[The Future of Telemedicine ⑤] "DoctorNow Prevention Act" on the Brink... What Is the Solution for Platform Regulation?

'Pharmaceutical Affairs Act' Amendment Stalls at National Assembly Plenary
Ministry of Health and Welfare and Ministry of SMEs and Startups Remain at an Impasse Over Wholesale Ban

Editor's NoteWe are now living in an era where, instead of waiting in long lines at hospital waiting rooms, patients can meet doctors through their smartphone screens. After being temporarily permitted during the COVID-19 pandemic and during periods of conflict between the medical community and the government, as well as through pilot programs, telemedicine is set to be fully implemented at the end of this year. While telemedicine offers the convenience of filling gaps in healthcare access for remote areas and vulnerable populations, there are also limitations due to the ban on medication delivery and concerns about the misuse of pharmaceuticals. At the same time, sharp differences in perspective persist among the medical community, platform companies, and patient organizations. Facing a monumental change that could shake the very paradigm of the medical industry, we closely examine how telemedicine is transforming the Korean healthcare landscape and analyze the key issues that must be addressed to achieve true innovation.

While telemedicine has been institutionalized, the partial amendment to the Pharmaceutical Affairs Act-known as the "DoctorNow Prevention Act"-which includes a ban on telemedicine platforms establishing wholesale businesses, failed to pass. Arguments have clashed: some insist this bill must be blocked as it could become a "second Tada Ban Act," while others argue that it is necessary to prevent large platforms from monopolizing the ecosystem. As a result, the fate of the bill, which was set for a plenary vote in the National Assembly, has become uncertain.

According to industry sources on February 3, a meeting held on January 14 between government ministries for last-minute coordination ended without any results. This has brought the "public interest logic"-that telemedicine platforms should be prevented from dominating the pharmaceutical distribution market-into direct conflict with the "innovation logic"-that the growth of new industries should not be hindered. In response, the government is also considering building a public platform to fulfill the public service function of telemedicine.

DoctorNow, a telemedicine platform established in 2019, grew to become the number one platform in the industry through pilot projects during the COVID-19 period. Starting in February 2024, it established Bijin Pharmaceuticals, a pharmaceutical wholesaler, and entered the wholesale business. The rationale was that by directly supplying medicines, the platform could more accurately track pharmacy inventory and solve the so-called "pharmacy merry-go-round" problem, where patients who received telemedicine services have to search for pharmacies that carry the prescribed specialty drugs.

However, the response from the field has been cold. DoctorNow granted a "NOW Inventory Guarantee" mark to pharmacies that purchased a certain amount of drugs from its subsidiary and gave them priority exposure at the top of the app. The pharmaceutical industry has defined this as a clear form of new rebate. Critics argue that the method of sending patients only to pharmacies that buy from a specific wholesaler is no different from the illicit dealings that used to occur between pharmaceutical companies and hospitals.

An official from the Korean Pharmaceutical Association criticized, "If a platform goes beyond being an intermediary and becomes a supplier, pharmacies will be forced into a subordinate relationship, compelled to purchase certain drugs just to stay in the platform's favor. This will ultimately restrict patient choice and lead to increased misuse of pharmaceuticals." The Korean Medical Association stated, "The amendment to the Pharmaceutical Affairs Act prohibits platform companies that emerged with telemedicine from receiving rebates from pharmacy operators. This law is essential for maintaining fair trade among pharmacies and for public health and safety."

"Second Coupang Prevention Act" vs "Second Tada Incident"

Opinions are also divided within the National Assembly. Assemblyman Kim Yoon of the Democratic Party of Korea, who sponsored the bill, and other members of the Health and Welfare Committee argue that large platforms must be prevented from monopolizing the market by controlling manufacturing, distribution, and brokerage. They especially emphasize that in the pharmaceutical sector, which is directly linked to public health, platforms cannot be allowed to encourage prescriptions of non-reimbursed drugs to maximize profits.

On the other hand, Assemblyman Kim Hankyu and other members of the startup research support group "Unicorn Farm" are concerned about a potential "second Tada" incident. They argue that killing a company with after-the-fact regulations, when it started business within legal boundaries, undermines the nation's commitment to fostering new industries.

The Korea Venture Business Association also maintains that platform-driven patient solicitation for medical institutions and pharmacies, as well as market-disrupting behavior by pharmaceutical wholesalers, can be regulated by amending existing regulations. The Ministry of SMEs and Startups also insists that "an outright ban on wholesale licenses is excessive regulation and an infringement on business freedom," and that it is more reasonable to prepare post-regulation measures.

In response, the Ministry of Health and Welfare argues, "Given the current law prohibits medical institutions and pharmacy operators from engaging in wholesale, making an exception only for platforms would be preferential treatment," further deepening inter-ministerial conflict. As a result, whether the Office for Government Policy Coordination will mediate and whether the extraordinary session of the National Assembly after the Lunar New Year holidays will become a turning point in this debate is drawing attention.

If the DoctorNow Prevention Act passes as originally drafted, DoctorNow will have to give up either its platform business or its wholesale business immediately. Its subsidiary, Bijin Pharmaceuticals, will likely face sale or closure. It will also be prohibited from placing specific pharmacies at the top of the app or using the "Inventory Guarantee" mark to attract customers. However, it will still be allowed to provide information based on pharmacies' proximity to the patient or higher ratings.

Conversely, if the bill fails or is significantly revised, the influence of platforms is expected to grow even further. There are concerns that platforms may begin charging brokerage fees or subscription fees, or accelerate commercialization by leveraging accumulated medical data in connection with the insurance or health supplement markets. For this reason, experts argue that there is a need to create institutional pathways that ensure platforms are fairly compensated for technological innovation without undermining the public interest in healthcare.

Park Sungmin, Professor at the Graduate School of Public Health at Seoul National University, pointed out, "Telemedicine platforms are certainly innovative, but if their revenue model is limited to pharmaceutical wholesale margins, that is distribution, not medical innovation." He warned, "If platforms rely on wholesale margins as their business model, it could directly impact patient health."