Medicine prices tell a horror story

Medicine prices continue to increase each year in Indonesia as producers enjoy an "overdose" of profits. Government officials and doctors benefit from this situation. A team of reporters from The Jakarta Post recently conducted research on the issue and interviews to find the root of the problem. The following report plus the first-time-ever-published price list and other related articles on Page 6 and Page 9 were prepared by team members Junaidi, Arief Suryobuwono, Benget Simbolon, Gedsiri Suhartono, K. Basrie and Prapti Widinugraheni. These stories refer to prescription drugs.

JAKARTA (JP): Your health is your treasure, a proverb says.

Sure it is. The problem is, health is too often a luxury that only a lucky few can afford to "buy". Health is nothing more than something one has to purchase in the form of medicines.

For many years, the health service, including the pharmaceutical industry, has become a profitable business for government employees, pharmacy owners and medical practitioners.

Despite the fact that there are now around 250 medicine factories, 1,300 distributors, about 4,000 pharmacies and hundreds of thousands of drugs stores, the prices of the estimated 20,000 types of medicines on the market, most of which are made locally, remain high.

Collusion involving these three parties is strongly believed to have caused the continuous increase in medicine prices.

"They are criminals," said Prof. Iwan Darmansyah from the School of Medicine at the University of Indonesia.

Medicines sold at pharmacies can be over three times higher than those offered by PT Askes, the only health insurance firm assigned by the government to provide low-cost medicines and medical treatment to state employees (see table).

Compared to some other countries, some of the prices may look only slightly higher or even lower.

Income

"But don't forget that our per capita income is much lower than many other countries," said Iwan.

Some medicines at pharmacies in neighboring Australia, for instance, are still much cheaper than here, even though Australia's Gross National Product per capita is US$19,100, or 20 times higher than Indonesia's $940.

The Director for Drug Control of the Health Ministry, Andajaningsih, defends medicine prices here, saying that everything is reasonable.

"If our medicine prices are higher than those in foreign countries, we would see many Indonesians buying medicines abroad. But in fact, not many of them do it," she said, without giving any figures.

There are many factors behind the high prices of medicines here, including the fact that many government officers routinely ask for money from the businessmen involved with medicines.

"I know of high-ranking officials in the Ministry of Health who often ask for money from certain pharmaceutical companies for their official trips overseas," said a source who requested anonymity.

The money-oriented entrepreneurs will, of course, add the extra costs to the prices of their products.

Another factor is attributed to the fact that producers need extra funds to bribe doctors to help sell their medicines.

The method of bribery differs from one firm to another.

"It could be in the form of goods, like cars, but there's also a firm which offers a share to doctors whose selling performance is good," said Kartono Mohamad, a former chairman of the Indonesian Medical Association (IDI).

Under these circumstances, many doctors try to meet the target, forgetting their oath in the process.

"Many patients have come to me for explanations on the purpose of the bulk of medicines they receive from their doctors," said Iwan. "After a brief examination, I learn that none of the medicines suit their health problems!"

Further in the cost process is the distribution line, through which medicines pass before they reach the consumer.

At this stage, prices jump to at least 70 percent above the factory prices, according to Medika health magazine.

Small market

Indonesian Medical Association chairman Asrul Azwar said the big number of producers in the tiny market here has also helped boost medicine prices.

"The various brand names have to compete tightly on the market in order to survive. This means that producers have to escalate promotional campaigns and that means costs, costs and costs," Asrul said.

Another factor is passive consumers, who never complain. As a result, only a few out of Indonesia's population of 195 million are able to purchase proper medicines.

According to the World Bank, purchases of medicines for treatment in Indonesia make up a large part of household expenses for health, about US$4.5 million in 1994, or about one-third of the total expenditures on health.

Yet, this large expenditure on drugs and medicines buys far fewer quantities of actual medicines than in most countries, according to the report.

Even hospital staff take advantage of the situation to cheat their ailing patients. Last year, for example, a senior nurse at the Dr. Mintohardjo Navy Hospital in Central Jakarta was reported to have offered and sold various prescription medicines to patients at cheaper prices.

Powerful syndicate

A number of practitioners said that it would be difficult to mend the current system.

"The system is already established and people involved in this business have set up a powerful syndicate," said senior doctor Rizal (not his real name).

"Many of us, doctors, could not escape from the tempting incentives offered by the industry because everybody knows that we've spent a lot of money and spent a lot of time to become doctors through the 'official' complicated procedures," he said.

"That's why we need to take 'revenge'," said Rizal, a government-paid doctor who opened a small clinic in Tanah Abang, Central Jakarta.

Anthony Sunarjo, president of the Indonesian Pharmaceutical Association, denied that producers could set prices of their products indiscriminately.

"If we try to increase the prices beyond the limit, we will surely get pressure from competition," added Anthony, also director of PT Kenrose Indonesia.

A pharmacy owner in South Jakarta said it is the government and the Indonesian Pharmaceutical Association who determine the prices.

Government efforts

Actually, the government is not completely immune to the problem. It has, for example, taken a few steps to help lower medicine prices, such as through the cutting of 2 percent of state employees' wages through PT Askes.

In return, the employees, including the retirees, have to spend only a very small amount of money for medicines and medical treatment.

However, the procedures are very complicated and the service is bad.

"It's just another way for the government to extort low-paid employees," said Soepomo (not his real name), a personnel manager of a firm.

To overcome the problem, Asrul recently made a breakthrough by allowing the approximately 33,000 doctors all over the country to dispense medicines directly to their patients.

"Actually, we have proposed this system to the government many times but the government never seems to agree with it. I don't know why," he said.

Since 1983, the government has also promoted the use of generic medicines, which are a lot cheaper.

However, a recent study at several pharmacies in Jakarta found that only 5 percent of their customers choose generic medicines as an alternative.

Rosa, a pharmacy employee in Central Jakarta, said that the low prices of generic medicines often raise patients' doubts about the drugs' potency.

A rural doctor in Samarinda, East Kalimantan said: "Many of my patients are poor, but they refuse to take free generic medicines I give them just because they are not wrapped in the way they think medicines should be."