Unichem's annual convention was held this week on the island of Borneo, at Kota Kinabalu in the Malaysian state of Sabah
The main convention session, held on September 28, looked at the threat or opportunity posed by on-line pharmacy services to community pharmacy in the United Kingdom. In the first presentation, Mr William Cotton (managing director, Crookes Heathcare Ltd) outlined how the development of e-commerce gave an opportunity for pharmacies. Mr Ron Nelson (chief executive, Walsh Healthcare Solutions) then described how his company was involved with on-line pharmacy services in the United States. Finally, Mrs Sue Sharpe (director of professional standards, Royal Pharmaceutical Society) looked at how e-commerce might work in the UK and what the Society was doing about it
Electronic commerce, or e-commerce, would be part of all pharmacists lives and sooner rather than later, said Mr William Cotton (managing director, Crookes Healthcare Ltd).
The rapid pace of technological change, which was increasing all the time, could be graphically illustrated, he said, if the whole of human history was compressed into a notional year. On this basis, all of the technological development in human history from the building of the pyramids onwards had taken place in the final day of the year, and the industrial and technological developments which had led to the development of the internet in the final hour.
The use of the internet was going at a fantastic pace. In the past year, an average of 80,000 new users had been registered every single day. Within two years, the European internet market was estimated to have 53m users and be worth $64bn. Total global e-commerce in five years time was expected to be worth over $1 trillion.
All of this was an incredible opportunity for those who wanted to take advantage of it. It could offer a new approach to health care. However, those taking part had to imagine a radically different future.
Mr Cotton went on to look at how the internet would affect pharmacy consumers, pharmacy staff and the pharmacists themselves.
The pharmacy customer with internet access would be better informed and better educated due to the vast range of information sources which were available, but the customer was also at risk of making more mistakes because of this information. Thus customers were likely to have more questions.
As an example of this, a customer with "a nasty rash" could search the internet via the Yahoo search engine and find over 91,000 pages of information. Focused information from the American on-line pharmacy site Drugstore.com might inform the customer that the problem was contact dermatitis caused by cheap jewellery. The customer might find that there were products available to treat this which were available directly from an on-line pharmacy, but he or she would not be familiar with all the brands on offer. This was where the local pharmacist came in, to confirm the self-diagnosis and help in product selection.
Pharmacy staff had the opportunity to use the internet for training, to become better informed themselves, and to conduct many of the pharmacy "back office" functions, such as purchasing, invoicing and payments electronically. Unichem already offered some of these services via its own intranet site.
Opportunity
For the pharmacist, there was a great opportunity to access high quality clinical information directly from on-line publications or specialist health care sites aimed at professionals. Data could even be obtained directly by e-mail from the experts who conducted the trials.
Pharmacists needed to look ahead, to plan for and cope with the changes the internet was bringing. They should heed the lesson of the Encyclopaedia Britannica which had seen its 225-year-old multivolume paper publishing business come to end in a space of 24 months due to the appearance of encyclopaedias in CD-ROM format.
The key to success in the on-line pharmacy business in the United States was a dual-track approach which combined internet services with traditional bricks-and-mortar pharmacies, Mr Ron Nelson (chief executive, Walsh Healthcare Solutions) explained.
Walsh Healthcare Solutions, of which he was chief executive, had been founded in 1920 by his wife's grandfather. It was a family-owned business based at Texarkana, Texas. It currently owned two regional wholesaling companies, a mail-order pharmaceuticals business and was the fulfilment agency for the Drugstore.com on-line pharmacy business. The company's sales had grown from $50m in 1988 to $650m in 1999 and turnover was predicted to exceed $1,250m in 2000.
Drawing inspiration from the United States's participation in the 1960s space race, Mr Nelson said that three things were needed for success. First was a clear and understandable strategy — in this case, to put a man on the moon, and return him safely, before the end of the decade. Secondly, the application of superior resources was needed to make this happen. In contrast to the investment made by the US, the Soviet space programme had been shown to be based mainly on bluff. Strategies without resources were dreams at best. Finally, a noble cause which went beyond the finishing line was needed. It was not enough to be first: it was also necessary to reap the benefits of taking part in the race.
US market
Looking at the US market, the combined value of the prescription and over-the-counter medicines market was around $150bn — a major opportunity for e-commerce. Due to an aging population, the introduction of new drugs and an increase in the use of drugs as part of health care, the prescription market was expected to grow from 2.8bn prescriptions filled in 1998 to 4bn by 2005. Automation and e-commerce were certainly part of the solution to this surge in volume.
Penetration of the internet was high in the US, with 50m households and 100m users registered already. It was expected that 85 per cent of the population would be on-line in five years.
For these users, an increasing number of whom were aged 55 years or older, health information sites were the second most popular type visited (after sex sites) and formed the sixth largest content area on the internet. Studies had revealed that patients with chronic conditions — for whom 75 per cent of all prescriptions were written — were inclined to buy drugs over the internet.
Thus it was clear from the growing use of the internet by the older population, who in turn were large users of pharmaceutical products, that the internet was being seen as part of the continuum of care that would help define health care provision in the future.
The internet as a retail vehicle was unique in that it was able to work across product branding, information sharing and transaction execution. It gave instant access to information. It provided selection and scale. Huge inventories could be held in a way which not possible in the bricks-and-mortar physical world. All of the information was searchable and sortable. Because of this, the catalogue business was dead unless it moved onto the world wide web. Finally, there were no boundaries to the web — it was global.
Mr Nelson said that he expected that in the near future patients would be able to use the internet to order a prescription which was approved by their physician, authorised by an institution, paid for by their insurer, delivered by a mail-order pharmacy and accompanied by a selection of OTC medicines, and to do this from the comfort of their own homes at any time of the day or night.
Mergers
However, in the US there had recently been a spate of mergers or alliances which had seen the main on-line pharmacies link up with pharmacy owning companies so as to give themselves a physical presence as well as an electronic one — this appeared to be the model for future operations.
To supply this market in the US, Walsh Healthcare Solutions was intending to provide both an internet strategy and the resources to make it possible through its own internet service: Healthcare America.com (HCA.com). This service would offer the company's independent community pharmacy customers a chance to develop their own customised websites with their own pricing strategies, hosted by HCA.com which would provide the order placement and payment functions in return for a transaction fee. Customers would have to affiliate with a pharmacy to have access to the product catalogue. The service would be extended from OTC medicines to prescriptions by early next year. Walsh would maintain the content of the product catalogue, the product fulfilment and the marketing support for the service.
This service had many advantages for independent community pharmacists: it made them look innovative, service orientated and sensitive to the convenience of their customers. New products could be offered at with reduced overheads and working capital needs. Credit card purchases made over the internet were credited to the pharmacist within a couple of days.
"The internet has become a phenomenal tool to shift costs from the pharmacist to the patient or payer and make them happy about it by giving them convenient delivery of health care information, personalised services and products," Mr Nelson said.
He emphasised that in order for this service to work well it had to be backed by an appropriate level of investment. His company had invested much time and money in the new service, but it saw itself in a position to make considerable returns by being able to provide customers with the service they wanted, which would ensure continuing use.
Should Unichem follow Walsh's example?
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E-commerce in pharmaceuticals would soon be a reality in the United Kingdom and Europe, Mrs Sue Sharpe (director of professional standards, Royal Pharmaceutical Society) said. The profession needed to manage its introduction and not blindly oppose it.
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Sue Sharpe: advent of e-commerce in the UK must be seen in a European Union context |
On-line or internet pharmacy was the next logical step on from mail-order pharmacy, as Mr Nelson had described. Just as the UK had looked somewhat askance at mail-order a few years ago, now it was considering the prospect of on-line pharmacy.
The advent of e-commerce in the UK had to be seen in the context of its membership of the European Union. The European Commission was preparing a directive on electronic commerce in the internal market. From what she had seen, its main aim was to remove current legal obstacles to the on-line provision of goods and service. These included professional obstacles such as different rules on advertising. Pharmacy services would be covered by this directive. The message was clear: the obstacles had to go. The directive would look to clarify the needs of both cross-border residents or travellers and those resident in one member state alone.
National residents might want to use the internet to gain access to pharmaceutical products from abroad if they could not order them on-line in their own country, if the product was not available in their own country, if the product was much cheaper abroad, or if they knew that access to it was not restricted in other countries.
Illicit internet trading had already been seen before the UK launch of Viagra (sildenafil) and also in steroids and performance enhancing drugs, although this trade was marginal in terms of the whole market.
In the UK, the Government had recently issued a White Paper on electronic commerce, stating an aim "to make the UK the world's most attractive centre for e-commerce by 2002". The Electronic Commerce Bill was scheduled to enter Parliament in the forthcoming session.
To handle the introduction of e-commerce, pharmacy had to manage it, as it had with the issue of electronic transfer of prescriptions a couple of years ago. Agreement had been secured from the National Health Service Executive to set standards which ensured that developments were influenced by professional rather than third-party commercial needs. Electronic links had become integrated into the wider development of NHS services. However, the days of the hard copy prescription were clearly numbered.
There were many legal and professional barriers to the introduction of American style on-line pharmacies in the UK. They included requirements of the NHS contract, the Medicines Act 1968 and the Society's Code of Ethics. All envisaged a service and a relationship with patients based on physical proximity between patient and pharmacy.
In view of the European directive, the legal barriers were unlikely to prevent changes in the long term. In professional terms, the Society had recently started a consultation process on revisions to the Code of Ethics. The new code was based on three core principles: welfare of the patient, competence and integrity. Although the proposed revisions did not address on-line services directly, the core principles would still apply.
Considering the six components of a community pharmacy service she had outlined earlier, Mrs Sharpe said that she could not see how, for the majority of pharmacy customers in the UK, the on-line pharmacy could compete with the high quality personal service offered by local pharmacies. Remote dialogue via a computer was a poor substitute for face-to-face discussion. In addition, profound and politically sensitive changes would need to be made to the current structure of the NHS to allow patients to enjoy the price benefits seen by American patients.
Areas in which e-commerce might be viable in the short-term included the provision of vitamin and mineral supplements and complementary medicines where there was already significant mail-order trade.
Pharmacy could not prevent the introduction of e-commerce. Any such attempts were doomed to failure. By concentrating on the quality of the service they provided local pharmacies would be able to retain the customers who valued personal contact and a relationship built on established trust.