As in the EU and the US, the life sciences sector is highly regulated in Japan. The manufacturing, marketing, and selling of medical products, including medicines, quasi-medicines, cosmetics, medical devices, and regenerative medical products, are regulated under the Act on Securing Quality, Efficacy, and Safety of Products Including Pharmaceuticals and Medical Devices (Pharmaceuticals Act).

In addition, a business entity must obtain a:

Pharmaceutical companies must also obtain marketing authorisation from the Ministry of Health, Labour, and Welfare (MHLW) to market each specific medicine.

The life sciences sector sometimes sees M&A activity. A notable case was the 2019 acquisition by Takeda Pharmaceutical Company Limited, the largest pharmaceutical company in Japan, of Shire plc, a UK-founded biopharmaceutical company. The purpose was to strengthen Takeda's standing in gastroenterology and neuroscience and have a leading position on rare diseases and plasma-derived therapies. The price for the acquisition was reportedly about GBP46 billion.

The Medical Care Act imposes certain restrictions on the funding of medical corporations, which are entities providing doctor-to-patient medical services. These include the following:

For gifts, sponsorship, or incentive schemes for health care establishments, see Question 21.

Japan's National Health Insurance (NHI) covers all citizens. Under the NHI, depending on their age, patients only pay 10% to 30% of the costs of medical services and prescription medicines. However, patients must periodically pay insurance premiums to a medical insurer. As of 2018, such insurance premiums accounted for about 50% of the national cost of medical services and prescription medicines, alongside public subsidies (40%) and patient payments (10%).

The prices of prescription medicines, which are partially paid by the insurer under the NHI, are set in the NHI price list (see Question 4). Since medical institutions use medicines that appear on the NHI price list, pharmaceutical companies must have their medicines listed on the list in order to sell them to medical institutions.

However, prices of over-the-counter medicine are not regulated, and their prices are paid entirely by the consumer. Similarly, prices of medical devices are not generally regulated (see Question 4).

The prices of prescription medicines provided by medical institutions to patients are determined and disclosed in the NHI price list by the MHLW under the Health Insurance Act (HIA) and notices issued under the HIA. In principle, prices are determined by comparing the prices of similar medicines on the list or calculating the manufacturing costs. The listed prices are subject to annual or biennial review to reflect the actual prices. The listing process is separate from the marketing authorisation process.

The initial distribution prices of prescription medicines set by pharmaceutical companies to wholesalers are substantially influenced by the prices indicated on the NHI list. However, the prices of prescription medicines for secondary distribution from wholesalers to medical institutions or pharmacies are usually set at a discount from the listed prices. Due to this discount, wholesalers may find it difficult to make a profit on secondary distribution. Therefore, in practice, pharmaceutical companies often pay rebates to wholesalers.

Prices of over-the-counter medicines and many medical devices are not regulated under the HIA. However, some limited types of medical devices, such as pacemakers and stents, are covered and reimbursed under the NHI.

Under the NHI, patients only pay 10% to 30% of the price of prescription medicines they receive. Medical institutions can claim reimbursement of the remainder of the price of prescription medicines from the insurers.

Medical institutions can also claim payment at the listed prices for some limited medical devices, as indicated on the NHI price list.

Pharmacists can claim reimbursement from the insurers for the remainder of the price of prescription medicines that is not paid by the patients. However, pharmacists cannot claim such reimbursement for unregulated over-the-counter medicines.

Under the Medical Practitioner's Act and Pharmacists Act, only a doctor can prescribe medicines to patients. Pharmacists and doctors can only supply prescribed medicines to patients based on a prescription issued by a doctor.

To distribute medicines, a business entity must obtain a marketing business licence and MHLW marketing authorisation for each specific medicine.

Virtually all over-the-counter medicines marketed online and through mail order are subject to regulations that require online or mail order retailers to have at least one physical retail premises.

To sell medicines, a business entity must obtain a sales business licence for one of the following:

In 2018, the MLHW released good distribution practices (GDP) for business entities involved in wholesale distribution, to control the quality and integrity of medicines and prevent counterfeits.

The MHLW has primary authority to monitor activities relating to the marketing and manufacturing of medicines under the relevant business licences. The relevant prefectural governor has partial authority to monitor the marketing and manufacturing of medicines, and monitors activities relating to the sale of medicines under business licences.

Under the Pharmaceutical Act, the MHLW and the prefectural governors have various powers to supervise distribution. For example, where necessary to monitor compliance with the Pharmaceuticals Act and its regulations, the MHLW or prefectural governor can require business licence holders to submit reports, and can carry out inspections at their offices. In addition, to prevent the occurrence or spread of public health hazards, the MHLW can order business licence holders to temporarily suspend the manufacturing, sale, leasing, or provision of medicines.

If business licence holders do not comply with the Pharmaceuticals Act or its regulations, the Minister can:

In addition, under the Pharmaceuticals Act, certain non-compliant acts are punishable by a fine and imprisonment.

However, the GDP and its regulations are not legally enforceable with sanctions. Unlike the good quality practices and good manufacturing processes, compliance with the GDP is not a requirement to obtain or renew business licences.

A marketing business licence and a product marketing authorisation are required to import into and sell medicinal products in Japan. However, individuals who intend to import medicinal products for personal use, and doctors who intend to import medicinal products for treatments or clinical trials under their own responsibility, can do so without the licence by obtaining a certificate of import issued by the Regional Bureau of Health and Welfare.

The relevant import requirements must be satisfied to conduct parallel imports. In addition, parallel imports can raise intellectual property issues.

On 1 July 1997, the Supreme Court found that unless there is a specific agreement with a patent assignee to restrict the buyer, and the restriction is expressly indicated on the patented products, once a patent owner hands over patented products outside Japan, parallel imports of the products do not raise patent infringement issues.

According to a Supreme Court decision of 27 February 2003, parallel imports of genuine goods do not raise trade mark infringement issues if they meet three requirements:

The Act against Unjustifiable Premiums and Misleading Representations sets out general regulations for advertisements, while the Pharmaceuticals Act specifically regulates advertisements of medicinal products.

The main regulatory authority enforcing the Pharmaceuticals Act is the MHLW. Prefectural governors also have certain enforcement authority, and in practice are responsible for checking compliance with the advertising regulations.

The MHLW has also issued guidelines including its Guidelines on Promotional Information Provision Activities for Prescription Medicines and Guidelines for Adequate Advertisement of Medicines (MHLW Guidelines).

In addition, the Japan Pharmaceutical Manufacturers Association (JPMA), an industry association, has issued guidelines, the JPMA Code of Practice, prescribing various rules and principles for its member pharmaceutical companies to comply with.

According to a notice issued by the MHLW, advertising of pharmaceuticals is defined as any act that does all the following:

For example, a website is categorised as advertising if it satisfies all the above elements.

On 19 November 2018, the Tokyo High Court found that a published paper was not an advertisement because it was an academic report for experts and did not intend to induce consumers to buy a product. The judgment was later affirmed by the Supreme Court.

Under the MHLW Guidelines, companies should set up internal procedures to ensure that advertising activities are conducted properly, including setting up:

There is no approval process with a regulator for pharmaceutical advertising.

Under the MHLW Guidelines, comparative advertising between products can only be undertaken within the scope of a business's products and with the name of the product clearly stated. A business cannot engage in comparative advertising with the products of another business, either explicitly or implicitly. In addition, even when conducting comparative advertising between its own products, a business must provide appropriate information.

It is possible to share information about unlicensed pharmaceuticals or indications, at a doctor or pharmacist's request, but such information must be shared according to the MHLW Guidelines. When sharing information on unlicensed pharmaceuticals or indications, or unapproved dosages and administrations, such information must be demonstrably accurate on scientific and objective grounds, for example, treatment guidelines, peer-reviewed original papers, and overseas package inserts that have been evaluated, at least to a certain extent, by academic societies or overseas governmental agencies.

Currently, there are no specific rules or issues on the use of the internet and social media for advertising pharmaceuticals. Advertising pharmaceuticals is regulated in the same way whether through the internet, social media, or otherwise.

A violation of the rules of the Pharmaceuticals Act (including MHLW notices and guidelines) in relation to advertising pharmaceuticals can subject the offender to imprisonment or a fine, or both. In addition, the company employing the offender is also subject to a fine.

There is also an administrative monetary penalty system for violations, enforced by the MHLW. Generally, a surcharge of 4.5% of the sales amount of the target product during the period of violation is imposed. However, if the surcharge is below JPY2.25 million, it is not administered. Currently, if a surcharge is levied based on the Act against Unjustifiable Premiums and Misleading Representations (3% of the sales amount) in the same case, the surcharge based on the Pharmaceuticals Act is levied on the sales amount after deducting that amount. In addition, there is a 50% reduction if the company voluntarily reports the breach to the authorities before it is discovered by the authorities.

Under the MHLW Guidelines, prescription medicines cannot be advertised to the public (and can only be advertised to pharmaceutical personnel).

Over-the-counter medicines can be advertised to the public, but to maintain accuracy relating to efficacy and effect, diseases that cannot be cured without involving a doctor must not be advertised as curable.

It is permissible for a person who advertises pharmaceuticals to provide prizes as long as this does not violate the Act against Unjustifiable Premiums and Misleading Representations. It is prohibited to offer pharmaceuticals as prizes, but this does not apply to home remedies (usually symptomatic treatments used at home), which can be provided as samples.

Under the MHLW guidelines, if requested by patient organisations, pharmaceutical manufacturers can provide information on unlicensed pharmaceuticals and indications, and dosages and administrations that are not approved in Japan. However, the information must be provided only to the person who made the request, and a record must be kept.

Health care professionals and health care organisations are not defined under the Pharmaceuticals Act. The provision of information to health care professionals and health care organisations is treated in the same way as providing information to the public, and there is no specific regulation on advertising to such organisations.

Marketing practices such as gifts, sponsorships, and incentives are considered wrongful customer inducements and prohibited by the Act against Unjustifiable Premiums and Misleading Representations.

If public servants (such as doctors at a government-managed hospital) receive excessive gifts or the like in relation to their official function and capacity, both:

If an act of bribery occurs in Japan, and the bribe is offered to a public servant of another country, the party offering the bribe can be subject to criminal penalties.

As with the US Sunshine Act, there is a Japanese mechanism for information disclosure. Under Article 33 of the Clinical Trials Act, pharmaceutical companies must disclose information about the provision of clinical research expenses. The relevant industry associations (such as the JPMA and the Japan Self-Medication Industry) have issued Transparency Guidelines for Medical Institutions in the Medical Device Industry. These guidelines require pharmaceutical companies, and medical device manufacturers who are members of the Japan Federation of Medical Device Associations, to disclose amounts paid to doctors on the company's website. The items to be disclosed include:

Violations of the regulations on advertising pharmaceuticals can lead to fines and/or imprisonment, as well as administrative monetary penalties (see Question 16).

If excessive gifts are offered, this may constitute a violation of the Act against Unjustifiable Premiums and Misleading Representations (see Question 21).

A failure to disclose necessary information in violation of Article 33 of the Clinical Trials Act can trigger a recommendation by the MHLW to rectify the omission. A failure to obey the recommendation can be made public by the MHLW.

Under Article 29 of the Patent Act (Act No. 121 of 13 April 1959), an inventor of an industrially applicable invention can obtain a patent unless either:

Japan has adopted the first-to-file system. Therefore, a person who has first filed a patent application will be granted the patent for the relevant invention if the invention and the application satisfy the requirements.

Both product patents and process patents are available in Japan. Under the Patent Act, inventions are divided into three categories:

Any method of treating humans by surgery or therapy is not a patentable subject-matter in Japan. Diagnostic methods practised on the human body also cannot be patented. The patent examination guidelines consider these methods to be industrially inapplicable inventions (section 3101 of Chapter 1, Part 3, Examination Guidelines).

For biological inventions and medicinal inventions, the Japan Patent Office (JPO) publishes the Examination Handbook for Patents and Utility Models in Japan on its website. In the Examination Handbook, Annex B, Chapter 2 covers biological inventions, and Annex B, Chapter 3 covers medicinal inventions.

According to the Examination Handbook, the novelty of a medicinal invention is judged from two points of view:

(Section 2.2.1, Chapter 3 of Annex B, Examination Handbook.)

The Examination Handbook also sets out two examples in relation to medicines that do not meet the patent requirements:

(Section 1.2.1, Chapter 3 of Annex B, Examination Handbook.)

The novelty of a medicinal invention is judged not only on the compound itself, but also on a new medicinal use based on the attribute of the compound (see above, Conditions and legislation). Therefore, even if the structure of a certain chemical compound is known to the public as of the filing date, a new patent can be granted for the same chemical compound if an inventor finds a new medicinal use. In that case, the patent only covers the chemical compound being used for that specific purpose.

Patent applications must be filed with the JPO. The JPO website provides guidelines on the application procedure and fees.

Under Article 36, paragraph 4, item 2 of the Patent Act, patent applicants must disclose prior art references of which they are aware when filing a patent application. However, the failure to meet this disclosure duty does not render the patent invalid.

According to the JPO's guidelines, the outline of the patent examination procedure is as follows:

An applicant can file a request for an appeal trial against a refusal, handled by a board of trial examiners. If the board of trial examiners finds that the refusal is erroneous, it will revoke the examiner's refusal and declare that a patent should be granted. If the board of trial examiners sustains the refusal, it will dismiss the applicant's request. The applicant can then file an action with the Intellectual Property High Court to seek rescindment of the trial decision.

According to statistics published by the JPO, the average period from a request for examination to first notification of refusal or grant of the patent was 10.1 months in 2020.

Citizens and residents of, and legal entities with a business office in, a contracting party to the Paris Convention for the Protection of Industrial Property 1883 (Paris Convention) or a World Trade Organization member can claim a priority right based on a first application filed in any of these countries/members for a subsequent application in Japan.

To claim a priority right, the applicant must file a patent application within the priority period of one year from the filing date of the first application (priority date) and must declare the priority claims within 16 months from the priority date, or four months from the patent application in Japan, whichever expires later.

A patent right expires after 20 years from the filing date of the patent application. The duration cannot be extended.

If a patentee (or a licensee) cannot implement a patented invention during a certain period because of the need to obtain marketing approval under the Act on Securing Quality, Efficacy and Safety of Pharmaceuticals, Medical Devices, Regenerative and Cellular Therapy Product, Gene Therapy Products, and Cosmetics (Law No 145, 1960), the duration can be extended for a period up to five years.

To enjoy an extended patent term, the patentee must file a request for registration of the extension with the JPO within three months from the date of the marketing approval required to implement the patented invention.

In addition, a patentee can seek a patent term extension if the patent application is granted after five years from the patent application date, or three years after the request for patent examination, whichever is later (amendment to the Patent Act, effective 30 December 2018).

A patent right is effective on registration. A patentee has an exclusive right to implement the patented invention as a business. If a person implements a patented invention without the patentee's permission, the implementation is deemed to be an infringement.

Implementation includes the following:

For a product or process to constitute an infringement, it must have all the features of the patented invention. An infringement can be established under the doctrine of equivalents.

The Patent Act does not stipulate that filing an application for marketing approval for a generic drug is a patent infringement. Article 69(1) of the Patent Act stipulates that a patent right cannot be enforced against implementation of a patented invention for experimental or research purposes. The Supreme Court of Japan has held that clinical tests performed during the life of a patent for the purpose of obtaining marketing approval after expiration of the patent term are not patent infringement because of this experimental/research exemption (second petty bench of the Supreme Court on 16 April 1999, Minshu, 53-4-627).

Under the Patent Act, a patentee can seek an injunction order to prevent infringement. A patentee can also request a court to order an infringer to take measures necessary to prevent the infringement (including destruction of infringing products). Judges usually issue an injunction order automatically when they find a patent infringement.

Under the Patent Act, a patentee can also claim damages calculated based on the following:

Research exemption. Under the Patent Act, a defendant in a patent infringement case can argue that a patent does not prevent the implementation of the patented invention for experimental or research purposes (see Question 27).

IP exhaustion. Patent exhaustion is established by a Supreme Court judgment of 8 November 2007. The Supreme Court ruled that a patentee cannot exercise its patent rights against the use or transfer of products that the patentee has sold in a market. However, the court also ruled that a patentee can exercise its patent rights against the use or transfer of such products if, due to modification or replacement of certain parts, they are no longer identical to the original products that were sold.

Other exemptions. A typical defence in a patent infringement case is a statutory non-exclusive licence based on prior use. A defendant who has implemented a patented invention without knowledge of its contents before the application date has a statutory licence for the patented right, but only to the extent that the defendant actually implements or prepares for implementation of the invention.

In addition, where the patent concerns medicines manufactured by mixing two or more medicines, or a process for such medicines, a defendant can argue that such a patent does not prevent the preparation of such medicines based on a doctor's prescription.

Japan is a party to various treaties concerning IPRs, including the:

Japan is a party to the Patent Cooperation Treaty 1970 (PCT). This enables applicants to seek patent protection by initially filing an international application in designated countries that have also joined the PCT.

Japan has entered into the WIPO Madrid Agreement Concerning the International Registration of Marks 1891. This enables the protection of a mark under a unified system in the designated countries that are parties to the agreement.

The Trade Mark Act (Act No. 127 of 13 April 1959) sets out the legal criteria to obtain a trade mark registration.

Any trade mark to be used in connection with goods or services pertaining to the business of an applicant can be registered, unless the trade mark:

However, a trade mark that falls under any of the third to fifth items above can be registered if, due to the use of the trade mark, consumers are able to recognise the goods or services as those pertaining to the business of a particular person.

A trade mark includes any character, figure, sign, or three-dimensional shape(s), or any combination of them, and a motion, colour, position, and sound.

Article 4 of the Trade Mark Acts stipulates 19 categories that cannot be registered as a trade mark. These include trade marks likely to:

A medicinal brand can be registered as a trade mark unless it falls under the above categories. The same criteria apply to trade marks for medicines as for other categories of goods. For example, the name of an active ingredient cannot be registered as a trade mark for medicine.

The major benefits of registering a trade mark include that the trade mark owner:

The Unfair Competition Prevention Act (Act No. 47 of 1993) also protects well-known trade marks without registration.

Trade mark applications must be filed with the Japan Patent Office (JPO). The JPO's website provides guidelines on the application procedure and fees.

The Ministry of Health, Labour and Welfare, the pharmaceutical products regulator in Japan, is not involved in the review of trade mark applications.

Under the JPO's guidelines, the procedure to obtain a trade mark right is as follows:

If a trade mark application is refused, the applicant can appeal to the JPO board of trial examiners. If the board decides to revoke the refusal, it will issue a decision to register the trade mark. If the board of trial examiners sustains the refusal, it will dismiss the appeal. The applicant can then file an action with the Intellectual Property High Court to rescind the trial decision.

According to statistics published by the JPO, the average period from application to first notification of refusal or registration was 10.2 months in 2020.

Japan has a post-registration opposition system, therefore applications are not published for opposition. A third party can only oppose a trade mark or service mark after registration.

An opposition can be filed with the JPO on the grounds that the trade mark or service mark is unregistrable within two months from publication in the Gazette showing the trade mark or service mark. The examination of the opposition filing is conducted by documentary examination. Any party can seek invalidation or cancellation of the registration of a trade mark or service mark with the JPO.

The Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (Act No. 54 of 14 April 1947) (Anti-Monopoly Act) establishes competition regulations. The Anti-Monopoly Act mainly prohibits the following acts and situations:

An enterprise that has violated the Anti-Monopoly Act will be ordered to cease the violating acts. The violation is also subject to criminal penalties. In addition, an enterprise that engages in certain violations, such as forming a cartel, can be ordered to pay a surcharge to the national treasury.

A person whose interests are infringed or likely to be infringed by acts constituting unfair trade practices can seek the suspension or prevention of those acts. A person who suffers damage resulting from private monopolisation, unreasonable restraints of trade, or unfair trade practices can claim compensation for damages.

The Japan Fair Trade Commission (JFTC) has regulatory power to conduct investigations and issue orders under the Anti-Monopoly Act.

The pharmaceutical industry and other industries is subject to the Anti-Monopoly Act.

A report published by the JFTC on the distribution of drugs in Japan sets out certain acts that may be deemed to be unfair trade practices, such as:

There are no court precedents in Japan on reverse payments (payments by an originator company to a generic company to delay generic drug entry).

Under the Patent Act, regulatory submissions by generic companies do not constitute patent infringement. According to the Supreme Court, clinical tests performed during the life of a patent to obtain a marketing approval after expiration of the patent term are not patent infringement because of the experimental/research exemption under the Patent Act (see Question 27).

The JFTC has established guidelines such as the Guidelines on the Abuse of Dominance under the Antimonopoly Act, which sets out basic principles on what acts may be deemed an abuse of dominance. This applies to the pharmaceutical industry as well as to other industries.

An act may be deemed an abuse of dominance if an enterprise forces a counterparty to accept disadvantages by using a superior bargaining position unjustly in light of normal business practice. Whether an act is deemed an abuse of dominance depends on the circumstances. The guidelines state that whether an enterprise has a superior bargaining position over the counterparty is determined by various factors, including the:

The JFTC has published Guidelines for the Use of Intellectual Property under the Anti-Monopoly Act, which describe some examples and basic principles on how the Anti-Monopoly Act applies to licensing restrictions on the use of technology.

The Guidelines stipulate that certain restrictions on the grant of a licence can be deemed to be private monopolisation if there is a deviation from the purpose of the intellectual property system. Similarly, if participants in a patent pool refuse to grant a licence to a new market entrant or existing market participant without reasonable grounds, the restriction may be deemed to exclude others' business activities and be a violation of the Anti-Monopoly Act.

The JFTC has also established Guidelines on Joint Research and Development under the Anti-Monopoly Act, which prohibit acts causing substantial restraint of competition in the market in all technological fields, including pharmaceutical research and development (R&D) projects. According to these guidelines, if joint project R&D substantially restricts competition in the relevant technology field or relevant market, the joint R&D project may be deemed to be an unreasonable restraint of trade.

The Patent Act does not place any restrictions on licensing or transferring patents to foreign parties, regardless of whether the patented invention is created in an R&D project funded or partially funded by public investment.

However, the Foreign Exchange and Foreign Trade Control Act restricts technology transfers to foreign parties where the technology falls under certain restricted categories.

Neither party to a licence needs to obtain any approval from any authorities. Once the licence is executed, it can become enforceable without being approved or accepted by a government or regulatory body.

Under the Pharmaceuticals Act, the MHLW is the main regulator of medicinal product safety, although local prefectural governments have certain authority.

The regulator can take measures to control the safety of medicinal products if it deems such actions necessary to protect public health, including:

Non-compliance with such requests is punishable by imprisonment or fines.

The following laws apply to medicinal product liability:

A claimant can seek damages under these laws through civil court proceedings, or the parties can settle such a case. Settlements are not necessarily required to be made public.

Product Liability Act. To seek damages for medicinal product liability, a claimant must prove the following elements:

A clamant does not have to prove that such medicinal product liability arises from negligence or wilful misconduct.

Tort. A claimant must prove:

Contract law. A claimant must prove:

A claimant can seek damages from manufacturers or importers, including entities:

There is no limitation on who can be liable for a tort claim, as long as the alleged tortfeasor satisfies the substantive test (see Question 36). A claimant can claim damages for a defective medicinal product from the manufacturer, importers, and sellers, as well as hospitals, doctors, nurses, pharmacies, and pharmacists, if they are negligent.

In addition, doctors can potentially be subject to tort liability for claims arising from off-label use.

A clamant can seek damages under contract law from a contractual counterparty. A consumer or patient is not usually able to claim for breach of contract against the manufacturer or importer because there is no contractual relationship between them.

Manufacturers, importers, and/or sellers often set out provisions (including an indemnity clause) in the agreement to allocate product liability.

Product liability insurance is generally available.

In many cases, a defendant asserts the non-existence of one or more of the elements required to establish a product liability claim (see Question 36). The following defences are also available.

Product Liability Act. Manufacturers and importers are not liable for damages if they can prove either of the following:

Tort. For tort claims, a defendant may reduce the amount of damages by proving either of the following:

Contract Law. A party will not be liable for damages if it can prove that it was not negligent.

Product Liability Act. The statutory limitation period is the earlier of either:

However, in the case of latent injuries or damages that are only evident after a certain period, the starting date of the above ten-year limitation period is the date on which the damages first show.

Tort. The statutory limitation period is the earlier of either:

Contract. The statutory limitation period is the earlier of either:

The Japanese legal system does not have a class action process. Instead, the Civil Procedure Act allows additional claimants to join an existing case if their claims, and their grounds for bringing those claims, are the same or similar to those in the first case.

A claimant can seek damages reasonably caused by a defect. Punitive or exemplary damages are not available in Japan. However, damages that have arisen through special circumstances (including consequential damages) can be awarded if the defendant foresaw, or could have reasonably foreseen, the special circumstances.