HHS DEPUTY SECRETARY TROY'S VISIT TO JAPAN

UNCLAS SECTION 01 OF 03 TOKYO 003221

SENSITIVE
SIPDIS

DEPT FOR AIAG AMBASSADOR LANGE
DEPT FOR EAP/J AND OES/IHA
USDA PASS TO APHIS
HHS FOR DEPUTY SECRETARY TROY
HHS FOR OGHA STEIGER AND ABDOO
DEPT PASS TO AID/GH/HIDN

E.O. 12958: N/A
TAGS: SOCI TBIO KSTH ECON PREL KFLU JA
SUBJECT: HHS DEPUTY SECRETARY TROY'S VISIT TO JAPAN
NOVEMBER 24-27

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Summary
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2. (SBU) As the world's second largest economy, Japan
remains a strong ally and a key partner for the U.S. in
global health efforts. During its G8 presidency, Japan has
shown leadership on important global issues and continues to
be a top contributor to initiatives on infectious diseases
and pandemic preparedness. At the same, with a declining and
rapidly aging population, plus a growing need to pay
attention to current and future budgetary constraints, Japan
faces increasing health care challenges and domestic public
pressures. The world's second largest pharmaceutical market,
Japan nevertheless has lagged other countries in introducing
innovative drugs and devices. Limited reforms are underway
to reverse the "drug lag" and similar delays in approvals of
medical appliances, but progress has been slow. Still, and a
point not often understood by the Japanese public or Japanese
officials, Japan is a world leader in life sciences and our
long-standing cooperative science relationship continues to
facilitate promising medical research in both countries. End
Summary.

Japan's Healthcare System - Strong, Expensive, and Under Fire
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3. (SBU) Japan's national healthcare system receives high
marks for delivering basic healthcare at a reasonable cost,
but faces serious challenges. Japan boasts the world's
highest life expectancy, the lowest rate of infant mortality,
and, although rising, the developed world's lowest prevalence
of obesity. While overall healthcare spending, at eight
percent of GDP, and health spending per capita, are well
below OECD averages, Japan is grappling with how to finance
care for an aging population and ensure access to innovative
drugs, devices, and specialized care. The recent death of a
pregnant woman who was refused treatment by eight Tokyo
hospitals further raised awareness of critical gaps in
Japan's system, including a shortage of hospital beds and of
nurses and doctors, especially in rural areas. Recent
efforts, such as those to encourage medical school
enrollment, may help over the long term, but current
shortfalls raise questions about Japan's capacity to care for
its growing ranks of older citizens and to respond
effectively to health emergencies.

Innovation
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4. (SBU) Japan is the world's second largest market for
pharmaceuticals and medical devices, but the launch of
innovative drugs and devices is often described -- by some
Japanese as well as by many American experts -- as the
slowest in the industrialized world. Recognizing the
economic and health implications of the "drug lag," the
government has taken initial steps to accelerate the
approvals process, bolster clinical trials infrastructure,
and improve the competitiveness of the Japanese
pharmaceutical industry. The U.S.-Japan Economic Partnership
for Growth and other bilateral economic dialogues have been
useful for highlighting the benefits of health innovation to
our bilateral economic relationship. While progress has been
made, critical issues remain. For example, the
Pharmaceutical and Medical Device Agency (PMDA) hired
additional reviewers in 2008, paid for by increased user fees
for device reviews. However, PMDA still employed just 276
reviewers as of May 2008. Pricing and reimbursement policies
that aim foremost to curb government healthcare spending
continue to stifle innovation. Imports account for about 20
percent of Japan's pharmaceutical market. Taking into

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account licensees and local production by foreign firms, the
foreign share of the market approaches 40 percent.

Stem Cell Research
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5. (SBU) The recent breakthrough by Kyoto University
researchers in cultivating induced pluripotent stem cells
(iPS) from human skin gave a boost to Japan's ambitions to
become a global leader in stem cell research. Similar
research advances in the U.S. have only heightened Japan's
competitive focus. The Council for Science and Technology
Policy (CSTP),chaired by the Prime Minister, has pushed iPS
research to the top of the government's life sciences
research agenda. For FY2008, the GOJ increased spending on
iPS research more than tenfold to roughly USD 50 million.

G8 and Global Health
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6. (SBU) As G8 president, Japan supported our efforts to
incorporate U.S. priorities on accountability and
transparency into the Toyako Framework for Action on Global
Health. Despite serious and growing budgetary pressures,
Japan remains a key partner in global efforts to fight
infectious diseases and other health threats. Japan is the
third largest contributor to the Global Fund for AIDS,
Tuberculosis, and Malaria, and has recently fulfilled a
pledge to supply ten million long-lasting insecticide-treated
bed nets to sub-Saharan Africa. Japan's financial commitment
to polio eradication is less certain, however, despite recent
contributions through UNICEF. We continue to urge Japan to
join in helping eliminate polio in the four countries where
it remains endemic.

Pandemic Preparedness
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7. (SBU) Japan has consistently supported the U.S. in
calling for timely sharing of virus samples with the WHO.
However, Japan's position has been tempered at times by a
desire to avoid appearance of a standoff between developed
and developing countries. At October's Ministerial
Conference in Egypt, Japan pledged an additional USD 24
million for international efforts, the second largest pledge
after the U.S. At a November trilateral health ministerial,
Japan pledged closer cooperation with China and Korea on
information sharing and joint pandemic exercises.
Domestically, Japan continues to develop its capabilities to
respond to a pandemic by raising targets for anti-viral
stockpiles and testing prepandemic vaccine on 6,000
volunteers in front line occupations. Bureaucrats and
lawmakers have followed U.S. preparedness efforts closely,
particularly on difficult issues such as vaccine allocation,
anti-viral stockpiling, and guidance to citizens living
abroad.

Food Safety
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8. (SBU) Recent scandals involving tainted food imports,
particularly from China, have prompted proposals to increase
monitoring of food imports and more stringent labeling
requirements. While domestic food labeling scandals have
also captured headlines, consumers are more concerned with
the safety of imported food. Imports account for 60 percent
of Japan's food supply. The recent melamine scandal in China
has led to new requirements for testing Chinese dairy
products and is fueling a more general suspicion of food
imports from China, currently Japan's second largest supplier
of food after the U.S. While we support efforts for
international coordination on food safety, we continue to
urge Japan to adopt science-based regulations and avoid

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damage to U.S. agricultural trade.
SCHIEFFER