Is drug price on online pharmacy platform a "weapon" for price discovery? Caixin journalist exclusively confirmed from the National Medical Insurance Bureau that the document comparing the drug prices of various channels with the "instant delivery price" on online pharmacy platforms has been issued and the "instant delivery price" will be used as an anchor point for comparison in drug price information monitoring to regulate unreasonable high prices.

In fact, the price difference between online and offline drugs is not an individual phenomenon. Some pharmaceutical retail listed companies believe that this is caused by different cost structures, superimposed subsidies and other reasons. A secretary of a listed company on the sector said to Caixin that the gradual tightening of policies is conducive to the development of more compliant leading companies, and the market concentration will accelerate.

There are also industry experts who told Caixin reporters that the unification of prices for all terminals is a trend. Under this policy, the future drug stores will operate in a more compliant manner. As for the impact on the performance of drug stores, it depends on the operating capabilities and service levels of drug stores. Drug stores need to find a balance between traffic and profits.

The medical insurance bureau extends its drug price control action to non-public systems.

Today, Caixin reporters learned from the National Medical Insurance Bureau's Medical Price and Tendering Purchasing Department that the "Special Action on 'Online Stores, Checking Drug Prices, Comparing Data, and Capturing Governance'" has been sent to the procurement departments of medical insurance bureaus at all levels, and has not yet been made public. The document has circulated in the industry before and caused a sensation.

The document mentions that the medical insurance bureau will carry out special actions, and introduce the "instant delivery price" of drugs on online pharmacy platforms, such as the same-day delivery model price of "take-away price", "hourly delivery price", "immediate delivery price", and "limited-time delivery price" as an anchor point to compare drug prices through drug price information monitoring, triggering the trend of "checking drug prices on the internet and comparing data to capture governance".

Specifically, the first step is to find the "instant delivery price" on online pharmacies. Priority is given to querying the same-day delivery model price of large-chain online pharmacies (including online pharmacies and offline pharmacies selling through internet platforms) with high sales volume and high sales revenue in the same city on online pharmacy platforms; the second step is to use the "instant delivery price" of online pharmacies as the anchor point for comparison, including the provincial-level procurement platform listing price, the centralized quantity-purchased procurement selected price, and the price of drug products sold by designated retail pharmacies; the third step is to regulate unreasonable high prices. In the price comparison range, if the price is significantly higher than the "instant delivery price" on online pharmacy platforms, especially those involving medical insurance fund payment, various ways should be taken to guide and urge pharmaceutical companies and designated pharmacies to correct unfair and discriminatory high prices.

Zheng Pei, General Manager of Henan Dongxiao Enterprise Management Consulting Co., Ltd., said in an interview with Caixin reporters that the reason for the issuance of the document may be due to the fact that some consumers previously reported to the medical insurance bureau that buying medicine in pharmacies is more expensive than online, as well as the influence of public opinion in recent years. It can be said that the starting point is "everything for the masses". In the era of big data, this special action is not difficult to carry out. All medical insurance payment systems, hospital systems, and designated pharmacy distribution systems are connected to the Internet.

Li Changcheng, an industry expert, told Caixin reporters that regardless of online or offline, centralized procurement or not, pharmacy or online, the prices of all terminals must be unified. This rectification should be a long process, and will start with the medical insurance catalogue, centralized procurement, and national negotiated varieties. National price stability reduces people's living costs and promotes other consumption.

This is not the first time that the NMI has carried out rectification actions against unreasonably high-priced drugs. In fact, in January of this year, the official notice "On promoting inter-provincial equal, honest, transparent and balanced pricing of 'Four same' drugs (referring to drugs with identical generic names, brands, dosage forms, and specifications)" was officially released, which required all localities to focus on "Four same" drugs, compare local listed prices with monitoring results, and check for abnormal values that deviate significantly from the monitoring results, and urge and guide enterprises to correct unfair and discriminatory high prices, promoting prices to return to a more fair range. The relevant work is expected to be completed by the end of March.

This time, the release of the document can be seen as extending the drug price control action to the non-public hospital channel system based on the pricing governance of "Four same" drugs.

Which types of enterprises will be most affected?

Zheng Pei believes that one of the most affected types of companies is retail. Currently, except for individual provinces, most retail pharmacies have independent pricing. The prices are relatively high. If these high-priced drugs are purchased by swiping medical insurance cards, it will be suspected of using medical insurance funds or illegally occupying medical insurance funds. Under the policy implications of the document, future drug stores should operate in a more compliant manner. As far as performance is concerned, he thinks that "it depends on the operating capabilities and service levels of drug stores, and will face market competition for survival of the fittest."

Liang Runshi, Secretary of Dashenlin (603233.SH), said to Caixin reporters at an earnings conference held today that the company will use professional pharmacy services as a differentiation competitive strategy, and steadily improve the company's operational efficiency. The gradual tightening of policies is conducive to the development of more compliant leading companies, and the market concentration will accelerate.

In addition, as an investor, Cailian News reporter called several listed chain drug stores. Among them, the staff of Yifeng Pharmacy (603939.SH) Securities Department said they do not understand the policy.

The staff of LBX Pharmacy Chain (603883.SH) Securities Department responded that the company has noticed that the Bureau of Medical Insurance has begun to investigate the differences between online and offline prices, and it is currently under study. This time the main purpose is to issue a notice, and formal action has not yet begun, but after several rounds of rectification of online and offline sales, the (price) gap has basically narrowed. The Bureau of Medical Insurance has been working on this since the beginning of this year, and is getting more attention due to the frequent publication of related policies.

The staff of Yunnan Jianzhijia Health-chain (605266.SH) said they have noticed the policy and are still studying it.

Li Changcheng believes that production companies and pharmacies hope for standardized prices, and distributors, agents, and promoters also hope for uniform pricing. In the past, price differences were caused by disorderly competition. Now the market competition is fierce, there are many similar products, and products that engage in price wars are almost zero profit, and even sold at a loss. Non-medical insurance products may become high-margin products for pharmacies in the future.

In the capital market, affected by this policy and Yixintang Pharmaceutical (002727.SZ) being named by the Bureau of Medical Insurance, the pharmacy concept stocks were sluggish today, and the offline pharmacy index of Shenwan fell by 2.79% today. Yixintang hit the limit down at the opening, and as of today's close, the company's stock price fell by 8.53%. In addition, multiple stocks in the sector opened low, and the stock price stabilized somewhat at the close.

Why is there a price difference between online and offline sales?

A reporter from Cailian News found that there are indeed large price differences for some drugs between online and offline sales. Taking an antidiarrheal and antiperistaltic drug as an example, a certain drugstore priced the drug at 14.9 yuan (36 pills/box) on "Meituan Buy Medicine", while its staff stated that the price for the same specification drug in the physical store is 32.9 yuan/box when contacted by the Cailian News reporter.

Yixintang, LBX Pharmacy Chain, and Yunnan Jianzhijia Health-chain Securities Department staff stated that the price difference between online and offline sales is due to the different cost structures of the two, and the platform may also have activities, discounts, coupons, etc.

A Yixintang customer service staff revealed that there is more than one company with different prices, and this situation may also occur elsewhere.

"There is no specific policy interpretation of which price is used on the internet," said the LBX Pharmacy Chain Securities Department. "I think the display price is used and the company's normal profits can be guaranteed."

"The competition system is also different," explained the staff of Yunnan Jianzhijia Health-chain. "In offline purchases, there will be professional guidance from licensed pharmacists or store staff. This service is not available online." At the same time, the staff revealed, "The prices of drugs on the platform will be determined by the market. Prices that are extremely low might be due to platform activities, and the company will also participate in brand promotions. Medical insurance products account for a relatively high proportion, and pricing of other products is mainly based on market trends."

Zheng Pei told Cailian News that there are differences in drug prices between online and offline sales. First, this is due to different costs. There is no rent and less manpower cost online. Second, it depends on price wars to attract traffic. Consumers can see the prices of pharmacies in the entire city on the online platform, which is relatively transparent. Third, pharmacies, companies, and platforms all provide subsidies. However, he does not think that the prices of relevant drugs in offline pharmacies will decrease due to the policy. He believes that it may lead to an increase in the selling prices of some drugs on online platforms. Pharmacies must find a balance between traffic and profits.

In addition to the above factors, Li Changcheng also believes that most online drug prices are due to low-priced inventory. In drug sales, there are many promotion fees and channel fees, and many agents and even salespeople of production companies will use low prices to complete tasks, and sell products at low prices to other regions to generate additional sales.