Unpacking the Complex Factors Behind High Drug Prices in Indonesia: A Call for Collaborative Solutions

As the pharmaceutical landscape in Indonesia evolves, the nation faces a critical challenge— the soaring prices of essential drugs. A recent note from Indonesia to the Organisation for Economic Co-operation and Development (OECD) sheds light on the multifaceted issues contributing to this concern.

1. Competitive Structure Under Strain:

While Indonesia boasts a seemingly competitive pharmaceutical market, a closer look reveals distortion. The influence of doctors in drug selection has created a quasi-monopoly, limiting the optimal functioning of market-driven competition.

2. Doctor-Pharma Dynamics:

A significant contributor to high drug prices lies in the intricate relationship between HCPs and pharmaceutical companies. Despite regulations mandating generic prescriptions, enforcement remains limited to government-owned health facilities.

3. Branded Generics Unique to Indonesia:

In a departure from international standards, Indonesia introduced a third category—branded generics. These drugs, originally patented but now generic, maintain brand names, adding complexity to pricing structures.

4. The Price of Patents:

Unsurprisingly, the high cost of patent drugs plays a pivotal role in the overall elevated drug prices in the country.

5. Components Defining Drug Costs:

A closer look at the components defining drug prices reveals a web of factors, including:

• Import of raw materials exceeding 90%, primarily from China and India.
• Marketing fees, accounting for promotional costs that can surpass 30%.
• Distribution costs range from 6-12% per drug type.
• 10% VAT for each distribution chain.
• Packaging types, such as plastic and aluminium, influence prices.
• Adherence to quality standards like the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (PIC/S).
• Special obligations like General Administration Expenses.

Moving Forward:

Understanding these challenges is the first step toward collaborative solutions. Stakeholders in Indonesia's pharmaceutical industry must engage in open dialogues to address these issues collectively. From fostering fair competition to enhancing regulatory oversight and encouraging sustainable practices, there are avenues for positive change.

The call for affordable and accessible healthcare is a global one. As Indonesia grapples with high drug prices, the industry has an opportunity to reshape its dynamics. By fostering transparency, embracing fair practices, and advocating for policies that prioritize public health, stakeholders can contribute to a pharmaceutical landscape that serves the needs of all Indonesians.

Let’s work together for a healthier and more equitable future. #HealthcareInIndonesia #PharmaceuticalIndustry #DrugAffordability #HealthEquity #IndonesiaHealthcare