Online pharmacy is what the doctor ordered

The deadly second wave of the Covid-19 pandemic has not only shattered India’s health care system, but there is also widespread black-market marketing of drugs and equipment in demand. It is hoped that the ongoing pharmaceutical market research conducted by the Competition Commission of India (ITC) will lead to recommendations that can correct unfair trade practices that harm consumers.

Market research by competition authorities is often carried out to gain an overview of the industry so that the authority can handle micro-issues more competently. Recently, the CCI has also relied more on market studies to better understand the dynamism of a given market or sector. In addition to the ongoing study on the pharmaceutical sector, CCI has recently conducted such studies in the telecommunications sector, digital market and e-commerce.

Priority sector

The health sector, including pharmaceuticals, is high on the agenda of governments around the world, including India, resulting in a massive increase in budget allocation for ‘health and good’. -to be”. In addition, competition authorities are also doing their best to improve access to healthcare and other essentials around the world. It was also the theme of World Competition Day on December 5, 2020.

The pandemic has dramatically changed the behavior of the market. Not only are consumers and physicians now embracing virtual consultation, the online sale and purchase of pharmaceuticals has increased dramatically. According to a FICCI white paper, the number of households using e-pharmacy services has climbed two and a half times during last year’s lockdown period (to around 8.8 million). The newspaper indicates that 70 percent of consumers are satisfied with e-pharmacy services. Likewise, in-person consultations with doctors have been cut in half. The second wave of the pandemic further accelerated this phenomenon.

Essential service

It’s no wonder that the e-pharmacy was declared an essential service to be fully operational, even during last year’s strict lockdown period. Electronic pharmacy is also one of the six building blocks of the national flagship mission for digital health, announced by Prime Minister Narendra Modi during his Independence Day speech. As e-pharmacy is called upon to play an important role in our daily life, the entire ecosystem must be nurtured, in particular among acquired groups whose control over the sector is shrinking due to this digital disruption.

Professional associations, such as the Pan-Indian Organization of Chemists and Drug Stores (AIOCD) and its sub-national subsidiaries, exercise significant control over the pharmaceutical supply and distribution chain, which often has anti-competitive effects. These associations seem determined to stop the digitalization of the supply chain by e-pharmacies, including through frivolous lawsuits and by directly influencing the powers that be. The CCI and its predecessor, the MRTP Commission, have repeatedly spoken out against the anti-competitive practices of these associations.

Competition concerns in the retail segment are one of the areas of interest for ICC’s pharmaceutical industry market research, as well as understanding the effects of competition due to the prevalence of brand name generics. , entry barriers for biosimilars, etc. The market research will also empirically examine the competition issues identified in ICC’s 2018 policy note, “ Making Markets Work for Affordable Health Care. ”

According to this policy note, e-pharmacy can provide transparency and stimulate price competition between platforms as well as between retailers. It also improves consumer choice by providing a list of equivalent drugs. In addition, the ease of supply chain tracking in the online setup also reduces the risk of counterfeit drugs, drug abuse and self-medication, as well as black marketing. The note therefore called for a level playing field between the offline market and the online market. He advocated optimal regulation of the online market by maintaining the distinction between a pure market model and an inventory-based electronic pharmacy model.

The draft rules for e-pharmacies, in limbo since 2018, could be inspired by the Policy Note as part of the definition of (diversified) economic models for e-pharmacies.

Access question

The CCI Note also pronounces against any territorial limitation of the sales area of ​​e-pharmacies put in place by any regulation. It says, “[T]The rules may allow e-pharmacies to serve the whole country. This will help solve the problem of distributing drugs throughout the country. Digitization and information technology can play a revolutionary role in reducing the information asymmetry that historically prevails in healthcare markets around the world, especially in India.

It is hoped that the ICC market research will have the same zeal while examining electronic pharmacies and identifying regulatory and non-regulatory obstacles in its path of expansion, including those posed by AIOCD.

Frivolous litigation

The ICC is aware of the anti-competitive effects due to the self-regulated supply chain of medicines by professional associations, which include the existence of high trade margins.

However, it can also take note of frivolous disputes initiated by such vested interests. In the case of biosimilars, the ICC has already seen and dealt with frivolous litigation.

Drug prices are essential for accessing health care due to very high personal expenses.

According to one estimate, if ₹ 100 is the total health expenditure, ₹ 74 is spent in the consumer’s pocket, of which ₹ 50 is spent on pharmaceuticals.

Thus, e-pharmacy is the key to offering the best prices to consumers, by shortening the supply chain, freeing it from the control of trade associations, offering cost-effective choices and strengthening retail competition. Safe home delivery is a bonus.

However, ICC can also apply the lessons of its e-commerce market research and see if similar competition concerns exist in the e-pharmacy segment. It can also take note of the recent trend towards consolidation in the sector.

In the interests of consumers, the best approach for market research would be to promote the e-pharmacy ecosystem, while minimizing any competition concerns in the industry.

Market research must therefore lead to a program to promote competition, so that market players and consumers are better informed, as well as the political system and the judiciary.

The authors work for CUTS International, a global public policy research and advocacy group.


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