House Commission to summon generic drug producers

Sari P. Setiogi, The Jakarta Post, Jakarta

The House of Representatives (DPR) Commission VII is planning to summon domestic producers of generic drugs to shed light on the recent price hike of the commodity.

Deputy chairman of Commission VII Surya Chandra Surapaty said on Tuesday the commission needed detailed information about the move and planned to summon the producers next month.

"After that, we will judge whether the price hike is necessary or not as it relates to the life of so many people," Surya told The Jakarta Post.

Should the House find the price increase unacceptable, it would ask the government to roll back the prices of generic drugs, he said.

Health minister Achmad Sujudi announced on Monday that the government had raised the prices of generic drugs last July by between 2.33 percent and 50.62 percent.

Sujudi said drug producers had prodded the government to raise the prices of generic drugs, which had not increased in the past two years.

Surya said the reason the minister gave as to why they increased prices was unclear.

"We are still looking for evidence whether the argument is acceptable. Who knows, if the price hike relates to losses suffered by Indofarma last year...," said Surya.

Indofarma, a drug producer previously owned by the state, suffered losses worth Rp 20 billion (US$2.5 million) in 2002.

Other former state-owned drug producing firms are Kalbe Farma, Kimia Farma and Phapros.

Meanwhile, chairman of the Indonesian Pharmaceutical Association (GP Farmasi Indonesia), Anthony Ch. Sunarjo, said that newly privatized drug producers were entitled to earn profits.

"Their social function is automatically reduced. That is the risk of privatizing them," he said.

Anthony also said generic drug prices had never increased in the last two years. "The price of raw materials is not increasing as the U.S. dollar rate falling against the Indonesian rupiah, but production cost is increasing," Anthony said.

Anthony said the government's decision to increase the generic drug prices was likely aimed at helping newly privatized drug producing companies, not the whole manufacturers of generic drugs.

"When they were still state-owned companies, the government gave subsidies valued at US$300 million to buy raw materials for generic drugs. At that U.S. dollar rate was different," said Anthony.

But, even with such a large subsidy, those companies were still incurring losses.

A source who was refused to be identified told the Post that in the recent past, Indofarma was able to offer low prices and discounts on certain generic drugs, mostly those in demand such as amoxicillin and paracetamol.

"In the end, all manufacturers did the same in order to compete, but no profit could be gained as Indofarma was selling far below profit levels," the source said.

Marius Widjajarta from the Indonesian Health Consumer Empowerment Foundation (YPKKI) said generic drug manufacturers gave discounts to pharmacies of between 10 percent and 70 percent.

He also questioned why drug producers had to ask for price increases where in fact they could still give discounts to pharmacies.

There are currently 15 generic drug manufacturers in the country, including Indofarma, Kimia Farma, Pharos, Dexamedica, Sanbe and Fahrenheit.