Chain gang

Good Distribution Practice in rural Indonesia. Photo: Elizabeth Pisani

Getting medicines to patients across Indonesia’s 13,000 islands: what could possibly go wrong?

Medicine supply chains are more of a tangled web at the best of times. In Indonesia, with its 13,000+ islands scattered across three time zones, more so than most. Add to that a complex mix of pharma regulations designed to apply uniformly across one of the most diverse countries on earth; a rapidly-expanding but underfunded national health insurance system; and a fiercely competitive medicine market with hundreds of producers and thousands of small distributors. What could possibly go wrong?

This was the implicit question behind our recent research into incentives in the medicine supply chain in Indonesia (pdf). It built on an earlier, but recently-published study, led by Amalia Hasnida, which looked at the factors that create markets for low quality and fake medicines in Indonesia. We interviewed distributors, medicine company sales staff, procurement officials, doctors, midwives and pharmacists, in shops as well as hospitals and primary care centres, in two quite different areas of Indonesia. Relmbuss Biljers Fanda talked to people in the remote eastern Indonesian district of Timor Tengah Selatan, only a stone’s throw from the north coast of Australia. Aksari Dewi, meanwhile, interviewed people in Malang district, in the heartland of Indonesia’s most populous island, Java. (Both also collected information on sales prices, both directly from supply chain actors, and through mystery shopper surveys).

The market dynamics were actually quite similar in both areas — the nature of business is that more or less anyone in a for-profit enterprise will try to maximise those profits by keeping spending and other costs low, while selling at the highest prices the client will bear. Similar market regulations, on the other hand, impact different areas rather differently. For example, rules that restrict who can buy and sell medicines are designed to protect patients from medicines that might have been handled improperly and thus be degraded, or even fake. But in remote areas, enforcing those rules would effectively mean that patients have no access to any medicines at all. So the rules get bent, often for very good reasons.

If the profits from expensive products sold to rich patients subsidise cheaper quality-assured medicines for poor patients, great. If they only subsidise private jets for pharma shareholders, not great.

It’s hard to reduce something as complex as the medicine supply chain to a few bullet points. But if we had to, we’d note the following key lessons from the research:

  • Regulators protect product quality, while manuacturers, distributors, pharmacists and many hospitals and health care providers protect profits. If a rule meant to protect quality eats into profits, the market will probably find a work-around.
  • The price charged by one actor in the supply chain obviously affects the profits made by the next link in the chain. Where the loss-avoiding incentives of Actor 1 (say, a producer) enhance the profit-making incentives of Actor 2 (perhaps a distributor), the product will fly through the supply chain, whatever its quality. A great pathway for substandard medicines. If the two are in conflict, the more likely result is shortages. A market opportunity for fakes.
  • In a diverse country, rules must be applied flexibly. In under-resourced areas, sticking too closely to the rules can reduce patients’ access to any medicine at all.
  • Prices for similar products vary hugely. That’s not a problem, as long as poorer patients can afford the medicines they need. If the profits from expensive products sold to rich patients subsidise the production of cheaper quality-assured products for poor patients, great. If they only subsidise private jets for shareholders of pharma companies, not great — it means the cheaper drugs may well be substandard.
  • Institutional incentives are also important in shaping behaviour in medicine supply chains in Indonesia, especially in the public sector. Sometimes, well-intentioned efforts to curb corruption or increase oversight makes civil servants and others risk-averse in ways that leave patients without medicine.

If you’re interested in what we think this means for policy-makers, please read the full report. We’re keen to hear your thoughts, especially on how similar or different the dynamics are in other countries.

We thank the Global Health Supply Chain Summit for funding the bulk of this research. Thanks are also due to Australia’s Australia’s National Health and Medical Research Council/The George Institute for Global Health, which supported Aksari Dewi, and USP Quality Institute, which supported Amalia Hasnida.

This report is a first draft; we aim to finalise it after getting feedback from a number of supply chain actors in Indonesia. An Indonesian language version will be available soon. Terima kasih atas kesabaranya.

Political persuasion: data alone won’t do the job. So come help us do better.

Tertarik tentang ekonomi dan politik kesehatan? Mau interaksi dengan pejabat, pengusaha, toko politik? Ayo, megabung dengan tim peneliti kami, untuk membangun koalisi yang peduli mutu obat di Indonesia.

For all the endless talk of “evidence-based policy” and “listening to the scientists”, we know that data presented by researchers doesn’t lead directly to political action. Different interests (poltical, economic, societal, cultural) have to be taken into account in setting research questions, and when collecting and interpreting data, if the research is to lead to action. So you really need to involve those different interests right from the start of your research. If you “get” that, and you are Indonesian, interested in the politics of public health and, especially, the quality of the medicines Indonesian patients take; if you also have great social skills and the patience to work with multiple government agencies, please consider joining our research team.

Job decription: Policy Engagement Manager for Medicine Quality Estimates Study

You’ll be employed by Univeristas Pancasila, Jakarta, and working with an interntational research coalition that includes Imperial College London and Erasmus University Rotterdam. You’ll work 70% (about 4 days a week). You speak fluent Indonesian, and good English. Start date: immediate. Appply by February 15, 2021


Protecting society from poor quality medicines is a formidable task for national medicine regulatory authorities, especially in a resource-limited setting such as in Indonesia. Indeed, there are no globally recognised methods for estimating the prevalence of substandard and falsified medicines in a country, or for assessing their impact on health or the economy. Although post-market surveillance is a routine activity for medicine regulators, even this is done differently in different countries. With support from the UK government’s National Institute for Health Research, the Faculty of Pharmacy at Universitas Pancasila (UP) will collaborate with Imperial College London and Erasmus School of Health Policy and Management (ESHPM) to pilot a sentinel surveillance system for medicine quality, and to develop methods for estimating the prevalence, health and economic impact of poor quality medicines.

The concept arose from earlier research into the factors that incentivise the production, trade or consumption of falsified or substandard medicines. While the medicine regulator bears primary responsibility for assuring quality, this work reveals that many other institutions, actors, regulations and practices also have a profound effect on shaping risk. Understanding which medicines are most likely to be of poor quality thus involves the collection of secondary data from a large number of public and private sources, a process which involves active engagement with a number of institutions.

Over the next three years, we plan to work actively to develop, maintain and/or expand engagement with other institutions whose decisions and behaviour shape the quality of medicines. We believe their early involvement will contribute to policy-relevant analyses, improve research uptake and improve inter-actor communication in the ongoing effort to ensure that Indonesian patients are not exposed to fake or substandard medicines. We hope that they will contribute data, interpretation, policy suggestions and methodological improvements to our work.

Working with key governmental partners under the guidance, for example, of the Coordination Ministry for People’s Welfare, we will invite participation in a high-level consultative group known as the PokJa Estimasi Mutu Obat or PEMO [Working Group on Medicine Quality Estimates] Under the consultative group will be three Technical Working Groups, comprising the prevalence, health, and economic impact estimates working groups. The PEMO will include representation from institutions whose decisions and actions shape the quality of medicine in Indonesia; several of these are listed below. Membership of Technical Working Groups (TWGs) will bring together sub-sets of institutions with more specialised expertise. Ad-hoc members may also be called to contribute knowledge and experience as needed. The research team, including the Senior Policy Advisor, has existing relationships with some, but not all, of the institutions we hope to involve.

We seek to appoint a Policy Engagement Manager to guide and administer the establishment and functioning of the PEMO and technical working groups, to establish and maintain relationships with members, to provide technical inputs, and to help integrate PEMO advice into the programme of research.

Scope of work

The selected candidate is expected to provide the following work:

  • In consultation with the research group’s Senior Policy Advisors, develop a strategy in approaching and engaging the PEMO members
  • Develop communication materials to introduce the study to potential PEMO members including expected support from each stakeholder
  • Maintain relationship with PEMO members and the key opinion leaders from PEMO member institutions throughout the study, including disseminating study progress
  • With the support from the policy assistant, undertake administration (e.g. formal letters, invitation letters) necessary for effective engagement with government and other institutions
  • Develop and maintain a systematic monitoring tool (in Excel spreadsheet) to monitor interactions and communication with all the PEMO members, engagement milestones, and actions plans relevant to each of the interactions
  • Provide a short monthly engagement report for internal use, and participate in a monthly meeting with the research team to monitor and review the PEMO process
  • From the research team, gather and organise data and other material needed for PEMO/TWG meetings; prepare briefing summaries ahead of meetings
  • With logistics support from the policy assistant, plan, manage, and attend all of the PEMO/TWG meetings, and provide a written summary from each meeting
  • Work closely with policy researcher to systematically collect or gather relevant information for policy learning e.g. meeting minutes, internal working group memo, other technical documents

Eligibility criteria

  • Master degree, preferably in Public Health/Health Policy/Public Policy/Health Administration/Pharmacy or other related fields, or equivalent experience
  • Familiar with the roles and responsibilities and political dynamics of actors that influence the Indonesian health system in general – and especially pharmaceutical markets – is an asset
  • At least 5 years experience in working in the area of health policy or policy engagement, and with a broad network in Indonesian health sector
  • Proven record of interaction with senior figures in government or business
  • An active listener and communicator, with excellent people skills
  • Has good management skills
  • Good command of English

For interested candidates, please send your CV and cover letter to:, cc: no later than 15 February 2021.

Join the MedsWatch crowd

We’re looking for researchers to join the team in Indonesia and the UK

“Substandard and falsified medicines are a growing problem….” Most reports on the subject start with something like that, before going on to tell us that fake and crap medicines damage health, waste money, and undermine confidence in health systems. But ARE they a growing problem? We actually don’t know, because no-one has been measuring medicine quality in a systematic way over time. DO they damage health and waste money? Yes, obviously, but how much, we’ve no idea, because no-one has been measuring or even estimating impact systematically at a national level .

We’re going to try to do exactly those things, in Indonesia, and we’re looking for people to help us, in Indonesia and the UK. The work on prevalence of poor quality medicines will be based in Indonesia; it will be led by Universitas Pancasila, under Yusi Anggriani and Elizabeth Pisani. Though the health and economic impact measures will be applied to Indonesian data in collaboration with institutional partners in Indonesia, methods development for these parts of the work will be based at Imperial College in the UK, and will be led by Kalipso Chalkidou and Adrian Gheorghe. Imperial is already hiring a research assistant for a London-based post; at UP, in Jakarta, we’ll be hiring research assistants, data managers, engagement managers and others in September.

For administrative reasons, the Imperial job description is quite generic. To give a bit more background, here’s what we’ll be trying to do over the course of what we expect to be a three year project:

  1. Bring together data from a wide variety of instructional sources relevant to medicines available to Indonesian patients  (data regarding procurement, market, regulation, reimbursement, trade etc.)
  2. Analyse the data using a flagging system which helps indicate which products are most at risk of being falsified or substandard, and develop a sentinel surveillance framework.
  3. Conduct sentinel surveillance of medicines in 9 districts across Indonesia, and test the selected medicines to ascertain their quality.
  4. Combine the results with market and other data to develop national estimates of the prevalence of substandard and falsified medicines.
  5. Combine the results with reimbursement, burden of disease and other data to develop national estimates the health impact of substandard and falsified medicines.
  6. Combine the results with market, procurement and other data to develop national estimates the economic impact of substandard and falsified medicines.

Throughout this work, we’ll be working in consultation with the national medicine regulator and people from Indonesian institutions and companies with an influence on policies that affect the quality of medicines. We also hope to engage with the World Health Organization Member State Mechanism on falsified and substandard medical products, which is currently working to improve risk-based post market surveillance for poor quality medicines.

If you have good quantitative data skills, are not afraid of hard work, and are interested in medicine quality, public health surveillance, incentives in pharma procurement and/or the political economy of decision-making in health, we want to hear from you. If you speak Indonesian and have any inside knowledge of the pharma industry or medicine markets, and/or know your way around public procurement/ JKN policies and BPJS data, we are even more keen hear from you (including if you are based in the UK). You won’t get rich working with us, but you will get to work (hard!) with a bunch of curious people from different backgrounds who try to keep research grounded and useful, and who believe that learning new stuff should be fun.

Disclaimer: The information provided in this note is entirely informal, and aims only to try to make sure that the people who are likely to be most interested by the work know about it. It has no binding influence on Imperial’s recruitment process. To apply for the Imperial research assistant post, please take note of the requirements in the formal job ad, including full pdf job description. These over-ride the extra information given in this note. The deadline for applications is August 13th. End of disclaimer.

Untuk yang di Indonesia: kalau tertarik gabung sama tim kami di Universitas Pancasila (mulai September/Oktober 2020), tolong hubungi dengan CV. Nanti, kalau jobdes yang resmi sudah keluar, kami akan kontak kembali.

Quality-by-association? The knock-on effect of sloppy regulation in rich countries

With COVID-19 diagnostics, “stringent regulatory authorities” are anything but stringent. Opportunistic companies (and DJs) profit, while poorer countries are hoodwinked.

School children are not generally allowed to grade their own homework, for fear that they’d give themselves a 10 for work that really only rates a 4. In the US and Europe, however, makers of COVID test kits can give themselves any grades they like: tests are being waived through on a self-certified basis.

That’s obviously potentially dangerous for patients, because sometimes the tests aren’t really up to scratch. A case in point is the rapid antibody tests made by Chinese company Hangzhou Alltest Biotech Co Ltd. While they claim that the tests are 92.9% accurate for early-developing markers, and 98.6% for later antibody markers, a careful validation in a clinical setting in Spain (yet to be peer reviewed), showed that the test was very good at spotting uninfected people – it gave no false positive results. But it was only able to correctly identify infected people around 47% of the time two weeks after onset of symptoms, though the proportion did climb further after about a month. And there’s no information at all about how the test performed among people who never had symptomatic infection – the very people we’d need to identify if we were testing to selectively release people with some immunity from lockdown. Oxford University, which tried to validate the Hangzhou Alltest test kits among others, said that none of the rapid diagnostic kits they tested was good enough to use widely. No surprise, then, that both Spain and the UK sent back test kits they had bought from Hangzhou Alltest and other Chinese manufacturers.

Find it hard to believe that companies get to just self-declare the accuracy of their tests? Actually, it’s worse than that. European and American distributors can buy tests made by other companies in other countries — China, say, or India — rebrand them to look like they were made in Europe or the US, and then send them through the system based on declarations about effectiveness made by the original manufacturers, even giving themselves the coveted “CE” mark of quality, without anyone ever checking whether the tests work or not. Some do this enthusiastically, because they know that masking the product’s origins — and making it look like it comes from a country with a strong regulator — works really well as a marketing ploy, both at home and in export markets.

A particularly enthusiastic rebrander is Dutch company Inzek International Trading, which sells tests under the brand Biozek. Its website declares “Biozek medical is a Netherlands based manufacturer with wide ranges of IVD products…” What it does not say is “…which we buy from Chinese companies, rebrand, and re-sell to other countries, encouraging them to believe that these products have been validated by European regulators”. But, as this great piece of investigative journalism from OCCRP reveals , that’s exactly what they do.

The trick works brilliantly. Biozek is reported to have sold 1.5 million COVID-19 test kits to over 20 countries. These include Indonesia, where state-owned pharmacy giant Kimia Farma has bought 300,000 repackaged Hangzhou Alltest kits. In the Indonesian media, Biozek staff and their local distributors were absolutely brazen in puffing out smoke and flashing mirrors to create an illusion of “European-made” quality. In a press release, Biozek’s Mustafa Hamid lied said “The test was developed and produced under the regulations of the EU and the Netherlands, which are very tight.” Meanwhile, the distributor in Indonesia, Erro Verschoor of MACH-E, had the gall to accuse other manufacturers of taking advantage of the current crisis. “We’ve seen many tests, even certified ones, go to market and then fail to meet regulated standards. In the end those products get sent back, or their use is prohibited in Europe. We’ve noticed that many governments and organisations don’t want to take the risk, so in the end they decide to collaborate with us to buy our test kits.”

In my school days, that would have been referred to as “bare-faced cheek”, though these days my choice of words might be stronger. Not least because it does seem that Biozek went to considerable lengths create the illusion that the tests they were selling to Indonesia were European made. According to OCCRP:

Andi Prazos, a director at Indonesia’s Kimia Farma, said the state company had been convinced the tests were Dutch made. Kimia staff were even given a tour of Inzek’s production facility in the Netherlands before placing their order, he said.

Other savvy marketers have been playing the same game on a smaller scale. According to the UK’s Sun newspaper (not one I regularly quote, I admit) London-based DJ Enay has been pimping Biozek products through social media channels, using the fantasy European badge of quality.  

I leave you with the Sun’s screenshot of the DJ’s promotional Snapchat, and the deliciously ironic possibility that the low accuracy “mentioned by the Spanish government” actually refers to the very kits that he is flogging.

DJ Enay's Snapchat ad for COVID tests

Indonesia, USA: medicine pricing causes common headaches

The US and Indonesia are very different, but medicine reimbursement policies in both countries sometimes encourage pharmacies to limit stocks of cheaper drugs

As COVID-related news, research reports, papers, blog-posts and general pontification flood across my desk, I’ve been trying to fish out the bits most likely to signal existing or up-coming assaults on the quality of medicines. And one of the things I find most interesting is that the same risk-indicator fish seem to be swimming in very different bodies of water.

One example: reimbursement policies that incentivise legitimate pharmacies not to dispense the most affordable medicines, thus potentially sending patients to dodgier outlets where they are more likely to get fake medicines.

We see this in both the US and Indonesia, even though the two countries differ on virtually every health-care related measure. The US, one of the richest countries in the world, accepts that it’s fine to allow tens of millions of citizens to live without health insurance. Those that are insured have to choose between thousands of different private plans, each with different reimbursement policies. Meanwhile, lower-middle income Indonesia (which comes right after the US in population size, with close to 300 million citizens) has been working to provide at least basic health care to the whole population through one, mighty, national insurance system. The purchasing power that that confers has allowed Indonesia to do much more to bring down the price of medicine in the public sector (to the point where some medicines are arguably dangerously cheap). The fragmented US market seems to accept that, in general, medicine manufacturers should be allowed to charge whatever they can get away with; insurers and patients then decide what they can afford.

This very interesting analysis of variation in reimbursement rates in the US, from 3Axis Advisors [full report available at link], highlights the amazing range that insurance plans are willing to pay for the same medicine. For the same dose of generic azithromycin, for example, some insurers pay as little as US$0.11 while others pay $3.53 — over 30 times as much, for a product that consistently cost pharmacies between 53 and 69 cents to buy (HT @EdSilverman via Pharmalot).

A fair bit of the time, the reimbursement rate is less than the pharmacy paid for the medicine. Pharmacists may make up the loss with cross-subsidisation from other insurers (recouping the underpayment of the 11 cent insurers with cash sloshed their way by the three-dollar plans) or from other medicines. But where reimbursement is consistently below cost price, pharmacies don’t have much of an incentive to stock a medicine. And, as 3Axis observed (and we noted in our earlier blog post about the effect of COVID on medicine quality) the pandemic will likely exacerbate the problem, because producers will push up the price of medicines more quickly than payers will raise their reimbursement rates, making it even more unprofitable to dispense those meds.

The effect of this may be to push pharmacies to simply “short” the medicines which cost them money to dispense, offering patients instead the medicines they make money on. “Sorry, we’ve no generic azithromycin in stock, but I can offer you Zithromax, for cash…”

This is a dynamic we also see in Indonesia (though it will only apply to the handful of medicines which are reimbursed). The net effect of pushing patients towards out of pocket payment for more expensive medicines is to push them to buy medicines online, or in other unregulated outlets. That makes them easier prey for falsifiers.

In their blog post summarising the research, 3Axis listed some of the ways in which COVID-19 will push up the prices of generic medicines:

(Sound familiar?)

But nowhere do they address the question of reasonable or fair prices for generics, or any other kinds of medicines. The list price to pharmacies of 250mg azithromycin in the Indonesian market ranged from 29 US cents to two dollars in 2019 (compared with the 53-69 cent range actually paid by US pharmacies, according to 3Axis). The public procurement price for a pill with twice as much active ingredient (500 mg) was half as much — just 1778 rupiah, or 11 cents. Yet in the Indonesian market, Pfizer’s Zithromax 500mg sold to pharmacies at US$4.00 a pill — close to 40 times the public procurement price, and about the same as the “regular” cash price in the US, after applying the 90+ percent discount from the list price, according to the price comparison site Good Rx. But just take a look at the list price for something Good Rx describes as “an inexpensive drug” — US$ 434.65 for a product that the Indonesian government buys for 66 cents.

That’s an insane difference, and one that threatens quality from both sides. The Indonesian price is probably too cheap — it’s really hard to make and distribute a good quality antibiotic for 11 cents, even when you’re guaranteed a really big market. (New Zealand, which is notoriously good at driving a hard bargain for quality-assured medicines, pays 28 US cents for the same product.) But pricing medicines too high attracts falsifiers (who think just like pharma companies: why sell something cheap when you could sell the same thing more expensively?) And it drives patients who can’t afford the regular pharmacy list price into unregulated on-line stores, where everything is negotiable.

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