The online sale of prescription drugs and beauty products currently represents only a small portion--$120 million--of the estimated $180 billion drug and beauty market. And just $40 million of that total represents the online sale of prescription drugs, according to Gomez Advisors, a Lincoln, Mass.-based e-commerce research firm. The potential to capture the remaining $179.9 billion in drug and beauty sales, however, has created a frenzy of activity.
To date, physicians have mostly watched the boom from afar, as online pharmacies busied themselves with the consumer market. But Internet analysts agree that physician participation is integral to the success of online drugstores.
Physicians write some 2.5 billion prescriptions a year, and online pharmacies are working to grab a share of those prescriptions directly at the source. In exchange for sending prescriptions to online pharmacies, physicians may eliminate the hassles often associated with simple prescriptions, including pharmacy call-backs and formulary conflicts.
"Getting the providers on board is important, and I think the online drugstores will do it indirectly by partnering with companies that are more focused on providing solutions to physicians," says David Restrepo, an analyst with the New York-based Internet commerce research firm Jupiter Communications.
Atlanta-based Healtheon/WebMD last month announced a partnership with Woonsocket, R.I.-based CVS, the nation's largest drugstore chain. CVS.com now will be the exclusive online pharmacy for Healtheon/WebMD's health information site and its online partners, including Excite, Lycos and the Microsoft Network.
Over the next six months, about 50 million CVS electronic pharmacy transactions will be moved to the Healtheon/WebMD network. Physicians who use Healtheon/WebMD technology will be able to electronically transmit prescriptions directly to CVS.com.
Also last month, South San Francisco, Calif.-based PlanetRx.com announced it was signing an exclusive contract with CCN, the nation's largest preferred provider organization. The agreement makes PlanetRx.com the exclusive online pharmacy for CCN's 32 million enrollees and 340,000 participating physicians.
Another important link between physicians and online pharmacies is electronic prescription companies. Currently, only about 1% of prescriptions are transmitted electronically, but Bellevue, Wash.-based Drugstore.com is banking on a boom in e-prescriptions. Drugstore.com is positioning itself in the physician's examining room by working with 12 electronic prescription companies to develop standards for the transmission and receipt of electronic prescriptions. The companies that meet Drugstore.com's security and authenticity standards will receive the pharmacy's stamp of approval and will be offered a direct link to Drugstore.com. The standards will be rolled out this quarter.
Marc Lilly, Drugstore.com's director of health services, says the standards will result in cost savings and hassle reductions for all the players. Physicians won't be bothered with pharmacy call-backs verifying patient information, and patients won't have to do anything at all.
Mountain View, Calif.-based ePhysician, which offers physicians a Palm Pilot-like hand held electronic prescription device, is one of the companies working with Drugstore.com on the standards.
"We really have a huge opportunity as physicians and as physician connectivity companies to shift the marketplace, and when we talk about shifting, we're talking about shifting the power back to the patient and the doctor," says Stuart Weisman, M.D., ePhysician's president and chairman.
Such exclusive relationships with online pharmacies may initially limit consumer choice, but analyst David Steele, M.D., believes it's a natural evolution for the market. Steele, who is senior Internet healthcare analyst for Gomez Advisors, says that initially physicians likely will send prescriptions to online pharmacies that are directly linked to their office management or electronic prescription tools.
"There will be no incentive to go outside that network. However, it's possible that down the line these connectivity companies will open up their relationships to other pharmacies," he says.
Physicians also wield considerable influence on the underbelly of the online drug world. Last month, Seattle physician Howard Levine, M.D., was the latest doctor to be charged with illegally prescribing drugs over the Internet. The Washington State Medical Commission suspended Levine's license after he was accused of prescribing Viagra and Xenical through his Web site to patients he had not examined and who had no valid prescription.