Distribution and marketing of drugs in Indonesia: overview

A Q&A guide to distribution and marketing of drugs law in Indonesia.

The Q&A gives a high level overview of distribution and marketing of drugs law, including pre-conditions for distribution; licensing; wholesale distribution; marketing to consumers; marketing to professionals and engagement with patient organisations.

To compare answers across multiple jurisdictions, vist the Distribution and Marketing of Drugs Country Q&A Tool.

This Q&A is part of the global guide to Distribution and Marketing of Drugs.

Eri Budiarti and Iqsan Sirie, Assegaf Hamzah & Partners
Contents

Distribution

Pre-conditions for distribution

1. What are the legal pre-conditions for a drug to be distributed within the jurisdiction?

Authorisation

All medicines that will be distributed in Indonesia must be registered with the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM). The BPOM will issue a distribution licence (izin edar) for the registered medicines on registration.

Exceptions

Medicines that are used for special purposes are exempted from the registration requirement and include:

  • Medicines as requested by physicians.

  • Donated medicines.

  • Medicines for clinical sampling.

  • Sample medicines.

 
2. Do any types of named patient and/or compassionate use programmes operate? If so, what are the requirements for pre-launch access?

There are no specific laws and regulations relating to named patient and/or compassionate use programmes in Indonesia.

Licensing

3. What is the procedural structure regarding licensing a drug for distribution?

Structure

The Ministry of Health Regulation No. 1010/Menkes/Per/XI/2008 on Registration of Medicines, as amended by Ministry of Health Regulation No. 1120/Menkes/Per/XII/2008 (Regulation No. 1010/2008) provides that a medicine to be distributed in Indonesia must be registered with the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM). The BPOM will issue a distribution licence if the medicine meets the following criteria:

  • Produces a benefit and is safe, as proven through animal testing and clinical examination trials or other scientific evidence.

  • Its quality fulfills the requirements of, and its production is in accordance with Good Medicine Manufacturing Practices (Cara Pembuatan Obat Yang Baik) (CPOB), as provided for by BPOM Decree No. HK.00.05.3.02152 of 2002.

  • The relevant product information contains complete and objective information to ensure its correct, rational and safe use.

  • It satisfies a public need.

Registration procedure

The registration documents are submitted to the BPOM together with the official fee. A medicine produced in Indonesia (whether for domestic use or for export) is registered by the relevant pharmaceutical producer (that must have an industrial business licence). An imported medicine is registered by a domestic pharmaceutical producer that has obtained written approval from the foreign pharmaceutical producer. The written approval must provide for a transfer of technology so that the medicine can be produced locally within a five-year period, except if it is patented. The foreign pharmaceutical producer must also comply with the CPOB, as evidenced by relevant documents or an inspection by the Indonesian authorities. The documents must be attached to the application, together with the latest data on inspections conducted by the relevant local authorities (that is, for at least the last two years).The BPOM either approves or rejects the application for the distribution licence based on the recommendation of the committees. The BPOM reports the issuance of the distribution licence to the Ministry of Health (MOH) annually. If the registration is rejected, the applicant can submit a request for re-examination.

Once a distribution licence has been issued, the distribution licence holder must produce/import and circulate the medicine within a one-year period from the date of issuance.

Regulatory authority

The BPOM is authorised to issue the distribution licence.

 
4. Is there a simplified licence proceeding, or relaxed licensing conditions, for drugs which have already been licensed for distribution in another jurisdiction?

There are no simplified procedures for medicines that have already been licensed/approved in other jurisdictions. The medicines must still be registered with and obtain a distribution licence from the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan).

 
5. Is virtual drug distribution possible from your jurisdiction?

Virtual distribution of medicines (that is, the physical products never enter the country but are distributed using the authorisation obtained in Indonesia) from Indonesia is not allowed, because under Indonesian law distributing medicines without actually having any control over the product is illegal.

 
6. What is the procedure to appeal (legal remedy) a licensing decision?

If an applicant's registration is rejected by the Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM), the applicant can re-register the same medicine using the same process for registration. However, if the applicant objects to the BPOM's decision to reject its application, the applicant only has the opportunity to appeal once (peninjauan kembali).

The applicant can lodge an appeal up to six months from the date of the BPOM's rejection letter. The appeal can be in the form of a hearing, and the appeal process must not exceed 100 calendar days from the submission date of the appeal documents.

 
7. What are the costs of obtaining licensing?

A non-tax state revenue (pendapatan negara bukan pajak) applies with amounts ranging from IDR50,000 to IDR30 million per medicine, depending on the type of medicine that will be registered.

Distribution to consumers

8. What are the different categories of drugs for distribution?

There are three main categories of medicine:

  • Over-the-counter medicines.

  • Hard medicines (or prescription medicines).

  • Narcotic and psychotropic drugs.

 
9. Who is authorised to distribute prescription drugs and over-the-counter drugs to consumers?

Prescription drugs

Pharmacies, hospital pharmacies, clinics, drug stores and community health centres (Puskesmas) are authorised to distribute prescription medicines directly to customers.

Over-the-counter drugs

Over-the-counter medicines can be distributed by pharmacies and drug stores.

 
10. What drugs can an attending physician distribute and under what circumstances?

There are no specific regulations that set out the types of drugs that doctors can distribute directly to patients. However, in performing their duties as a doctor, they must observe the Indonesian Doctoral Code of Ethics issued by the Indonesian Association of Medical Doctors (Ikatan Dokter Indonesia). The Indonesian Doctoral Code of Ethics contains provisions prohibiting doctors from:

  • Giving free samples of medicines that they receive from pharmaceutical companies.

  • Encouraging patients to purchase certain medicines in return for commission paid by the relevant pharmaceutical company.

  • Directly or indirectly promoting certain drugs, medical devices or other medical substances for the purpose of receiving benefits from third parties.

 
11. Who is authorised to prescribe prescription drugs to consumers?

Prescription medicines can be prescribed by doctors. Midwives working in remote areas (where no doctors are available) also have the right to prescribe medicines.

 
12. Is direct mailing/distance selling of drugs permitted in your jurisdiction?

Conditions

Direct mailing of drugs has not been regulated in Indonesia. Distance selling is permitted for the export of medicine, provided that the legal entity exporting the medicine has obtained the following licences/documents:

  • Exporter licence in accordance with the prevailing laws and regulations.

  • Declaration from the Ministry of Health stating that the medicines have passed a quality, safety and benefit inspection.

Cross-border sales

See above.

 
13. What regulatory authority is responsible for supervising distribution activities?

The Ministry of Health (MOH) periodically carries out inspections to protect the public from possible dangers posed by medicines that are distributed in the market. If the inspection findings do not satisfy the quality, safety and/or benefit requirements, the distribution licence can be revoked, and the product must be withdrawn from circulation by the producer/importer and be destroyed. The MOH is required to inform the general public in such cases.

 
14. What is the procedure to appeal (legal remedy) a distribution decision?

There are no specific regulations providing a legal remedy in the event a party's distribution licence is revoked by the Ministry of Health (MOH) following inspection by the MOH (see Question 12). However, the party whose distribution licence is revoked can file a claim to the Administrative Court (Pengadilan Tata Usaha Negara) if it considers that the MOH's decision is arbitrary or a loss or damage was suffered by the party.

 
15. What are the legal consequences of non-compliance with consumer distribution laws?

The Ministry of Health (MOH) can impose administrative sanctions on pharmaceutical distributors that violate the relevant laws and regulations on the distribution of medicines. The sanctions include:

  • Warnings.

  • Temporary prohibitions on distribution and/or instructions to withdraw products from distribution.

  • Instructions to destroy products.

  • Temporary or permanent revocation of the distribution licence.

In addition, criminal sanctions apply for certain acts as provided in the Health Law and its ancillary regulations. The Indonesian National Police Force and authorised officials from the MOH are responsible for investigating suspected criminal acts under the Health Law. The criminal offences established by the Health Law and its ancillary regulations include the following:

  • Any person who produces and/or distributes medicines that do not satisfy the requirements of the Health Law is subject to imprisonment for a term of up to ten years and/or a fine of up to IDR1 billion.

  • Any person who distributes medicines without a distribution licence is subject to imprisonment for a term of up to 15 years and/or a fine of up to IDR1.5 billion.

If the offences above are committed by a legal entity, the company is also subject to a fine three times the amount referred to above and can also have its business licence and/or corporate entity status revoked. This is in addition to the terms of imprisonment and fines that are imposed on the management of the company.

Wholesale distribution

16. What is the legal regime regarding wholesale distribution of drugs?

In Indonesia, wholesale distribution of drugs is carried out by "large pharmaceutical distributors" (Pedagang Besar Farmasi), which must secure a licence issued by the Ministry of Health (MOH), specifically the Director General of Pharmaceuticals and Medical Equipment (DGPM). The licence is valid for five years and can be extended if certain requirements are fulfilled. In addition, only a limited liability company or co-operative can apply for such licence.

Pharmaceutical producers and pharmaceutical wholesalers cannot sell medicines to end customers. However, they are allowed to sell medicines to other large pharmaceutical distributors, pharmacies, hospital pharmacies, clinics, drug stores and community health centres (Puskesmas).

Under the Negative Investments List, there are restrictions on foreign investment in distribution of medicine activities. Only a company that is wholly owned by locals can sell medicines in Indonesia, except if the distribution is carried out by a pharmaceutical production company, in which case foreign investors can partially own shares in the company (that is, not more than 85%).

 
17. What regulatory authority is responsible for supervising wholesale distribution activities?

Regulatory authority

The Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) (BPOM) supervises the manufacture and distribution of medicines in Indonesia.

Supervision

The BPOM's supervision is mainly implemented through periodical reports submitted by large pharmaceutical distributors.

Rights of appeal

See Question 13.

 
18. What are the legal consequences of non-compliance with wholesale distribution laws?
 

Marketing

Promotion

19. What is the general legal regime for the marketing of drugs?

Legal regime

Marketing of medicines is regulated in a Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan) regulation (No. HK.00.05.3.02706 of 2002 on Medicine Promotions). However, general legislation applicable to marketing must be considered when undertaking marketing activities. For example the:

  • Consumer Protection Law must be observed when targeting consumers.

  • Anti-Monopoly Law must be taken into consideration when marketing activities are targeted to businesses.

Limits to marketing activities

In general, the limits to marketing activities are as follows:

  • Medicine promotions in the form of sponsorship are only allowed for scientific purposes.

  • Provision of medicines to an institution (but not to professionals) for free or as a donation must not come with an obligation for the recipient to prescribe or use the medicines.

  • Pharmaceutical producers/distributors must not:

    • enter into a co-operation with pharmacies or medicine prescribers (for example, doctors);

    • organise a group specifically to increase the use of certain medicines for marketing purposes;

    • promote certain medicines by using prizes as the reward (for example, quizzes or returning a medicine's packaging).

In addition, all promotional activities must be conducted on a transparent basis, and the medicines must provide written product information that is objective, complete and correct. The product information must contain the following minimum information:

  • Trade/product name.

  • Name of the producer/importer.

  • Main ingredients/components.

  • Directions for use.

  • Warnings and side effects.

  • Expiry date.

 
20. Are there other codes of conduct for the marketing of drugs (for example, by professional or industrial organisations)?

The Association of the Indonesian Pharmaceutical Company (Gabungan Perusahaan Farmasi Indonesia) and the Assoctiaton of International Pharmaceutical Manufacturers Group (Perkumpulan International Pharmaceutical Manufacturers Group) have their own codes of ethics:

  • Code of Ethics on Marketing in Indonesian Pharmaceutical Industry (Kode Etik Pemasaran Usaha Farmasi di Indonesia).

  • Code of Ethics on Pharmaceutical Product Marketing Practices (Kode Etik Praktek Pemasaran Produk Farmasi).

Both contain detailed regulation on the marketing of drugs. In addition, there are codes of ethics that are issued by the respective doctor and pharmacist associations, which contain provisions on the marketing of medicines.

All relevant parties have undertaken to comply with the codes, and the codes can be considered as constituting customary regulation of the industry and complementing the applicable laws and regulations.

Marketing to consumers

21. What is the legal regime for marketing to consumers?

Legal regime

See Question 18.

Products

Only products that have been registered in Indonesia and have obtained a distribution licence can be marketed. The marketing of prescription drugs to consumers is prohibited.

 
22. What kinds of marketing activities are permitted in relation to consumers and the products which may be advertised to them?

The relevant laws and regulations have not defined the permitted marketing activities in Indonesia. However, the limits provided in Question 18 must be considered when undertaking marketing activities.

 
23. Is it permitted to provide consumers with free samples? Are there particular restrictions on special offers (for example, "buy-one-get-one-free")?

The provision of free samples of medicines and special offers are not a permitted marketing method.

 
24. Are there particular rules of practice on the use of the internet/social media regarding drugs and their advertising?

There are no specific rules on the use of the internet/social media regarding drugs and their advertising. However, the laws and regulations on the use of the internet will apply. For example, the Electronic Information and Transaction Law prohibits any party transmitting or distributing any content on the internet that violates public decency and/or contains misleading information that may lead to consumer loss.

 
25. What regulatory authority is responsible for supervising marketing activities to consumers?

Regulatory authority

See Question 16.

Supervision

See Question 16.

Rights of appeal

See Question 16.

 
26. What are the legal consequences of non-compliance with consumer marketing laws?

Marketing to professionals

27. What kinds of marketing activities are permitted in relation to professionals?
 
28. Are there any restrictions on marketing to professionals?

Marketing activities

See Question 18.

Frequency

There are no laws and regulations specifically governing how, when, where or how often professionals can be targeted by sales representatives. However, in marketing their products to professionals, sales representatives must comply with the codes of ethics and the limitations to marketing activites (see Question 19).

Provision of hospitality

The Code of Ethics on Marketing in Indonesian Pharmaceutical Industry (Kode Etik Pemasaran Usaha Farmasi di Indonesia) and the Code of Ethics on Pharmaceutical Product Marketing Practices (Kode Etik Praktek Pemasaran Produk Farmasi) requires that any type of event targeting professionals must only be organised for the purpose of:

  • Disseminating information about the pharmaceutical company organising the event.

  • Providing accurate and propotionate scientific and education information.

The event must not involve the provision of any kind of appreciation, door prize, incentive, or monetary compensation to the professionals attending the event. The codes also regulate the bugdet, moderator/speaker fee, venue, and type of entertainment that is allowed when organising or sponsoring an event where the audience are professionals.

 
29. What information is it legally required to include in advertising to professionals?
 
30. Are there rules on comparisons with other products that are particularly applicable to drugs?
 
31. What other items, funding or services are permitted to be provided to professionals?

Discounts

See Question 18.

Free samples

See Question 18.

Sponsorship of professionals

See Question 18.

Other items, funding or services

See Question 18.

 
32. What regulatory authority is responsible for supervising marketing activities regarding professionals?

Regulatory authority

See Question 16.

Supervision

See Question 16.

Rights of appeal

See Question 16.

 
33. What are the legal consequences in case of non-compliance with professional marketing laws?
 

Engagement with patient organisations

34. What kinds of activities are permitted in relation to engagement with patient organisations? What are the restrictions that are imposed on relationship with patient organisations?

Prospective programmes that are held with patient organisations must be based on a written agreement and in line with the code of ethics of the pharmaceutical company. Pharmaceutical companies can only provide financial support to patient organisations if the financial support is intended to be used for professional, educational and scientific purposes.

 

Reform

35. Are there any plans to reform the law on the distribution and promotion of drugs in your jurisdiction?

The Indonesian legislative body (Dewan Perwakilan Rakyat) (DPR) has proposed two new laws relating to:

  • Pharmaceuticals practice.

  • Supervision of food and medicines.

Both new laws contain legal provisions on the distribution of pharmaceutical supplies (including medicines) in the list of legislation that the DPR will pass during the period from 2014 to 2019. Unfortunately, the laws are not part of the 37 prioritised legislations that the DPR will pass and enact during this period.

 

The regulatory authorities

Ministry of Health of Republic of Indonesia (Kementerian Kesehatan Republic Indonesia) (MOH)

W www.depkes.go.id/index.php

Principal responsibilities. The MOH is responsible for formulating national policy, implementation and technical policy in the field of health. It is also in charge of issuing licences in the healthcare industry.

Food and Medicine Supervisory Board (Badan Pengawas Obat dan Makanan)

W www.pom.go.id/new/

Principal responsibilities. The Board is responsible for implementing specific policies in the food and drug industry, including but not limited to the supervision of the implementation of such specific policies in the industry.



Online resources

W www.hukumonline.com

Description. The website is maintained by PT Justika Siar Publika (JSP), a private company unaffiliated to the government, and is the only web portal in Indonesia providing an organised and systematic collection of laws, regulations and court cases. The website provides English translations for some laws and regulations and is generally up-to-date.



Contributor profiles

Eri Budiarti, Partner

Assegaf Hamzah & Partners

T +62 21 25557811
F +62 21 25557899
E eri.budiarti@ahp.co.id
W www.ahp.co.id

Professional qualifications. Advocate, Indonesia

Areas of practice. General corporate law; M&A.

Iqsan Sirie, Associate

Assegaf Hamzah & Partners

T +62 21 25557805
F +62 21 25557899
E iqsan.sirie@ahp.co.id
W www.ahp.co.id

Professional qualifications. Advocate, Indonesia

Areas of practice. General corporate law; M&A.


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