Report: Online Health Care Sales Boom on the Way

ORLANDO (01/27/2000) - People turn to the Internet in droves to find health care information but they prefer to buy health care products at the corner drugstore because it's more convenient than shopping online, according to a Jupiter Communications report released Wednesday.

The market research firm estimated that health e-commerce would grow from $200 million in 1999 to $10 billion by 2004.

But at Jupiter's first online health care conference, analysts warned that 49 percent of 1,600 Net consumers surveyed found that shopping for drug prescriptions and other health products on the Internet is too difficult.

"Do you know who your pharmacy benefits manager is?" asked Jupiter analyst Claudine Singer, referring to companies who process prescription claims covered by health insurance for pharmacies. "Most people don't know who their PBM is.

But you better know who your PBM is if you want to get a prescription filled online."

That's because most online drugstores currently have exclusive relationships with one pharmacy benefits manager. If customers aren't covered by that manager, they must pay full price for a prescription and then apply for reimbursement from their insurance company. That's not the case at the average neighborhood outlet of the big retail drugstore chains. "Offline, you can pretty be much assured that nearly anywhere you go, you can get your prescription filled and just pay the co-pay," Singer said.

Making it easy to fill prescriptions online regardless of consumers' insurance will be crucial, Singer said, noting that pharmaceutical products will account for about 45 percent of the $10 billion forecasted to be spent online for health care products in 2004. Still, online pharmaceutical sales will remain a fraction of the $175 billion drug market.

Despite health care's importance to the offline economy, it lags in the Internet Economy, according to Jupiter analysts. The report noted that only one Internet health care company, OnHealth, has cracked the top 100 Web sites as ranked by Media Metrix. Furthermore, health ranks 18th out of America Online's 23 "channels." Jupiter predicted that health advertising will rise from $100 million in 1999 to $700 million in 2004, but will account for only 5 percent of all Net advertising. "The eyeballs are not there," Singer said.

Of course, putting the fragmented and technologically Balkanized health care industry online is a little more complicated than selling books or CDs, Jupiter chief executive Gene DeRose acknowledged.

"The health care industry itself is such a monster of an industry with its own dynamics driven by doctors, hospitals" and insurers, DeRose said.

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