Japan is the world’s third largest healthcare market behind the United States and China. Its health insurance is well financed and coverage is effectively universal. Its teaching hospitals and research institutes are well equipped, and its innovative researchers are frequent and valued contributors to the global store of knowledge in life sciences. It is a mature market, and the country’s aging society creates a growing demand for new high-cost treatments.

Despite these obvious attractions and its advanced industrial base, Japan’s clinical development had until recently lagged significantly behind other industrialized countries. Complex regulatory and cultural considerations combined to create a notorious ‘drug lag’ in which approvals took up to seven years longer than in the EU or the US.

The Pharmaceuticals and Medical Devices Agency (PMDA) was established in 2004 and created the hope that the situation would vastly improve. The PMDA, set up under Japan’s Ministry of Health Labour and Welfare, consolidated and rationalized several overlapping reviews and approvals bodies. It has moved steadily to align Japan’s regulatory environment with the best of global practices. However, certain impediments keep the Agency from operating at full efficiency.

A major one has been a lack of personnel within the PMDA as it has steadily expanded its capacity; however, the agency is on track to reach its employee target of 1,065 by 2018. Despite this, ensuring qualified personnel are brought on will create a challenge and could further impede the ability to accelerate the review and approval of new drugs.

Another issue is a lack of qualified on-the-ground RA (Regulatory Affairs) experts, a role that is critical to the proper filing of paperwork and shepherding of medical products through the PMDA’s system. In Japan, there is an essential need for everything to be prepared and executed correctly the first time, and any misstep may create delays on the one hand, and jeopardize ultimate approval by creating doubts in minds of PMDA officials, and lead to lost opportunities and sales. As such, it is imperative for companies to carefully select their RA employees, to ensure their experience and capabilities are aligned with the company’s mission, and to retain the best people at all cost.

The overall landscape is improving, however. Japan has adopted simultaneous global clinical development and are, in some cases, aligning phases I to III and Review in multi-regional clinical trials. The objective is for NDA submission and subsequent approval to be simultaneous in all territories. The previous insistence on conducting clinical trials in Japan has also been relaxed. Approvals can now be given for drugs tested in a global trial if there was sufficient Japanese patient participation in the trial.

As the PMDA steadily resolves its staffing issues, new positions being filled are largely devoted to safety and review inspectors, not back-office or administrative staff. As a result, NAS approvals have steadily increased, reaching 52 in 2014. There were fewer than 20 in 2005. During the same period, the PDSA approval time was sharply reduced, falling to 306 days in 2014, on a par with the EMA and the FDA.

A fast-track program, known as Sakigake, is also helping to stimulate R&D and bring products to trial. Sakigake designation applies to innovative products, treatments or devices where there is a particular therapeutic need. Obtaining Sakigake designation brings prioritized and shorter consultations and reviews, and more flexibility in post-market measures, while treatments approved will enjoy a significant price premium. Under Sakigake, approval can be sought first in Japan or simultaneously with other countries.

Recent laws promoting regenerative medicine are another factor behind Japan’s increased trial activity. The laws define regenerative medicine comparatively broadly, opening the field to all types and functions of cellular or gene therapy. The pull for drug manufacturers is that conditional marketing authorization for up to seven years can be given, enabling them to earn sales revenue while testing continues. This would dramatically transform the fortunes of many companies.

Some foreign companies are already taking advantage of this new, more welcoming environment. Many are expected to follow as it becomes clear that Japan’s ‘drug lag’ is on track to becoming a thing of the past.