In 2014 biopharmaceuticals alone made $1.2 trillion in the United States. With that large a foothold in the pharma market there is no doubt why intelligent people get into the pharmaceutical drug market. Despite the many perks many banks and credit card processors consider the industry high risk.
First, there is the issue of human contact. Product that are ingested receive additional scrutiny from regulators and the government than most products. This includes any products for pets, products that are simply used on pets and not ingested receive even more scrutiny. Because of this it incredibly difficult to get products to market creating risk.
Just because you have been approved by regulators does not mean your free and clear. Teams in the public health sector maintain constant reports on side effects. You may already be familiar with many of the huge pharma recalls. With recalls come the many penalties handed down by the FDA (Food and Drug Administration) which include , finding the patients that ingests the drug , contacting the patients doctors. While not required many companies provide refunds for those who took their product.
Some companies may not choose to give refunds and as a result customers may seek refund though chargebacks even if the vendor doesn’t have to refund the money, the card issuer may find the companies wronged the customers all the same. With this High-risk merchant accounts are needed to maintain the account when normally it would be cut off due to recall. It's not only Human ingested drugs that this effects drugs for pets have the same risks.
When it comes to delivering products there are many factors that can prevent a products from being received by the consumer. Products may get lost , stole, damaged by weather.
When the delivery does not go as planned customers ask for refunds from Card Processors causing charge backs. Because of this not High risk merchant accounts are often canceled while High risk accounts are already prepared for it.
Be it complication with other products , dosing errors, or any number of factors presented by the patient. Claiming the product does not work often leads to charge back situations and with charge backs the risk of having your merchant account canceled is very real. With a High-Risk account your credit card processor expects these situations.
If you have ever watched late night television, you have probably seen ads by law firms seeking patients to took certain drugs. Now whether or not the merits of their case are true or not they seek out customers with claims of serious side effects from certain drugs. Just the idea of health problems will cause patients to act and seeks lawsuit or refunds.
This causes credit card processors to investigate pharmaceutical companies and while the claims are being investigate the pharmacy's money is put on hold. So customers can ask for their money back this causes much stress on the merchant.
Vitamins / Nutraceuticals
Nutraceuticals include vitamins, supplements, herbal products, nutrients in pill or liquid form, powdered supplements. While manufactures claim their products provide health benefits, but under U.S law it is up to them to ensure the product is safe. Not until the product reaches the market does the FDA get involved in the safety of the product.
Because of how the regulations work, Nutraceutical companies are able to sell products still under review by the may review agencies. Even if the product works are claimed the idea that a product is under review can cause a panic among the users. This may result in chargeback situations.
