Jupiter: Kiosk-aided foreign drug sales threat to U.S. pharmacies

NEW YORK--Analyst firm Jupiter Research estimated that U.S. consumers spent $700 million online to purchase prescription drugs from foreign online pharmacies, including those in Canada, in 2002.

Kiosk-facilitated channels pose the most-immediate threat to U.S. prescription drug sales, since inexperienced online consumers and some offline consumers use these online storefronts to process their prescriptions to save costs, the report said. The problem, according to Jupiter, is that FDA does not closely monitor these transactions.

Monique Levy, Jupiter analyst, said, "Although the current market size for cheap prescription drug imports is less than 0.4 percent of the overall market, the biggest worry to U.S. pharmaceutical manufacturers and retail pharmacies is the potential of the kiosk and Internet cafe-facilitated channel because of lax enforcement by the FDA."

The report, "Foreign Online Pharmacies: Sizing the U.S. Market for Imported Prescription Drugs," is based on a March 2003 consumer survey fielded by Jupiter Research. The research found that less than 3 percent of online chronic drug users purchase prescription drugs directly from foreign online pharmacies.

The current threat to the U.S. prescription drug market is somewhat limited because inadequately insured seniors and low-wage workers, the consumers with the greatest motivation to seek out low-cost drugs, are underrepresented online, the report said.

The most-effective lever that U.S. pharmaceutical manufacturers have for limiting foreign trade is to continue to restrict supply, for example, to Canadian wholesalers. Said Levy, "Defining the potential growth of this market will be unclear until conflicting political, commercial, legal and consumer interests are resolved."