Pharmaceutical Sales Using E-Commerce

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Table of Contents

Introduction
Advantages
Disadvantages
Conclusion
Works Cited

Introduction

Healthcare marketing is a relatively new concept. Considering the fact that it so long to recognize the role of marketing in the field of healthcare, one would have serious doubts when it comes to the use of the Internet in healthcare marketing. Yet, the growing use of the net in healthcare marketing appears to be the living testament to the popularity of the practice. Another major component of e-commerce related to health issues involves online pharmacies.

Consumers are now looking for convenience and cost savings when making a purchase decision. Internet drugstore is a major convenience for the consumer as it lets them shop quickly and easily, day or night. It also allows a consumer easy access to the vast retail drug store market where they can even do a price comparison without driving or calling multiple competing stores. At present, online pharmacies offer a wide array of prescription drugs, over the counter (OTC) drugs, and health and beauty products. (Michael, 122)

A consumer can shop for intimate or personal items and even e-mail a pharmacist for confidential advice or research drug information and disease states, all without loss of confidentiality or leaving the comfort of their home or office. Some online pharmacies also offer value added services such as, reminders when it is time to order refills, discount coupons, price comparisons, health information, and quick refills. The benefits of and concerns related to online pharmacies and healthcare marketing are discussed in brief below.

Advantages

Rapid Information Transfer Capabilities

Before the advent of Internet technology, the dissemination of information and products from one part of the world to another used to take a tremendous amount of time. The primary mode of information transmission and product requests was in the form of printed materials, such as product purchase forms, mailed to the consumer and vice versa. Telex, telephone, and telegraph are also some other forms of information transmissions and delivery but they were not only available to only a select group of people, but also they were quite expensive. (Kanungo, 49)

The same was true for fax. As compared to these Information transmission techniques, Internet is relatively cheap for both the consumer and the marketer. Internet access is readily available in most countries, which are often called developed countries. Rapid advances in the telecommunications technology have in the recent years made Internet accessible to consumers even in the developing and underdeveloped nations.

Borderless Trade

Internet trade can also be called as a borderless trade. The tremendous amount of revenues that are generated by this form of trade is perhaps one of the reasons that it is being called as one of the most effective and efficient forms of commerce. Internet based marketers can easily promote their products to consumers worldwide at a relatively low expense as compared to traditional marketing techniques. With this form of boundary-less marketing, people from different countries can view and order products from companies and suppliers located in different countries. This way, the marketer can expand their customer base and even their market share by attracting international consumers.

However, for some U.S. pharmaceutical companies, foreign-based online pharmacies have affected their sales (and likely the profit margins as well) in the U.S. markets. (Wilkins, 8) Recently, due to the increasing popularity of Canadian online pharmacies among U.S. consumers, which sell U.S. made pharmaceutical products cheaper than the U.S.-based online or retail pharmacies, GlaxoSmithKline Inc. stopped shipping drugs to Canadian wholesales that sold the products to online pharmacies. (Michael, 128)

Enhanced Market Share

Online pharmacies can also benefit significantly by increasing their supply line as they have the potential of purchasing goods from a larger market. This is especially true in areas of herbal and alternative medicine. At present, it seems like online pharmacies can supply only a select group of products, such as OTCs and herbals, to consumers located in foreign countries. This form of trade can give the international consumers easy access to purchase prescription products from anywhere in the world and hence making it a true global market for online pharmacies.

However, online pharmacies should pay great attention to the standards and legal systems of foreign countries where they intend to ship prescription drug products directly to consumers. The FDA recently issued a warning to foreign online pharmacies about illegal sales of Cipro in the U.S. by these companies. (Kanungo, 54) The U.S. federal officials have also worked closely with authorities in foreign countries to shut down some online pharmacies, which were involved in selling prescription drugs to the U.S. consumers. (Breen, 572)

Economic Gains for Consumers

In the past, consumers sought various forms of cost containment methods, such as using a generic substitution or similar products that are available in the formulary of the health service provider of the consumer and are relatively cheap. Online pharmacy services are a new form drug distribution that provides prescription and OTC products to the consumer in a cost effective manner. (Steven, 150) Consumers can gain significant economic gains by having prescriptions transferred to online pharmacies.

Maintenance and Chronic Therapy Management

As healthcare systems evolve, its focus is shifting from strictly controlling cost to improving patient compliance and outcome in a cost-effective manner. Quality of care, value, and accountability are becoming goals of our healthcare system. Maintenance and chronic drug therapy represents the mainstay of online pharmacy business. Patients on this type of therapy require fewer counseling sessions for monitoring their disease state. (Steven, 144) For most patients on maintenance therapy, the convenience of online pharmacies may be persuasion enough.

Value Added Services

Web-based pharmacy services are marketing their ability to save money for the consumers and employers by providing value added incentives such as online libraries that provide information on dosing, side effects, and contraindications. They also have the capability to provide drug and healthcare related information that may not be readily available to pharmacists and consumers via e-mail once the information is obtained.

Disadvantages

There is no doubt that online pharmacies offer a multitude of conveniences over the more traditional pharmacy settings. However, as indicated earlier regarding drug sales to U.S. customers by foreign based online pharmacies (4–6), there is growing concern that this e-commerce formula which often works for selling books online will not work for OTC and prescription drug products. (Shane, 201) There are some downsides to ordering drugs online. A few situations where online pharmacies may not be a good option for the consumer and the pharmacy itself are discussed below.

Potential Health Hazards

Drug interactions, noncompliance, and misuse or abuse are major concerns of industry experts, prescribers, and regulators. Anecdotally, many of these professionals now doubt in the success of this form of sales and distribution for drug related products. The cost of noncompliance is quite significant and even the consequences are quite severe. Based on national statistics, in 1995, in the state of New York only, it was estimated that noncompliance was perhaps the reason for as many as 8600 deaths, 1.4 million lost work-days corresponding to approximately $100 million in income, and also an increase in hospital and nursing home re-admissions. (Michael, 125)

Given the fact that pharmacies have drug profiles on hand, the one-on-one relationship between the pharmacist and patient is critical for ensuring compliance. Online pharmacies may not be able to assist a patient in understanding adverse drug reactions and often lack the ability to discuss a specific drug use or provide suggestions regarding alternative therapy.

Emergency Situations

Online pharmacies can be quite inconvenient for emergency situations such as emergency trauma, serious allergy attacks, sudden asthma attack, immediate use of antibiotic therapy, etc. Under those circumstances, it is highly advisable for the consumer to use the traditional retail pharmacy outlets.

High Product Delivery Costs

There are stiff fees for overnight and next day shipping services, some as much as 15 dollars, in addition to standard freight charges. Although, most services utilize secure encryption for information placed with orders, there is the potential for computer hackers to access the most secure systems. Worse is the fact that most Pharmacy Benefits Managers (PBMs) and/or health insurance providers programs do not as of yet recognize the online pharmacy services for co-payment billing. (Breen, 590)

Consultation Costs

Most of the times when an online pharmacy provides the heavily discounted price to the consumer, they do not tell them what other costs may be associated with the drug purchase from the online pharmacy. It is usually the goal to convince the consumer that the drug’s cost less at the online pharmacy, which truly may be the case. However, there may be ‘‘physician consultation’’ fee associated with the dispensing of the product, which can run the cost of pharmaceutical products up quite rapidly. (Shane, 205) There is also a significant concern regarding the fact that how can a physician who has not seen the patient, but only seen a form filled out by the patient, make an accurate assessment that the patient really needs the product?

Conclusion

The evolutionary changes of the American pharmacy are occurring with an increasingly concerned and cynical public concerned with threats to its privacy. With the arrival of complex and technologically advanced computer systems the public has become more concerned with the impact it will have on maintaining the privacy of personal information, especially the information concerning their health.

People are concerned that errors will be made, information might be sold or misused, and that automation will allow unauthorized to access their personal health records. Some of these concerns may be because people are unaware of the content of their medical records and do not know which information can be used for or against them. It appears that the Internet will provide the platform that will tie together the fragmented healthcare service providers, payers, and patients.

The technology made possible by the net has the potential to establish communication channels among all these parties. By using these channels, the efficiency in the marketplace is bound to improve and raise the level of satisfaction of its participants. The key point is to examine the concerns such as the ones listed above carefully in developing the e-commerce strategy. It is necessary to integrate the health care management practices with new information technologies offered by the Internet. After all, having a successful e-commerce strategy in healthcare marketing requires much more than just going on-line with a website.

Works Cited

Michael Ira, Ph.D. Smith, Albert I. Wertheimer, Jack E. Fincham. Pharmacy And The U.S. Health Care System. Pharmaceutical Products Press, 2005: 120-129.

Kanungo, Rama Prasad, “E-Commerce in the Pharmaceutical Industry: Threshold of Innovation” Management Research News, Vol. 27, No. 8/9, 2004: 49-55.

Breen, Liz; Crawford, Helen. Improving the pharmaceutical supply chain: Assessing the reality of e-quality through e-commerce application in hospital pharmacy. International Journal of Quality & Reliability Management, Volume 22, Number 6, 2005, pp. 572-590(19).

Wilkins Stephen T, Frederick H. Navarro. Has the web really empowered healthcare consumers? Marketing Health Services Fall 2001; 5–10.

Shane P Desselle, David P. Zgarrick. Pharmacy Management. McGraw-Hill Medical, 2004: 198-207.

Steven B. Kayne Pharmacy Business Management. Pharmaceutical Press, 2005: 144-158.

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