Ministry of Health Encourages Sustainable Health Innovation Industry Through Regulatory Sandbox

In recent years, there has been a phenomenon of the rapid growth of health system innovation in Indonesia. The Ministry of Health (MoH) of the Republic of Indonesia takes the initiative to adapt in responding to the current health innovation development. Specifically regarding the guarantee of access, quality, and security of healthcare services.

Head of Health Innovation Ecosystem Tribe in Digital Transformation Office (DTO) MoH, Patota Tambunan, said that the emergence of health innovations have become opportunities for the development of medical technology and healthcare services in Indonesia.

“In the current Covid-19 pandemic situation, health industry is one of the most potential and fastest growing sectors in the midst of high demand for the medical devices, medicines, and vaccines,” said Patota.?

It is undeniable that the Covid-19 pandemic has disrupted various healthcare services that were previously carried out face-to-face (in-person visit) to virtual (online). This can be seen by the increasing number of telemedicine services users. The latest survey from the Katadata Insight Center, the number of new users of telemedicine services increased to 44.1 percent in mid 2022 compared to the end of 2021.

Not to mention the innovations which combine biomedicine with advanced technology such as machine learning and artificial intelligence/AI. One of them is genomic-based biomedical applications which contributes to fostering health innovations in the Covid-19 pandemic situation to improve public health

“Therefore, the Ministry of Health Indonesia through the Center for Data and Information Technology and DTO (Pusdatin-DTO) designed a ‘safe space’ for testing mechanisms through the regulatory sandbox scheme. This is intended to support the growth and sustainability of health technology innovations with a quality and safety assurance for users,“ explained Patota.

What is a regulatory sandbox?

If you are a fan of Korean drama series, you must be familiar with the drama entitled Start-Up. This drama tells about innovators from several technology companies who succeeded in joining the incubation program called ‘Sandbox’.?

In the series, the Sandbox is illustrated as a well-known holding company that has an incubation program to attract innovators and produce successful start-ups. Those who have interesting ideas and innovations will get a series of coaching, mentoring and investment opportunities for a period of time.?

More or less the same as Start-Up series, the regulatory sandbox scheme which initiated by the MoH Indonesia acts as a ‘safe space’ for innovators in the health sector from startups, government agencies, communities, associations, and universities to receive guidance and support in developing business models, products and technologies to ensure its sustainability.

In carrying out government functions, Pusdatin-DTO uses the regulatory sandbox to learn from current best practices and design support tools to help the industry to grow. Later on, it will produce various policy recommendations for the government that can protect users, industries, and also consumers

“Besides generating legal products that are in accordance with the development and needs of the health technology industry, it is also hoped that in the future, innovators are able to understand and comply with regulations resulting from the regulatory sandbox,” said Patota.?

The regulatory sandbox scheme exists to examine various business models from joined companies as a reference for policy making and as a tool for the government to connect the health technology industry with investors. “So that the industry can continue to develop various innovations to improve healthcare services in Indonesia,” said Patota.

The MoH Indonesia is not the first institution to implement the regulatory sandbox scheme as a policy-making tool. Previously, the regulatory sandbox was applied by the Financial Services Authority (OJK) as an act of self-adaptation in the midst of an increasing number of financial technology innovations (fintech) such as Gopay, OVO, Dana, etc. OJK utilizes the regulatory sandbox as an operational feasibility test to protect users' security while supporting the growth of the industry itself.

From an academic perspective, the e-Malaria Team of Gadjah Mada University (UGM) also uses the regulatory sandbox scheme to provide policy recommendations and technology systems to the government in overcoming malaria outbreaks in Indonesia.

Pusdatin-DTO Held Focus Group Discussion to Formulate Regulatory Sandbox

Pusdatin-DTO held a focus group discussion with relevant stakeholders within the MoH Indonesia regarding the preparation of guidelines for implementing the regulatory sandbox scheme for health innovations on July 13-14, 2022. OJK and the UGM e-Malaria team who have previously implemented the regulatory sandbox were also invited.

“Hopefully, the OJK and UGM e-Malaria team can provide various inputs to the regulatory sandbox guidelines draft for health innovators,” said the Chief of DTO, Setiaji in his speech, Thursday (14/6).

To learn regulatory sandbox best practices from OJK, UGM, and other countries, on the first day of the discussion, Pusdatin-DTO with various directorates and units in the MoH Indonesia set various clusters as targets. Three priority clusters were selected consisting of telemedicine, pharmacy, and medical devices as well as online marketplace and on demand healthcare.

These three clusters were selected based on their presence, the number of services offered, and the growth of their users. The urgency of the need to protect users and workers in the innovation cluster is also becoming a consideration to determine priorities. However, the number of these clusters will continue to grow as the regulatory sandbox is implemented.

On the second day, various stages were formulated for the prospective participants in the regulatory sandbox from registration, trial, assessment, and recommendation. If passed in the registration stage, participants will proceed to the next stage for in-depth assessment to find more detailed information and identify the readiness of the business implementation.

Further, participants will be tested in several product proposal scenarios covering business activities, risk management, and accuracy. Live test is carried out on the functionality aspect of the product. The result of the assessment is categorized into recommended, needs improvement, and not recommended. Industry who get “recommended” results will have a privilege that can support their legitimacy as a trusted health innovation product as well as having more value for future investment. They will also receive supervision and guidance for a certain period of time.

All types of categories given in the current time do not affect the granting or revocation of business licenses. The assessment from the regulatory sandbox does not have the authority to do any of these things. Applications for business licenses can be made by operators who follow sandbox regulations in a separate process to other authorized institutions.

On the other hand, the assessment team will identify the needed policy to accommodate the participants. If there is none, Pusdatin-DTO will initiate the needed policy for the sustainability of the industry and the protection of workers and consumers.

In carrying out the regulatory sandbox in the future, Head of the Electronic System Supervision Work Team in the MoH, drg. Rudy Kurniawan, M. Kes, reminded that there are important things that must also be considered, “Open collaboration with various stakeholders. Not only between government institutions, but also academics, investors, the public, and also the media to support the development of future health innovations.”

In the near future, Pusdatin-DTO will hold the next focus group discussion to form a working team and discuss the mechanism for other guidance materials in more depth with relevant stakeholders.