Indonesia Medical Procurement System
Indonesia’s national public procurement agency announced its intention to restart enrollment of medical products in its national e-Katalog public procurement system. In 2019, hospitals and clinics used the e-Katalog system to procure $2.7 billion worth of medicines and medical devices covered by Indonesia’s national public health insurance system. The e-Katalog is managed by the Government Goods & Services Procurement Policy Agency (LKPP).
The previous new enrollment period for medicines and medical devices for the e-Katalog system took place in 2018. The resulting listing had been set to expire in mid 2020 in order to make way for a new enrollment and price negotiation process. Due to the pandemic, however, the listing period has been extended until December 31, 2020, and only emergency use and locally manufactured products have been able to newly enroll this year.
LKPP leadership said that they do not plan to extend the current listing period beyond December 31, 2020 and that they hope to launch a new enrollment period “within the next one or two months.” Although the exact timeline has not been officially announced, companies should begin preparations early. Enrollment for medicines is expected to start first and enrollment of medical devices is expected to follow.
There are three main methods used to procure medicines and medical devices for hospitals and clinics in Indonesia under the national public health insurance system. First, national public procurement tenders are used for products of similar specifications that can be supplied by multiple distributors. Second, the national e-Katalog online procurement system is used by public and private hospitals and clinics to procure specialized medicines and medical devices for which there is only one supplier or very few suppliers. Third, individual hospitals conduct procurement tenders, usually for more highly specialized products that would only be used at that hospital.
Indonesia’s e-Katalog online procurement system lists the technical specifications and prices of specialized products from various providers. In 2019, the total procurement transaction value was $462 million for pharmaceutical products and $2.2 billion for medical devices. Products that are currently listed would need to re-enroll in order to remain listed in the future.
Only products that have current regulatory approval in Indonesia and have been included in the Ministry of Health’s list of eligible products are considered for enrollment in the e-Katalog. Prices are negotiated between LKPP staff and the local marketing authorization holders. For imported products, prices are negotiated based on the import transfer price plus an additional percentage to allow for local distribution costs, post-marketing surveillance costs, and a profit margin.
Because LKPP staff cover a wide range of public procurement areas, they do not usually have in-depth specialized knowledge of the medical field. This results in a greater emphasis during price negotiations on short-term cost reduction and less emphasis on how innovative products may contribute to greater quality of life. There are no price incentives for innovative medical products that have never been used previously in clinical practice in Indonesia.
Under Ministry of Industry Regulation No. 16/2020, medical products that have been certified by the Ministry of Industry as having high local content will be given priority over otherwise similar imported products in e-Katalog procurement. Indonesia allows for a 20-year patent period which protects innovative medicines from local competition. Regulations updated in 2019 restrict compulsory licensing to situations where there is a clear public health emergency.
Indonesia has approximately 1,047 public and 1,830 private hospitals. In addition, there are 10,134 government-funded Health Community Centers. In 2014, the Government of Indonesia introduced a national public health insurance system. The system has expanded rapidly and now covers more than 222 million enrollees, making it one of the largest public health insurance programs in the world.
Much of the public health insurance funding for comes from monthly health insurance premium payments made by individual policy holders, and their employers. To cope with budget deficits, the Government of Indonesia raised the monthly premium rates in 2020. Many hospitals also accept private health insurance, in which roughly 20 million people are enrolled and offers more generous health benefits.
For more information contact office.jakarta@trade.gov.