Imagine you're on a playground seesaw. On one side, you have exciting innovation, eager to go higher. On the other, you have regulation, making sure no one is harmed. Finding the right balance is crucial. Too many rules can stop new ideas and stifle innovations, but too few can lead to risky, even harmful products, even if they seem good at first.

The rise of regulatory sandboxes

The idea of a "regulatory sandbox" first appeared in the UK in 2015. Think of it as a safe, limited space to play with your new ideas–just like what your kids do in a playground sandbox. It lets innovators test their concepts in a controlled way, allowing regulators to observe and see the potential benefits and risks on a small scale. Initially introduced in the financial technology sector, this concept was first adopted in Indonesia in 2018 by the country’s financial authorities, Otoritas Jasa Keuangan (OJK) and Bank Indonesia.

The Ministry of Health later followed suit in 2023 and implemented its own regulatory sandbox, driven by the massive growth of the digital health ecosystem during the COVID-19 pandemic. This initiative aims to inform the government on necessary policies for new healthcare service models, particularly telehealth. Before that, there were no specific regulations for direct telehealth services, even though telehealth providers had been operating for over ten years in the country.

Unaddressed challenges in digital health sandboxes

Since its start in 2023, our team, with \Think Policy, Instellar, and British Embassy Jakarta, has supported the Ministry of Health in running the regulatory sandbox for 28 digital health innovations with various business models and services, including telehealth, health professional education, medical diagnostics, wellness, and online marketplace. 

Our work has given policymakers important insights and recommendations, including early findings and lessons on using artificial intelligence in healthcare. However, there are still significant challenges in running the digital health innovation sandbox.

1. Limited resources

The Ministry of Health is working to build a stronger regulatory framework for the digital health innovation sandbox. They want to ensure its continuity, expand it to other health technologies, and add other types of sandboxes, namely the innovation labs and industrial sandboxes. But real problems come from limited funding and human resources. With less international funding and government budget cuts, we need new, creative partnerships and ways to get funding. Also, showing the benefits of the program is essential to get support from various stakeholders.

2. Sandbox not designed for systemic oversight

While the regulatory sandbox lets the Ministry of Health observe newly emerging innovations, it's not designed to provide systemic oversight of all digital health innovations used by the public. Each year, only a small number of participants can join the sandbox, usually those with relatively more developed business models. These selected participants go through a series of tests and mentorship to receive feedback and recommendations from the regulator. However, many digital health innovations outside the sandbox continue to operate with little oversight, which could pose risks to the public.

Furthermore, even innovations that have completed the regulatory sandbox might change how they operate, affecting service quality and public safety. Therefore, a structured and sustainable mechanism for oversight and guidance beyond the regulatory sandbox is crucial to ensure the quality of digital health innovations.

3. Lack of public awareness

Unlike regulatory sandbox programs in many other countries, which often just observe without making definitive judgments, Indonesia’s digital health innovation sandbox takes a more decisive approach. After completing the series of tests, participating innovations get either a "recommended" or "not recommended" status.

This clear evaluative judgment is specifically designed to help the public, guiding them toward safer and better quality digital health services that have gone through a series of assessments. Unfortunately, despite this important goal, the public knows very little about the regulatory sandbox process itself and the government’s valuable recommendations for tested innovations.

Toward a stronger future

To make the regulatory sandbox process stronger and ensure it continues, here are some suggestions:

1. Get investors involved

The regulatory sandbox should help connect digital health innovators with potential investors. The testing process within the sandbox can help investors find promising innovations, especially with government recommendations. Investors can also provide various types of funding to help the regulatory sandbox keep running.

2. Establish a separate structured framework for registration, licensing, and oversight

We need a more organized, complete, and reliable system for registering and overseeing digital health innovations, similar to what OJK does for financial technology. To avoid overcomplicated bureaucracy and ensure efficient use of resources, the Ministry of Health could work with the Ministry of Communication and Digital Affairs to set up administrative requirements for registering and licensing electronic system providers (PSEs) in the health sector and create a special oversight system for health PSEs. The government can also provide a way for people to complain about digital health innovations, as a means for public oversight and participation.

3. Increase public awareness of recommended digital health innovations

Just as the "healthy choice" label on packaged foods from the Indonesian Food and Drug Authority (BPOM) helps consumers choose what to eat, a similar level of transparency is needed for digital health innovations. The public must know which digital health solutions have passed the regulatory sandbox process and are recommended by the government. It's vital for the government to actively share information about innovations that have received their official support. This will tell users that these services are safer and quality-assured, building much-needed trust in the complex and changing digital health landscape.

Do these insights into the challenges and recommendations for Indonesia's digital health regulatory sandbox spark any further questions for you? 

Contact us at contact@amana.id