Review of Industrial Organization 22: 85–87, 2003.
The Japanese Pharmaceutical Industry, L. G. Thomas, III. Cheltenham, U.K.:
Edward Elgar Publishing, 2001, 232 pages, $80.
The story Thomas tells is rather alarming. Early in the 1970s, the United States ex-
perienced a well-documented lag in the introduction of new drugs. It took the FDA
many years to eliminate that lag. During the past decade such a lag has emerged
again – this time in Japan. In this slim volume, Thomas analyzes the nature, causes,
and consequences of the new drug lag in Japan, drawing attention to the powerful
role of Japanese domestic politics in shaping pharmaceutical practices in that na-
tion. According to Thomas, more than 80 percent of the signiﬁcant pharmaceutical
innovations in recent years are unavailable in Japan, denying patients the beneﬁts
of important new treatments.
Thomas focuses attention on innovations that have been approved for use in six
or more nations – drugs he terms “global”. He reports that a mere 13 percent of
the products that have gained global acceptance since 1995 were available in Japan
in 2000. Looking back to 1990, only 33 percent of the products that had gained
global acceptance were available in Japan in 2000; just 43 percent of those that had
gained global acceptance since 1985 were available in 2000. Of course, some of the
older “unapproved” drugs may no longer rank as drugs of choice, but many of these
drugs do still rank as signiﬁcant innovations that have important therapeutic effects.
In Japan (like anywhere else), the regulation of pharmaceutical innovations should
weigh the cost and beneﬁts of approving new drugs, always balancing the adverse
side-effects of new drugs for certain patients against the adverse consequences of
withholding effective new drugs from other patients.
Although the new Japanese drug lag has a number of unique characteristics,
the underlying premise of this book is that there is nothing inevitable about this
drug lag. Thomas notes that greater exclusion of signiﬁcant new drugs from Japan
began in the late 1980s and he shows that the problem became more pronounced
after the Ministry of Health and Welfare began to reform the registration process
for new drugs in 1992. Ten years later, additional reforms are urgently needed in
Japan, ﬁrst in the registration process, but also in pricing regulations, the approach
to biomedical research, and the nature of pharmaceutical demand.
To more fully explore the nature of the new drug lag in Japan, Thomas ex-
amines the political constraints and economic incentives that operate there. The