Medicine and medical device e-commerce: regulatory restrictions and opportunities

More and more healthcare and pharmaceutical companies are entering the world of e-commerce. As a result, they find themselves attempting to identify the most suitable way to meet ever-burgeoning demand while dealing with numerous regulatory restrictions.

IQVIA analysis shows that in 2018 the value of online sales of over-the-counter medicine, food supplements, nutritional products, and cosmetic products reached approximately € 154.5 million, compared to € 96 million the previous year, and forecasts predict that the Italian market will continue to expand.

Regulations for medicine and medical device e-commerce

While wellness and beauty products, such as nutrition supplements and cosmetics, may be sold online with few regulatory restrictions (although there are still a number of important requirements to inform potential consumers about the characteristics of the products and their prices), e-commerce of medicines is subject to considerably more conditions. In some cases, the absence of legislation raises questions and creates a high level of uncertainty for those considering entering the e-commerce field (e.g., those in the medical device industry).

At the same time, authorities continue to enact oversight and enforcement. There are frequent reports of websites that are banned because they offer prescription-only medicines or even illegal medicines to Italian consumers (this includes websites operating abroad).

E-commerce of medicines

Specific legislation governing online sale of medicines was set forth in 2014. That legislation basically provides the following: (i) remote supply of prescription-only medicines to the general public is prohibited; (ii) non-prescription medicines may be supplied remotely to the public via general information services (i.e., the Internet) only if the following conditions are met:

• Only pharmacies and health and wellness product stores (“parafarmacie”) may sell medicines online;
• Pharmacies and health and wellness product stores shall be authorized by their regions after having communicated their websites and all relevant information necessary to identify those websites;
• Pharmacies and health and wellness product stores shall submit to the Ministry of Health: (i) applications for registration on the list of sellers authorized to sell medicines remotely to the public and; (ii) requests for digital copies of the national identification logo;
• The national identification logo issued by the Ministry of Health shall be clearly visible on each page of the website; the logo shall contain a hyperlink to the corresponding pharmacy or health and wellness product store listing on the list of authorized remote sellers of medicines to the public on the Ministry of Health website.

Although these requirements are clear, there are other issues that may be raised when implementing an e-commerce platform.

The position of the Ministry of Health

In order to respond to early questions, the Ministry of Health issued two memos, one in January 2016 and the other in May of that year, that appear to impose further restrictions on businesses. Specifically, the memos do the following:

• Prohibit the use of intermediary websites, e-commerce platforms (marketplaces), and mobile apps for smartphones and tablets (APPs) for online management of purchasing processes;
• Require prices of medicines sold online to be the same as those charged in brick-and-mortar pharmacies and health and wellness product stores;
• Require that the identification logo appear only on pages selling medicines and not pages featuring other products, such as medical devices, supplements, cosmetics, and so on;
• Prohibit the use of technology platforms where a user chooses a product and then is redirected to an authorized seller selected by the system, as that would infringe on a citizen’s right to free choice of pharmacy.

Therefore, medicines (including over-the-counter medicines) are not permitted to be sold on Amazon or other e-commerce platforms, and pharmacies/health and wellness product stores are prevented from the use of any kind of apps, while they are allowed to use websites.

Selling online services rather than products

How do these rigid rules and interpretations combine with the introduction of numerous apps that a consumer can use to choose a medicine and have it delivered? Does the regulatory framework described above create insurmountable obstacles to the launch of a new business in this industry?

These questions can be answered by differentiating between the sale of products and the sale of services: When an unauthorized website or app offers consumers a service (e.g., home delivery, booking, and so on) rather than a product, a whole series of rigid regulatory restrictions can be sidestepped.

The focus should be on assessing the business model on a case-by-case basis and adapting it to ensure it complies with the regulatory framework.

The problematic nature of cross-border sale of medicines

Another issue of considerable interest is online cross-border sale of medicines within the EU. The mechanism outlined above, which relies on the identification logo to denote authorized pharmacies, is a system used all over Europe; the relevant logo (with a different flag) appears on all authorized websites in the various EU countries.

However, the recent case of Shop-Apotheke shows that it may not be always clear which regulations apply to online sale of medicines. Shop-Apotheke is a Dutch pharmacy, located only in the Netherlands, authorized by the Dutch authorities to sell medicines online by exhibiting the relevant Dutch identification logo. However, it sells pharmaceuticals in Italy through an Italian site, though it does not have a physical pharmacy inside Italy.

Therefore, the question is whether Shop-Apotheke, which operates in accordance with Dutch law, can sell online medicines to Italian customers without a physical pharmacy and an authorized website in Italy that shows the Italian logo.

E-commerce of medical devices in a climate of regulatory uncertainty

The scenario regarding regulation of medical devices is, in some respects, even more complex than the scenario regarding medicines described above. That complexity mainly stems from the absence of a regulatory framework that could provide reliable answers to business in this sector. Indeed, it remains to be determined whether or not the online sale of such products is admissible, who is allowed to sell them if so, and what limits should be placed on those sales.

In the absence of an express legislative prohibition, the online sale of medical devices is a very widespread practice that is carried out by means of e-commerce platforms such as Amazon, among others. The legality of this seems to be confirmed by the provisions contained in new European regulations on medical devices, although no details have been provided on the relevant conditions and limits.

Many unresolved matters and contradictory aspects remain. One of these is the advertising issue. Indeed, the Ministry of Health’s guidelines on the advertising of medical devices require ministerial authorization for any form of web-based presentation of medical devices. Since online sales require the presentation of products (i.e., the virtual showcase), ministerial authorization would seem to be necessary. For medicines, the law expressly waives the need to obtain ministerial authorization for advertising in the case of e-commerce, while no equivalent provision has been set forth in the case of medical devices.

Therefore, while the online sale of medical devices is certainly more liberal than the online sale of medicines (but only when speaking of devices that do not require a medical prescription or participation of a healthcare professional for their use), the absence of a clear regulatory framework may discourage businesses from entering this field.

Restrictions and opportunities

As previously noted, e-commerce in medicines and medical devices triggers several limitations and uncertainties. The questions raised by the creative efforts of those in the field often remain unresolved due to the static nature of the law, which often proves unable to keep pace with the times and technological innovation.

There are, however, clear benefits and opportunities that multi-channel is able to provide for companies in this industry so that they may offer patients a full range of both off-line and online products and services and benefit from the combination of these channels.

Therefore, we should not shrug and give up in the face of regulatory obstacles, but instead should explore innovative solutions that will enable new business to be created by making effective use of all the tools technology provides in compliance with the applicable laws.