Japan has been working feverishly to stay at the cutting edge of research and clinical applications in regenerative medicine. It has invested billions of yen in induced pluripotent stem (iPS) cells — made by reprogramming an individual’s adult cells so that they can develop into any body tissue — and has overhauled its drug regulations to create a fast track to bring regenerative therapies to market.

The strategy is working, up to a point — in September, the first treatments were approved under the new law. According to bullish regenerative-medicine firms in Japan, the scheme is the fastest way to meet patients’ needs. Without it, they argue, treatments get bogged down in phased clinical trials that can take several years and cost hundreds of millions of dollars. But it is not clear whether the acceleration will benefit patients or help Japan’s overburdened national health system.

One of the approved treatments, HeartSheet, is made of skeletal-muscle stem cells that are taken from a patient’s thigh and grown in the lab. The sheet, made by the company Terumo, is then applied to the hearts of people who have severe cardiac failure. Japan’s health ministry gave “conditional approval” for clinical use of the treatment after the company carried out a phase II trial, which hinted at its safety and efficacy in seven patients (Y. Sawa et al. Circ. J. 79, 991–999; 2015).

The company can market and sell the treatment. The approval comes with the condition that, within 5 years, Terumo must provide data from at least 60 patients treated with HeartSheet and 120 controls to show that the treatment is effective. Officials at the Pharmaceuticals and Medical Devices Agency, which approves new treatments, say that the examination of these data will be just as strict as it would be for a conventional phase III clinical trial.

Such approvals feed two Japanese obsessions. First, they allow Japan to be at the forefront of regenerative medicine, something that it has pursued doggedly since iPS cells — which would go on to win one of the country’s scientists a Nobel prize — became a national project. Second, Japan is determined to find new engines of economic growth, because it has enjoyed few successes in biotechnology so far.

Japan could find itself flooded with unsuccessful treatments.

Biotech firms around the world are excited about the approval, too. Stories of commercialization are a welcome counterpoint to the narrative of failure. California biotech firm Geron, once a trailblazer in regenerative medicine, has given up on embryonic stem-cell therapies and, just this year, Masayo Takahashi of the RIKEN Center for Developmental Biology in Kobe decided to halt her trial of iPS-cell-derived retinal grafts to treat age-related macular degeneration.

Patients are willing to pay, and pay dearly: the HeartSheet treatment costs nearly ¥15 million (US$122,000). Last month, the health ministry added it to the procedures covered by national health insurance, which will help. But patients still pay 10–30% of the cost for a drug that is not known to be effective. As they do so, they basically subsidize the company’s clinical trial.

Japan has turned the drug-discovery model on its head. Usually, the investment — and thus the risk — is borne by drug companies, because they stand to gain in the long run. Now the risk is being outsourced. By the time it is clear whether a treatment works or not, the companies will have already made revenue from it.

The government argues that its system will encourage firms to bring to market regenerative-medicine treatments that might work. They will, at least, work well enough to make it past small initial trials. Many drugs do that, and then most of them fail at phase III. 

Biotech companies in other countries are keen on the idea and have pushed their own regulatory bodies to follow Japan’s lead. This is a bad move. Regulatory agencies around the world should resist pressure to create such fast-track systems, at least until Japan has proved that its system works. That will take time. The country will have to demonstrate that its health-care system can withstand the costs of the new regenerative-medicine treatments, and that patients do not feel cheated. What happens when, inevitably, one of the fast-track drugs turns out to be ineffective? Company officials and government representatives say that patients will not be reimbursed, even though some might have paid up to ¥4.5 million (the rest covered by health insurance) for an ineffective treatment.

Japan’s drug authority must guarantee that the post-commercialization evaluation of the drugs will be as rigorous as it says. It will not be easy to rein in a drug that has already been approved, whether that approval is conditional or not. If lax evaluation means that ineffective drugs are not revealed, or are not taken out of circulation, Japan could find itself flooded with unsuccessful treatments. And that would not be good for patients, the government or the biotech companies that want to see their truly effective medicines noted as such.