Corporate Bulletin – June 2023
The Future of Healthcare Innovation – Overview of the Regulatory Sandbox
Digital healthcare innovation in Indonesia is growing rapidly in the past years. In 2022 alone it is estimated that approximately 18 million health consultation activities were carried out through telemedicine companies.
The development of formal laws and regulations is far behind the rapid growth of the digital healthcare innovation sector while the respective regulator e.g., Ministry of Health must remains resilient to supervise and accommodate the growth. For completeness, to date, the bill of the new Law of Health remain being discussed and no expectation of enactment in the near future.
On 4 April 2023, the Minister of Health enacted the Decree No. HK.01.07/MENKES/1280/2023 (“Decree 1280/2023”) which provides a regulatory sandbox expected to accommodate the digital healthcare innovation development in Indonesia.
Similar to the sandbox in other sectors such as financial technology, the regulatory sandbox for digital healthcare under the Decree 1280/2023 is designed to be a safe trial space to showcase capabilities of the innovation to the potential investors and public, test the protection of privacy of personal (including medical) data, and provision of feedbacks from publics and regulators (including advocacy support).
Download Decree 1280/2023.
Participants of the Regulatory Sandbox
Decree 1280/2023 requires the following healthcare innovation businesses to participate within the regulatory sandbox:
- Non individual business operators as governed by the integrated licensing system;
- Performs the business activities on wide nation basis or the business has been conducted in at least 2 provinces; and
- Innovation could lead to complexity from both perspectives of technology and utilization.
Certainly, it must be noted that the registration to participate in the regulatory sandbox requires submission of legal and technical details of the business. However, the Ministry of Health also includes the requirement for all parties (the Ministry of Health and the respective operator) to sign a non-disclosure agreement to protect the proprietary information.
Clusters of Participants of the Regulatory Sandbox
Decree 1280/2023 establishes the tier of priority clusters and potential clusters summarized as below:
Priority clusters
- Telemedicine cluster – includes remote health services using digital technology to allow information exchange such as diagnoses, cure and prevention of disease, research result, governance. This cluster includes sub-clusters of public telemedicine and inter-healthcare facilities telemedicine.
- Pharmaceutical services and medical equipment providers cluster – includes disruptive innovation in the sectors of pharmaceutical and medical equipment. This cluster covers any application or information system on an online basis in the form of online medicine delivery, electronic prescriptions and other similar services.
- Medical marketplace cluster – includes disruptive innovation in relation to the online transaction of medical services and on-demand medical services. This cluster covers the marketplace of homecare services and medical evacuation, self-screening and testing, and transaction data of health services.
Potential clusters
- Artificial intelligence cluster
- Medical education cluster
- Health management cluster
- Genomic cluster
- Blockchain cluster
Brief Overview of the Sandbox Process
It appears that the Decree 1280/2023 prescribes formal conclusion of the reviews within the regulatory sandbox. Conclusion could be a recommendation or non-recommendation based on the trial result (UAT is expected to be completed).
The recommendation would then be followed by the guidance and socialization which will lead to either extension of recommendation or revocation of the recommendation. Regular overview may be undertaken by the Ministry of Health as the Decree 1280/2023 suggests that the healthcare innovation operators must disclose the plans post the completion of the regulatory sandbox.
Mapping of the sandbox process is described in the flowchart below.
Image taken from (https://pro.hukumonline.com/a/lt645b6aebd5af9/achieving-advanced-technology-based-healthcare-services-through-the-regulatory-sandbox-for-digital-healthcare-innovation).
Closing Note
In conclusion, the Decree 1280/2023, the bill of Law of Health, E-health Strategy Regulation[1], and the Regulation on the Strategic Plan of the Ministry of Health[2] showcase proactive attempts by the Indonesian government to accommodate the growth of the digital healthcare innovation sector in Indonesia while ensuring sufficient protection of the public interest.
As legal practitioners in Indonesia, we do look forward towards future regulatory developments and guidance from the regulatory authorities.
[1] Regulation of the Minister of Health No. 46 of 2017.
[2] Regulation of the Minister of Health No. 21 of 2020 as lastly amended by the Regulation of the Minister of Health No. 13 of 2022.
Download PDF version here.
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