China: Prescription Drugs Available Online via Loophole

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Chinese ecommerce behemoths Alibaba and JD.com are being used to buy and sell tens of thousands of prescription medicines, skirting regulations in what is a legal grey area.

According to a recent Financial Times report, dozens of listings from third party vendors – mainly pharmacies – for drugs such as Pfizer’s antidepressant Zoloft and its anti-inflammatory drug Celebrex were available on the sites.

As the drugs are paid for on delivery, Alibaba and JD.com are able to class the transactions as “offline”. However, both sites host the listings, take marketing fees from the stores and, in some cases, deliver orders through courier companies in which they have ownership stakes.

Furthermore, some vendors do not require evidence of a prescription from buyers, creating the potential for adverse reactions or overdoses when the drugs are consumed.

There is a lot of room for discussion about whether these actions are illegal… This is a grey area

Mark Zhang, King & Wood Mallesons

Mark Zhang of Hong Kong-based law firm King & Wood Mallesons told the FT that, “There are regulations which explicitly prohibit online sales of prescription drugs,” but admitted that “There is a lot of room for discussion about whether these actions are illegal… This is a grey area. Policy encourages the industry to make innovations but retains the space for penalties.”

The consultancy Roland Berger estimates that online pharmacy sales in China totalled USD 2.5bn in 2016, but that this was mostly made up of medical devices, contraceptives and contact lenses. In line with the rapid growth of the overall ecommerce market, Roland Berger expects the Chinese online pharmacy sector to grow 50 percent annually to reach USD 12bn by 2020.

This is not the first time that prescription drug sales have caused problems for Alibaba. In 2016, Jack Ma’s company had to order vendors on its ecommerce platform Tmall to stop hosting medicine sales in response to an “urgent” directive from a local regulator.

Responding to this latest report, Alibaba’s Tmall said in a statement: “Merchants on our platform, including pharmacies, are prohibited from carrying out online sales of prescription drugs. We will take action against those who violate our product listing policy.”

However, Zhao Heng, an analyst at consultancy Latitude Health, feels that, despite directives and legislation to the contrary, the likes of Alibaba and JD will continue to host medicine sales. “As long as no one reports them, [companies] will quietly do it,” he stated.

 

FT’s report: https://www.ft.com/content/11686e94-c2e5-11e8-95b1-d36dfef1b89a

 


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