GTIPA Perspectives: How Smart Deregulation Can Unleash Powerful Innovations Worldwide: Mail Order Business for Medicines

In order to introduce competition into the electricity market, it was necessary to define the rules that would keep markets open. A natural monopoly such as the electricity grid needs special regulation to promote and maintain competition. Therefore, market liberalization often goes hand-in-hand with regulation. Today, deregulation initiatives tend not to be very fundamental, as there are not many markets left to be opened and liberalized. Deregulation therefore tends to be a reform of existing regulation, with less fundamental changes but important advances in detail. However, there are more recent examples of further liberalization and deregulation.

Mail Order Business for Medicines 

In 2003, the European Court of Justice (ECJ) ruled that the ban on cross-border mail-order sales of pharmaceuticals was illegal. It considered this to be a measure having an equivalent effect (that is, having the same effect as the quantitative import restrictions prohibited under EU law). In Germany, the ban on mail order sales of non-prescription medicines was repealed on January 1, 

2004 by an amendment to the law, although Germany did not wait for the ECJ ruling. Interestingly, mail order medicines were only banned by law in Germany in 1998. It was only then that the mail order business became significant in Germany. 

The mail order trade in medicines has been dominated by a few large suppliers. However, smaller operators are also active in this sector. According to estimates by the Federal Association of German Mail Order Pharmacies, around 2,500 of the approximately 18,400 public pharmacies were licensed as mail order pharmacies in 2022, although only around one-third of these were engaged in serious mail order sales of medicines. Total sales in the non-prescription sector (medicines, health products, cosmetics, body care products, and medical supplies such as tests and aids as well as special food) amounted to just under €3.2 billion ($3.74 billion) in Germany in 2023. In the first half of 2024, turnover was already at €2.04 billion ($2.38 billion). In 2020 as a whole, it was still €2.5 billion ($2.92 billion). The restrictions during the COVID-19 pandemic are also likely to have boosted online sales of medicines. Mail order sales (domestic and international) accounted for 21.3 percent of sales of over-the-counter (OTC) medicines in 2023. 

Although mail order sales of prescription drugs (Rx) are also permitted in Germany, they do not yet play such a significant role. According to a 2020 survey, 58 percent of people in Germany have ordered medicines from an online pharmacy, but only 17 percent have also ordered prescription medicines. However, electronic prescriptions could also change this for this market segment as well, as paper prescriptions no longer need to be sent by post.