Pharmaceutical Research and Manufacturers of America - Policy Views - Issues Around The World - Special 301 Report



Intellectual Property Protection

The Indonesian Government has drafted a number of new amendments to IPR laws which are meant to be TRIPS compliant and approved by the Parliament in the first half of the new year. Approval of the amendments has been delayed due to the late electoral process and dramatic result in October 1999. As such, the same issues remain as in the last report as no action has been taken by the Indonesian Government of President B.J. Habibie during his transition tenure. In addition, even when the amendments are passed by the legislature, there are significant issues regarding enforcement of IPR laws as a result of the weak Judicial system. Accordingly, PhRMA asks that Indonesia be placed on the 2000 "Special 301" Watch List.

The main aim in the year 2000 is to:

  • Amend the Patent Law 1989/1997 amendment so as to comply with TRIPS.

  • Strengthen IPR enforcement capabilities and infringement penalties within the Judicial system.

  • Educate the legal profession and judiciary on Pharmaceutical IPR issues.

  • Strengthen the Trademark protection at a legal level.

  • Work with the Ministry of Justice, IRP department to help process Patent applications more efficiently.

    In addition, the pharmaceutical industry will have to address the issue of theft of trade at some stage in the future. Theft of trade secrets continues.

    Barriers to Market Access for Patented Pharmaceutical Products

    During the turbulent year of 1999 with many political changes in Indonesia, the key issues affecting the U.S. Research Based Pharmaceutical Industry have changed considerably in terms of emphasis, although the content is similar to previous years.

    The revised list includes:

    A. NCE or Pharmaceutical product registration by the Indonesian FDA (Dir. Jen. POM) is now so slow and confusing that approval time exceeds 2 years.

    B. Marketing practices of foreign/domestic industry remains an issue limiting the U.S. companies ability to compete..

    C. Counterfeiting and smuggling.

    D. Other issues: generic prescribing, taxation, and deregulation and.

    NCE and Pharmaceutical Product Registration: During the course of 1999 and with the appointment of a new Director General of Dir. Jen POM (FDA), Drs. Sampoerno, a number of changes were implemented which, despite the intention of encouraging openness and transparency, have resulted in a backlog of 1,800 products. The approval time for 12 months maximum in 1997 has now extended to over 24 months with virtually no approvals being received for U.S. companies for over 10 months of 1999.

    This issue now represents a serious trade barrier to entry into the Indonesian market. The local trade association, IPMG, has been working on various levels to suggest changes to the regulations which would speed up the process with the present resources available to POM.

    Without changes to process the backlog, the backlog will increase in 2000 to more than 2000 products, of which 300 are NCE's or new product indications/presentations.

    Marketing Practices: During 1999 a Code of Pharmaceutical Marketing Practices was issued (April) and approved by both trade associations, GP Farmasi (representing local companies) and IPMG (Research industry). However, only IPMG members have endorsed the code by agreeing in writing to abide by its content. This Code will be officially recognized at the annual meeting of GP Farmasi in March 2000 but it is not expected that all local companies will agree to follow the code. Blatant malpractice in various forms continue to disadvantage the U.S. companies who have to follow strict compliance procedures.

    Smuggling and Counterfeiting: A few success stories have appeared in 1999 in the area of anti-counterfeit activities. Some local operators have been forced to close down as a result of investigations and police raids. However, the penalties remain inadequate and the actual fate of the perpetrators is unknown. More serious laws and implementation thereof are needed in the future. This can only be expected as the new Indonesian Government begins to tackle the whole issue of the Judiciary and law enforcement.

    Damage Estimate

    PhRMA is currently studying methodology that may be used for estimating damages caused by the aforementioned trade barriers in Indonesia (See Appendix B). The total pharmaceutical market in Indonesia in 1999 was US$770 million.2 Of this total, the local companies dominate 50 percent of the market, as do the international companies, so international company sales last year amounted to US$385 million. Of this total, the value of products still under patent was around US$60 million, or about 15 per cent of the total. Of this total of US$60 million, the U.S. companies saw sales of around US$24 million or 40 per cent of that total. PhRMA believes that, if Indonesia were to establish effective patent protection, the value of products still under patent would be higher - perhaps 50 per cent of the total number of products on the market in Indonesia. In 1999, this would have amounted to US$193 million. Of this, US companies would have realized sales of around US$87 million.