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    Columns

    Healthcare Practitioner Channel Dynamics: A Thriving Market for Dietary Supplements

    This unique distribution channel is well positioned to lead the nutraceuticals industry in innovation, quality, and efficacy.

    Healthcare Practitioner Channel Dynamics: A Thriving Market for Dietary Supplements
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    By Gregory Stephens, Windrose Partners09.09.21
    The U.S. healthcare practitioner channel is one of the most dynamic segments of the natural products industry—characterized by strong steady growth, innovation, and increasing involvement of major multinational players. In 2019, practitioner channel sales accounted for 9.7% of total dietary supplement sales, up from 8.3% in 2012, and 6.6% in 2003. According to Nutrition Business Journal (NBJ) the practitioner channel generated $4.5 billion in sales in 2019, up from $3.69 billion in 2012.

    Growth in this channel reflects the public’s strong desire for non-pharmaceutical, nutrition-based medical options; increased acceptance of supplements by conventionally trained physicians; and more practitioners seeking new revenue streams to help offset declining insurance reimbursement and other financial pressures.

    Key Channel Dynamics
    The health practitioner channel for dietary supplements, medical foods, and foods for special dietary use differs considerably from other distribution channels in the natural products industry (e.g., traditional food/drug/mass/club stores, health food stores, multi-level marketing, and direct-to-consumer marketing). Successful products sold through the practitioner channel are often perceived to be higher quality and more efficacious compared to other channels.

    On the other hand, healthcare practitioners have high expectations for product safety, purity, and other quality measures. They also expect efficacy supported by sound clinical research. Because of these and other expectations, prices for nutritional products in this channel can be significantly higher than similar products in other channels.

    Another characteristic of successful products in the practitioner channel is that they address unmet patient/consumer needs. This can be a challenge; the U.S. FDA has stated that dietary supplements are intended to maintain optimal health for healthy people, not for treatment or prevention of disease. From a regulatory perspective, dietary supplements, medical foods, and foods for special dietary use are not intended to treat, prevent, or mitigate any diseases. Even medical foods are limited to the “dietary management” of certain diseases and health conditions. Under the law, products promoted for use in the care of sick people must be approved as pharmaceuticals.

    With that said, the reality in clinical settings is that many practitioners do recommend or dispense supplements to their patients with the intention of preventing or treating specific diseases. FDA and FTC have no jurisdiction to regulate the practice of medicine as such. But they can, and do, enforce the laws governing the claims that supplement brands can make. This can create communication gaps; companies cannot make product claims using the disease-treatment/prevention language that practitioners use in their day-to-day practices. 

    Under these circumstances, educating healthcare practitioners on the benefits of nutritional interventions and products can be challenging. It is imperative that companies have the resources and expertise to educate and influence health practitioners effectively, but within the boundaries set by the Dietary Supplement Health and Education Act (DSHEA).

    The COVID-19 pandemic is presenting many challenges for all health practitioners. However, there is no doubt that the health practitioner channel will remain viable and dynamic. One outcome from the pandemic is that many more people are becoming proactive about their health, and dietary supplements are one of the main modalities to which they turn.

    According to a survey conducted for the Samueli Foundation (Harris Poll) in June 2021, 59% of consumers who are currently taking supplements indicated they are taking more supplements since the beginning of the pandemic. The primary reasons given for increased usage is “to enhance my immunity” (57%), followed by “to take my health into my own hands” at 42% (Samueli Foundation, The State of Supplements Survey, June 2021).

    The practitioner channel offers many strengths and opportunities: 

    • Premium price points;
    • Steady increase in the number of physicians, nurses, and other professionals who are interested in nutritional supplements and other non-pharmaceutical alternatives;
    • Greater opportunity to leverage science by addressing a highly educated customer base (practitioners) that understands and values the research and other product substantiation;
    • Reputation for quality, safety, and efficacy, along with the inherent credibility and compliance that comes with a professional recommendation;
    • Expanding opportunities for medical foods and other targeted clinical nutrition products;
    • Some regulatory leeway by FDA and other regulators allowing health practitioners to make broader claims for dietary supplements.

    Stable Ground
    Although there are some prescription nutritionals (e.g., prenatal vitamins), there is no legal definition for “professional grade supplements.” From a legal perspective, there is no difference between a practitioner-only supplement sold in a physician’s office and a private label discount product in a convenience store. In practice, however, the FDA and other regulators recognize that the guidance of a physician or other health professional can mitigate potential risks associated with indiscriminate supplement use based in part on a clinician’s understanding of products.

    This, in turn, requires clear and non-ambiguous communication. While practitioner-channel companies are still prohibited from making disease claims, they have a bit more latitude in the use of clinical data to explain the benefits of specific products or ingredients.

    Generally, to date, federal and state regulators have chosen to leave the practitioner channel alone. This is in part because regulators are reluctant to interfere with doctor-patient relationships, but also because practitioner-focused companies are small relative to the retail conglomerates, and the retail side of the supplement industry presents greater risks. However, the practitioner channel is not a regulatory safe haven. Just because regulators have not challenged professional brands, does not mean they won’t in the future.

    Although experiencing strong growth, the health practitioner channel also has vulnerabilities.

    • Unauthorized online resale of practitioner brands erodes the professional only (sold only through health practitioners) value proposition (e.g., Amazon).
    • Repeat purchase rates can be low because many patients dislike the inconvenience of returning to their doctor to obtain supplements. Online dispensaries have mitigated this issue somewhat.
    • High price points in the practitioner channel may limit growth. Many middle- and lower-income people cannot afford out-of-pocket office visits, let alone high-priced supplements.
    • Perception of quality and efficacy is not the same as actual quality and efficacy substantiated by sound clinical research. Increasingly, practitioner-only brands will be called upon to prove their claims.


    Key Elements of Continuing Education
    Understanding how and where health practitioners learn about products is important. Although the COVID environment halted conferences, trade shows, and other in-person education opportunities, it is expected these will resume in the coming year, albeit not at the previous attendance levels. Conferences and seminars will remain a mainstay for practitioner education.

    Webinars and live-streamed educational events have become an increasingly important medium for practitioner education, especially since the COVID outbreak. As conference organizers and marketers become savvier with online learning technologies, their importance and usage will continue to increase.

    When educating practitioners about the benefits of branded products, there are several specific factors which consistently rate as important. Trust and product safety are always #1. This has been referred to as an “ante” for getting into the health practitioner channel. Safety is followed closely by efficacy, specifically the level and quality of clinical research substantiating product claims. Related, “does the patient realize a benefit” from taking the product comes in at #3 on surveys.

    Evolving Opportunities for Product Distribution
    Traditionally in the health practitioner channel, patients would either purchase supplements directly from practitioners in their clinic/office, or the practitioners would recommend products that the patients would purchase at retail or online. For a variety of reasons, some practitioners prefer not to distribute products from their offices, or they are prohibited by state laws from doing so.

    According to Holistic Primary Care’s (HPC) most recent Practitioner Survey (2019), 65% of practices dispense supplements to their patients, up from 35% in 2013. Of those practices that dispense, 79% do so from a formulary in the clinic/practice; 11% dispense their own private label products; and 56% use an online dispensary.

    The HPC survey also included the question, “How important is the revenue from dispensing supplements to the economic health of your practice?” Of the 65% of respondents who do dispense natural products, 14% said it was “essential” (can’t stay in practice without it); 35% said it was “very important”; 35% said it was “somewhat important,” and only 16% indicated it was “unimportant.”

    Much of the growth in physician influenced purchases has been through online supplement distributors. This simplifies the process, assures patients get quality products, and provides a simple means of payment to the practice, if desired. Much of the growth in practitioner-referred online sales has been driven through Emerson Ecologics and Fullscript.

    For the future, expect continued growth of these distributors as well as the number of physicians recommending products to be purchased at retail or from other touch points that are convenient for patients. As the number of physicians prescribing or recommending supplements increases, the number of conventionally trained, allopathic physicians is also increasing. For decades, companies like Nestle Clinical Nutrition (formerly Mead Johnson) and Abbott Nutrition (Ross Laboratories) have benefited from simple physician endorsement of products which patients later purchase at retail. These companies have used physician recommendations to help build multi-billion-dollar nutritional businesses.

    As the overall market for preventive and clinical nutrition products continues its impressive growth, the healthcare practitioner channel is well positioned to lead the market in innovation, quality, and efficacy. Understanding the needs of not only the practitioner but also their patients will be instrumental to leaders in the market. 


    About the Author:Greg Stephens, RD, is president of Windrose Partners, a company serving clients in the the dietary supplement, functional food and natural product industries. Formerly vice president of strategic consulting with The Natural Marketing Institute (NMI) and Vice President of Sales and Marketing for Nurture, Inc (OatVantage), he has 25 years of specialized expertise in the nutritional and pharmaceutical industries. His prior experience includes a progressive series of senior management positions with Abbott Nutrition (Ross Products Division of Abbott Laboratories), including development of global nutrition strategies for disease-specific growth platforms and business development for Abbott’s medical foods portfolio. He can be reached at 267-432-2696; E-mail: gregstephens@windrosepartners.com.
     
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