A Look at New Requirements for Pharmaceutical/Healthcare Companies on Sponsorship

Legal Updates | A Look at New Requirements for Pharmaceutical/Healthcare Companies on Sponsorship

Recent Developments

On 8th November 2016, the Minister of Health issued Regulation No. 58 of 2016 on Sponsorship for Healthcare Professionals ("Regulation 58"), which took effect on 29th November 2016. Regulation 58 is the second regulation of a series of Minister of Health regulations that will be issued to prevent corruption within the Ministry of Health ("MOH"), the first regulation being Minister of Health Regulation No. 14 of 2014 on Control of Gratification in the MOH ("Regulation 14"). On 24th September 2014, the Minister of Health issued Regulation No. HK.02.02/MENKES/306/2014 on Technical Guidelines on Control of Gratification in the MOH, as a follow-up action of the issuance of Regulation 14.

Implication for Pharmaceutical/Healthcare Companies

Under Regulation 58, both givers and receivers must report to the Corruption Eradication Commission (known as Komisi Pemberantasan Korupsi or "KPK") within 30 days after any sponsorship is received. This means that any pharmaceutical/healthcare company that would like to give sponsorship that falls under Regulation 58 to any healthcare professional in Indonesia must make a report to the KPK. This reporting obligation did not exist before the introduction of Regulation 58. However, Regulation 58 only provides administrative sanctions (i.e., verbal warnings, written warnings and/or revocation of licenses) for healthcare professionals who fail to comply with the sponsorship requirements. That is, Regulation 58 is silent on sanctions for givers of the sponsorship who fail to make a report (e.g., pharmaceutical/healthcare companies).

What the Regulation Says

A sponsorship is defined as the provision of support:

in any form of assistance and/or activities;
in order to increase knowledge;
that is undertaken, organised, sponsored by pharmaceutical companies/industry, medical device companies/industry, medical laboratory device companies/industry or other companies/industries; and
that is transparent and accountable (no conflict of interest).

Transparency and accountability are meant to maintain the independence of the receivers, e.g., in giving prescriptions and in recommending the use of the sponsors' products or other products.

Regulation 58 allows sponsorship to be given to:

healthcare professionals (either government employees, non-government employees or individual practices); and
institutions, health service facility organisations and/or professional organisations.

The number of sponsorships granted must be in accordance with the prevailing laws and regulations, or with the unit cost applicable to the relevant givers.

Matters that Should be Considered When Giving/Receiving Sponsorship

Sponsorship given to healthcare professionals must meet the following requirements:

must not intervene with impartiality in providing health services;
must not be in the form of money or something that is similar to money (e.g., checks, demand deposits or bilyet) – except for honorarium for speakers or moderators;
must not be directly given to the individuals (i.e., must be given through the relevant institutions based on an assignment, and the institutions are obliged to announce openly and periodically (at least once a year) the names of the healthcare professionals receiving sponsorship) – except for honorarium for speakers or moderators, or if the healthcare professionals are individual practitioners;
must be in-line with the expertise of the relevant healthcare professionals;
must be transparently given; and
must be accountably and transparently organised.

The table below shows the types of sponsorship that can be granted under Regulation 58:

Moving Forward

Regulation 58 seems to be the next step toward directing more public attention to corruption in the healthcare sector. However, how it will be implemented remains to be seen. Nevertheless, pharmaceutical/healthcare companies should now be cautious when giving sponsorship to healthcare professionals as they are now required to make a report to the KPK.

Hadiputranto, Hadinoto & Partners, Member of Baker & McKenzie International - 23rd december 2016

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)