Why do chemists hate e-pharmacies so much?

23 Jun

Last June, I wrote about the burgeoning online pharmacy business on this blog.

Taking off on a column that I had authored for the Indian Express, I pointed out that while India’s regulation of brick-and-mortar pharmacies (or chemist shops) has been slack, online pharmacies would be held to higher standards. That in the absence of a clear-cut legal pathway for online pharmacies to follow, friction with regulators could not be ruled out. And that these uncertainties would adversely impact e-pharmacies’ ability to raise funds from investors.

At a recent event organised by the Indian Internet Pharmacy Association (IIPA), it became clear that all this and more had come to fruition.

What intrigued me is that the e-pharmacy’s enemy number one appears to be India’s foremost chemist association AIOCD. IIPA members allege that they have had to endure regulatory harassment triggered by complaints from AIOCD members. These complaints have led to police investigations, regulatory raids, and the cancellation of licences of chemist shops supplying Internet pharmacies culminating in the IIPA openly accusing AIOCD members of instigating the administration to launch unnecessary probes against them. And of pressuring those chemists who do supply e-pharmacies to back off.

Readers will recall that the AIOCD had organised a nationwide strike of chemists last year to protest against online drug retail.

Why have chemist shops become the most vociferous opponents of the e-pharmacy model? Why is it not health activists, not politicians, but chemists who are mouthing concerns over patient safety, to nip the model in the bud? The obvious reason seems to be loss of business. The AIOCD has said that it is not just patient safety but the interests of its members that it it seeking to protect.

Risk vs Benefit

But won’t e-pharmacies potentially open up new markets to existing chemists? After all, the former are conduits and don’t hold licenses to hawk drugs. Nor do they wish to. What they offer is access, convenience and discounts. The orders that they receive are fulfilled by chemist shops. Zigy or 1mg cannot function without, not one but several, partner chemists since licences to retail drugs are geography-specific.

However, it is likely that when they weigh both the benefits and the risks, many chemists see the ratio as adverse.

Here are some theories about what could be behind their fears.

One, the probability that e-pharmacies – if successful –  will consolidate demand and channel it to those partners who have the heft to ensure supply on favourable terms thus throwing the smaller ones out of business. Currently, drug retail is hugely fragmented and comprises mom-and-pop stores. Pharmacy chains tried but failed to consolidate it.

Two, that once scaled-up, web platforms will squeeze their vendor-partners for ever greater discounts (or other favourable terms) when currently, chemists get to keep retailer margins on drugs and dole out discounts to patients at their discretion.

Three, that they will end up raising the bar for everyone. IIPA members are showcasing the transparency and traceability of the model for all its worth. Their systems, they claim, are robust enough to spot unethical consumer/partner behaviour (buying/selling drugs without prescription) and can help trace drugs all the way to the end-user in case of a recall. In fact, hitting back against the chemist association, IIPA filed 500 complaints with the Maharashtra Food & Drug Administration against chemist shops that were dispensing drugs without a prescription.

Perhaps chemists are fearful that, if allowed to succeed, e-pharmacies will turn standard-setters – both from a regulatory and customer service point of view.

Of course,  all this is far out into the horizon – online pharmacies still account for a miniscule share of the market. But why wait for the acorn to turn into an oak?

Four, and here I go into the realm of conspiracy theory, it is possible that the advent of an organised industry draws undue attention to those chemists and wholesalers in the supply chain who are running online pharmacies themselves – but without bending over backwards to be compliant – and puts their way of doing business under threat. Could they be fomenting protest by fanning the insecurities of their fraternity?

Note that IIPA members are asking to be regulated.

They want the report of a sub-committee on e-pharmacies set up by the central drugs regulator to spell out norms for e-pharmacies, to be published. They want a separate licence for platforms such as theirs that can be displayed on their homepage. They understand that asking for more regulation is the best way to raise both credibility and barrier-to-entry in one stroke – a time-tested strategy used effectively by the global drug industry.

The final word

It is likely that with sustained pressure on the government, and occasionally relying on the judiciary as Zigy did recently, online pharmacies will finally get what they seek : the unqualified right to operate within the framework of the law. That will be just one battle won. The ultimate arbiter of this model is going to be the patient.

Prima facie, consumers should love e-pharmacies much. But there is that bit about having a valid prescription. Some e-pharmacies want it scanned others come home to pick it up, but you can’t buy without one – at least not from a legit source whom you can hold accountable.

On the other hand, you can buy medicines without a prescription/re-using old prescriptions from the neighbourhood chemist shop getting both convenience and accountability. Is the long-term saving on medicines worth spending the time and energy to visit the doctor more often for prescriptions? Is the brand/drug not easily available? Is access to a reliable chemist an issue? It is answers to these mundane questions that will ultimately drive the legitimate Internet pharmacy business.

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