Following a flurry of recent reform plans, the Japanese government has targeted a 3.16% cut in healthcare costs in 2006. The savings will be made through cutting medical service fees as well as severely curbing drug spending. It is hoped that the new measures will help save roughly JPY240bn (US$2.07bn) per year.

Under the plans, medical service fees will be cut by a record 1.36%. The previous highest-ever reduction was the 1.3% cut in 2002. Meanwhile, the government is planning to cut the price of pharmaceuticals in the country by 6.7%.

In Japan, drug prices are reduced every two years in order to help curb health expenditure. However, the latest reduction is larger than previous biannual decreases. Japan's Medical Association has criticised the moves to cut hospital costs as "bizarre," claiming that medical institutions are being forced to shoulder an unfair burden of the savings.