Online Retail Trend Reaches Pharmaceuticals
As with almost all other products that are bought and sold in the 21st century, pharmaceuticals are being ordered over the internet and shipped via mail more frequently. It’s a growing trend, but is it viable — or even ethical — enough to become the new way we get our medicine?
In the United States, we hold 45 percent of the global pharmaceutical market, a share valued at almost $446 billion. We spent $425 billion on medicine in 2015, and another $60 billion on domestic research and development that same year. This is not a small industry, and it touches the lives of almost every citizen to some degree.
Because it’s the business of keeping us all alive, the pharmaceutical industry is no stranger to controversy. Studies show that Americans’ opinions of the pharmaceutical industry usually trend toward the unfavorable. While the pharmaceutical industry is considered essential, it is, at its essence, an industry like any other. It provides a valuable service for profit and requires innovation to be successful.
In fact, it’s been changing in the same way that large retailers like Walmart have in recent years, embracing an economy that is now trending toward ecommerce. Believe it or not, mail-order pharmacy has been around for a while. While its popularity wasn’t great back then as most people still elected to go their local pharmacist, the groundwork was there for remote distribution. The difference now is that these companies are setting up online platforms for ordering.
Image source: Biodiversitas
Years ago, the closest thing to an online pharmacy order was something called an EDI, or Electronic Data Interchange. Basically, you would create a document, much like an invoice, convert it to an electronic format, and send it to a supplier — or vice versa — where it would be automatically processed and filled. This was mostly used between pharmacies and suppliers for larger orders, and never offered a level of efficiency that was widely usable by customers.
Now, we can order most things from the comfort of our homes. However, when medicine and people’s health is involved, the issue is less straightforward than it is for clothing or food. Questions regarding the ethics of allowing people to obtain medicine without having to encounter another person face-to-face are of great concern.
The fact does remain that ecommerce improves efficiency for every industry it touches, and pharmaceuticals are likely no different. When the bottom line is getting a product to a consumer as quickly and efficiently as possible, it’s often wise to embrace the way the market moves, as some companies have already discovered.
Online In The Outback
According to Digitalcommerce360, Australian Pharmaceutical Industries Ltd. took prescription orders via phone and fax before 2012. Then, they implemented an ecommerce platform — and everything changed. As Dirk Bellman, API’s applications manager for online systems, said:
“Since rolling out an ecommerce platform late that year, online drug orders have grown and now account for 75 percent of all wholesale orders, which in turn account for 50 percent of sales volume. The ecommerce platform now processes more than 12,000 orders daily, compared with 6,000 a day via EDI or manually in 2012, before implementing the Magento Enterprise platform from Magento Inc. later that year.”
Not only have they gone from a strictly offline system to a mostly online one in five short years, but they’ve doubled their processing capacity. The online system requires less staffing as well, allowing API to shut down an entire call center due to reduced volume and saving money in the processing.
Image source: API (via Logistics Bureau)
Letting customers self-serve is almost always a huge boon for businesses, as it can eliminate an entire section of the customer service they need to provide. It’s much cheaper to maintain and improve a website with a few dedicated customer service individuals than it is to rent and fill an entire call center. Online shopping also reduces the amount of calls placed to the call centers that do remain open. When consumers can see discounts and pricing options as they shop online, there’s less need for them to contact customer support about such things.
API also introduced an app that allows users to scan items in the pharmacy aisle and reorder them directly from their website. This means that you can go on a drugstore run, scan the things you need, and never have to go back because they’re shipped to your home whenever you need them.
It’s a clear victory for API: they’re more profitable and efficient than ever, providing better customer service while spending less on it. Their success mirrors other companies worldwide that have shifted their focus from their physical locations to their online marketplaces. This phenomenon is far from limited to Australia.
In the United States, mail-order pharmaceutical orders rose by 25 percent from 2013-2014, and this will increase as generations that grew up using the Internet move into age demographics where they’re more likely to require multiple prescriptions.
Ethical Ecommerce?
As more medicine is bought and sold online, and consumers have less contact with medical professionals in the process, it will become more important to remain aware of potential mischief. The National Association of Boards of Pharmacy (NABP) is the organization responsible for accrediting all legitimate pharmacies nationwide since 1904, and are responsible for creating the standards and criteria that ensure that you don’t end up with counterfeit medicine from your local drugstore.
In 1999, they created the Verified Internet Pharmacy Practice Sites (VIPPS) program, NABP’s online equivalent. Distributors looking to become accredited must apply, present licenses, and undergo both a business review and an on-site survey. Those that make the cut are added to the VIPPS list of safe pharmacies (which you should reference if you’re thinking about ordering your medicine online).
Many online pharmacies do not meet appropriate safety and quality standards. The NABP has reviewed over 11,500 of them and has found that “96 percent appear to be operating in conflict with pharmacy laws and practice standards.” Additionally, the Center For Safe Internet Pharmacies (CSIP) estimates that 20 new illegal pharmacies appear online every day.
Many of these stores do not require a prescription, which to many might seem like a great shortcut. In reality, this is a huge red flag; not only is there no guarantee that you are getting what you are purchasing, but if you’re buying scheduled drugs like narcotics, you could easily land yourself in legal trouble. This is a serious problem, and the more normalized online pharmacies become, the more opportunities counterfeiters and illegitimate operations will have to sell their questionable wares.
The Future of Physical Pharma
Right now, unless you use the NABP list, it’s difficult to tell which online pharmacies are reputable. As pharmaceutical ecommerce grows, it’s not too farfetched that we might see more widely known corporations getting in on the business. Unsurprisingly, it seems Amazon has been tentatively gathering information and hiring experts in the field. It makes sense, as the retailer is a one-stop shop for most other everyday essentials. You’d be able to submit your prescriptions and just tack them onto other orders, or possibly even subscribe in the vein of Amazon Pantry.
The network of drug distributors is already well-established and highly regulated, so it’ll likely be awhile before a website like Amazon can get you your medicine, but it’s not outside the realm of possibility. When and if that does happen, we might see a large-scale shift in the infrastructure of drug distribution. As older demographics become more tech-savvy, we’ll move to a future where most people prefer to have their medicine delivered when given the option. If this comes to pass, it might mean we’ll see less local pharmacies, and more regional, distribution-style hubs.
Of course, it would also mean enhanced scrutiny and regulation on those retailers selling the pharmaceuticals. It’s hard to imagine the government tolerating an industry where 96 percent of the companies involved don’t meet established criteria. Still, it seems to be the way all things commerce are trending, and if it’s an option for pharmacy, it’ll probably come to pass.
In the end, it’s going to come down to whether the businesses are willing to make the seismic shift in how they operate, and if consumers feel that they can trust online retailers with their health and well-being. The market will follow the demand, and we might see yet another major industry take the leap to ecommerce.
Would you like to see more pharmaceutical companies provide an online option? Do you think it’s viable in the near future?