The impact of Indonesian generic medicine pricing policy on medicine prices

Abstract

Introduction:

The government of Indonesia has established a commitment to the provision of affordable medicines. The retail price of unbranded generic cannot exceed the maximum retail price set by the Ministry of Health. The generic medicine pricing policy that has been implemented by the Indonesian government must be evaluated.

Objectives:

To evaluate the impact of the generic medicine pricing policy on the price of selected medicines and to measure the differences between the prices paid by patients for unbranded generic medicines and the maximum retail price.

Method:

The study design was a cross-sectional survey and policy evaluation. Medicine prices were measured in 2010 at nine public hospitals, 64 private pharmacies, and nine non-governmental organisation hospitals in four provinces in Indonesia. The price of the lowest price generic (LPG) and innovator brand (IB) medicines in 2010 was compared to the price of the medicines before policy implementation. The results from a 2004 survey conducted by the Indonesian National Health Research Institute and Health Action International were used as the baseline data for the comparison. The price of unbranded generic medicine paid by patients was compared to the price in the generic medicine pricing policy 2010 edition.

Results:

The results indicated that the price of LPG and IB medicines was lower in 2010 than in 2004. The decline was approximately 40% to 2200%. Wide variations were observed in the excess of the unbranded generic medicine price paid by patients compared with the maximum retail price from the Ministry of Health, exceeding the maximum price by approximately 2% to 600%.

Conclusion:

Generic medicine pricing policies have succeeded in lowering the price of unbranded generic medicines. The price of IB medicines has declined but remains high compared to the international reference price. The prices paid by patients for unbranded generic medicines are more expensive than the maximum prices in the policy.

Keywords

Consumers generic medicine medicine prices pricing policy retail price Indonesia

Introduction

The price of medicines can affect health outcomes and access to care. People have more opportunities to treat their health problems if medicines are available at an affordable price.¹ In fact, one-third of the population lacks access to medicines and faces financial constraints in paying for them.² High medicine pricing can lead to impoverishment, especially in low- and middle-income countries (LMIC).³

As a middle-income country, the price of medicines in Indonesia is high in the public and private sectors. Survey results from 2004 showed that the price of medicines in Indonesia in both the public and private sectors was high.⁴ The price of innovator brand (IB) medicines was 22 to 26 times higher than the international reference price (IRP) in the public and private sectors in 2004. Although generic medicines were priced lower than IB medicines, they still cost nine times the IRP. Moreover, a one-day global snapshot survey conducted in 2010 showed that the price of a vial of soluble insulin injection in Indonesia was nearly as high as the price in developed countries such as the United Stated and Austria.⁵ These high prices affect people’s access to the medicines they need, especially when the average income is much lower than in the United State or Austria. In Indonesia, most people (60% to 85%) purchase medicines through out-of-pocket payments.⁶ The government only subsidizes. Branded generic medicines dominate Indonesia’s pharmaceutical market, although IB medicines also have a significant market share.⁷ Thus, people have to pay more for medicines.

The Indonesian government has long been aware of the high price of medicine. To solve this problem, the government has implemented several policies to regulate medicine prices. The policies issued by the government regulate the price of unbranded generic medicines (generic medicines using international non-proprietary names). The retail price of unbranded generic medicines in the public, private, or other sectors cannot exceed the maximum price set by the Ministry of Health (MoH). The effectiveness of the medicine pricing policy should be evaluated by assessing the impact of the policy in the field through reliable and valid data on processes and outcomes.⁸ Unfortunately, there is little reliable information on the effectiveness of mark-up regulation in LMIC.⁹

In Indonesia, reliable and up-to-date data on the impact of the medicine pricing policy are scarce. A study on medicine prices, availability, and affordability was conducted prior to the implementation of the generic medicine pricing policy. Between 2005 and 2010, several medicine pricing policies were launched by the government. The implementation of the policies may have influenced the price, availability, and affordability of medicines. Therefore, the objective of this study was to assess the impact of the generic medicine pricing policy on the LPG medicine price and to measure the differences between the prices paid by consumers for unbranded generic medicines and the maximum retail price of the MoH.

Methods

A cross-sectional survey was conducted from April to September 2010 to measure medicine prices using the WHO/HAI methodology.¹⁰ The study was conducted in the provinces of South Sumatera, Jakarta, Yogyakarta, and South Sulawesi, which represent three out of four regions in Indonesia. Price data were collected from nine public hospitals. Additionally, 64 private pharmacies were surveyed, and nine non-governmental organisation (NGO) hospitals were surveyed in the other sector.

Policy evaluation was conducted to determine the impact of the policy on price, the results of the 2010 study were compared with medicine price data from the 2004 study (which also used the WHO/HAI methodology).⁴ The findings from 2004 were used as the baseline. We also measured differences between the prices paid by patients for unbranded generics and the maximum retail price of the MoH 2010 edition.

Ethical clearance and endorsement of the survey

Permission to conduct the study was received from the Indonesia Ministry of Internal Affairs. Ethical clearance was granted by the National Ethics Committee under the National Institute of Health Research and Development.

Medicine selection and data analysis

Seventeen medicines found in both the 2004 and 2010 surveys with the same strength and dose form were included in the analysis. Data for two product types were analysed: IB and LPG. Prices are expressed as median price ratios (MPR), i.e. the median local price (in rupiah) divided by the median IRP. The source of the IRP was the Management Sciences for Health’s (MSH) International Drug Price Indicator Guide.¹¹ The MSH price was converted into rupiah using the exchange rate on the first day of data collection (1US$ = 9172 IDR).

A previous study in Indonesia using the WHO and HAI methodology was conducted in 2004. To accurately compare the results between the 2010 and 2004 surveys, the MPR from 2010 was adjusted for inflation using Consumer Price Index (CPI) data.¹² The data from the current study were adjusted from the 2009 IRP to the 2003 IRP because a previous study in Indonesia was conducted in 2004 using the 2003 IRP. The world economic outlook database included the following data for Indonesia: the CPI in 2004 was 75.04 and the CPI in 2010 was 120.968.¹³

The price of unbranded generics found in the health facilities were compared with the price in the policy. The price of medicines was calculated in Indonesian rupiah (IDR). Wilcoxon signed ranks or paired T-tests were used to assess differences in prices between 2004 and 2010 and in the comparison of prices with set MRPs.

Results

The impact of the generic medicine price policy on the price of LPG and IB

The results indicated that LPG and IB medicine prices were less expensive in 2010 than they were in 2004. The price of some LPG medicines declined drastically by more than 2000% (Table 1). Both the public and the private sectors showed significant differences in the prices of LPG in 2010 and 2004 (p value <0.001). The difference in the prices of IB in 2010 and 2004 was only found in the private sector because the number of IB found in the public sector was too small. After adjusting for inflation, most of the MPRs were less than one. The highest MPR was observed for amlodipine 5 mg cap/tab.

Table 1.

The median price ratios (MPRs) in 2010 vs 2004

No	Medicines	MPRs of LPGs in the public sector				No	Medicines	MPRs of LPGs in the private sector				No	Medicines	MPRs of IBs in the private sector
No	Medicines	2010	2010^a	2004	% Change	No	Medicines	2010	2010^a	2004	% Change	No	Medicines	2010	2010^a	2004	% Change
1	Simvastatin 20 mg cap/tab	1.11	0.34	7.27	−2013	1	Simvastatin 20 mg cap/tab	1.15	0.36	8.32	−2232	1	Co-trimoxazole suspension 8+40 mg/ml millilitre	24.40	11.05	43.81	−297
2	Omeprazole 20 mg cap/tab	1.84	0.12	1.66	−1320	2	Omeprazole 20 mg cap/tab	1.86	0.12	1.73	−1358	2	Ciprofloxacin 500 mg cap/tab	79.64	32.17	90.08	−180
3	Ciprofloxacin 500 mg cap/tab	1.15	0.47	6.03	−1195	3	Ciprofloxacin 500 mg cap/tab	1.43	0.58	7.78	−1246	3	Fluoxetine 20 mg cap/tab	133.38	21.40	54.1	−153
4	Phenytoin 100 mg cap/tab	3.52	1.79	21.46	−1100	4	Diazepam 5 mg cap/tab	0.92	0.59	6.77	−1052	4	Amoxicillin 500 mg cap/tab	11.66	4.80	11.85	−147
5	Diazepam 5 mg cap/tab	0.80	0.51	5.32	−950	5	Ranitidine 150 mg cap/tab	1.16	0.42	3.43	−707	5	Glibenclamide 5 mg cap/tab	88.22	34.23	79.45	−132
6	Ranitidine 150 mg cap/tab	1.16	0.42	3.40	−700	6	Ceftriaxone injection 1 g/vial vial	1.99	0.21	1.49	−620	6	Metformin 500 mg cap/tab	12.36	3.04	6.97	−129
7	Glibenclamide 5 mg cap/tab	1.99	0.77	5.51	−612	7	Glibenclamide 5 mg cap/tab	2.45	0.95	5.74	−505	7	Acyclovir 200 mg cap/tab	28.28	4.56	10.18	−123
8	Ceftriaxone injection 1 g/vial vial	2.06	0.22	1.41	−556	8	Amlodipine 5 mg cap/tab	10.42	8.23	49.43	−501	8	Pyrimethamine + sulfadoxine 25+500 mg cap/tab	39.17	13.66	30.1	−120
9	Captopril 25 mg cap/tab	2.06	0.22	1.41	−507	9	Metformin 500 mg cap/tab	1.79	0.44	2.62	−−493	9	Ranitidine 150 mg cap/tab	32.15	11.77	25.89	−120
10	Metformin 500 mg cap/tab	1.75	0.43	2.54	−490	10	Acyclovir 200 mg cap/tab	1.50	0.24	1.37	−466	10	Amlodipine 5 mg cap/tab	30.88	24.39	53.26	−118
11	Amlodipine 5 mg cap/tab	10.81	8.53	45.85	−437	11	Captopril 25 mg cap/tab	1.70	0.30	1.71	−462	11	Atenolol 50 mg cap/tab	72.37	35.03	75.07	−114
12	Acyclovir 200 mg cap/tab	1.76	0.28	1.38	−387	12	Carbamazepine 200 mg cap/tab	2.00	0.64	2.81	−338	12	Carbamazepine 200 mg cap/tab	28.34	9.06	18.92	−109
13	Carbamazepine 200 mg cap/tab	2.05	0.65	2.84	−334	13	Co-trimoxazole suspension 8+40 mg/ml millilitre	1.43	0.65	2.27	−251	13	Salbutamol inhaler 100 mcg/dose	6.08	2.21	4.49	−103
14	Amitriptyline 25 mg cap/tab	2.20	0.63	2.15	−240	14	Amitriptyline 25 mg cap/tab	2.22	0.64	2.23	−250	14	Diazepam 5 mg cap/tab	81.31	51.71	101.96	−97
15	Amoxicillin 500 mg cap/tab	1.27	0.52	1.77	−238	15	Amoxicillin 500 mg cap/tab	1.37	0.57	1.82	−222	15	Captopril 25 mg cap/tab	65.24	11.70	22.78	−95
16	Co-trimoxazole suspension 8+40 mg/ml millilitre	1.44	0.65	2.12	−225	16	Hydrochlorothiazide 25 mg cap/tab	1.13	0.40	0.81	−102	16	Omeprazole 20 mg cap/tab	78.38	4.99	9.48	−90
17	Hydrochlorothiazide 25 mg cap/tab	1.11	0.39	0.70	−78	17	Pyrimethamine + sulfadoxine 25+500 mg cap/tab	5.62	1.96	2.75	−40
		MPRs in 2010 < MPRs in 2004 (n = 17; p value <0.001^b)						MPRs in 2010 < MPRs in 2004 (n = 17; p value <0.001^b)						MPRs in 2010 < MPRs in 2004 (n = 16; p value <0.001^c)

After adjusting with IRP 2003 and CPI, CPI in 2004 was 75.04, CPI in 2010 was 120.968.

Wilcoxon signed-ranks test at α = 0.05.

Paired T-test at α = 0.05.

The decline of IB medicine prices was not as drastic as the LPG (90% to 297%). There were significant differences between IB prices in the private sector in 2010 and 2004 (p value <0.001). The MPR of IB medicines was 5 to 35 times more expensive than the IRP.

Comparisons of a patient’s medicine prices with the maximum retail price of the MoH

In all sectors, patients often paid a price for unbranded generics that exceeded the maximum retail price of the MoH. Wide variations were observed in the excess of the price paid by patients compared with the maximum retail price. Some medicines even exceeded the maximum retail price by 100%. There were significant differences between a patient’s median price and the maximum retail price (p value <0.05) (Tables 2 –4; the results are presented in descending order of the percentage differences).

Table 2.

Comparison of the median price of lowest price generic (LPG) medicines with the MRP of Ministry of Health (MoH) in 2010 in the public sector

No	Medicines	Median price (IDR)	MoH-MRP in 2010 (IDR)	% Differences
1	Phenytoin 100 mg cap/tab	300	99.5	202
2	Dextromethorphan 15 mg cap/tab	123.75	44.5	178
3	Paracetamol 500 mg cap/tab	120.75	57	112
4	Folic acid 1 mg cap/tab	64.4	40.25	60
5	Acyclovir 200 mg cap/tab	650.1	485.2	34
6	Diazepam 5 mg cap/tab	43.12	35.94	20
7	Ceftriaxone injection 1 g/vial	13000	11937	9
8	Mefenamic Acid 500 mg cap/tab	177.97	164.9	8
9	Omeprazole 20 mg cap/tab	542	510	6
10	Ciprofloxacin 500 mg cap/tab	350	331	6
11	Hydrochlorothiazide 25 mg cap/tab	32.48	30.8	5
12	Paracetamol suspension 24 mg/ml	37.95	36	5
13	Simvastatin 20 mg cap/tab	675.13	641	5
14	Furosemide 40 mg cap/tab	84.39	81.78	3
15	Ibuprofen 400 mg cap/tab	188.5	184	2
16	Co-trimoxazole 400+80 mg cap/tab	127.5	125	2
17	Diclofenac 50 mg cap/tab	275	272	1
18	Captopril 25 mg cap/tab	173.75	172.19	1
19	Amitriptyline 25 mg cap/tab	115.13	115	0
20	Allopurinol 100 mg tab/cap	150	150	0
21	Glibenclamide 5 mg cap/tab	75	75	0
22	Metoclopramide 10 mg cap/tab	95.38	95.38	0
23	Metronidazole 400 mg cap/tab	168.75	168.75	0
24	Ranitidine 150 mg cap/tab	250	250	0
25	Rifampicin 300 mg tab/cap	562.5	562.5	0
26	Amoxicillin 500 mg cap/tab	462.49	462.5	0
27	Carbamazepine 200 mg cap/tab	307.75	308	0
28	Amoxicillin suspension 25 mg/ml	69.38	70.83	−2
29	Metformin 500 mg cap/tab	181.28	186	−3
30	Dexamethasone 0.5 mg tab/cap	68.22	71.81	−5
31	Co-trimoxazole suspension 8+40 mg/ml	55.59	59.15	−6
32	Doxycycline 100 mg cap/tab	261.9	281	−7
33	Salbutamol 2 mg cap/tab	106	125.04	−15
34	Phenobarbital 30 mg cap/tab	38.75	55	−30
p value = 0.02^a; median price > max price of MoH (n = 19; 55.9%).

Wilcoxon signed-ranks test at α = 0.05.

Table 3.

Comparisons of the median price of lowest price generic (LPG) medicines with the MRP of Ministry of Health (MoH) in 2010 in the private sector

No	Medicines	Median price (IDR)	MoH-MRP in 2010 (IDR)	% Differences
1	Phenytoin 100 mg cap/tab	757	99.5	661
2	Folic acid 1 mg cap/tab	100	40.25	148
3	Paracetamol 500 mg cap/tab	120	57	111
4	Metoclopramide 10 mg cap/tab	150	95.38	57
5	Co-trimoxazole 400+80 mg cap/tab	186	125	49
6	Dexamethasone injection 5 mg/ml	1600	1134.71	41
7	Diazepam 5 mg cap/tab	50	35.94	39
8	Ciprofloxacin 500 mg cap/tab	434.5	331	31
9	Metronidazole 400 mg cap/tab	215.03	168.75	27
10	Glibenclamide 5 mg cap/tab	92	75	23
11	Furosemide 40 mg cap/tab	100	81.78	22
12	Mefenamic Acid 500 mg cap/tab	200	164.9	21
13	Dextromethorphan 15 mg cap/tab	52	44.5	17
14	Paracetamol suspension 24 mg/ml	41.67	36	16
15	Acyclovir 200 mg cap/tab	555.15	485.2	14
16	Chloramphenicol 0.5% eye drops	800	700	14
17	Captopril 25 mg cap/tab	190	172.19	10
18	Dexamethasone 0.5 mg tab/cap	79.2	71.81	10
19	Simvastatin 20 mg cap/tab	700	641	9
20	Amoxicillin 500 mg cap/tab	500	462.5	8
21	Omeprazole 20 mg cap/tab	550	510	8
22	Hydrochlorothiazide 25 mg cap/tab	33.18	30.8	8
23	Doxycycline 100 mg cap/tab	300	281	7
24	Rifampicin 300 mg tab/cap	600	562.5	7
25	Amoxicillin suspension 25 mg/ml	75	70.83	6
26	Ibuprofen 400 mg cap/tab	194	184	5
27	Diclofenac 50 mg cap/tab	285.5	272	5
28	Ceftriaxone injection 1 g/vial	12516.5	11937	5
29	Amitriptyline 25 mg cap/tab	116	115	1
30	Allopurinol 100 mg tab/cap	150	150	0
31	Metformin 500 mg cap/tab	186	186	0
32	Ranitidine 150 mg cap/tab	250	250	0
33	Carbamazepine 200 mg cap/tab	301.5	308	−2
34	Co-trimoxazole suspension 8+40 mg/ml	55	59.15	−7
35	Salbutamol 2 mg cap/tab	111	125.04	−11
36	Phenobarbital 30 mg cap/tab	44	55	−20
p value <0.001 ^a; median price > max price of MoH (n = 24; 75%).

Wilcoxon signed-ranks test at α = 0.05.

Table 4.

Comparisons of the median price of lowest price generic (LPG) medicines with the MRP of Ministry of Health (MoH) in 2010 in the NGO sector

No	Medicines	Median price (IDR)	MoH-MRP in 2010 (IDR)	% Differences
1	Phenytoin 100 mg cap/tab	550	99.5	453
2	Paracetamol 500 mg cap/tab	87.86	57	54
3	Co-trimoxazole 400 + 80 mg cap/tab	178.75	125	43
4	Acyclovir 200 mg cap/tab	687.5	485.2	42
5	Ciprofloxacin 500 mg cap/tab	454	331	37
6	Amoxicillin 500 mg cap/tab	618	462.5	34
7	Ceftriaxone injection 1 g/vial vial	14992	11937	26
8	Amoxicillin suspension 25 mg/ml	81.13	70.83	15
9	Paracetamol suspension 24 mg/ml millilitre	41.1	36	14
10	Glibenclamide 5 mg cap/tab	85.07	75	13
11	Dextromethorphan 15 mg cap/tab	50	44.5	12
12	Furosemide 40 mg cap/tab	90.04	81.78	10
13	Allopurinol 100 mg tab/cap	165	150	10
14	Co-trimoxazole suspension 8 + 40 mg/ml	64.75	59.15	9
15	Rifampicin 300 mg tab/cap	605	562.5	8
16	Doxycycline 100 mg cap/tab	300	281	7
17	Captopril 25 mg cap/tab	182.88	172.19	6
18	Simvastatin 20 mg cap/tab	674.99	641	5
19	Mefenamic acid 500 mg cap/tab	172	164.9	4
20	Carbamazepine 200 mg cap/tab	319	308	4
21	Amitriptyline 25 mg cap/tab	119	115	3
22	Metronidazole 400 mg cap/tab	172.68	168.75	2
23	Omeprazole 20 mg cap/tab	521	510	2
24	Metformin 500 mg cap/tab	190	186	2
25	Hydrochlorothiazide 25 mg cap/tab	31	30.8	1
26	Diclofenac 50 mg cap/tab	272	272	0
27	Ranitidine 150 mg cap/tab	250	250	0
28	Dexamethasone 0.5 mg tab/cap	70	71.81	−3
29	Salbutamol 2 mg cap/tab	121.62	125.04	−3
30	Phenobarbital 30 mg cap/tab	40.97	55	−26
p-value <0.001^a; median price > max price of MoH (n = 27; 76.7%).

Wilcoxon signed-ranks test at α = 0.05.

In the public sector, the differences between the median price and maximum retail price ranged from 5% to 202%. In the private sector, the difference between the median price and the maximum retail price was approximately 4% to 661%, whereas in the NGO sector, the difference was between 2% and 453%. The highest number of medicines that exceeded the maximum retail price was found in the private sector. In all sectors, phenytoin was consistently observed as the most expensive medicine compared with the maximum retail price (200% to 600%). However, some medicines (e.g. phenobarbital 30 mg cap/tab, salbutamol 2 mg cap/tab, and dexamethasone 0.5 mg cap tab) were sold lower than the price in the policy.

Discussion

In 2010, the price of LPG medicines was lower than it was in 2004 in all sectors. From 2005 to 2010, six generic pricing policies were implemented to regulate LPG prices. This means that medicine pricing policies might have impact on decreasing LPG prices. Most LPG medicines in the 2010 survey were unbranded generic medicines, whose price is set by the government, whereas in 2004, some of the LPGs were branded generic medicines.⁴ In 2004, the government had not regulated the price of unbranded generic medicine (because the generic medicine pricing policy began in 2005). Therefore, the price of unbranded generic medicines was occasionally higher than the price of branded generic medicines. Some evidence shows that the price control on medicine in European countries has led to decreased medicine prices.^14–16 In the developing countries, India has implemented a cost-plus pricing method for essential medicines, which cannot exceed twice the cost of their production.¹⁷ Therefore, the price of essential medicines in India is reasonable.¹⁸

In addition to the policy that lowered the price of generic medicines, a drastic decline occurred due to the adjustment for inflation during the five-year period. Price changes in the policy might not consider inflation, as evidenced by the fact that the prices of medicines in the policies for the 2008–2010 period remained relatively stagnant.

Despite the absence of regulations that govern IB medicines, the prices of IBs in 2010 were lower than the prices in 2004. Unfortunately, when compared to the international reference price, the price of IB medicines remains very expensive. This problem is due to the fact that the price of IB medicines in Indonesia is left to the market.⁶ A free pricing system has led to expensive medicine prices.^9,19 In contrast, Malaysia is a middle-income country that implements free pricing for medicines. Without a medicine pricing policy, in Malaysia, the mark-up for generic medicines is greater than for IBs.²⁰

In the implementation of the Indonesian generic medicine pricing policy, some health-care facilities have violated the maximum retail price. Most pharmacies, especially in the private sector, sell unbranded generic medicines at a price higher than the maximum retail price. Low prices for medicines leads to a lower profit margin; therefore, these facilities sell unbranded medicine at a price higher than the maximum retail price. The government does not punish the health-care facilities that sell medicine at a price higher than the maximum retail price. This situation shows that the implementation of the medicine pricing policy in Indonesia is not optimal. The policy is simply considered a formal document without strong law enforcement for violations. To achieve the optimal impact, the implementation of the policy should be followed by adequate law enforcement.⁹

Medicine prices can be reduced by implementing a medicine pricing policy. However, such a policy may have unintended effects. In the Indonesian context, pharmaceutical industries ceased their production activity, especially for low-price medicines.²¹ In turn, the availability of some unbranded generic medicines in Indonesia declined.

The problems with the Indonesian pharmaceutical industry’s response to the medicine pricing policy can be viewed from two perspectives. First, based on the process of the medicine pricing policy, a cost-plus pricing system has difficulty obtaining reliable information on the cost of production. Policymakers estimated prices using inadequate data. Another part of this study presents results showing that when setting the prices of medicines, policymakers relied on the opinions of an expert and the experience of an expert consultant. The use of the IRP as a reference was limited to the prices of some medicines and was only implemented in 2011; in fact, not all medicines in the policy have IRP data. Thus, the prices that were determined might be too low or too high. In addition to a decrease in medicine prices, this situation may decrease the profits of the pharmaceutical industry.²² In this case, the pharmaceutical industry would not produce medicines whose prices did not provide an adequate margin or were harmful to the industry. In the long term, price control could decrease a company’s spending on innovation research.^16,19,23

From the pharmaceutical side, if policymakers determined prices using an appropriate formula and all cost variables were included in the pricing, the problems may be due to production inefficiencies in the pharmaceutical industry, which would prevent the industry from fulfilling production at the price set by the government.The cost-plus pricing system often leads to problems between policymakers and the pharmaceutical industry. The pharmaceutical industry finds it difficult to adjust prices when there are changes in the market or economic situation.²⁴ The application of cost-plus pricing is quite effective if it is implemented in a country that has few pharmaceutical industry facilities. In developing countries with a large market segment and adequate pharmaceutical industry facilities, the price competition method is an effective strategy to obtain lower prices.²⁵ In practice, the application of a medicine pricing policy is dynamic; the medicine pricing system in a country can be changed or combined with other methods if the evaluation does not provide optimal results or generates unintended effects.

Nevertheless, the low price of generic medicines in Indonesia did not increase the use of unbranded generic medicines. The impact of the generic medicine pricing policy on generic medicine use in health-care facilities is not optimal.²⁶ According to the government, the use of unbranded generics in public health-care facilities remains low. Therefore, to increase the use of unbranded generic medicines, the government revitalised the policy on unbranded generic use in 2010. The policy stated that it is compulsory for public sector health-care facilities to procure and use unbranded generic medicines. However, the use of unbranded generics did not increase. This problem may have been caused by stakeholders’ perceptions of the quality of generic medicines.^27,28 Stakeholders may have perceived that low medicine prices indicate low quality.^24,29 The government should ensure the quality of the unbranded generic medicines, which would influence the effectiveness of the policy implementation.³⁰ The government could provide information regarding the quality of medicines for prescribers or consumers, such as the bioavailability profiles of unbranded generic medicines. Another strategy would be for the government to educate consumers to change consumers’ perceptions. In addition, consumers could be informed that medication costs could be reduced by the use of generic medicines.^31,32

The findings of this study describe medicine prices after the government of Indonesia implemented a series of medicine pricing policies. The findings also provide data on the effects and the compliance of health facilities with the generic medicine pricing policy. The government can use this information to develop effective medicine pricing policies and implementation strategies in Indonesia. In addition, to optimise the medicine pricing policy, there is a need to implement adequate law enforcement and to regularly monitor price. The limitation of this study was that it did not use a time series and longitudinal study design and only compared the price pre- and post-policy intervention. The use of a longitudinal study design would more clearly capture the change in trends before and after policy intervention.³³

Conclusions

The government has been successful in regulating the price of unbranded generic medicines through the generic medicine pricing policy. However, many outlets sell unbranded generic medicines above the maximum retail price set by the government. The price of IB medicines remains high because no policy regulates these prices.

Footnotes

Acknowledgements

We thank the pharmacy directors of the Provincial Health Offices, the hospital directors, the pharmacy managers of the hospitals, and all pharmacists at the pharmacies in all four provinces who endorsed and provided medicine pricing information for this study. We would like to thank Martuti Budiharto and Selma Siahaan on behalf of the Indonesian National Health Research Institute for providing the data used as the baseline in the comparison before and after policy implementation.

Conflict of interest

The authors declare that they have no conflicts of interest to disclose.

Funding

The study presented in this paper was part of a PhD thesis sponsored by the Ministry of Education Republic of Indonesia and Faculty of Pharmacy Pancasila University, Jakarta Indonesia.

Author biographies

Yusi Anggriani is a pharmacist with masters' degree in medicine policy and management and doctoral degree in social pharmacy. Currently senior lecturer at Faculty of Pharmacy, Pancasila University, Jakarta, Indonesia, supervises undergraduate research works. Areas of expertise include rational drug use, pharmacoeconomic, and pharmaceutical management.

Mohamed Izham M Ibrahim is a professor of social and administrative pharmacy at College of Pharmacy, Qatar University. He obtained his PhD degree in pharmacy administration from the Philadelphia College of Pharmacy & Science (PCPS), Philadelphia, USA. His areas of research, publication and consultancy focus on Pharmaceutical Policy & Supply Management, Pharmacoeconomics, Pharmacoepidemiology, Socio-behavioral Aspects of Pharmacy, and Pharmaceutical Management & Marketing.

Sri Suryawati is professor of pharmacology and therapeutics, Director of Centre for Clinical Pharmacology and Medicine Policy Studies, Gadjah Mada University, Yogyakarta, Indonesia. International consultant in medicine policy, drug evaluation, essential medicine, and rational drug use. WHO Advisory Panel on Medicine Policy and Management since 1999, member of International Narcotics Control Board (2007–2012, 2013–2017).

Asrul A Shafie is a registered pharmacist in Malaysia since 2001 and completed his PhD degree in pharmacoeconomic in Cardiff University, UK, in 2007. His research interests are in the application of economic evaluation in pharmaceutical services and product, and pharmacy practice. He is now leading and co-investigating many researches in pharmacy practice, PRO instrument validation and valuation, and health technology assessment. At present, Dr Asrul is an Associate Professor and Chairman in Social and Administrative Pharmacy in Universiti Sains Malaysia, where he teaches pharmacoeconomic, statistic and epidemiology to both undergraduates and postgraduates in the university and four other local institutions.

References

Everard

Access to medicines in low-income countries. In: Dukes

MNG

Haaijer-Ruskamp

Joncheere

(eds). Drugs and Money: Price, affordablity and cost containment, Amsterdam: IOS Press Ohmsa (Published on behalf of WHO Regional office Europe), 2003, pp. 137–149.

WHO. Who Pays for Health Systems? Geneva World Health Organization, http://www.who.int/health_financing/documents/cov-whr00_ch5_en/en/index.html (2000, accessed August 2010).

Niens

Cameron

Van de Poel

. Quantifying the impoverishing effects of purchasing medicines: a cross-country comparison of the affordability of medicines in the developing world. PLoS Med 2010; 7(8): e1000333–e1000333. doi:10.1371/journal.pmed.1000333.

Siahaan S, Putri AE, Tjahjono L, et al. The prices people have to pay for medicines in Indonesia Jakarta: National Institute for Health Research and Development (NIHRD) Indonesia, World Health Organization, and Health Action International 2004, http://www.haiweb.org/medicineprices/surveys/200408ID/survey_report.pdf (accessed December 2009).

HAI. Global briefing note [One day snapshot survey]. Health Action International, http://haiweb.org/medicineprices/07072010/Global_briefing_note_FINAL.pdf (2010, accessed December 2010).

Wang H, McEuen M, Mize L, et al. Private sector health in Indonesia: a desk review. Bethesda, MD: Health Systems 20/20 project, Abt Associates Inc, www.healthsystems2020.org/…/2356_file_Indo_PSA_Desk_Review_FINAL.pdf (2009, accessed January 2011).

Rokx C, Giles J, Satriawan E, et al. New insights into the provision of health services in Indonesia: World Bank 2009 [updated March], https://openknowledge.worldbank.org/bitstream/handle/10986/2434/538830PUB0Heal101Official0Use0Only1.txt?sequence=2 (accessed December 2009).

Mossialos

Mrazek

Data needed for developing and monitoring policies. In: Dukes

MNG

Haaijer-Ruskamp

De Joncheere

(eds). Drugs and Money, Amsterdam: IOS Press Ohmsa (Published on behalf of WHO Regional office Europe), 2002, pp. 15–27.

Ball D. Pharmaceutical pricing policies and intervention. Working paper 3: The regulation of mark-up in the pharmaceutical supply chain: World Health Organization and Health Action International, http://www.haiweb.org/medicineprices/05062011/Mark-ups%20final%20May2011.pdf (2011, accessed January 2012).

10.

WHO, HAI. Measuring Medicine Prices, Availability, Affordability and Price Components. Geneva: World Health Organization and Health Action International, http://www.haiweb.org/medicineprices/manual/documents.html (2008, accessed January 2009).

11.

MSH. International drug indicator price: Management Science for Health, http://erc.msh.org (2009, accessed April 2010.).

12.

HAI. Comparing price data from different surveys. In: Health Action International, http://www.haiweb.org/medicineprices/manual/comparing.html (2008, accessed May 2012).

13.

IMF. Consumer price index (CPI). World economic outlook database: International Monetary Fund, http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/weorept.aspx?sy=2004&ey=2010&scsm=1&ssd=1&sort=country&ds=.&br=1&c=536&s=NGDPPC%2CNGDPDPC%2CPPPEX%2CPCPI%2CPCPIE&grp=0&a=&pr.x=61&pr.y=6 (2010, accessed January 2013).

14.

Leopold

Vogler

Mantel-Teeuwisse

. Differences in external price referencing in Europe—a descriptive overview. Health Policy 2012; 104: 50–60.

15.

Puig-Junoy

. Impact of European pharmaceutical price regulation on generic price competition: a review. Pharmacoeconomics 2010; 28: 649–663.

16.

Dylst

Simoens

. Generic medicine pricing policies in Europe: current status and impact. Pharmaceuticals 2010; 3: 471–481.

17.

Kumar

. India to extend price controls on drugs. BMJ 2004; 329: 368–368.

18.

Kotwani

Ewen

Dey

. Prices & availability of common medicines at six sites in India using a standard methodology. Indian J Med Res 2007; 125: 645–654.

19.

Golec J and Vernon JA. European pharmaceutical price regulation, firm profitability, and R&D spending. Working Paper 12676, http://www.nber.org/papers/w12676 (2006, accessed October 2012).

20.

Babar

Ibrahim

Singh

. Evaluating drug prices, availability, affordability, and price components: implications for access to drugs in Malaysia. PLoS Med 2007; 4: e82–e82.

21.

Anonymous. 18 Persen obat generik tidak tersedia (18 percent of generic products not available). Kompas. 11 February 2010.

22.

Sood

De Vries

Gutierrez

. The effect of regulation on pharmaceutical revenues: experience in nineteen countries. Health Aff (Millwood) 2009; 28: w125–w137.

23.

Vogel

. Pharmaceutical pricing, price controls, and their effects on pharmaceutical sales and research and development expenditures in the European Union. Clin Ther 2004; 26: 1327–1340.

24.

Rietveld

Haaijer-Ruskamp

Policy options for cost containment of pharmaceutical. In: Dukes

MNG

Haaijer-Ruskamp

De Joncheere

(eds). Drugs and Money: Price, affordablity and cost containment, Amsterdam: IOS Press Ohmsa (Published on behalf of WHO Regional office Europe), 2002, pp. 29–54.

25.

Moon

Jambert

Childs

. A win-win solution? A critical analysis of tiered pricing to improve access to medicines in developing countries. Globalization Health 2011; 7: 39–39.

26.

Dwiprahasto I. Obat generik tak bergigi (Generic policy does not bite). Kompas. 22 February 2010.

27.

Kaplan

Ritz

Vitello

. Policies to promote use of generic medicines in low and middle income countries: a review of published literature, 2000–2010. Health Policy 2012; 106: 211–224.

28.

Hassali

Kong

DCM

Stewart

. Utilisation of generic medicines in the Australian healthcare system. J Generic Med 2004; 2: 42–52.

29.

Waber

Shiv

Carmon

. Commercial features of placebo and therapeutic efficacy. JAMA 2008; 299: 1016–1017.

30.

Nguyen A, Kaplan WA and Laing R. Policy option for promoting of generic medicines in developing and transitional countries: a review paper. Geneva: World Health Organization, 2008.

31.

Cameron A and Laing R. Cost savings of switching private sector consumption from originator brand medicines to generic equivalent. Background Paper 35. Geneva: World Health Organization, http://www.who.int/healthsystems/topics/financing/healthreport/35MedicineCostSavings.pdf (2010, accessed January 2012).

32.

Kanavos

. Do generics offer significant savings to the UK National Health Service? Curr Med Res Opin 2007; 23: 105–116.

33.

Zhang

Wagner

Ross-Degnan

. Simulation-based power calculation for designing interrupted time series analyses of health policy interventions. J Clin Epidemiol 2011; 64: 1252–1261.