The Rationale for Pharmaceutical Separation: Historical Background and Contemporary Significance

When patients receive medical consultations at healthcare facilities today, it is common practice to obtain a prescription from the physician and then collect medications from a separate pharmacy. However, this system has evolved through a long historical process. This article examines the historical development of pharmaceutical separation in Japan, the background of its promotion, and current trends in digitalization.

Historical Development of Pharmaceutical Separation

Introduction of the System in the Meiji Era

The origins of pharmaceutical separation in Japan date back to the Meiji era. In 1874 (Meiji 7), the Meiji government promulgated the “Medical System” (Isei), modeled after the German healthcare system, which stipulated that “physicians shall be prohibited from selling medicines themselves.” This reform was influenced by recommendations from invited physicians, including German Army Medical Corps Major Leopold Müller. They strongly advised the government that healthcare should be built upon the dual pillars of physicians and pharmacists, and that pharmaceutical education was urgently needed.

In 1889 (Meiji 22), the “Regulations on Pharmaceutical Business and Pharmaceutical Handling” (Yakuritsu) was enacted, officially defining “yakuhoshu” (pharmacy owners) as “pharmacists.” However, this law included a supplementary provision permitting physicians to compound medicines. The reasons for this exception were twofold: Japan had a long tradition of Eastern medicine (Kampo medicine) where physicians customarily performed both diagnosis and medicine compounding, and there was an insufficient number of pharmacists and pharmacies to meet demand. Due to this exception, pharmaceutical separation existed as a system but made virtually no progress in practice.

Post-War Reform and Stagnation

After World War II, the General Headquarters (GHQ) of the Allied Powers strongly urged the Japanese government to implement American-style pharmaceutical separation. In response, the “Pharmaceutical Separation Act” was enacted in 1951 (Showa 26) and came into effect in 1956 (Showa 31). However, the Japan Medical Association vehemently opposed this, declaring that “prescribing medications is a medical act.” Their opposition stemmed from reluctance to relinquish the price differential margin (yakka sakei), which represented profits from the difference between drug procurement costs and the official drug prices.

This conflict intensified. In November 1954, the Japan Medical Association resolved to “absolutely oppose compulsory separation” at a national physicians’ conference, while the Japan Pharmaceutical Association held a national pharmacists’ rally for the implementation of pharmaceutical separation, gathering approximately 8,000 pharmacists demanding complete separation. However, in 1955, a pharmaceutical separation law amendment bill submitted by medical legislators was passed in the Diet, adding an exception provision to Article 22 of the Physicians Act, effectively re-permitting physicians to compound medicines.

The “First Year of Pharmaceutical Separation”: 1974

A major turning point occurred with the 1974 (Showa 49) healthcare fee revision. In this revision, the prescription fee for physicians was substantially increased from 6 points to 50 points. This economic incentive enabled pharmaceutical separation to begin moving forward in practice. Consequently, 1974 is referred to as the “First Year of Pharmaceutical Separation.”

Subsequently, when the then Ministry of Health and Welfare instructed 37 model national hospitals nationwide to achieve complete separation (external prescription acceptance rate of 70% or higher) in 1997, pharmaceutical separation accelerated nationwide.

Background of Promoting Pharmaceutical Separation

The promotion of pharmaceutical separation was driven by both officially stated reasons and more fundamental economic and institutional considerations.

Official Rationale: Improving Healthcare Quality and Safety

The most important official purpose of pharmaceutical separation is to enhance the quality and safety of healthcare. By having pharmacists, as medication specialists distinct from physicians, check medications, the following benefits were anticipated:

First, it enables checking for drug interactions and duplicate prescriptions from different healthcare institutions. This checking function is extremely important for medical safety, particularly for patients visiting multiple healthcare institutions, especially elderly patients.

Second, professional medication guidance by pharmacists promotes patients’ correct understanding and appropriate use of medications. Pharmacists can provide explanations about drug effects, side effects, and administration methods tailored to each patient’s individual circumstances.

Third, pharmaceutical history management ensures continuity in patients’ drug therapy. Particularly by having a “family pharmacy” (kakaritsuke yakkyoku), consistent pharmaceutical history management becomes possible, improving healthcare quality.

Fundamental Reasons: Healthcare Cost Optimization and Economic Background

However, more fundamental economic reasons existed behind the promotion of pharmaceutical separation.

The greatest challenge was the problem of so-called “medication-dependent healthcare.” Under the previous system, when physicians prescribed medications, the differential between drug procurement prices and official drug prices (yakka sakei) became an important revenue source for healthcare institutions. In 1989 (Heisei 1), the House of Representatives Budget Committee’s disclosure that the price differential margin reached 1.3 trillion yen (approximately 25% of total drug costs at the time) became a major social issue.

This structure created incentives for healthcare institutions to prescribe more medications than necessary, leading to excessive prescribing and increased healthcare costs. Pharmaceutical separation was expected to achieve more appropriate drug therapy by separating physicians’ economic interests from prescribing behavior.

Deregulation of Pharmacy Management

Another important aspect was the diversification of pharmacy management structures. While healthcare institutions can only be managed as medical corporations, pharmacies can be operated as stock companies. This institutional difference enabled entry by major corporations and businesses from different industries, promoting the development of pharmacy chains.

While this regulatory difference promoted competition in the pharmacy industry and brought about service diversification, it significantly impacted the business environment for independent local pharmacies.

Progress of Pharmaceutical Separation

Trends in Separation Rate

In 1974, considered the “First Year of Pharmaceutical Separation,” the prescription acceptance rate (pharmaceutical separation rate) was merely 0.6%. It gradually increased thereafter, surpassing 50% for the first time in 2003. It reached 70.0% in 2015, and though it temporarily declined in fiscal year 2021 due to the COVID-19 pandemic, it subsequently resumed its upward trend.

According to statistics from the Japan Pharmaceutical Association, the prescription acceptance rate reached 80.3% in fiscal year 2023, surpassing the 80% milestone for the first time approximately 50 years after the “First Year of Pharmaceutical Separation.” In fiscal year 2024, it further increased to 82.1%, reaching an all-time high. By prefecture, Akita, Aomori, and Niigata show high separation rates exceeding 90%, while Fukui remains at 62.6%, indicating regional disparities.

Trends in Dispensing Fees

The number of prescriptions has also steadily increased, reaching 856.3 million in fiscal year 2023. Dispensing fees totaled 7.9272 trillion yen, approximately four times the 1.89 trillion yen in 1974, the “First Year of Pharmaceutical Separation.”

Meanwhile, the amount per prescription decreased from 9,348 yen in fiscal year 2022 to 9,258 yen in fiscal year 2023, demonstrating the effects of drug cost optimization through the promotion of generic drugs.

Impact of Pharmaceutical Separation

Positive Effects

The promotion of pharmaceutical separation has yielded several positive outcomes.

First, pharmacists’ professional competence has been established, and their role as specialists has been clarified. Since 2006, pharmacist training has become a six-year program, providing more advanced specialized education.

Second, entry by diverse companies has advanced service diversification, including 24-hour pharmacies and pharmacies supporting home medical care. Flexible service provision has become possible according to patients’ lifestyles and healthcare needs.

Third, the 2006 revision of the Medical Care Act legally positioned pharmacies as “medical care provision facilities,” clarifying the role of pharmacies and pharmacists in community healthcare more explicitly.

Fourth, a certain degree of healthcare cost optimization has been achieved through the reduction of price differential margins. According to Ministry of Health, Labour and Welfare estimates, the price differential has decreased from approximately 20% to approximately 8%.

Negative Effects and Challenges

However, several challenges have also been identified.

The greatest challenge concerns patient convenience. The need to go separately to a pharmacy after consultation has increased patients’ waiting time and travel burden. This burden is particularly significant for elderly patients and those with physical disabilities. Travel between healthcare institutions and pharmacies during rainy weather or cold seasons imposes inconvenience on patients.

Second, there has been an increase in patients’ out-of-pocket healthcare costs. Compared to in-hospital prescriptions, external prescriptions tend to increase patients’ co-payments due to the addition of multiple technical fees such as basic dispensing fees, dispensing fees, and pharmaceutical service history management guidance fees.

Third, a structural change has occurred where the rise of major pharmacy chains has led to a decrease in small independent local pharmacies. This trend may affect the diversity of pharmacies in community healthcare.

Fourth, there is ongoing debate about cost-effectiveness relative to the increase in dispensing fees. While the overall conceptual healthcare cost growth rate from 2000 to 2012 was 30.5%, dispensing pharmacies showed a substantial increase of 138%, raising concerns about the increasing proportion of dispensing healthcare costs in overall healthcare costs.

Progress of Digitalization and New Prospects

Introduction of Electronic Prescriptions

On January 26, 2023, the operation of “electronic prescriptions,” bringing significant transformation to Japan’s healthcare system, commenced. Electronic prescriptions are a system for electronically exchanging prescriptions between physicians/dentists and pharmacists through the “Electronic Prescription Management Service,” based on the online qualification confirmation system.

The greatest feature of electronic prescriptions is not merely “digitizing paper prescriptions” but functioning as an “information sharing infrastructure for prescription information.” Even when patients use multiple healthcare institutions and pharmacies, the past three years of prescription and dispensing information can be referenced in real-time, enabling automatic checking for duplicate prescriptions and contraindicated drug combinations. This represents a unique value of electronic prescriptions that could not be realized with traditional paper-based medication notebooks or online qualification confirmation.

The government aims for dissemination to almost all healthcare institutions and pharmacies by around summer 2025. As of October 2025, while the adoption rate at pharmacies has reached approximately 86.5%, it remains at 17.3% for hospitals and 23.3% for medical clinics, making promotion of adoption by healthcare institutions a challenge.

In the 2024 healthcare fee revision, the “Medical DX Promotion System Development Premium” was newly established, requiring the start of electronic prescription operations by March 31, 2025. This has strengthened incentives for adoption by healthcare institutions.

Furthermore, starting January 23, 2025, an in-hospital prescription information registration function was initiated, enabling healthcare institutions providing in-hospital prescriptions to also reference information registered in the Electronic Prescription Management Service and check for duplicate prescriptions based on in-hospital prescription information.

Development of Online Medication Guidance

Triggered by the COVID-19 pandemic, online medication guidance was temporarily permitted from April 2020 through a time-limited measure called “0410 Response.” Subsequently, after the 0410 Response ended on July 31, 2023, it was established as a permanent system based on the revised Pharmaceuticals and Medical Devices Act.

Current online medication guidance requires real-time, two-way audio-visual communication, demanding quality equivalent to face-to-face medication guidance. Through integration with electronic prescriptions, patients can receive online medication guidance and obtain medications at home simply by sending the prescription reference number to the pharmacy.

From around summer 2024, “online pharmacy services” that enable everything from online medication guidance to prescription drug delivery were officially launched by major pharmacy chains and major shopping sites. Patients can select a pharmacy from a smartphone app, book online medication guidance, receive pharmacist explanations at home, and obtain medications. This service meets the needs of a wide range of users, including patients regularly requiring prescription drugs for chronic conditions, parents wishing to reduce travel and waiting time, and busy business professionals.

Refill Prescription System

The “refill prescription system” was introduced in April 2022. This system allows patients with stable chronic conditions to receive medications multiple times (up to three times) within a certain period without requiring physician consultation. This system, widely established in Western countries, aims to reduce patients’ hospital visit burden and efficiently utilize healthcare resources.

From January 2024, refill prescriptions also became compatible with electronic prescriptions, operating as “electronic refill prescriptions.” This eliminates the need for patients to manage paper prescriptions, enabling more convenient services when combined with online medication guidance by simply sending the reference number to the pharmacy.

Evaluation of Pharmaceutical Separation and Future Challenges

Achievement of Original Purposes

Continuous verification is needed regarding the extent to which the original purposes of pharmaceutical separation—”improving healthcare quality and safety” and “optimizing healthcare costs”—have been achieved.

Regarding patient safety, certain effects have been recognized, such as pharmacists checking for duplicate prescriptions and preventing drug interactions. According to surveys by the Japan Pharmaceutical Association, pharmacies conduct over 10 million inquiries per year (contacting physicians when prescription contents are questionable), contributing to medical safety. The spread of electronic prescriptions is expected to further strengthen this checking function.

Regarding healthcare cost optimization, dispensing healthcare costs continue to increase, and debate continues about cost-effectiveness. While there are effects from reducing price differential margins, the overall healthcare cost suppression effect is limited due to increases in dispensing technical fees and other costs.

Transition to Patient-Centered Healthcare

Future pharmaceutical separation needs to evolve from mere task division between physicians and pharmacists toward building a community healthcare system centered on patients. The following points are important for this purpose:

First, strengthening the functions of “family pharmacies” and “family pharmacists.” Higher quality drug therapy is realized when patients receive continuous pharmaceutical history management at one pharmacy. The “Family Pharmacist Guidance Fee” was newly established in the 2016 healthcare fee revision, and the 2019 revision of the Pharmaceuticals and Medical Devices Act mandated pharmacists’ continuous monitoring of medication status and medication guidance, advancing institutional development.

Second, balancing convenience and safety using digital technologies such as electronic prescriptions and online medication guidance. Maintaining and improving healthcare quality while reducing patients’ waiting time and travel burden is required.

Third, strengthening the role of pharmacies and pharmacists in the community-based integrated care system. With advancing aging, the importance of pharmaceutical management in home medical care and nursing care facilities is increasing. Pharmacies are expected to function as community health hubs, contributing to community residents’ health promotion through support for self-medication with OTC medicines (over-the-counter drugs) and health consultations.

Future Outlook

Pharmaceutical separation is expected to continue evolving. The spread of electronic prescriptions will enable closer information sharing between healthcare institutions and pharmacies, and they are expected to serve as the foundation for medical DX (Digital Transformation).

Additionally, with the development of AI (Artificial Intelligence) technology, pharmacists’ work may become more sophisticated, including checking drug interactions and predicting adverse reactions. Pharmacists are required to shift their roles from mere dispensing work toward more specialized pharmaceutical management and patient education.

Simultaneously, how to balance patient convenience with healthcare quality remains an ongoing challenge. While utilizing new technologies such as online medication guidance and electronic prescriptions, the importance of face-to-face communication must not be forgotten.

Conclusion

Pharmaceutical separation has become an important pillar of Japan’s healthcare system, approximately 150 years after its institutional introduction in the Meiji era and 50 years after the “First Year of Pharmaceutical Separation” when practical promotion began. It was not merely a change in how medications are obtained but a major systemic transformation in which medical safety, economics, and social systems were complexly intertwined.

This system has brought many achievements, including establishment of pharmacists’ professional competence, improvement of healthcare quality and safety, and healthcare cost optimization, while also carrying challenges to be resolved, such as patient convenience and increased healthcare cost burden.

The ongoing spread of electronic prescriptions and development of online medication guidance indicate a transition to a new phase of pharmaceutical separation. By utilizing digital technology, it is becoming possible to resolve the convenience challenges that traditional pharmaceutical separation faced while further improving healthcare quality and safety.

Healthcare systems need to continue evolving in response to social changes. Pharmaceutical separation must also develop toward better forms while adapting to technological innovation and societal needs under the fundamental principle of patient-centered healthcare. For this purpose, it is essential that healthcare professionals, policymakers, and patients themselves correctly understand the significance and challenges of this system and continue constructive discussions.