KPPU Investigates The Problem Of Medical Device Mafia

JAKARTA - In the midst of the corona virus pandemic or COVID-19, whose spread is increasingly widespread, medical devices (medical equipment) and medicines are indispensable items. However, in this emergency situation, the issue of the medical equipment and drugs mafia emerged. Therefore, the Business Competition Supervisory Commission (KPPU) admits that it will oversee this industrial sector.

The contents of the medical equipment and drugs mafia were first revealed by the Minister of State-Owned Enterprises (BUMN) Erick Thohir. Not long ago, he assumed there was an alleged mafia in the pharmaceutical and medical equipment sector. This is because, so far, Indonesia has tended to choose to import raw materials for medical devices and medicines, rather than producing them domestically.

In fact, according to Erick, as a large country Indonesia has the capacity to be able to produce its own raw materials for medicines and medical devices.

Commissioner for the Supervision of Business Competition (KPPU), Guntur Saragih, said that the pharmaceutical and medical devices industry sector is one of the priority sectors that KPPU is currently supervising. He emphasized that his party would process indications of violations in the business competition sector, if the investigation found the potential.

"In the near future we will ask for information from the Ministry of SOEs regarding this information," said Guntur in a virtual press conference in Jakarta, Thursday, April 23.

According to Guntur, after an examination, it can only be determined whether it will be included in the KPPU's law enforcement domain if there are indications of suspected violations of Law Number 5 of 1999 concerning Prohibition of Monopolistic Practices and Unfair Business Competition.

Establish Own Factory

Previously, Director of Bio Farma Honesti Basyir spoke about the issue. According to him, the problem of medical equipment and medicine mafia was present during the COVID-19 pandemic due to higher demand than supply.

"There is a shortage of supply. Moreover, the export-import process is not running smoothly, because each country imposes restrictions," he said, during a virtual hearing (RDP) with Commission VI, in Jakarta, Tuesday, April 21.

Meanwhile, said Honesti, the high demand for imported raw materials is due to the unavailability of basic raw materials for medicines in Indonesia. According to him, these basic raw materials are generally produced by basic chemical companies. However, the problem is that this raw material is not produced in Indonesia.

"The raw material was recognized more than 90 percent of imports, raw material problems are not purely pharmacy because of the problem in the upstream, this basic concern. What we make is the active ingredient, raw material basic chemistry. If outside is already established, unlike Indonesia, "he explained.

Honesti said, to solve the problem of medical equipment and drug mafia in Indonesia, the company which is included in the pharmaceutical BUMN holding company emphasized that it will start to suppress imports of medicinal raw materials in the next 2021. The step taken by state-owned companies is to produce the necessary raw materials for medicines.

The state-owned pharmaceutical company, said Honesti, took the initiative to build its own raw material factory through PT Kimia Farma Tbk (KAEF). Kimia Farma and PT Indofarma Tbk (INAF) are members of the holding under Bio Farma.

Honesti said, with this effort, it is expected that there will be a reduction in dependence on imports by 75 percent next year. This means that it is 15 percent reduced from the current condition of around 90 percent of imports.

However, continued Honesti, this effort not only needs to be carried out by state-owned pharmaceutical companies but also by hundreds of other private pharmaceutical companies. Moreover, considering the number of pharmaceutical manufacturers in the country there are 200 companies. Meanwhile, this state-owned company only controls 7 to 10 percent of the national market share.

In addition, said Honesti, government efforts are also needed to encourage the development of the basic chemical industry in the country to meet the need for pharmaceutical raw materials.

Honesti explained that his party had made a roadmap or road map regarding this matter. He said the government needed to motivate the basic chemical industry to start thinking about pharmaceutical raw materials.

BUMN Not Involved

Regarding the mafia for medical equipment and medicine procurement, Honesti believes that pharmaceutical SOEs will not act as a mafia for medical devices and medicines, because they have an agent of development function.

As an example of masks, said Honesti, the only company that still keeps the price of masks at the same price is Kimia Farma, and their purchases have restrictions.

Until the end of March, he continued, Kimia Farma was still selling masks at a price of IDR 2,000 per sheet. Maintaining prices is an effort so that people get an adequate supply of masks. However, because his party only acts as a distributor and not a producer, he hopes that there will be supply certainty from the principal.

"We try to make a direct deal with the manufacturer. We are assisted by friends from the Indonesian Embassy in China, India and several countries of origin of high-tech medical equipment," he explained.