Japan’s FY26 Price Revision Expands G1 Repricing and Drives Price Reduction

Why It Matters

The deeper, broader price cuts tighten profit margins for legacy drugs and accelerate the shift toward biosimilars, reshaping Japanese pharma revenue models and influencing global pricing strategies.

Key Takeaways

• FY26 revision cuts average drug prices 4.02% across 15,800 products.
• G1 repricing expanded to all off‑patent drugs and biosimilar‑eligible biologics.
• Off‑patent biologics saw 95% price reductions, small molecules 69%.
• PMP scheme renamed but still shields innovative drugs during patent term.
• Some branded drugs face deferred cuts up to 36% after gap assessment.

Pulse Analysis

Japan’s National Health Insurance (NHI) system conducts biennial drug price revisions to curb public spending, and the FY26 cycle went into effect in April 2026. The latest adjustment lowered average prices by 4.02% on a spending basis, affecting roughly 15,800 products—slightly less than the 4.67% cut in FY24 but covering a broader product set. GlobalData’s Price Intelligence data shows that 73% of all medicines experienced a price change, with 61% receiving cuts and 12% seeing increases. The revision reflects the government’s dual aim of cost containment and supply stability.

The most consequential change is the expansion of the G1 repricing framework. Previously limited to off‑patent drugs with high generic substitution rates, the rule now applies to any long‑listed, off‑patent product that has passed its replacement period, as well as biologic originators with listed biosimilars. This broader eligibility pushed the share of off‑patent biologics with price cuts to 95% and raised the reduction rate for small‑molecule originators to 69%. Roche’s Avastin, for example, faced a 45% cut, underscoring the depth of downward pressure on legacy therapies.

Pharmaceutical firms must adapt their Japanese market strategies to the tighter pricing environment. While the Patent‑Period Price Maintenance Program continues to protect innovative, patent‑protected drugs, the scheme now allows marketability and pediatric premiums and still subjects products with large price gaps to deferred cuts—as seen with AstraZeneca’s Forxiga, which saw a 36% reduction. Companies are likely to accelerate biosimilar launches, negotiate volume‑based rebates, and prioritize high‑value therapies less vulnerable to G1 repricing. The FY26 revision signals that future cycles will further expand G1 coverage, making price‑risk modelling a critical component of Japanese launch plans.