Japan's Ruling Parties Agree to Annual ¥188 Billion Medical Cost Reduction

Historic Agreement Reached on Medical Cost Reduction

Tokyo, Japan – Japan's ruling political parties, the Liberal Democratic Party (LDP) and the Japan Innovation Party (Nippon Ishin no Kai), reached an agreement on Friday, December 19, 2025, to implement measures aimed at reducing the nation's medical costs by an estimated 188 billion yen annually. This significant reform focuses on revising drug insurance coverage and is slated for implementation in the fiscal year beginning next April.

Key Revisions to Drug Insurance Coverage

The core of the agreement involves introducing additional payments for patients receiving certain prescription medications. Specifically, patients will face an increased financial burden for drugs whose ingredients and effects are similar to those available over-the-counter (OTC), even while maintaining insurance coverage for these items. The additional payment is set at one-fourth (25%) of the drug's cost.

The ruling parties have identified 77 ingredients and approximately 1,100 drugs that will be subject to these new additional costs. While specific items were not fully disclosed, categories such as hay fever medicines, poultices, and gastrointestinal drugs are expected to be included. Importantly, exemptions will be made for individuals with intractable or chronic diseases, as well as children, who will not be charged this special fee.

Further revisions include:

• An increased special fee for patients who opt for off-patent original drugs when generic alternatives are available.
• Promotion of a 'refill prescription' system, allowing patients to repeatedly acquire the same medications without requiring new medical consultations.

Financial Impact and Rationale

The introduction of additional patient costs for OTC-like drugs alone is projected to reduce annual medical expenditures by 90 billion yen. This reform is part of a broader effort to alleviate the financial strain of insurance premiums on Japan's working generation.

Alex Saito, policy chief for the Japan Innovation Party, commented on the agreement, stating, 'The reform opened a path to lowering social insurance premiums.' Japan has been grappling with steadily rising healthcare costs, a challenge exacerbated by its aging population and the increasing expense of advanced medical treatments.

Outlook for Japan's Healthcare System

This agreement marks a concrete step in Japan's ongoing efforts to ensure the sustainability of its national healthcare system. The government plans to finalize the detailed framework of the revised medical insurance system for pharmaceuticals based on this agreement, with implementation set for the upcoming fiscal year.