Japan’s government, eager to contain the cost of health care as the country’s population ages, is encouraging the greater use of generic drugs by promoting them publicly and cautiously reforming the reimbursement system. Thanks to ad campaigns by some of their manufacturers, most patients affirm a desire to take them to save money on co-payment charges. Yet only one in seven has dared to ask a doctor to prescribe generics, our research shows (exhibit).

Japanese patients generally don’t like to question a doctor’s treatment regime, and Japanese doctors don’t have a financial incentive to prescribe and dispense generics. What’s more, doctors tend to distrust their quality. For these and other reasons, even though their use has been growing by almost 10 percent a year in Japan since 2001, they still account for only 17 percent of prescriptions by volume, compared with 59 percent in the United States. We estimate that Japan’s total expenditure on off-patent drugs could fall by up to 3 trillion yen ($26 billion) annually, one-third of the country’s total drug bill. But first, the adoption of generics must rise to US levels, and prices—currently, on average, 50 percent of the price of the original branded drug—must drop to 20 to 30 percent, the level in the United States.

Motivating doctors to trust and prescribe generics will be crucial to make these changes happen. Continued reform of the reimbursement system to get generics dispensed when they are available is a requirement; another would be for local and international makers of generic drugs, as well as companies that produce branded ones, to seize the opportunity to improve the image of generics among Japan’s physicians by further developing the country’s market for them. Local and international makers of generic and branded drugs alike stand to gain. In addition, manufacturers of branded products may benefit from the government’s stated intention of plowing some of the savings obtained through the increased use of generics into better rewards for new and innovative drugs.