ICC’S OUTLOOK ON THE SUPPLY OF COVID-19 RELATED DRUGS.

Jakarta (30/7) – Indonesia Competition Commission (ICC) has monitored the prices and supply of drugs essential for COVID-19. The monitoring has been conducted since the putting into effect of the Imposition of Public Activity Restriction (PPKM) period in the beginning of July and constitutes a form of ICC’s support for the Government that has set a policy on the setting of the prices of drugs for handling COVID-19 by virtue of Decision of the Minister of Health of the Republic of Indonesia Number HK.O 1.07lMENKES/4826/2021 regarding the Highest Retail Price of Drugs during the Corona Virus Disease 2019 (COVID-19) Pandemic Period so that their implementation in the field may run properly. The setting of the Highest Retail Price according to ICC is indeed needed in conditions when excess demand takes place and the supply is relatively limited, especially for essential products or those that are badly needed by the community.

The results of ICC’s temporary monitoring show that apart from the large number of drugs being sold in excess of the Highest Retail Price (HET) as regulated by the Government, there is also a shortage of supply of drugs and oxygen cylinders in almost all regions, especially in Southern Parts of Sumatra, Java and Bali. Such scarcity also transpires in Kalimantan and Sulawesi up to eastern regions of Indonesia due to supply constraints from the pharmaceutical centers and the oxygen industry in Java and its vicinities.

Based on the information obtained by ICC in the field, especially in several regions in Kalimantan and Central Java, the setting of the Highest Retail Price has been complained by several pharmacies and drug stores. Such complaint is based on the setting of the Highest Retail Price that has given rise to a relatively small margin limitation, hence aggravating pharmacies or drug stores in regions. Several pharmacies say that the occurrence of a decline in the supply of drugs is due to the small margin which does not reflect the costs and operational risks faced. Besides, there has been a finding that Pharmaceutical Wholesalers (PBF) further give priority to supplies to hospitals and clinics under the  consideration of the urgency of use, because patients hospitalized generally have more severe symptoms. Such various conditions might have caused of the scarcity of the relevant medicinal products in some drug stores and pharmacies in regions.

In addition to the above, some medicines are produced with a portion of imported raw materials of more than 90%, while currently there are several bans on the export of raw materials and finished drugs in countries supplying such raw materials. The said export bans may be caused by an increase in demand in the importing countries, thus hampering domestic production. Another trigger is the obligation stipulated by the National Drugs and Food Control Agency (BPOM) to report daily distributions so that it becomes one of the reasons for pharmacies not to procure such drugs. Drug stocks in the Farmaplus application (https://farmaplus.kemkes.go.id/) do not constitute real-time data, either. Since the pharmaceutical industry and pharmaceutical wholesalers put forward data 1 day before the D-Day that differences in the data presented from those existing in the field may occur.

In responding to the said conditions, ICC views that there are several options that may be taken into account by the Government, namely:

1. Reformulation of the Highest Retail Price (HET) by making a reasonable margin adjustment for retail pharmaceutical players;
2. Putting into effect the Highest Retail Price by providing incentives, such as subsidies to partially cover distribution costs; and
3. Sticking to the current amount of the Highest Retail Price, but by using the network of State-Owned pharmacies and/or health facilities belonging to the central and regional governments as key channels for the distribution and sales of the relevant drugs. The assumption is that the network of pharmacies and government-owned health facilities may satisfy most of the demands for such COVID-19 essential medicinal products.

With regard to the issues of competition, ICC will focus its research on the types of drugs the availability of whic is fairly plenty for the needs, but they are hard to find in the market. The research will also focus on regions that have a high percentage of the availability of drugs, but there are still prices above the Highest Retail Price bein found and low supples.