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 USD 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:

a. Ministry of Health of the Republic of Indonesia (Kementerian Kesehatan Republik Indonesia, “MOH”); and
b. 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”).

Drugs and Biologicals

• Authorization

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 (“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. According to Government Regulation No. 24 of 2018 Online Single Submission Services (“GR No. 24/2018”), which created the legal basis for the OSS system, the OSS system is now the main gateway for business licensing for the licenses previously handled by different line ministries, regional governments, and quasi-government bodies, including the Indonesian Direct Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”). All licenses and permits covered under GR No. 24/2018 must be applied for through the OSS system now managed by the BKPM.

Following the launching of the OSS system, the BPOM issued BPOM Regulation No. 26 of 2018 on Electronically Integrated Business Licensing Services in the Drug and Food Sector, which stipulates further implementation of the OSS regulation, including norms, standards, procedure, and licensing criteria at BPOM. In the near future, the BPOM online system for authorization is expected to be linked to the OSS system.

• Pricing

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).

Medical devices

• Authorization

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”).

Following the launch of the OSS system, the MOH issued MOH Regulation No. 26 of 2018 on Electronically Integrated Business Licensing Services in the Health Sector, which stipulates further implementation of the OSS regulation, including norms, standards, procedure, and licensing criteria at MOH. This regulation particularly sets out the authorization process and requirements applicable to domestically produced medical devices. As for imported medical devices, applicants may refer to the process and requirements under MOH Regulation 62/2017.

• Pricing

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?

Drugs

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 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.

The following are the steps for obtaining a MA:

a. Registration at the BPOM online system to obtain username and password
b. Pre-registration phase

• The applicant will be required to fill in certain details, including description and information on the drugs and the applicant’s data. If the drugs are registered overseas, the registration status should also be provided.
• Upon completing the required details, the applicant must upload documents such as pharmaceutical industry manufacturing license, Good Manufacturing Practice certificate, summary of characteristics of drugs/brochure.
• Upon completion of uploading process, the system will issue a Payment Instruction Letter. The applicant must print the letter and pay the relevant fee, before uploading the evidence of payment to the system. The BPOM will then conduct a verification of the payment and process the application.

c. Registration phase

• The applicant will be required to fill in certain details, including description and information on the drugs and the applicant’s data. If the drugs are registered overseas, the registration status should also be provided.
• Upon completing the required details, the applicant must upload documents such as pharmaceutical industry manufacturing license, Good Manufacturing Practice certificate, summary of characteristics of drugs/brochure, formula and components of the drugs, manufacturing process.
• Upon completion of the uploading process, the system will issue a Payment Instruction Letter. The applicant shall print the letter and pay the relevant fee, before uploading the evidence of payment in the system. The BPOM will then verify the payment and process the application.

Medical Devices

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:

1. Class A: low risk;
2. Class B: low to medium risk
3. Class C: medium to high risk;
4. Class D: high risk.

Prior to distribution of medical devices, an MA issued by the MOH must be obtained. The application is conducted online. The following is a summary of the steps for obtaining an MA:

a. Obtaining a Medical Devices Manufacturing Certificate/Medical Devices Distribution Certificate

• 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 an online application.

b. Obtaining quality management system certification (ISO 13485, ISO 9001, CE)
c. Determination of class of the medical devices

• Registration at the MOH online system to obtain username and password
• Prior to submitting the MA application, the applicant must submit an online application to determine the class of its medical devices. Upon determination of the class by the MOH, the applicant will receive a payment instruction in accordance with the class. The applicant shall then make payment and upload the evidence of payment in the system.

d. Submission of online application of MA

• The applicant must fill in certain details and provide certain requirements, including technical information (product information, formulation, contraindications, etc.), specification and quality assurance (Material Safety Data Sheet/MSDS, packaging specification, risk management, etc.), specific (safety of radiation materials and HIV product clinical trial from a nationally referred laboratory), labelling (instruction for use, etc.), and post-market (recording and side effects and complaint handling procedures).
• Upon assessment of the application by the MOH, the system will generate a billing code. The applicant must then make payment using the billing code and upload the evidence of payment in the system. The MOH will then verify the payment and process the application.

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.

Medical Devices

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 maximum 5 years, to the extent that they comply with the prevailing laws.

Re-Registration

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.

Medical Devices

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 Devices

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 is able to select the type of the products to be registered, as follows:

1. Single Product, if the product only consists of drug;
2. Combination Product, if the product consists of drug and solvents or drug use aids (e.g., syringe, aerosol, spray, implant); or
3. 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.

Drugs

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.

Medical Devices

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

Sanctions for noncompliance are stipulated under different regulations, according to the subject of violation. The applicable sanctions are mostly administrative sanctions, ranging from written warning to revocation of MA and prohibition to apply for the same for 2 years.

Medical Devices

Similar to drugs, sanctions for noncompliance by medical devices business actors are also stipulated under different regulations. They are also mostly administrative, ranging from written warning to revocation of MA.

Despite the foregoing, the Health Law provides criminal sanctions for 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.

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. 5 of 2018, 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?

Drugs

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.

Medical Devices

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.

As of September 2018, it is reported that 77% of Indonesians have been registered as participants of Health BPJS. Nonetheless, 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

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).

Medical Devices

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:

1. Dispensing drugs in accordance with the prescription, including compounding if necessary;
2. Ensure correct labelling and packaging of the drugs;
3. Ensure that the drugs are given to the correct patients or their families;
4. 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;
5. Maintaining records of dispensed drugs; and
6. Educating patients who require OTC drugs for mild disease.