Analysis of the Online Prescription Drug Market

Introduction

This essay will address the recent trends and developments in the online consumer prescription industry, specifically in the digital market.

Methodology

This essay draws on studies by Doran (2016), Kim (2015) and Southwell et al (2016), which discuss recent trends, issues and challenges in the online consumer prescription industry. This essay also draws on case studies primarily in the United States, which has a robust but troubled prescription industry regulated by the FDA, and other countries with more lax drug and consumer market regulation regimes, such as China and India.

The studies collectively show that the main trends in the online consumer prescription industry are drug affordability, drug approvals, product labelling, misleading advertisements, information asymmetry, incentive misalignment and security issues.

Foremost, the online consumer prescription industry has shown the potential of being a major source of drug affordability for many patients. Many of these online consumer prescription drug companies use generic brand drugs and other copycat drugs, often where the IP and patents owned by major drug companies have expired, to manufacture affordable drugs for the average consumer. This has the effect of increasing competition within the prescription drug industry, and making drug prices more affordable for the average consumer. This is a major development for the healthcare ecosystem on the whole, given that reports suggest that the online consumer prescription drug industry is expected to grow to around 128 billion USD by 2023, more than fourfold of its market valuation of 29 billion USD in 2014.

Secondly, drug approvals have continued to be a major issue in the online consumer prescription industry. The FDA has, to date, maintain a strong regulatory regime for drug trials and drug licensing in the United States. However, as the online consumer prescription industry has grown, the global pharmaceutical market has continued to grow in complexity, outstripping the FDA’s capability in regulating and approving drugs. As a result, many drugs that eventually make it to U.S. consumers are not FDA-approved, and have not been certified for their safety and effectiveness by the FDA, which is dangerous for consumers. One such example is netmeds.com, an online pharmacy business run out of India by Pradeep Dadha, who operates in a regulatory zone that does not receive FDA approval, and is not subject to proper FDA oversight. (Fittler et al, 2018) Despite active consultations with the government, Indian online consumer prescription industry players such as 1mg, PharmEasy and Myra remain unable to secure the appropriate drug approval oversight necessary to be seen as appropriate players in the pharmaceutical industry. This has also been a major issue for these online consumer prescription drug companies, as up to 45 to 50% of their orders are rejected due to poor approval and invalid prescriptions. (Fittler et al, 2018)

Product labelling has also emerged as a major issue in the online consumer perception industry. Several third-party pharmaceutical product suppliers continue to mislabel their products, or do not label them in accordance with internationally recognized standards such as those of the FDA or the EU. Still others provide labels with incorrect expiry dates, ingredients and usage instructions, which may prove harmful or even fatal to the consumer. (Kim, 2015) Even in cases where the drug is legitimate, in an increasingly globalized world, what may be legal in one country may not fulfil the drug regulatory requirements of another country. Hence, product labelling in the online consumer prescription industry still has a long way to go. (Doran, 2016)

Misleading advertising has also been a major issue in the online consumer prescription industry. As the potential for digital marketing to reach and connect with targeted audiences has increased, so too has the potential for the online consumer prescription industry to reach better targeted audiences to position and market their products effectively. (Kim, 2015) However, these advertisements often come with unverified claims as to the clinical potential of their products (such as an X% reduction in hypertension or a Y% rate of success against diabetes), or often come without advisory warnings for patients with existing pre-conditions that may render them unsuitable for the administration of said drug. Still other online consumer prescription companies rely on sensationalist claims, such as sex organ enlargements or infertility cures, as a way to draw in customers, without adequately backing up their advertising claims with scientific evidence. (Doran, 2016) This has led to a rise in risks for consumers within the online consumer prescription industry, as they are no longer able to purchase and consume drugs with the same level of consumer trust as per normal. Digital marketing has also allowed for crowdsourcing of opinions on online consumer prescription products, and for key opinion leaders (such as Dr Oz) to recommend certain products. While the work of such crowdsourced opinions and key opinion leaders may indeed be valuable in democratizing the process of drug approval, the proliferation of these types of reviews has led to a lack of credibility in the public approval process for drugs, with such key opinion leaders and crowdsourced opinions not subject to the rigorous scientific scrutiny of processes by agencies such as the FDA. (Doran, 2016)

Next, information asymmetry has continued to plague the online consumer prescription industry. Many medicines and pharmaceutical products sold online are done so without nationally issued or state issued licenses, and are instead illegitimate businesses posing as legitimate pharmacies. Others use ‘medical specialists’ who are not trained to give diagnoses on clinical conditions. However, the consumer often does not know this when buying medicine online, leading to a serious information asymmetry, where the supplier is able to leverage the information gap between the supplier and consumer to cheat the consumer. To combat this, the FDA has set up an online notification system hotline for consumers to alert the FDA about problematic online retailers in the online consumer prescription industry, and created user-friendly tools for consumers to track the origins of their medicines. The FDA, along with other drug regulatory authorities, is also exploring the use of innovative solutions such as blockchain to increase transparency and information availability along the entire supply chain of the online consumer prescription industry. Finally, the FDA has initiated several programs aimed at encouraging consumers to consult in-person with their doctors before using third-party medications purchased online. These programs are also intended to encourage consumers to only take medicine that has been approved and prescribed by trusted healthcare professionals and healthcare practitioners, as part of a direct-to-consumer (DTC) approach that has been touted as a far safer system for consumers. With over 40,000 active online pharmacies in the U.S., many of which escape U.S. FDA oversight, this challenge of information asymmetry, with its attendant risks to consumers, is likely to proliferate. (Doran, 2016) In addition, only some perpetrators, such as Canada Drugs, were charged with placing patient lives in serious danger, for circulating illegitimate drugs such as those laced with the powerful synthetic opioid drug fentanyl. (Kim, 2015)

Furthermore, incentive misalignment has been rife within the online consumer prescription industry. Players in the online consumer prescription industry, such as generic drug manufacturers and third-party pharmaceutical product providers, are often revenue-maximizing companies with little corporate governance oversight and minimal incentive to ensure that the right products reach the right patients with suitable conditions and medical histories. (Doran, 2016) Furthermore, these companies are often left out of the healthcare ecosystem, with their products poorly integrated into the overall ecosystem. As a result, these players have minimal incentive to provide proper consultations, diagnosis and follow-up appointments for the consumers of their drugs, and therefore do not adhere to traditional healthcare provider incentives, such as a fiduciary duty to care for one’s patient. (Kim, 2015) This misalignment of incentives, where online consumer prescription companies seek to maximize profits rather than serve patients’ core interests, has led to cases of harm against consumers of online consumer prescription products.

Finally, online pharmacies continue to face major security issues. A study by Kuzma et al (2011) showed that many online pharmacies and online consumer prescription drug companies do not invest adequately in security architecture as a means of cutting costs. Nonetheless, they hold vital information about patients, including social security numbers, patient pre-conditions and patient drug purchases. In recent years, this situation has led to major leakages of critical consumer and patient information, which is unacceptable within the framework of the modern U.S. healthcare system.

Conclusion

The online consumer prescription drug industry remains highly suspect, and the issues of drug approvals, product labelling, misleading advertisements, information asymmetry and incentive misalignment continue to ensure that this industry remains under watch by drug regulatory authorities such as the FDA. However, with greater regulation and government oversight, there is a chance that the online consumer prescription drug industry can indeed become a valued player within the overall healthcare ecosystem. More research is therefore needed to better understand this growing player in the overall prescription drug industry, so as to better protect consumers and offer them better value in their drug purchases.

References

Doran, E. (2016). Trouble Spots in Online Direct-to-Consumer Prescription Drug Promotion: Teaching Drug Marketers How to Inform Better or Spin Better?: Comment on” Trouble Spots in Online Direct-to-Consumer Prescription Drug Promotion: A Content Analysis of FDA Warning Letters”. International journal of health policy and management, 5(5), 333.

Fittler, A., Vida, R. G., Káplár, M., & Botz, L. (2018). Consumers Turning to the Internet Pharmacy Market: Cross-Sectional Study on the Frequency and Attitudes of Hungarian Patients Purchasing Medications Online. Journal of medical Internet research, 20(8), e11115.

Kim, H. (2015). Trouble spots in online direct-to-consumer prescription drug promotion: a content analysis of FDA warning letters. International journal of health policy and management, 4(12), 813.

Kuzma, J. (2011). Web vulnerability study of online pharmacy sites. Informatics for Health and Social Care, 36(1), 20-34.

Southwell, B. G., & Rupert, D. J. (2016). Future challenges and opportunities in online prescription drug promotion research: comment on” Trouble spots in online direct-to-consumer prescription drug promotion: a content analysis of FDA warning letters”. International journal of health policy and management, 5(3), 211.