the help of foreign companies subsidiaries and trade associations in Japan, rather than conducting a comprehensive strategy abroad.

While international harmonization is not crucial to achieving JMEA’s long-run goals, the Global Harmonization Task force (GHTF) provides a forum in which Japan can notify other countries of its efforts to further deregulate its medical market. Through participation in GHTF, JMEA can:

• encourage the creation of an international framework for regulating medical equipment safety; and
• promote joint research for internationally acceptable scientific evidence regarding

[64] JETRO, Market Report, p. 4.

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