E-commerce is rapidly transforming the way business is carried out in India. The increasing use of internet and smartphones is further making people dependant on such options as they offer convenience, promptness and cost effectiveness in the services provided by them. Improvements in technology and growth in digital payments have increased people engaging in online shopping.
As per the Economic Survey, the e-commerce industry has been growing at a rate of 17 percent in the year 2018-2019. It is pertinent to highlight that E-pharmacy is the next big thing for e-commerce entities. There mode of operation is as follows: There is one where a technology corporation brings together neighbourhood licensed pharmacies to the consumers, and the other where the e-pharmacy is an online service of an offline pharmacy.
These pharmacies offer huge discounts to customers, providing value added services and free home delivery that are just a click away. A number of such factors have led to the springing up of a number of e-pharmacies lately that are close to about 250, and have cornered around Rs.1000 crores of the Indian market, where the retail market of overall drugs and medicines is worth Rs.1.2 lakh crores.
It is relevant to say that the mechanism of regulation of e-pharmacies is very shaky and cloudy, and the same has been manifest in the recent judgements against such online pharmacies by the Delhi High Court and Madras High Court (wherein the latter lifted the imposed ban until further guidelines on the functioning of these pharmacies are issued). On 12.12.2018, the Delhi High Court had ordered a complete ban on online pharmacies across the country with directions to the Central Government to implement the order. This decision came in the wake of a large number of protests from owners of traditional medical shops and All India Organization of Chemists and Druggists, against the proliferation of online pharmacies. The Petition stated that the sale of medicines online was without the mandate of law and illegal, and could also prove to be a major health risk as ‘drugs are highly potent and its misuse or abuse can have serious consequence on human health, a large number of people who are minors/uneducated use the internet and they can be victims of wrong medication while ordering medicines online.’
The Government and the Traditional Pharmacists’ contention has been that if such online pharmacies are not regulated; expired, unapproved, fake and contaminated drugs may be consumed by patients who obtain them through e-pharmacies.
The ban came at a time when the government has issued draft guidelines which recommend regulating the online pharmacy industry and licensing the e-pharmacies. The said draft rules were issued by the Ministry of Health and Family Welfare through notification dated 28.08.2018. It is noted that despite this order that was passed by the Delhi High Court, many pharmacy portals remained operational and their take on this issue was that if the Government has considered and issued guidelines for the regulation of online pharmacies, it is an indication that it does not want to kill the industry, as the same is at a very nascent stage. It is imperative to note that a Division Bench of Madras High Court on 02.01.2019 stayed the order passed by a single judge on 17.12.2018 banning the sale of medicines online. The Bench has observed that the Centre is actively putting systems in place for regulating the sector and is not opposed to online pharmacies.
Before substantiating upon the draft rules issued by the Ministry, it is pertinent to appraise the current regulatory state of the pharmaceutical and e-pharmacy industry. Regulatory framework in the pharma industry is aimed at the protection of human health. Governments spend on this industry because of its role in restoring health, saving lives, stopping epidemics and preventing diseases. Since the very purpose of drugs is to diagnose, prevent or treat ailments, they are products closely linked with advances in regulation and research. At present drugs in India are regulated under the Drugs and Cosmetics Act, 1940, that regulates the import, export, manufacture, distribution and sale of drugs and cosmetics. The Central Drugs Standard Organization(CDSCO) is the apex regulatory body that lays down the standard of drugs, diagnostics, cosmetics and devices, and also issues licenses to drug importers and manufacturers. It also lays down amendments to Acts, Rules, regulatory measures, and regulates market authorization of new drugs and clinical research in India. At present as per law, the fixed retail shops must obtain license under Section 18 of the DCA and Rule 61 of the DCR to carry sale of prescribed medicines. A brick and mortar pharmacy is required to have a drug license issued by the Licensing Authority, for dispensation of drugs with the mandatory requirement of a Registered Pharmacist who is a person registered under the Pharmacy Act, 1948, or a matriculate or equivalent with four years’ experience of selling drugs, or a degree holder form a recognized University who has one year’s experience of dealing in drugs. The Draft Rules impose similar conditions on the online pharmacies.
It is highlighted that the Drugs and Cosmetics Act was formulated in 1940 and the Drugs and Cosmetics Rules in 1945, since they were enacted prior to the advent of internet, they did not consider the sale of drugs online or over the internet. Through a circular dated 30.12.2015, the Drugs Controller General (India) clarified that the Act and Rules do not differentiate between the sale of drugs through conventional means or online. Companies selling drugs through online pharmacies were required to comply with the Act and the Rules. Due to the lack of a monitoring mechanism and operational efficiency, the need to introduce separate rules to govern online sale of drugs was realized. It is noted that parties opposing these e-pharmacies have averred that the former openly flout these rules and play with the health of millions. However, with the notification of the Draft rules being issued, it is highlighted that the Indian Internet Pharmacy Association (IIPA), a self-regulatory body of e-pharmacies believes that online pharmacies will encourage a transparent mechanism for drug dispensing and will also have higher accountability as the entire procedure will be tracked.
The Draft Rules on ‘Sale of drugs through e-pharmacy’ provide that:
- a) No person will distribute or sell, stock, exhibit or offer for sale of drugs through e-pharmacy portal unless registered (with the Central Drugs Standard Control Organization (CDSCO).
- b) Any person who intends to conduct business of e-pharmacy shall apply for the grant of registration to the Central Licensing Authority in Form 18AA through the online portal of the Central Government.
- c) The registration issued to any person for e-pharmacy will remain valid for a period of three years from the date of issuance, and a renewal of registration will have to be done if it wants to continue.
- d) The application of registration of e-pharmacy will have to be accompanied by a sum of Rs.50,000 and also that the registration holder of the e-pharmacy will have to comply with the provisions of the Information Technology Act, 2000.
- e) The supply of any drug shall be made against a cash or credit memo generated through the e-pharmacy portal and such memos shall be maintained by the e-pharmacy registration holder as record.
- f) The details of the patient shall be kept confidential and shall not be disclosed to any person other than the central government or the state government concerned, as the case may be.
- g) The e-pharmacies will not be allowed to sell narcotic drugs, tranquilisers, and Schedule X drugs.
- h) No e-pharmacy shall advertise any drug on radio or television or internet or print or any other media for any purpose.
- i) A team of officers authorized by the Central Licensing Authority, with/without experts in the relevant field or officers authorized by the concerned State Licensing Authority, will inspect the premises from where the e-pharmacy business is conducted, every two years.
- j) It would also be binding upon the online pharmacies to deliver the ordered drugs in the specific time that will be communicated to the patients during the time of purchase.
- k) The e-pharmacy portals will be required to have 24/7 call centres to assist and guide customers.
- l) The registration of the e-portal may be cancelled or suspended if any of the provisions of the Drugs and Cosmetics Act, 1940 are contravened.
An analysis of the draft rules brings to light certain inconsistencies such as the fact that where a pharmacy is already registered under the Drugs and Cosmetics Act, 1940 and it also operates an online pharmacy, would also be required to apply for an e pharmacy license. This would unnecessarily lead to double abidance to similar rules.
The current draft rules on e-pharmacies only talk about entities that directly undertake sale of drugs or retail sale and do not contemplate a ‘marketplace model’ under which online pharmacies are currently operating in India, basically providing a technological platform to connect sellers and customers for the sale of drugs. Such intermediaries do not hold the inventory of drugs and nor do they deal in sale, contrary to how a pharmacy operates in case of retail sale. It is unclear as to whether certain obligations provided by the rules would be relevant to the marketplace model if they were to obtain a registration, which actually apply to a retail sale model, some of them are as follows- procuring drugs for customers from a licensed premises, maintaining records of e-prescription uploaded on portal, having a registered pharmacist, etc.
India shall widen the ambit of the industry by incorporating the best practices from across the world such as establishing a National Portal which shall act as a nodal platform for transacting and monitoring online sale of drugs. The concept of online pharmacies can help contain problems such as over and unscrupulous use of drugs if sale is done through an Electronic Prescription Exchange(EPE). EPE is a computer based electronic generation, transmission and filling of a medical prescription by replacing the papers and faxed prescriptions.
These portals provide medicines at affordable prices, at huge discounts, and free delivery thus proving to be a more convenient option for patients, especially senior citizens. They allow people to order medicines discreetly and also to choose the best service out of a number of options without having to visit a store physically. These portals can also prove to be a possible solution for the problems of malpractices that offline pharmacies engage in, wherein they have tie ups with hospitals and doctors, while selling medicines of higher range for the benefit of commission for themselves or the doctors.
For any of these benefits of online pharmacies to practically accrue, there needs to be a solid framework for the regulation of these players, from registration to functioning, etc. Specific rules should be designed for prescribing, dispensing, selling, and delivering prescription drugs through these pharmacies. The e-pharmacies should be compulsorily registered and be licensed from the regulatory body and hence the legal mechanism shall be put in place.