“Is the Rule of Price Reduction through Joint Reassessment of Drug Prices Truly Lacking Rationality?”

MSD’s Keytruda has undergone four reassessments since its release, with two of them resulting in price reductions due to joint reassessment.

Due to the ripple effect of Opdivo, which saw enormous sales beyond expectations, MSD’s president, Mr. Tatsumi, contends that the rule lacks rationality.

As the sales surge was driven by competitor products, and the company’s own prices dropped in response, it’s understandable to consider this irrational as it leads to decreased profits.

But what would have happened if there hadn’t been price reductions through joint reassessment?

If the best-selling competitor in the same market becomes even more affordable, ONO will adopt a low-cost strategy for MSD and a cost-leading strategy for the overall market.
If products are equivalent, it’s self-evident that customers would choose the lower-priced one.

Furthermore, for pharmaceuticals subject to regulated pricing, companies cannot lower their own prices.

In other words, if government-led joint reassessment couldn’t result in price reductions, although short-term profits might be maintained, Opdivo’s market share would further grow in the medium to long term, putting Keytruda at a competitive disadvantage.

Even in the specialized business model of pharmaceuticals, the market principles of supply and demand balance are inevitable in a competitive market.

External environmental factors are beyond a company’s control, constantly influencing and necessitating relative adjustments.

Even pharmaceutical companies that have received various legal protections through the convoy system must now possess strategies to excel in competition, as markets contract and competitive environments intensify. Seeking protection might no longer suffice; a focus on strategies to triumph in competition becomes imperative.