Medicine prices tell a horror story

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."