Generic Drug Prices to fall between 5% and 30% from 1 October 2006

The Government appears committed to lowering the price of generic drugs to ensure equitable access for all Indonesians to essential medicines. The lower prices are based on a Minister of Health Regulation that was issued on 15 May 2006 and was amended on 17 July 2006. The Regulations affect 85 generic drugs and see the prices for them fall between 5% and 30%.

The first Regulation was to come into immediate force however technical problems have led to a delay in implementation of the price reductions. These price reductions are now expected to come into force for the general public on 1 October 2006.

The price reductions although not directly targeting branded generic drugs have also spurred a reduction in the prices of 31. These price reductions still allow for branded generics to be sold at a higher price than nonbranded drugs however the margins have fallen from between 6 to 8 times the price to approximately 3 times the non-branded generic price. This is good for discerning and capable consumers who may opt for branded drugs however these reductions are certain to put pressure on the bottom lines of a number of pharmaceutical companies over the long term. There is also concern that these reductions will lead to stagnancy with respect to growth in the pharmaceutical industry.