New Indonesian Health Law: An Umbrella Legal Framework for Healthcare in Indonesia

The Indonesian Government through its House Representative Commission IX, which holds jurisdiction over the healthcare industry has advocated for the establishment of an updated law concerning healthcare. The primary objective of this law is to assist the nation in its endeavors to revamp the healthcare system following the advent of the COVID-19 pandemic. The new health bill was officially issued in February 2023 and passed with several revisions on 11 July 2023. Subsequently it has been enacted as Law No. 17 of 2023 on Health (“Health Law”). The Health Law is now set to become the official umbrella legal framework for healthcare in Indonesia.

Considering that the Health Law comprises 358 articles, we have condensed a selection of the more noteworthy matters.

Abolishment of Compulsory Health Fund Contribution

Both Parliament and the government have reached a consensus to eliminate the previously mandated minimum spending requirement of 5% of the state budget (APBN) and 10% of the regional revenue and expenditure budget (APBD) for health. This requirement, originally established under the Health Law of 2009, has been a point of contention.

An investigation by the Ombudsman of the Republic of Indonesia has revealed that only 3–4% of several regions' budgets are allocated to healthcare. This issue stems from the constrained fiscal capacity of these regions and, at times, the limited commitment of their local leaders.

In cases where regional fiscal capacity is limited, it becomes imperative for the Central Government to provide assistance. Analyzing data from 2013 to 2019, it becomes evident that the allocation of the state budget to health has rarely exceeded 5%, aside from the year 2016. A temporary increase was observed between 2020 and 2022, primarily attributed to the impacts of the COVID-19 pandemic. The removal of the minimum health budget requirement in regions with weaker political commitment is likely to hinder the progress of healthcare development in those areas.

Minister of Health Budi Gunadi Sadikin has previously emphasized that the mandatory 5% health spending regulation must be eliminated, as it has not yielded the intended results and has the potential to be misused for ambiguous programs.

However, it is important to note that this removal is not coupled with a stipulation to aid regions lacking fiscal capacity with proper budget allocations and planning. Establishing this provision is crucial to promote regional autonomy and to work toward the goal of a performance-based health budget in the future.

Domestic Product Utilisation

Pursuant to the provisions set forth in the Health Law, it is mandatory for the Central Government to establish a comprehensive national inventory of essential medications that must be made readily accessible to the general public. The government bears the responsibility of ensuring the availability and affordability of generic drugs listed in the national essential medicines and national program medicines. In order to safeguard national resilience, the production of generic International Non-Proprietary Name (INN) drugs intended for sale in Indonesia shall exclusively be undertaken by domestic pharmaceutical enterprises. Furthermore, the procurement or manufacturing of pharmaceutical preparations, medical equipment, drug materials, and medical technology products should primarily be sourced domestically.

The Health Law introduces new incentives aimed at fostering investments in essential health technologies and providing supplementary advantages to companies that contribute to Indonesia's prioritization of health resilience. Through these policies, Indonesia endeavors not only to encourage heightened local investments by manufacturers but also to prioritize innovative medications that will serve as a cornerstone for the Indonesian healthcare system in the future. Additionally, it is anticipated that these measures will stimulate new investments in research and development pertaining to innovative essential vaccines, therapeutics, and diagnostics. The significance of these developments lies in their crucial role in sustaining the resilience of Indonesia's healthcare system in the face of emerging infectious diseases and the escalating burden of non-communicable diseases.

Medical Professionals

Indonesia is grappling with a scarcity of medical professionals. According to the World Health Organization (WHO), the recommended ratio is one physician per 1,000 individuals. Given Indonesia's population of 270 million, the country should ideally have 270,000 physicians. However, Statistics Indonesia Agency reported only 176,110 physicians, including specialists and general practitioners, in the country as of 2012. The extended duration and high costs of medical education have discouraged many students from pursuing medical careers, exacerbating the situation. Unsurprisingly, doctors often opt for urban settings with better remuneration, leaving rural areas underserved.

Efforts to increase the number of foreign medical professional face challenges due to opposition from the Indonesian Doctors Association (IDI). While the government contends that such measures are crucial for tackling healthcare sector issues like the shortage of specialized physicians, the IDI raises concerns. The Health Law intends to allow select hospitals to establish their postgraduate programs and permit foreign medical experts to bridge staff gaps. Nonetheless, IDI cautions that these measures could potentially lead to an oversupply of physicians in the long term, asserting that the government's inadequate distribution of healthcare workers is the fundamental issue.

Foreign Medical Professionals can operate in Indonesia under certain conditions:

• Only specialists, subspecialists, or healthcare professionals meeting specific competency levels are eligible to practice.
• Foreign professionals can practice for up to two years, with the option of a single extension for another two years.
• If follow-up competence evaluations deem an individual "lack of competence," they must adhere to relevant laws and regulations by returning to their home country.
• Standard registration and practice licenses are mandatory.
• Professionals can be exempt from competency evaluations if they meet the following criteria:
  • Graduated from specific overseas universities or educational institutions and practiced abroad as a specialist or subspecialist for a minimum of five years.
  • Certified as an expert in specific medical fields and practiced for a minimum of five years.

Healthcare Products

Beyond the imperative for pharmaceutical supplies and medical equipment to meet criteria of safety, effectiveness, quality, and affordability, the Health Law provides an encompassing categories of healthcare supplies, as follows:

While the Health Law maintains provisions dedicated to pharmaceutical supplies, medical equipment, and PKRT, the Health Law has introduced new obligations and restrictions on several provisions, one of them is the requirements on the components used for pharmaceutical supplies where the materials used in pharmaceutical supplies must adhere to distinct quality standards and/or criteria pertinent to the ensuing pharmaceutical substances, such as:

• Natural-origin pharmaceuticals
• Health supplements
• Quasi-drugs
• Specific cosmetics, as determined by risk assessments.

Top of Form

Concerns have arisen from the cosmetics industry regarding the prerequisite for pharmaceutical-grade elements in cosmetics. This perturbation arises as cosmetics are categorized by Regulation of the National Agency for Drug and Food Control (BPOM) No. 33 of 2021 on the Certification of Good Cosmetics Manufacturing Practice. These substances apply externally (e.g., epidermis, hair, nails) and include varied self-care items (e.g., shampoos, moisturizers, lipsticks, toothpastes).

These concerns encompass several points:

• Limited domestic supply of pharmaceutical-grade cosmetic materials
• Elevated procurement costs, three to five times standard rates
• Financial infeasibility for micro, small, and medium cosmetology businesses

Notably, the requirement for cosmetics to use pharmaceutical-grade ingredients is not present in the first draft of Health Law issued in February 2023, which only demanded adherence to applicable standards outlined in the Indonesian cosmetics codex or other standards.

Another issue revolves around the government's authority to ascertain and control healthcare product prices, notably pharmaceuticals and medical equipment. While the Health Law lacks constraints on this power, verbal clarifications have been offered that this authority doesn't extend to the private market. Monitoring forthcoming Health Law implementing regulations for clarifications on this aspect would be judicious.

Conclusion

The Government and legislators are striving to make significant changes within the healthcare sector, aiming to replace several existing laws to address the prevailing healthcare challenges in Indonesia. These challenges encompass various aspects, including the insufficient capacity and accessibility of primary healthcare services, sustainability issues, ineffective healthcare financing, disparities in the quantity and quality of healthcare professionals, and a lack of innovation.

Numerous healthcare practitioners and medical associations, including the IDI, have strongly criticized the lack of public participation during the formulation of the Health Law. Despite the Government's claims that the Law would enhance protection for Indonesian healthcare workers and address general issues in the health sector, these criticisms have led to resolute opposition to the Health Law.

In the wake of the issuance of the Health Law, specific implementing regulations for sectors such as medical practice, hospitals, healthcare workers, nurses, and midwifery will be issued by the Ministry of Health in the near future. Considering the potential impact on other industries currently regulated by BPOM, such as health supplements and cosmetic products, the requirements outlined in the recent implementing regulations need to be adjusted to align with the Health Law. The practical implementation in this sector will be affected, as this could potentially lead to issues of overlapping authorities if new relevant implementing regulations lack uniformity.