Regulatory, Pricing, and Reimbursement: Indonesia
The key facts about regulatory, pricing, and reimbursement of drugs in Indonesia. Prepared in association with ABNR, a leading global law firm, this is an extract from The Pharma Legal Handbook: Indonesia, available to purchase here for GBP 99.
1. What are the regulatory authorities with jurisdiction over drugs, biologicals, and medical devices in your country?
The regulatory authorities with specific jurisdiction over drugs, biologicals, and medical devices in Indonesia are:
- Ministry of Health of the Republic of Indonesia (Kementerian Kesehatan Republik Indonesia, “MOH”); and
- Indonesia National Agency of Drug and Food Control (Badan Pengawas Obat dan Makanan “BPOM”).
2. What is the regulatory framework for the authorization, pricing, and reimbursement of drugs, biologicals, and medical devices?
The basic regulation on health (including drugs, biologicals, and medical devices) is Law No. 36 of 2009 on Health (“Health Law”), as amended by Law No. 11 of 2020 on Job Creation (“Omnibus Law”).
Drugs and Biologicals
The authorization of drugs and biologicals is primarily regulated under BPOM Regulation No. 1010/MENKES/PER/XI/2008, as amended by BPOM Regulation No. 1020/MENKES/PER/XII/2008 on Drug Registration. Further, details on the requirements, criteria, category, as well as registration procedures of drugs and biologicals are further regulated under BPOM Regulation No. 24 of 2017 on Criteria and Management of Drug Registration, as last amended by BPOM Regulation No. 13 of 2021 (“BPOM Regulation 24/2017”).
Worthy of note is that at the end of June 2018, the Indonesian government launched the Online Single Submission (“OSS”) system, which serves as the main gateway for business licensing for the licenses previously handled by different line ministries, regional governments, and quasi-government bodies, including the Ministry of Investment/ Indonesian Direct Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”). The Indonesian government is continuously upgrading the OSS system, lastly into a Risk-Based Approach (“RBA”) OSS system as the implementation of Government Regulation No. 5 of 2021 on Risk-Based Business Licensing (“GR 5/2021”). The RBA OSS system is effective since August 2021.
GR 5/2021 has introduced a new paradigm in permits and licenses; company licenses are now determined by a risk-based analysis. The risk assessment is classified into 4 levels: Low, Medium-Low, Medium-High and High, each with its own characteristics, and assessed using various criteria, including safety, health, the environment, resource utilization and management. GR 5/2021 generally sets out the risk-level, validity, requirements, obligations, and timeline related to the licensing. Higher risk imposed higher license requirements.
All licenses and permits must be applied for through the OSS system, including licenses related to drugs and biologicals. Although, in some cases, verification and assessment by the relevant ministries are still required.
Pharmaceutical industries in Indonesia are required to provide information on the highest retail price on the relevant drug’s label under MOH Regulation No. 98 of 2015 on the Provision of Information on Highest Drug Retail Price (“MOH Regulation 98/2015”). The MOH Regulation 98/2015 also grants authorization to the MOH to determine from time to time the retail price of generic drugs that are not included in the e-catalogue (an electronic system on procurement of goods/services by government).
The authorization of medical devices is primarily regulated under MOH Regulation No. 62 of 2017 on MA of Medical Devices, In Vitro Diagnostic Medical Devices, and Household Health Products (“MOH Regulation 62/2017”).
Upon the launch of the RBA OSS system, the risk-level, validity, requirements, obligations, and timeline related to the licensing of medical devices are as regulated under GR 5/2021.
There is no specific regulation on the pricing of medical devices.
There is no regulation on reimbursement of drugs, biologicals, and medical devices in Indonesia. The Government, however, manages a public healthcare system via an independent authority. Please refer to Question No. 10 below.
3. What are the steps to obtain authorization to develop, test, and market a product?
Marketing Authorization (“MA”) of drugs, including imported drugs, must be obtained by Indonesian pharmaceutical manufacturing companies.
The Development and testing of drugs differs between generic and new drugs. For generic drugs, applicants may conduct development of formula/testing in the laboratory without any authorization. Once the applicant is sure of the result of the development/testing, the applicant must register the drugs and obtain an MA.
Development and testing of new drugs, on the other hand, must adhere to the regulations on pre-marketing clinical trials. If the new drugs are to be imported from overseas (meaning that they are already marketed and distributed overseas but not in Indonesia), the development and testing may be conducted overseas. The BPOM will accept result of clinical and non-clinical trials conducted overseas as part of the MA application as below.
Prior to distribution of drugs, an MA issued by the RBA OSS System on behalf of BPOM must first be obtained. The application of an MA is divided into 2 steps, namely: (i) pre-registration and (ii) registration phase. The application is conducted online through the RBA OSS System.
In general, the following are the steps for obtaining an MA:
- The applicant must be registered at the RBA OSS System.
- Pre-registration phase
The timeline for pre-registration phase is 40 days.
- Registration phase
The timeline for registration phase is ranging from 5 days up to 300 days, subject to the condition of the registration and the type of drugs being regis-
In both Pre-registration and Registration phases, the applicant must adhere to:
- Standard and requirement for criteria and procedure of drugs registration;
- Indonesian Pharmacopoeia Standard and/or analysis method, standard and/or other requirements; and
- Bioequivalence testing guidelines.
Similar to drugs, development and testing of medical devices prior to distribution shall adhere to the regulations on pre-marketing clinical trials.
In general, medical devices in Indonesia are divided into 4 classifications based on the risk of use against patients:
- Class A: low risk;
- Class B: low to medium risk;
- Class C: medium to high risk;
- Class D: high risk.
Prior to distribution of medical devices, an MA issued by the RBA OSS System on behalf of MOH must be obtained. In general, the following are the steps for obtaining an MA:
- Prior to applying for an MA, the applicant must first obtain a Medical Devices Manufacturing Certificate (for a local manufacturer) or Medical Devices Distribution Certificate (for importer) via the RBA OSS System.
- Registration for MA must also be done through the RBA OSS System. Pursuant to GR 5/2021, the applicant will be required to comply with the following requirements:
- Administrative requirements;
- Technical requirements; and
- Payment of Non-Tax State Revenue.
The timeline for new registration of MA is ranging from 10 days up to 45 days, subject to the type of medical devices being registered.
4. What are the approximate fees for each authorization?
Drugs and Biologicals
The applicable fees vary for each authorization, as stipulated under Government Regulation No. 32 of 2017 on Types and Tariffs of Non-Tax State Revenue Applicable at BPOM.
As an illustration, a pre-registration costs up to IDR 1 million per item, and a registration of drug with new active substance, biologicals, and combination costs up to IDR 30 million per item.
The applicable fees vary depending on the classification of the medical devices and the type of application (new or renewal), as stipulated under Decree of the Director General of Pharmaceutical and Medical Devices No. HK.02.03/I/767/2014 on Guidelines of Medical Devices MA Services. As an illustration, an application for new MA for Class D medical devices costs IDR 5 million per item.
5. For how long are MAs/registrations valid? How are MAs/registrations renewed?
Drugs and Biologicals
MA for drugs and biologicals are valid for 5 years, to the extent that they comply with the prevailing laws.
The timeline to submit re-registration application for renewal of MA depends on whether or not there is an alteration to the product. In the event of any alteration to the MAs (e.g., change of ingredients, manufacturer, etc.), the holders of MAs must submit re-registration applications to the BPOM at the earliest 12 months and latest 2 months prior to the expiration thereof. If there is no alteration, the application may be submitted within 1 month prior to the expiration of the MAs.
Should a holder of a MA fail to re-register within the required time period, a new registration application (not re-registration) must be submitted.
MA for medical devices are valid for maximum 5 years. Application for renewal of the MA shall be submitted at the earliest 9 months prior to the expiration thereof. Should a holder of a MA fail to apply for renewal after the expiration, a new registration application (not a renewal) must be submitted.
6. How does the authorization process differ between brand-name products and generic products? Are there differences for local manufacturers versus foreign-owned manufacturers?
Drugs and Biologicals
Drugs regulations do not differentiate the authorization process between brand-name products and generic products. The regulation however differentiates between registration of: (i) domestically produced drugs; (ii) imported drugs; (iii) licensed drugs; (iv) patent-protected drugs; (v) new development drugs; (vi) generic drugs; and (vii) orphan drugs.
The authorization process also differs between local manufacturers (whether 100% local or foreign-owned) and foreign manufacturers (import). As the application is made online, the system differentiates between an application for locally made medical devices and imported medical devices by providing different menus/options. Subsequently, different details will be required for each option.
Medical device regulations also do not differentiate the authorization process between brand-name products and generic products. If the medical devices are branded, the brand certificates shall be provided during the registration.
Similar to drugs, the authorization process also differs between locally-made medical devices and imported medical devices.
7. How are combination products (drug + drug, drug + biologic, drug + device, biologic + device, drug + biologic + device) regulated?
There is no specific regulation on combination products, as such, the applicant must adhere to each regulation relating to the products combined. For example, for drug and medical devices, the applicant must take into account the prevailing regulations on drugs and medical devices.
However, during the application for MA for drugs, the applicant should be able to select the type of the products to be registered, as follows:
- Single Product, if the product only consists of drug;
- Combination Product, if the product consists of drug and solvents or drug use aids (e.g., syringe, aerosol, spray, implant); or
- Combipack Product, if the product consists of two or three drugs packed into one package to be given to patients simultaneously.
8. How is compliance with regulation monitored and evaluated? Is the regulatory regime comparable with the U.S. Food and Drug Administration or the European Drugs Agency expectations and requirements?
In general, the requirements of U.S. Food and Drug Administration or the European Drugs Agency are informally used as benchmark by the Indonesian authorities, thus certain aspects are comparable. Nevertheless, Indonesia has a set of unique regulations that govern drugs and medical devices sectors.
Under Presidential Regulation No. 80 of 2017 on BPOM, BPOM is generally authorized to conduct intelligence and investigation activities in the drugs and foods sector as well as impose administrative sanctions, in accordance with the prevailing laws and regulations. The regulation also stipulates the establishment of a specific Investigation Deputy under BPOM, which is tasked to carry out the formulation and implementation of investigation policies against violations in the drugs and foods sector.
Under MOH Regulation No. 10 of 2018 on Monitoring in the Health Sector, a functional position of a Health Supervisor is established to implement monitoring and supervision in the health sector. The object of monitoring includes the public and each organizer of activities related to health resources (including medical devices) and health efforts (e.g., health services). Health Supervisors work at central level (appointed by the MOH), provincial level (appointed by the Head of Provincial Health Agency) and regency/municipal level (appointed by the Head of Regency/Municipal Health Agency).
A Health Supervisor is authorized to, among others, examine licensing related to the health resources and health efforts. If based on the monitoring and supervision activities, it is proven that a health personnel and/or a health services facility violates any regulation in the health sector, they may be imposed with administrative sanctions.
9. What is the potential range of penalties for noncompliance?
Drugs and Biologicals
Under GR 5/2021, noncompliance or violation of business licensing in the drugs and foods sub-sector, including licensing related to drugs and biologicals, is subject to administrative sanctions, ranging from written warning, temporary suspension of business activity through freezing of business licensing, administrative fine, coercion (i.e., withdrawal from distribution, compensation, extermination, closing or blocking of electronic system and/or other internet media used for online distribution of drugs and foods, and/or closing of access for business licensing application), and/or revocation of business licensing (e.g., MA).
Under GR 5/2021, noncompliance or violation of business licensing in the medical sub-sector, including licensing related to medical devices, is subject to administrative sanctions, ranging from written warning to revocation of business licensing (e.g., MA). Additionally, there is also administrative sanction in the form of government coercion, covering: (i) discontinuation of ad service (ii) product recall order, and/or (iii) product extermination order.
Despite the foregoing, the Health Law provides criminal sanctions for: (i) any person who intentionally produces or distributes pharmaceutical supplies and/or medical devices that contravene the standard and/or requirements for safety, efficacy or expedience, and quality in the form of imprisonment for a maximum of 10 years and penalty for a maximum of IDR 1 billion, (ii) anyone who intentionally produces or distributes pharmaceutical supplies and/or medical devices without proper business licensing in the form imprisonment for a maximum of 15 years and penalty for a maximum of IDR 1.5 billion.
10. Is there a national healthcare system? If so, how is it administered and funded?
In 2011, Law No. 24 of 2011 regarding Social Security Management Board (“Law No. 24/2011”) was enacted. The regulation is the basis of establishment of the Social Security Management Board (Badan Penyelenggara Jaminan Sosial or “BPJS”), which consists of 2 different bodies: (i) Health BPJS – which manages health security program; and (ii) Manpower BPJS – which manages manpower related programs such as pension fund. Both BPJSs are responsible to the President of the Republic of Indonesia.
The health social security program was formerly known as the Public Health Care Insurance (Jaminan Pemeliharaan Kesehatan Masyarakat) which was managed by PT Askes (Persero). Following the enactment of Law No. 24/2011, it transformed into the Health Security program and is managed by Health BPJS.
Any person, regardless of whether they already have another health insurance policy, is obligated to become a participant in the health security program managed by the Health BPJS. The Health BPJS will charge periodical contribution fees to the members. The Indonesian Government will provide contribution aid to the Health BPJS as an additional source of funding for the purpose of sponsoring the poor and less fortunate so that they can be covered by the health security program.
The Health BPJS will cover health services expenses of its participants in accordance with the health security program regulations.
11. How does the government (or public) healthcare system function with private sector healthcare?
Under MOH Regulation No. 71 of 2013 on Healthcare Services at National Health Security, as amended several times, lastly by MOH Regulation No. 7 of 2021, Health BPJS may cooperate with healthcare facilities managed by the government, regional government, and/or public. These include: (i) health centre (locally known as Puskesmas) or its equivalent; (ii) doctor’s practice; (iii) dentist’s practice; (iv) primary services doctor’s practice; (v) pratama clinic or its equivalent; (vi) pratama class D hospital or its equivalent; (vii) primary clinic or its equivalent; (viii) general hospital; and (ix) special hospital. The cooperation shall be carried out by a cooperation agreement between the Health BPJS and each health facility. The agreement must be valid for a minimum of 1 year.
On 28 March 2018, the MOH Regulation No. 4 of 2018 on Obligations of Hospitals and Obligations of Patients was enacted. The regulation stipulates that each hospital (whether public or private) must fulfil certain obligations, including, to provide facilities and services for the less fortunate and poor. It is further explained that this obligation shall be carried out by providing Class III care beds for the less fortunate and the poor, and/or for the health social security participants.
12. Are prices of drugs and devices regulated and, if so, how?
MOH Regulation 98/2015 requires pharmaceutical industries to provide information on the highest retail price on the label of the drug concerned. The information may be provided in the form of a nominal value (in IDR) or formula (as relevant). The price information differs in accordance with the type of the drugs:
- non-generic drugs,
- generic drugs listed in the e-catalogue for government procurement; and
- generic drugs that are not listed in the e-catalogue.
Price information based on the formula must be provided for generic drugs listed in e-catalogue. Specifically, for generic drugs not listed in the e-catalogue, the highest drug retail price must comply with the price determined by the MOH based on its decree. The MOH last issued an MOH Decree on this in 2015.
For non-generic drugs, the information must be provided in the form of a nominal value based on pharmacies’ nett price (i.e., retail price from pharmaceutical wholesaler to the pharmacies, including VAT) plus pharmaceutical services fee of 28% on the pharmacies’ nett price.
The pharmacies, drug stores, and hospital/clinic pharmaceutical installations may only sell drugs at an equal or lower price than the highest retail price, unless the price provided on the label is no longer valid.
There is no specific regulation on pricing for medical devices.
13. How are drugs and devices used by patients paid for? What roles do public and private payers play?
Patients pay for drugs and devices out-of-pocket or financed by private insurance or the Health BPJS. Some also enjoy the benefit of medical allowances provided by their employers.
Although currently the majority of Indonesians have been registered as participants of Health BPJS, due to the limitation of coverage provided by the Health BPJS, a good portion of the participants either elect to pay for drugs and devices entirely out-of-pocket or pay for the excess not covered by the Health BPJS.
14. Who dispenses drugs and devices to patients and how are those dispensers compensated?
Drugs dispensing and services based on prescription must be carried out by licensed pharmacists.
In remote areas where no pharmacist is available, the MOH may assign licensed pharmacy technical personnel to primary health services facilities to compound and dispense drugs to patients. Furthermore, in more remote areas where no pharmacy is available, licensed doctors or dentists may compound and dispense drugs to patients.
Drugs dispensers (i.e., pharmacists) are compensated either by way of salary or on their own account. Pharmacists are allowed to establish pharmacies using their own and/or their investors’ capital (individual/company).
There is no general regulation on medical device dispensing.
15. What are the professional and legal responsibilities of those who dispense drugs and devices? What role do they play in providing patient care, information, and safety?
Main responsibilities of pharmacists in dispensing drugs consist of 3 stages, namely, preparation, delivery and providing information on the drugs. In general, the main duties of the pharmacists include:
- Dispensing drugs in accordance with the prescription, including compounding if necessary;
- Ensure correct labelling and packaging of the drugs;
- Ensure that the drugs are given to the correct patients or their families;
- Providing information to the patients on the use and dosage of the drugs, as well as its side effects and list of consumables that must be avoided during consuming the drugs;
- Maintaining records of dispensed drugs; and
- Educating patients who require OTC drugs for mild disease.