Pill-Popping Is a Business Worth Watching for Japan's Drugmakers

(Bloomberg) -- To eke out growth in one of the developed world’s most sluggish pharmaceutical markets, Japanese drugmakers are turning to the pill-popping behavior of their customers.

Medication adherence is seen as an impediment to health as well as sales in Japan, and companies including Otsuka Pharmaceutical Co. and Eisai Co. are working with technology firms on compliance-boosting solutions — from treatment-sensing devices to automatic alerts sent via text message.

The strategy aligns with a worldwide drive for efficiency as drugmakers try to defend their profits from the cost-cuts sought by budget-strained health systems. In Japan, where an aging population has caused medical expenses to balloon, helping patients take medications as prescribed by their doctor may spur sales in a drug market predicted to expand at half the global pace over the next five years.

“Drugmakers are diversifying the ways in which they market medicines so that patients stay on their products longer and more consistently,” said Toshio Miyata, an executive director at the Health and Global Policy Institute in Tokyo who previously worked in the food and drug safety and evaluations division of Japan’s health ministry. “They can’t keep focusing on marketing to hospitals — they must work with the system, governments, medical professionals, and caregivers.”

Eisai, whose drug Aricept was once the world’s bestselling Alzheimer’s medication, created a pill storage and reminder device to improve adherence, and developed software with Nippon Telegraph & Telephone Corp. to maintain daily online medical records that help health-care providers better manage patients in their homes.

Drug Reminder

Otsuka, maker of the anti-psychotic treatment Abilify, developed an online system with NEC Corp. to remind patients to take its blood-thinner Pletaal. The company is also seeking Japanese regulatory approval for new product packaging that uses a smart device to prompt patients to take their pills, and sends compliance data to doctors, pharmacists and caregivers.

Takeda Pharmaceutical Co., Japan’s largest drugmaker, will launch a program in the Asian country to monitor patients in real time using a wristwatch-type device. The program, currently being tested in the U.S., is intended to support the use of Entyvio, Takeda’s treatment for inflammatory bowel disease, by capturing data on symptoms, potential drug interactions, as well as triggers and factors known to aggravate the disease. Entyvio, already sold in the U.S., is in the last stage of clinical trials in Japan.

“We are collecting information in real time in the U.S. so that we can provide the right services at the right time,’’ said Masato Iwasaki, head of Takeda’s Japanese unit, in an interview. “We need to look at end-users’ behaviors more. Digital technology will help us do that.’’

Cost Containment

Pressure to contain medical costs is especially acute in Japan, which has the world’s highest proportion of elderly citizens. It also has the highest ratio of hospital beds to residents and the lengthiest hospitalizations in the developed world — resulting in costs the government is now trying to cut by ensuring patients are cared for in the community, rather than in hospitals and institutions.

The government is also trying to trim expenditure on subsidized medicines. It’s testing the introduction of a cost-benefit analysis in assessing new-drug pricing, plans more frequent price reviews of all prescriptions from next April, and is offering cash incentives to pharmacists that dispense cheaper generic medications instead of brand-name products. It aims to ensure four out of five medicines dispensed are generics within three years, from 56 percent in 2015.

Skipping Doses

About 50 billion yen ($440 million) worth of medicines are potentially not being taken by consumers older than 75 years, according to documents prepared by the health ministry in 2015. Pharmacists reported that about 90 percent of their customers have leftover drugs at home.

The government is beginning to evaluate new medicines based on how novel and effective they are, Takeda’s Iwasaki said. That means companies can no longer rely on bringing out drugs that offer only limited advantage over rival products for growth, he said.

Plethora of Pills

In a northern Tokyo suburb, pharmacist Masashi Ohtake is relying on the Eisai device to monitor the medication adherence of one of his customers — an 85-year-old woman with Alzheimer’s who takes Aricept and seven other medicines at different times during the day.

“At first I was skeptical as I was convinced patients forget to take pills because of their dementia, and that the situation couldn’t be helped,” Ohtake said. “But it works brilliantly. The data help me track her drug patterns and better communicate with her doctors.’’

The woman now takes her pills correctly 98 percent of the time, compared with about 70 percent before she began using the device last November, said Ohtake. The pharmacist bundles pills that his customer’s son sets into individual lots inside the machine. The device registers when the dosages are removed, and sends confirmation via a text message.

The systems reflect the knowledge Eisai has accumulated about managing Alzheimer’s patients over decades, said Yoshiro Den, a senior executive director of Eisai’s Japanese unit.

“We want to make a good use of our assets and contribute to society in a way that will eventually result in a viable business,’’ Den said.

Money-Making Exercise

Some observers are cautious. Such innovations need to be evaluated carefully to ensure they benefit all of society, not just drugmakers, said Yoshinori Hiroi, a professor of public policy at Kyoto University’s Kokoro Research Center.

“On one hand, it’s positive that such activities can reduce wasteful spending,’’ Hiroi said. “On the other hand, they could lead to increased health spending because companies have a motive to expand their business and earn a profit.’’

Around the world, pharmaceutical companies are partnering with technology companies to develop specialized treatment platforms. France’s Sanofi, which makes Lantus, the world’s best-selling insulin, and Alphabet Inc.’s life sciences arm announced plans in September to invest $500 million in a joint venture to combine devices, software, and medicine for diabetes care.

Denmark’s Novo Nordisk A/S and California-based Glooko Inc. announced in January the development of a pen-like insulin dispensing device that sends dose and timing information to an app to help patients better control their blood-sugar levels.

Apple, Glaxo

Similarly, London-based GlaxoSmithKline Plc and Propeller Health Inc. developed a sensor-attached inhalation device to improve care for chronic lung-disease patients, and won marketing clearance from the U.S. Food and Drug Administration in November. Glaxo is running a study using Apple Inc.’s Research Kit to track symptoms in rheumatoid arthritis patients to improve the efficiency of its research.

The developments reflect a growing need for pharmaceutical companies to differentiate their products, demonstrate health benefits in patients who consistently take their medications, and to justify the drug prices they seek, said Olivier Leclerc, a senior partner at McKinsey & Co. in Los Angeles.

“There’s clearly recognition from pharmaceutical companies that just delivering products isn’t going to be enough going forward,” he said. The challenge for drugmakers will be to integrate their various digital platforms into a universal system that doesn’t overwhelm patients taking multiple medicines, he said.

To contact the reporter on this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net.

To contact the editors responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net, Jason Gale