Research on Development Strategy of Online Pharmacies Based on Blockchain Technology

Yin Yamin,Huang Zhe

(1.School of Business Administration,Shenyang Pharmaceutical University,Shenyang 110016,China;2.Liaoning Vocational College of Medicine,Shenyang 110010,China)

Abstract Objective To study the problems that restrict the development of online pharmacies,and put forward some suggestions for the development of online pharmacies with the help of blockchain technology.Methods Literature review method was used to understand consumers’ psychology of online drug purchase.Besides,some experts in related fields were consulted.The specific path of applying blockchain technology to online pharmacies was analyzed based on the unique characteristics of blockchain technology.Results and Conclusion From the perspective of the characteristics of blockchain technology,this paper analyzes the factors restricting the development of online pharmacies,and proposes targeted solutions to the problems of selling counterfeit drugs,leaking consumer information,and government supervision difficulties in the online pharmacies trading platform.This will break through its bottleneck and help the development of online pharmacies.

Keywords:blockchain technology; online pharmacy; development strategy

1 Introduction

Online pharmacies refer to the pharmaceutical e-commerce enterprises that have obtained the certificates issued by the national pharmaceutical regulatory department and conduct pharmaceutical trading on the Internet.The online pharmacies will provide consumers with detailed and comprehensive pharmaceutical consulting services while selling drugs.Compared with drugstores,online pharmacies have their unique advantages,such as low cost of registering,low price of drugs,breaking the restrictions of time,region and type,etc.Chinese government has provided a lot of policy support to promote the development of online pharmacies,and cancelled the B,C and A certificates of Internet drug trading qualifications.In November 2017,the China Food and Drug Administration announced that the Internet drug transaction would be changed from the examination and approval system to the filing system,which lowered the threshold for approval.On August 26,2019,the newly revised “Drug Administration Law of the People’s Republic of China” was officially promulgated,legalizing the online sale of prescription drugs.On August 30,2019,the National Healthcare Security Administration issued “Guideline on the Online Medical Service Price and Medical Insurance Payment Policy”,making it clear that equal medical insurance payment policies will be implemented both online and offline.To encourage consumers to purchase medicines online during COVID-19,the National Healthcare Security Administration and the National Health Commission of the People’s Republic of China jointly issued the “Guidance on Promoting Online Healthcare Services during the Prevention and Control of COVID-19” on March 2,2020.However,with the development of the online pharmacies,some problems such as selling fake and inferior drugs,the leakage of consumers’ information and difficulties in government supervision seriously restrict the development of online pharmacies.By July 2020,there were only 693 online pharmacies registered in the National Medical Products Administration(NMPA).To promote the rapid development of online pharmacies in China,it is essential to address consumers’ concerns about online drug purchase.Therefore,an efficient,low-cost,fair and safer online sales platform must be set up to have a good shopping environment for the consumers.Besides,the efficiency of government supervision must be improved.

Blockchain technology emerged during the development of Bitcoin,which is an integrated innovation of many mature technologies.It was once called “trust-building machine” by the economist.The development of blockchain technology has been highly valued by many countries at home and abroad.Its unique characteristics and high compatibility with Internet e-commerce make blockchain play a huge advantage in the field of e-commerce.The application of blockchain technology in pharmaceutical e-commerce is conducive to establishing a trusted shopping environment,thus getting rid of the participation of third-party platforms,which can ensure the transparency of pharmaceutical Internet sales platforms.In addition,it can promote fair and healthy competition among businesses,better maintaining their reputation and image.As a part of e-commerce in medicine,it is of great theoretical value and practical significance to explore in-depth the development strategies of online pharmacies under the background of blockchain technology,provide new ideas in establishing consumers’ trust in Internet,realize drug and its logistics traceability,and strengthen government supervision.

The current research on the development of online pharmacies and the application of blockchain technology provides us with the development status of online pharmacies in China,such as the application status and development trend.At the same time,it also points out the factors that restrict the development of online pharmacies,such as the difficulty of drug traceability,the serious information leakage,etc.The research on the development strategy of online pharmacies under the background of blockchain offers us innovative ideas to solve the problems faced by online pharmacies and important theoretical support for promoting its fast development.With the application of blockchain technology in various fields and its huge potential,it is significant to study the application of blockchain in the field of online pharmacies for promoting the development of medical health in China.Therefore,based on the blockchain technology,this paper conducts an analysis and development strategy research to solve the problems in online pharmacies.Firstly,the paper studies the blockchain technology,grasping the characteristics of the blockchain technology.Secondly,the paper analyzes the problems that restrict the development of online pharmacies at present.Based on this,the feasibility of using the blockchain technology to solve the problems is discussed.Finally,the paper studies the development strategy and the implementation path of the online pharmacies under the background of the blockchain technology,so as to promote its further development.

2 Introduction to related theories

2.1 The definition of blockchain

Blockchain is a time-stamped series of immutable records of data maintained jointly by multiple parties and guaranteed by cryptography for transmission and access security,which is also known as the distributed ledger technology[1].Blockchain is divided into three types:public chain,alliance chain and private chain.Since its birth,blockchain has attracted wide attention from all sectors of society and has been regarded as an ingenious innovation.The characteristics of blockchain determine that it can establish a trust mechanism at a lower cost and change the existing untrusting environment in various fields.Blockchain technology has been favored by all walks of life,such as Baidu blockchain,Ant blockchain,and Huawei blockchain.The big era of “blockchain +”provides a wonderful prospect for the development of various industries.

2.2 The characteristics of blockchain

2.2.1 Immutability

Blockchain can build a highly trusted Internet environment,the fundamental reason is that the blockchain is immutable,which is guaranteed by cryptography,Hash function,miner computation and so on.All the data and transaction records on the blockchain can hardly be tampered with.Falsifying a single record means falsifying the entire chain in millions of instances,so the information on the blockchain can only be added,which cannot be replaced and the record will be saved permanently.

2.2.2 Decentralization

The data storage of blockchain technology does not depend on the trusted third party,but it is distributed on many nodes in the network,and each node is highly autonomous.It is different from the traditional way of storing in one or several larger nodes,which does not depend on a particular trusted center system.All nodes participate in the verification,storage and maintenance of blockchain data,which is called decentralization.

2.2.3 Openness

Through the core technology of consensus mechanism,blockchain can make the data on the chain open to anyone (except private encrypted information).All participants can use the time-stamped mechanism to query and trace the goods or user’s behavior,which increases trust between strangers.In addition,it is also conducive to the supervision of relevant government departments.Therefore,it can help establish a highly transparent Internet trading platform.

2.2.4 Anonymity

The anonymity characteristic of blockchain means users do not use their real name.The privacy and personal information of users in the network can be replaced by cryptographic characters.We can see the data information of transactions on the blockchain,but we do not know the identity of the traders.The use of cryptography technology can protect consumer privacy,which can effectively prevent the leakage of personal confidential information.

2.3 Research status of blockchain technology in online pharmacies

In CNKI,we got 17 249 articles with“blockchain” as the keyword,and 1 369 articles with “online pharmacies” as the keyword.At the same time,only one article was retrieved with both blockchain and online pharmacies as the keywords.Therefore,blockchain technology is a hot research topic for scholars.It has been applied in various fields with good results.However,its application research in the field of online pharmacies still lags behind and should be studied urgently.Through consulting some literature,we can find the research achievements in the development of online pharmacies and the application of blockchain technology.In terms of online pharmacies,Lei Ting et al.[2]demonstrated the feasibility of the development of online pharmacies by analyzing their advantages and disadvantages.Zhang Xueyan et al.[3]studied the current situation of the online pharmacies in China,including problems and challenges.Then they put forward some corresponding suggestions,which provided a theoretical basis for the operation and standard of online pharmacies.Liu Shaoran[4]researched the current situation of the supervision of online pharmacies,and put forward a series of countermeasures to strengthen it.In terms of the application of blockchain technology,Bao Jie et al.[5]analyzed the advantages of blockchain and the problems in the development of e-commerce.And then they discussed the application and development of blockchain technology in e-commerce.Feng Xiao et al.[6]elaborated the application of blockchain technology in drug traceability,and built a drug traceability system based on blockchain,laying a foundation for online pharmacies.By analyzing the characteristics of blockchain,Qin Ming[7]found that blockchain could solve the problems in China’s logistics field,He also proved the feasibility of the application of blockchain in supply chain logistics management.

3 Analysis of problems restricting the development of online pharmacies

The government department says that it is difficult to supervise online pharmacies.Some criminals use the Internet to sell fake or inferior drugs by exaggerating the effects and efficacy of drugs,which is difficult to find and control.Consumers believe that pharmacies with specific stores and the medical products have quality assurance.Meanwhile,online pharmacies are virtual ones,which cause consumers concerns about the quality of drugs.To sum up,the main reasons for restricting the development of online pharmacies are as follows.

3.1 Consumers worry about buying fake or inferior drugs online

The quality of drugs is related to the health of consumers.However,many criminals use websites to spread false information about fake or inferior drugs,exaggerating their efficacy,which poses a threat to the safety of consumers.The NMPA has also repeatedly issued a severe crackdown on the use of the Internet to publish false drug information,illegal sale of fake or inferior drugs.It is because the current online pharmacy system is not sound.Most consumers have a crisis of trust in online pharmacies[8].

3.2 Consumers are concerned about the efficiency and safety of logistics distribution

The features of medical commodities require that the process of logistics and distribution should be both safe and timely.If the drugs purchased by consumers cannot be delivered in time,they will not be able to meet the needs of consumers,which may even affect the patient’s health and life.Besides,the process of drug distribution requires specific storage conditions.If the process of drug distribution does not meet the requirements of drug storage,it will cause damage to the drugs,or even contaminate the drugs.High-efficiency and whole-process supervision of the drug distribution system will greatly promote the development of online pharmacies.

3.3 Consumers worry about personal information leakage

With the development of electronic commerce and big data era,the economic value of citizens’information is increasing.In this situation,consumers are worried that when they buy drugs in online pharmacies,their personal information such as purchasing records,medical condition and consultation information will be disclosed or stolen by criminals.The personal information leakage of Internet is a serious problem,and the online pharmacy does not give consumers enough sense of security,which also restricts its development[4].

3.4 Difficulties in government supervision

Traditional supervision is also called territorial supervision.However,in the absence of traceability of online drugs sold to all parts of the country,it is difficult to supervise them once quality problems occur.Due to the characteristics of the Internet,such as strong concealment and wide coverage,the government’s supervision has been unable to meet its needs to a certain extent.Although the government has taken strict measures to solve problem of selling fake or inferior drugs on the Internet,there are still consumers deceived.Such repeated instances of consumers being cheated are common.Therefore,the government should explore new regulatory means to control such cases.Government regulation has restricted the promotion of online pharmacies from the policy and national level.

4 Strategy of online pharmacies under the background of blockchain technology

On October 24,2019,General Secretary Xi pointed out at the 18th group study of the Political Bureau of the CPC Central Committee that blockchain technology should be widely applied in the field of people’s livelihood.People’s medical and health care is fundamental to their livelihood,which is an important indicator for achieving a healthy China.The application of blockchain technology in online pharmacies is an important part of “blockchain+medical health”.The application of blockchain in online pharmacies is conducive to solving the problems that restrict the development of online pharmacies.

4.1 “Blockchain+online pharmacies” can achieve drug traceability

Blockchain technology started early in the field of product traceability and it has become a research hotspot in recent years.Up to now,blockchain technology has been fully applied and developed in the traceability of food,vegetables,fruits,eggs,overseas commodities and information.In March 2017,The US FDA applied the blockchain technology to the management of prescription drugs and began to explore their traceability.Domestic Unis Cloud introduced the blockchain technology to its drug traceability cloud service platform.Drug traceability can be a good solution to the problem of fake or inferior drugs purchased online.However,due to the disadvantages of the central accounting mode,the traditional drug traceability system has all the information of drugs in the central database,and the data may be tampered with in the process of uploading,storage,transmission and query[9].The immutability and decentralization characteristics of blockchain technology provide a new way of solving the problems in the traditional drug traceability system.

Based on the blockchain platform,drug information is collected by drug manufacturers,logistics enterprises and online pharmacies.The collected information is written into the blockchain by means of distributed ledger,intelligent contract and consensus mechanism to ensure that the drug information is immutable[5].The application of blockchain in the field of drug traceability is integrated with the online pharmacy,which can provide consumers with transparency,reliability and safety of drug information.In addition,consumers can use a unique drug identification code (two-dimensional code,electronic labels,etc.) to verify the ingredient,logistics and other information of drugs.The application of blockchain technology can enhance consumers’ trust in online pharmacies.Meanwhile,it also cracks down on criminals counterfeiting to a large extent.

4.2 “Blockchain+online pharmacies” can improve logistics services

Taking part in the training of elite class of pharmaceutical cold chain organized by Beijing Medical Chain Management Co.Ltd.in 2019,we discussed with experts in the field of pharmaceutical logistics such as Liu Yang,Qin Yong and Xu Wei and visited the enterprises.We can understand the difficulties in the distribution of medical commodities in China,which are mainly reflected in the opacity of the transport process,the lack of reliability of data,the untimely and inaccurate update of logistics information,and the lack of supervision of storage conditions,etc.In September 2017,some pharmaceutical companies such as Genentech and Pfizer jointly launched MediLedger blockchain to record the data of the whole process of drug circulation and promote the development of blockchain technology in the field of logistics traceability.The application of blockchain technology to online pharmacies can solve the problems in logistics distribution and eliminate consumers’ distrust and concerns.It is an important measure to promote the development of online pharmacies.

Firstly,based on the traceability and immutability of the blockchain,online pharmacies can realize the logistics and distribution traceability.Besides,consumers can check the logistics of the purchased drugs at any time.For example,they can get the delivery time,location,vehicle conditions,drug quality,and the specified conditions (such as temperature,humidity,tilt) for drug storage and transportation.If the process of drug delivery has any interruption or loss,the responsible party can be found for the first time.Secondly,the consensus mechanism based on blockchain technology can build a trust system for medical logistics,which is helpful to build an open and transparent logistics network and avoid the system paralysis caused by virus attack.Thirdly,the blockchain system saves the sender and recipient information,and the real-name authentication of distributed drugs can be realized through the blockchain technology to avoid being taken by the wrong person.Finally,the blockchain is combined with artificial intelligence and online pharmacies,which can be used in intelligent logistics process,such as unmanned warehouse management and vehicle distribution.The logistics efficiency will be greatly improved,and the transaction cost can be reduced that enhances online drug delivery service.

4.3 “Blockchain+online pharmacies” can prevent information leakage

According to the “Survey Report on the Rights and Interests of Chinese Netizens” released by China Internet Association in 2019,70% of the consumers who conducted online transactions believed their personal information and transaction records had been disclosed.The purchase of drugs through online pharmacies will involve consumers’ private medical information and personal information.Consumers fear that if personal information is stolen by criminals,it will have an impact on their daily lives,such as sales promotion and harassing phone calls,pop-ups,spam messages and e-mails,even loss of property.The encryption technology based on the blockchain can effectively protect the consumer’s private information.

Using blockchain encryption and access control technologies,consumers’ identities and data can be protected.The private information such as search,consultation and transaction records of consumers when they buy drugs online are encrypted.It means transactions are conducted anonymously,and data in the process of transmission cannot be checked by other people.In addition,the distributed ledger of data signature design almost blocks the attackers from data forgery and theft[10].The encrypted storage of the blockchain means that to access the data,one must use a private key,which is more secure than a normal password.It is almost impossible to crack by force.The distributed storage of blockchain greatly reduces the risk of leakage of all online data.Blockchain,like a chain storing data,is interlocked to ensure the confidentiality and integrity of consumers’ data and private information.

4.4 “Blockchain+online pharmacies” can help government regulation

In recent years,the government has published a series policies to promote the development of online pharmacies.But due to the difficulty in tracing the sales of drugs in traditional online pharmacies,some criminals use network platforms to sell fake or inferior drugs.Therefore,the false drug advertisement spread across the Internet,and there were many cases of illegal Internet sales of pharmaceutical products[11],which greatly increased the difficulty of government regulation.Based on its advantages of data openness,information traceability,security and reliability,blockchain provides a sound network environment for online pharmacies and a new method for government supervision.

Food and drug regulatory departments,drug manufacturers,drug quality inspection agencies,pharmaceutical logistics enterprises and Internet e-commerce companies can establish an alliance to bring all the data of drugs online from production,storage,logistics and trading.The government can take advantage of blockchain immutability to supervise the authenticity of online pharmacies’qualifications and certificates.Using the traceability feature of blockchain to trace the source of drug information is conducive to drug quality inspection agencies and government regulatory departments to supervise the authenticity of drugs sold online.By tracing logistics,the government can check the whole logistics distribution information of drugs,which provides the government the basis for the supervision and review.The application of blockchain technology can realize the government’s effective supervision of online pharmacies.The government can learn the people’s health status through the data of residents’online purchase of drugs,then,it can implement corresponding measures to improve the people’s health level,and realize the goal of healthy China.

5 Specific path analysis of the application of blockchain technology to online pharmacies

Through the in-depth study of the characteristics of blockchain,we find a breakthrough to solve the problems in the development of online pharmacies.Besides,there is a huge potential of blockchain technology in the field of online pharmacies.Based on the application of blockchain technology in various fields at home and abroad,this paper puts forward several specific paths to apply blockchain technology to online pharmacies.

5.1 Strengthening the research and development of blockchain technology

The application of blockchain technology in the field of online pharmacies cannot be separated from the technical support of blockchain.At present,blockchain technology is still not mature,and there are many technical problems,such as small expansion and instability.We should pay close attention to the frontier of blockchain technology development at home and abroad.Besides,personnel training should be enhanced.By strengthening cooperation between universities and research institutions,blockchain core technologies can have breakthroughs.In addition,blockchain needs strong infrastructure support.The popularization and development of artificial intelligence,5G,and other technologies can support the application of blockchain technology in online pharmacies.

5.2 Deepening consumers’ cognition of the“blockchain+online pharmacies” model

Most consumers know the blockchain technology in Bitcoin,very few are aware of its characteristics.Consumers’ understanding of the model of “blockchain+online pharmacies” should be deepened through TV,advertisements,newspapers,brochures,publicity,experience and other means.This will help eliminate their worries about problems such as buying fake or inferior drugs online and personal information leaking.Blockchain technology is used to establish a trust mechanism in the Internet world,and gradually change the buying habits of consumers,which will promote the development of online pharmacies.

5.3 Promoting the establishment of the application platform of “blockchain+online pharmacies”

To realize the application of blockchain technology in the field of online pharmacies,we need to learn from the establishment of blockchain platforms in other fields at home and abroad.An alliance that integrates production,transportation,sales,after-sales and supervision should be established with the help of blockchain technology.A demonstration blockchain application platform can be built for the pharmaceutical industry with fair,transparent and healthy environment for online drug purchasing.

5.4 Improving the application and supervision mechanism of blockchain technology in online pharmacies

As a new technology,the blockchain is not perfect in the aspect of supervision.The characteristics of the blockchain technology also bring some challenges to the supervision[7].The application of blockchain technology in online pharmacies cannot be free from the regulation of policy and the supervision of government.While constantly improving the legal provisions for the application of blockchain,we should strengthen the technical standards for the application in online pharmacies,drug purchase standards and the governance system for the alliance chain.A perfect supervision mechanism is the institutional guarantee for blockchain to give full play to its advantages in the field of online pharmacies.

6 Conclusions

This paper explores the characteristics of blockchain and the problems in the development of online pharmacies and finds that there is a great fit between them.Aiming at solving these problems,the solutions are discussed one by one in detail by using blockchain technology.Finally,the specific paths of applying blockchain to online pharmacy are analyzed from four aspects:technology research and development,consumer approval,platform establishment and system supervision,which provide reference and guidance for other scholars.

The application of blockchain technology in online pharmacies can effectively solve many problems that restrict the development of online pharmacies,breaking through its bottleneck,and offering unprecedented opportunities.With the deep integration of blockchain technology and online pharmacies,the change of people’s online purchasing idea,the promotion of government departments and the support of related policies,online pharmacies will certainly develop vigorously in China.