Japan is liberalizing its approval process for regenerative medicine:
Regenerative medicines in Japan can now get conditional marketing approval based on results from mid-stage, or Phase II, human trials that demonstrate safety and probable efficacy.
Once lagging behind the United States and the European Union on approval times, there is now an approximately three-year trajectory for approvals, according to Frost’s Kumar. That compares with seven to 10 years before. …
Around the world, companies have also faced setbacks while pushing such treatments. In the U.S., Geron Corp., which started the first nation-approved trial of human embryonic stem cells, ended the program in 2011, citing research costs and regulatory complexities. …
While scientists globally have worked for years in this field, treatments have been slow to come to market. But there is hope in Japan that without the political red tape, promising therapies will emerge faster and there will be speedier rewards.
Japan is liberalizing because with their aging population treatments for diseases like Alzheimer’s and Parkinson’s disease are in high demand.
Under the new system, a firm with a gene or regenerative therapy (e.g. stem cells) can get conditional approval with a small trial. Conditional approval means that the firm will be able to sell its procedure while continuing to gather data on efficacy for a period of up to seven years. At the end of the seven-year period, the firm must either apply for final marketing approval or withdraw the product.
The system is thus similar to what Bart Madden proposed for pharmaceuticals in Free to Choose Medicine.*
Due to its size and lack of price controls, the US pharmaceutical market is the most lucrative pharmaceutical market in the world.
Unfortunately, this also means that the US FDA has an outsize influence on total world investment. The Japanese market is large enough, however, that a liberalized approval process if combined with a liberalized payment model could increase total world R&D.
Breakthroughs made in Japan will be available for the entire world so we should all applaud this important liberalization.
* Editor’s note from the Foundation for Economic Education: There may well by a direct connection here. According to Madden, an early version of his proposal in Free to Choose Medicine was published in a booklet by the Heartland Institute, which was then translated and distributed in Japan by a Japanese free-market think tank.
Alex Tabarrok is a professor of economics at George Mason University. He blogs at Marginal Revolution with Tyler Cowen.