In Japan, all citizens are covered under public health insurance. This universal insurance system is called the National Health Insurance, or NHI, System. It is important to understand how this system works, what are the key ideas behind this policy, how the resources flow through it, and who are the stakeholders and decision-makers in order to understand the pricing of pharmaceuticals in Japan and its dynamics. Toshin Nagate reveals how the purpose of this article is not to discuss the overall structure of the NHI system, but is instead to summarise the key aspects of it that are relevant to pharmaceutical pricing and market entry strategies.