[e-drug] Internet sales threaten drug companies' supremacy

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E-drug: Internet sales threaten drug companies' supremacy
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BMJ 2002;324:998 (27 April 2002)

Internet sales threaten drug companies' supremacy
Annette Tuffs, Heidelberg 

A row is brewing over the announcement by a German health
insurance company that patients should buy their drugs over the
internet to cut costs a move that threatens to undermine the
monopoly of the German pharmaceutical industry.

The Bavarian health insurance company Bayerische Betriebs-
krankenkassen recently set up a contract with the Dutch internet
pharmacy shop DocMorris and has advised its 1.8 million members
to order cheaper drugs via the internet. This would enable them to
fill prescriptions at lower cost than at a pharmacy and would also
allow them to buy non-prescription drugs more cheaply.

The Bavarian company's website tells members: "You can use
DocMorris. Refundable drugs will be refunded by us, just like drugs
from any other pharmacy." 

The insurance company faces strong opposition from local
pharmacies as well as state institutions. The Bavarian social
ministry has issued an order from the State Insurance Agency trying
to stop the company accepting bills from DocMorris. 

But on Monday the "round table" of the German Health Service, a
body of health professionals and interest groups which advises the
minister, came down in favour of internet trade of pharmaceutical
drugs - against strong protests of the pharmacists who fear they
will go out of business. Health minister Ulla Schmidt said that the
health insurance companies should refund the costs of prescribed
drugs, which are also for sale in Germany, as long as there was
information provided on the application and side effects of the drug.
The drugs must be delivered speedily to the home of the customers,
said the Social Democrat politician.

Drug safety and the nationwide closed network of basic
pharmaceutical care are at risk if local pharmacists have to compete
with internet shops, the opponents of DocMorris say. However, the
Bavarian insurance group says that it has no doubts about the
quality of the 2500 or so DocMorris products available for German
customers as well as the DocMorris medical counselling, available
via a free hotline on the internet . 

The group says that customers appreciate the lower costs, which
are about 20% below average for drugs on prescription. Doctors
also profit from cheaper drugs because it reduces their drugs
budget. Doctors with their own practices, GPs, and specialists have
a budget for treatment and are punished if they exceed it. Therefore
they also want cheaper drugs and recommend contracts with
internet dealers like DocMorris. 

Gerhard Schulte, head of the Bayerische Betriebskrankenkassen,
estimates that German health insurance companies could save
about Euro 409m (GBP 251m; US$363.4m) by buying drugs over
the internet. 

However, the legal background is not yet clear. In the past two
years the German Pharmacists Association has tried to stop
DocMorris, which is said to have at least 20 000 customers in
Germany, mainly for over the counter drugs. 

In November 2000 a court in Frankfurt ordered DocMorris to stop
its deals with German customers because trading drugs by post is
not allowed in Germany. The Dutch internet shop reacted by letting
its customers pick up the drugs themselves or using special courier
services. The matter has gone to the European Court for a ruling,
and its decision is expected in 2003. 

Meanwhile the German federal health ministry is trying to take a
position on this issue. On the one hand, given rising health costs,
the admission of cheaper drug trading seems enticing. On the other,
the German system of pharmaceutical care might be shattered by
opening the doors to cost efficient competitors. 

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