Healthcare & Pharmaceuticals

Overview

In a televised program, Indonesia’s Minister of Health, Budi Gunadi Sadikin, stated that the Ministry of Health is targeting accelerated adoption of Artificial Intelligence (AI), Robotics, and Biotechnology in the healthcare sector. In early May 2025, this initiative received promising momentum when Bill Gates, during his visit to Indonesia, emphasized the urgent need to advance and apply Artificial Intelligence in healthcare. Gates highlighted that AI has significantly contributed to accelerating medical research, enabling breakthroughs in vaccine discovery and the development of modern medical devices.

In terms of health services, AI has also proven effective in expediting the diagnostic process. Gates concluded by reiterating his strong belief that, within the coming decades, AI will play a vital role in eradicating infectious diseases such as polio, measles, and malaria. The push to accelerate AI use and development is not unique to Indonesia. Countries such as the United States and China have made AI adoption and development national priorities, while others—including Brazil and the United Kingdom—have established regulatory and/or software sandboxes dedicated to AI.

At present, Indonesia does not yet have specific legislation governing Artificial Intelligence or AI use in the healthcare sector. As of 8 May 2025, only the European Union has enacted a dedicated legal framework for Artificial Intelligence through the Artificial Intelligence Act (Regulation (EU) 2024/1689 of the European Parliament and of the Council of 13 June 2024).
In general, Artificial Intelligence appears in two forms:

AI embedded as a component within a product (hardware-integrated AI)—for example, AI systems installed in vehicles for autonomous driving.
AI as a standalone product or software, such as facial recognition applications.

Under Article 6 of the Artificial Intelligence Act, specific rules govern high-risk AI systems. Indicators of high-risk AI include:

AI intended for use as a safety component of a product, or AI that constitutes a product’s safety function. These products fall under the categories listed in Annex I of the AI Act, such as Medical Devices and Vehicles. All such products must undergo third-party conformity assessments before being marketed or utilized.
AI systems listed in Annex III of the AI Act. These systems pose significant risks to health, safety, or fundamental rights, or materially influence decision-making outcomes. Examples include AI used in safety functions related to critical infrastructure management and operation, such as road traffic, water supply, gas, or electricity.

MARGONO-ISMAWAN & CO LAW FIRM fully supports the Indonesian Government’s plan to accelerate AI adoption and development in the healthcare sector. Nevertheless, we recognize the need for specific regulations governing AI in Indonesia regulations that uphold existing healthcare laws while considering cultural values, ethical norms, and principles of fairness that reflect Indonesia’s identity. The Artificial Intelligence Act summarized above may serve as an early reference for how AI is regulated internationally.

Currently, MARGONO-ISMAWAN & CO LAW FIRM is collaborating with several Hospital Networks, Pharmaceutical Wholesaler Networks, and leading IT companies in Indonesia to develop an Automated Drug Purchasing Software integrated with drug inventory databases, inpatient treatment plans, outpatient visits, and hospital medical records. Powered by AI, the system is designed to analyze medication needs and optimize procurement planning from Pharmaceutical Wholesalers—ultimately preventing unnecessary drug purchases, eliminating mark-ups, and improving hospital profitability. Our lawyers have extensive experience in assisting and resolving disputes within the realm of Healthcare Law. Each of our lawyers holds deep knowledge of the business models and operational structures of entities engaged in the pharmaceutical and healthcare sectors, including Hospitals, Pharmaceutical Wholesalers, and Medical Device Companies. Our lawyers are available for further communication in both Indonesian and English.

We are well-positioned to provide expert legal advice in Healthcare Law, assist in resolving disputes, building collaborations, and crafting comprehensive and strategic solutions tailored to your needs.

Our Services

1. Providing Legal Opinions and advisory services in Healthcare Law.
2. Assisting Clients in the management and operation of Hospitals, including:
  - Licensing and regulatory compliance;
  - Drafting and harmonizing internal regulations such as Hospital By-Laws, Corporate By-Laws, Medical Staff By-Laws, and Collective Labour Agreements (PKB) in accordance with the Company’s Articles of Association and prevailing laws, particularly Minister of Health Decrees;
  - Drafting and reviewing agreements between Hospitals and Insurance Companies, Third Party Administrators (TPA), Pharmaceutical Wholesalers, Medical Device Companies, and Application Service Providers.
  - Resolving disputes relating to hospital services, healthcare professionals, and related matters.
  - Supporting business development for related sectors, such as Private Clinics (KBLI 86105).
3. Assisting Clients engaged in Pharmaceutical Wholesale and Medical Device Distribution in licensing, contract drafting, and contract review.

Experience Highlights

We have assisted Clients who are Limited Liability Companies operating Hospitals and/or trusted Hospital Networks in:
- Drafting Hospital By-Laws, Corporate By-Laws, Medical Staff By-Laws, and Collective Labour Agreements (PKB) in alignment with the Company’s Articles of Association and applicable laws, particularly Minister of Health Decrees.
- Drafting and reviewing contracts between Hospitals and Insurance Companies, Pharmaceutical Wholesalers, Medical Device Companies, and Third Party Administrators (TPA) for health insurance processing.
We have assisted trusted private Hospitals in resolving disputes related to:
- Alleged Medical Malpractice in surgeries involving Incarcerated Hernia and Strangulated Hernia, conditions where herniated tissue becomes trapped and may suffer compromised blood flow leading to tissue death.
- Alleged violations of employment contracts and/or ethical misconduct committed by healthcare professionals.
- Alleged dissemination of false information (hoax) relating to accusations of patient neglect in the Emergency Department.
We also assist Clients in the collaboration and development of Automated Drug Purchasing Software integrated with drug inventory databases, inpatient treatment plans, outpatient visit records, and hospital medical records—powered by AI to analyze medication needs and procurement planning from Pharmaceutical Wholesalers, aimed at preventing unnecessary procurement, avoiding mark-ups, and improving hospital financial performance.