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

Get full access to this article

View all access options for this article.

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.