Consumers the Real Losers in Pharma Wars

http://www.thejakartaglobe.com/business/consumers/article/484.html

Hera Diani and Teguh Prasetyo

After bickering between Indonesia, the United States and World Health Organization over bird flu virus sample sharing this year, Health Minister Siti Fadilah Supari is waging a fresh war against the “new imperialism” by issuing a decree that could kick foreign pharmaceutical companies out of the country unless they build factories here.

A ministerial decree on drug registration, announced on Nov. 3, annuls licenses held by foreign wholesale pharmaceutical companies to import products under their brand names.

The decree targets overseas pharmaceutical companies that do not manufacture drugs in Indonesia, and instead import and distribute their medications from factories abroad. These companies would have two years to transfer their distribution licenses to local pharmaceutical companies and leave the country, or else start manufacturing drugs here.

The Health Ministry had refused to send bird flu samples to the WHO for fear that the development of a bird flu vaccine would primarily be handled by major pharmaceutical companies. The refusal, however, led to accusations that Siti was putting the world in danger of a pandemic by not supporting the global effort to find a vaccine.

Although the WHO’s intention was to protect developing countries, the Health Ministry said, it would actually make a bird flu vaccine more expensive because foreign drug companies would charge high prices that could be too costly for many patients.

Pharmaceutical company stakeholders said that the timing of the decree during the financial crisis was unfortunate, adding that it was sending the wrong message to international investors.
Siti said that her office was trying to protect local drug makers and reduce dependency on imports, as well as limiting the availability of counterfeit drugs.

“If companies want to sell drugs in this country, they have to build factories in Indonesia to create jobs,” she said on Wednesday. “My policy is to protect the economy in this time [of crisis]. We are a market for pharmaceutical companies, so they should share their profits.”

The decree has sparked protests from foreign drug makers. Fourteen pharmaceutical companies — including Eli Lily and Co., Wyeth, Roche, AstraZeneca PLC and Merck Sharp & Dohme — have threatened to leave the country.

Siti dismissed the threats, saying dozens of drug manufacturers were lining up to get into the country.

“If the companies leave, then we will import the drugs,” she said. “No lives would be endangered because the government imports medications for critical diseases through special access. Drugs are not just about trading; there is a social aspect to it.”

The pharmaceutical industry in Indonesia is complicated by an absence of regulation and monitoring, and a single ministerial decree would likely not do much to solve the problem.

Tadjuddin Noer, an executive at the Business Competition Supervisory Commission, or KPPU, said his office suspected that the pharmaceutical scene in this country was marred by monopolies, cartels and other suspect practices.

He said the pharmaceutical industry should not just be regulated by the Health Ministry, but must also receive oversight from the ministries of industry and trade.

“The industry is a mess; it lacks regulation,” he said. “There is no mechanism to set costs, so producers are slapping ridiculously high prices on drugs, sometimes 300 percent higher than in other countries. Consumers also don’t have the right to obtain certain drugs, such as certain bone medications that can only be bought abroad.”

Tadjuddin also pointed out that some local companies give commissions to doctors so that they will only prescribe their drugs, creating prescription monopolies.

Marius Widjajarta of the Indonesian Health Consumer Empowerment Foundation said that there should be an additional decree to regulate drug prices.

He said that pharmaceutical companies often created so-called “branded generic drugs” by repackaging and marketing generic drugs under a different name in order to exact higher prices.
“In other countries,” Widjajarta said, “branded generics are sometimes twice as expensive as non-branded generics. But here, they can be 40 to 200 times higher.”

For example, the antibiotic amoxycillin costs 3 cents per tablet to produce, but is sold in Indonesia for as much as 25 cents.

“Consumers are in no position to bargain as it is a life-and-death situation. And Indonesia is such a lucrative market,” he said, adding that drug producers refuse to produce here for fear of low profit margins.

Local and foreign drug companies have said that the Indonesian market is less competitive than other countries in the region, such as Singapore and Thailand, due to a lack of regulation. They have also blamed the arduous drug-registration process at the Food and Drug Monitoring Agency, or BPOM.

Mulyono, marketing manager for medical equipment firm PT Jala Indonesia Tritama, said that his company had backed off attempts to distribute foreign medicines.

“It takes up to a year to register a drug manufactured from other countries,” he said. “For local drugs, it takes around five to six months.”

Mulyono added that paying middlemen inside the BPOM would expedite the process.
“It is now even more difficult to register foreign-manufactured drugs, because the process should be handled by local importers or distributors,” he said.

BPOM head Husniah Rubiana Thamrin Akib was not available for comment. But Yeni Pangaribuan of the agency’s drug registration department said that the long registration process was due to hundreds of pharmaceutical companies trying to register their drugs.

“We’re understaffed for handling so many cases,” she said.

Singapore businessman Tonny Siva, who owns Indonesia-based Sai Med, said that it takes a long time to establish a drug company here. An Indian pharmaceutical firm that he partners with dropped plans to register its medicines, he said.

“Indian distributors would help provide cheaper drugs in this country because 50 percent of Indonesian pharmaceutical companies’ drug materials are imported from China and India,” Siva said.

He believes that local companies are afraid that competition would lower drug prices. “I also heard that there are cartel practices among local pharmaceutical companies,” he continued. “So if there is new player or competitor wanting to get into the business but not through the local firms, the new player would not have access to the market or government tenders.”

Amir Pane, spokesman for local pharmaceutical association GP Farmasi, denied rumors that it has tried to block foreign investment.

“We have no capacity to lobby for that,” he told the Jakarta Globe. “And it doesn’t make sense. We are part of a global community. We buy materials from other countries.”

“Eighty percent of domestic demand can be met by local companies, although the materials are still imported,” Amir said.

According to data from the Clinton Foundation, the price of the antiretroviral drug Neviral in the United States was $3.75 a bottle in April. The same medication produced by Indonesian state-owned firm PT Kimia Farma Tbk. costs Rp 219,450 ($19.95).

Parulian Simanjuntak from the International Pharmaceutical Manufacturers Group, or IPMG, said that the priority should be developing the market, which currently stands at $2.5 billion.

“Our country’s drug consumption per capita is only $10 to $11 a year, which is lower even than Vietnam’s,” he said. “Indonesia’s consumption is a health indicator that shows that many people still don’t get drugs they need.” Vietnam has a population of 85 million with per capita drug consumption of $13.50.

Parulian said that IPMG would appeal to the health minister to annul the decree because it could disrupt the drug supply.

“Local pharmaceutical companies don’t have research capacity,” he said. “If foreign companies leave, we will have difficulty obtaining innovative drugs to treat critical diseases like cancer and AIDS.”

Tadjuddin Noer of the KPPU said that the commission was monitoring the drug industry, with a report due in the next three months about the industry’s practices. “The country is a mere market in the medicine world,” he said. “We have no clear national strategy and policy.”

Labels: drugs, pharmaceutical

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