Joko Widodo was inaugurated as the new President of Indonesia on October 20, 2014. One of the tough challenges Widodo’s administration will face is reforming the healthcare system. Indonesia has a complicated, decentralized healthcare system that spreads responsibility from the national level down to the regional levels. Although the national Ministry of Health establishes nationwide provisions and policies, local facilities often do not have the resources and funding to keep up with the national standards. The quality of service and type of healthcare offered in each area varies even further due to widespread income disparity across the country and the disunited local healthcare programs supported by individual politicians from each district. These local healthcare programs are mostly targeted to garner support for each politician’s electoral campaign, and oftentimes do not conform to the national healthcare scheme.
The previous administration worked to address these issues, mandating a Universal Healthcare Coverage (UHC) program on January 1, 2014 that is slated to cover all Indonesian citizens by 2019. However, the UHC program is plagued by financial problems. The reimbursement system is not able to cover the cost of procedures, leading to complaints from healthcare providers that they are being underpaid. The program seeks to increase access to healthcare, but this would mean a greater strain on the healthcare facilities, which could have a negative effect on the quality of service in the long run.
Indonesia’s pharmaceutical market is dominated by domestic companies, which meet approximately 70 percent of Indonesia’s drug needs. This unbalance (where local drug companies dominate the market over foreign competitors) is due to a number of rules protecting local pharmaceutical companies, such as the Decree 1010 requirement that all products containing active pharmaceutical ingredients (APIs) must be registered by a company with a local manufacturing facility.
In contrast, Indonesia’s domestic medical device industry is very underdeveloped, and imported products account for more than 90 percent of Indonesia’s medical device market. Indonesia’s medical device market has seen an annual growth rate of more than 12 percent, and stable growth at about 15 percent is expected for the next five years.