The medical supplies distribution system in Japan is very complicated and hard to understand, and has been advocated the necessity of its modernization. Therefore, the distribution reform has been performed in 1992. Inoue and Tezuka (1998) analyzed theoretically the meaning of the distribution reform and obtained three propositions in their article. In this paper, we investigate the actual validity of their propositions based on the company financial data. The findings of this research are the following.

1) Medical-supplies manufacturer's profit is raised up rapidly after the reform.

2) As for the wholesalers, those profits increase after the reform, although it maybe temporary.

3) The profits of a medical organization, that is medicine price margin, definitely decrease after reform.

It made clear that these conclusions support Inoue and Tezuka (1998) theoretical propositions.

In this aging society, female hormone replacement therapy (HRT) has begun to attract close attention, not only for its efficacy in disease prevention and improvement of the quality of life of middle-aged and elderly women, but also from the aspect of health economics. In Western countries, HRT is administered to 20-30% of all postmenopausal women, and there has been discussion about its cost-effectiveness in helping to prevent fractures, angiopathy, etc. In Japan, this therapy is used less extensively (only about 1/10 as frequently) than in Western countries, and there has been little discussion on this therapy from a health economics standpoint in Japan. The present study aimed to evaluate HRT in Japan from the economic viewpoint, by calculating the cost of HRT itself and the economic impact through its effect of preventing bone fractures.

The present study focused on the relationship of HRT to osteoporosis and fractures, because its effectiveness in preventing other pathologic conditions has not yet been established. The medication cost of HRT was estimated at about 140 billion yen per year, if it were administered to all postmenopausal women with osteoporosis. The estimated cost of HRT was relatively small in comparison to that of other drug therapies for osteoporosis, even when side effects were taken into account.

When given to prevent osteoporosis and fractures, HRT was estimated, putting aside the cost of HRT itself, to reduce the direct cost of bone fracture care by 295.1 billion yen and the indirect cost by about 8.2 billion yen. Thus, a total reduction of about 303.3 billion yen by the administration of HRT was expected, suggesting that HRT could eliminate about 20% of the medical cost generally required for the treatment of osteoporosis and bone fractures. This analysis estimated the cost of the therapy itself and also the cost reduction due to the beneficial health effect of preventing osteoporosis, and suggested that HRT for postmenopausal women is comparable to or superior to other drug therapies conventionally used for osteoporosls. Considering also the clinical benefits of HRT of controlling conditions other than osteoporosis and fractures, HRT seems to be a promising therapy. It is desirable to analyze the factors hampering the acceptance of this therapy in Japan. In the future, clinical-epidemiological data should be collected and further economic analysis should be pursued, concerning this promising therapy and its related health conditions.

In Japan, the cost calculation method is used to determine innovative drugs' prices. The method, therefore, makes impacts on newly emerging industries as well as R&D-oriented pharmaceutical firms. This paper focuses on the method and analyzes the difficulties of cost calculation, the effects caused by the difficulties, and the effects on R&D incentives and business behaviors (PMS and promotion of innovative drugs). Then, the validity of the method, as a drug pricing method of innovative drugs, is examined. This paper finds some fundamental reasons not to support the method. One reason is that a parameter used in calculating drug prices under the method can hardly reflect the “average” image of R&D-oriented pharmaceutical firms. This suggests that only modification of the parameter is not sufficient to fundamentally improve the drug pricing method of innovative drugs.

Converting all rooms into private rooms and introducing small scale care units at the new type nursing home is meant to shift such facilities from being places for care to places for living. The study aims to examine the effectiveness of the reform and to provide theoretical background for the reform. The study is also meant to serve as a useful guide on the development of long-term care (LTCI) facilities for service providers as well as prefectural officials.