House Commission to summon generic drug producers

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.