While e-commerce is nothing new, the COVID-19 pandemic spurred a massive shift in consumer behavior, when traditionally in-person health care services became virtual, and online prescription purchasing moved from being a simple convenience to a crucial lifeline. Pharmaceutical e-commerce shows no signs of waning in the coming post-pandemic world, as many consumers are now accustomed to the convenience — and often lower costs — of remote prescriptions.
Government and consumer demands for lower prescription costs, as well as industry and regulatory efforts to loosen telepharmacy restrictions, are among the factors driving the growth of pharmacy e-commerce.
Recognizing the opportunities, e-commerce giants and telehealth start-ups put down stakes in the online pharmacy market, spurring competition for established pharmacies and other health care providers.
To compete successfully in this growing market, pharmacy leaders must understand the challenges and opportunities inherent in shifting to an e-commerce model and the recommended best practices to launch a successful pharmacy e-commerce platform.
Customers want it all
Evolving consumer needs and preferences due to COVID-19 made pharmacy e-commerce integral to health care delivery. More than a year after the pandemic took hold, consumers now expect all retail businesses — including pharmacies — to provide online conveniences with fast (and generally free) shipping.
Consumers are not just expecting lower costs; they’re demanding a higher level of service, convenience, innovation and personalization. They want the ability to choose when and where to receive service — which is increasingly online. When it comes to customer experience, consumers compare pharmacies with every other company regardless of industry. This challenges pharmacists to not only provide a positive customer experience in person, but through digital channels as well.
Competition and pandemic slowdown
Even before the pandemic, pharmacies were facing challenges, including shrinking reimbursements and below-cost prescription rates. When the pandemic hit, pharmacies saw reduced foot traffic due to stay-at-home orders, the delay of elective procedures and COVID-19-related job losses that caused millions to lose health insurance.
Then there are the competitive threats: a US e-commerce giant entering the pharmacy business, a large warehouse club retailer offering same-day pharmacy delivery and large chain pharmacies consolidating, increasing their footprint and market power.
Faced with all these challenges, many community pharmacy owners looked for exit strategies, leading to more consolidation.
Geographic restrictions on providing telehealth services as well as federal proposals for lowering prices are threatening the margins of many pharmacies. Although COVID-19 spurred the loosening of some digital pharmacy regulations — and telehealth itself is permitted in some form in all 50 states — 32 states are considered “restrictive” when it comes to pharmacy e-commerce services, with 26 states not allowing the practice at all, according to analysis by TelePharm.
In addition, public outcry for lower prescription costs and disparities in pricing between the US and other industrialized countries have spurred regulatory interest in price controls. However, regulations that may lower the prices for consumers don’t necessarily translate to lower costs for pharmacies.
E-services are not just being embraced by the young. Contrary to what many believe, baby boomers are fueling the e-pharmacy market as Americans age 50 and older are now adopting consumer technology at rates close to those ages 18-49, according to a 2020 AARP report. Pharmacies have an imperative to invest in e-commerce.
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