Regulating Online Sale of Drugs in India

Context: Recently, the Union Ministry of Health issued show-cause notices to more than twenty companies selling medicines online (e-pharmacies) over concerns expressed by the All India Organisation of Chemists and Druggists (AIOCD).

What are E-pharmacies?

• E-pharmacies are enterprises involved in the sale and purchase of pharmaceuticals and other medical equipment through the internet or other electronic modes.
  • They offer customers the advantage of not having to visit the brick-and-mortar store.
• The concept of e-pharmacy has boomed during the COVID times when medicines were needed at doorsteps.
• E-pharmacies entered the Indian market in 2015 supported by billions of dollars of private equity money while offering discounts in order to garner market share. However, profit margins in the sector are limited to 15-16%.
• They have described themselves as facilitators of doorstep delivery and claimed to have tied up with retail vendors to set up vending machines.
• New strategy: E-pharmacies have now begun to open their own capital-intensive brick-and-mortar stores while mom-and-pop chemists (independently owned) have introduced store apps and Whatsapp-based purchases.
  • In the past eight years, the market penetration of e-pharmacies has seen single-digit growth from 3% to 5%.

Regulation of e-pharmacies

• The Ministry of Health had floated the draft e-pharmacy rules in 2018 which were intended to regulate the sector but were dropped out midway.
• The 172nd Parliamentary Standing Committee report of June 2022 had also recommended the implementation of e-pharmacy rules.
• Multiple court orders from the Bombay, Patna, Madras and Delhi High Courts have also recommended the regulation of e-pharmacies.
• In 2019, the Competition Commission had recommended encouraging e-pharmacies as unreasonable trade margins imposed by traders’ associations had driven up prices and muted competition.

Draft Rules for E-pharmacy 2018

• Definition of E-pharmacy: “business of distribution or sale, stock, exhibit or offer for sale of drugs through a web portal or any other electronic mode”
• Mandatory Registration: The draft rules make it mandatory for e-pharmacy businesses to register with the Central Licensing Authority
• Data Localization: It mandates e-pharmacy portals to be established in India through which they are conducting their business and the data generated has to be kept localised.
• Privacy: It states that the details of the patient should be kept confidential and not to be disclosed to any third party except the central government or the state government concerned.
• Prescriptions: For carrying out the sale of prescription drugs (i.e., drugs listed under Schedule H, H1 of the Drugs and Cosmetic Rules) a prescription by a Registered Medical Practitioner must be uploaded by the customer.
• Prohibition on sale of certain drugs: The sale of drugs covered by the Narcotic Drugs and Psychotropic Substances Act, 1985, tranquillizers and drugs listed under Schedule X has been prohibited.
  • Schedule X drugs include narcotics and psychotropic substances.
• Prohibition on Advertisement: Advertisement of drugs is prohibited on any media for any purpose by an e-pharmacy.
• Compliance with the IT Act: E-pharmacies must comply with the provisions of the Information Technology Act, 2000 (IT Act) and Rules.
• 24*7 helpline: The rules state that complete information on the medicines will have to be provided by the e-pharmacy holders and a 24/7 helpline should be made available.

Significance and Challenges

Benefits

• Economic Advantage: At present, e-Pharmacy is at its nascent stage in India, but it has the potential to be a very large industry segment soon.

• Increased Consumer Convenience: E-pharmacy enables consumers to order medicines in a convenient manner, from their mobile or computer.
• Increased Access: Online platforms can ensure hard-to-find medicines available to consumers across India. Further, e-Pharmacies also enable access to rural areas where there is a limited presence of retail pharmacies.
• Improved patient Awareness: E-pharmacies have the technology infrastructure to provide value-added information to consumers, such as drug interactions, side effects, medicine reminders, and information on cheaper substitutes.
• Affordability: The e-pharmacy model reduces working capital, overhead costs, and trade margins for pharmacists.

Limitations

• Regulatory issues: The current Drugs and Cosmetics Act, of 1940 doesn’t explicitly deal with e-pharmacies. Thus, there is no clear-cut guidelines to regulate, control and monitor e-pharmacies in India.
• Promotion of self-medication: There are concerns that e-pharmacies will encourage self-medication or irrational use of medicines which is already a common practice in India.
• Misuse: Prescriptions submitted to e-pharmacies may be fake, and it could be difficult to verify their authenticity.
• Fake/Illegal sites and substandard medicines: There are concerns over fake or illegal sites coming up thus undermining consumer interest.
• Effect on retail sellers: The growth of e-pharmacies has given rise to concerns among retail sellers as they would not be able to compete with the discounted pricing provided by online platforms.
• Privacy issues: There are medical privacy concerns associated with the online transactions of drugs as the patient’s medical history could be leaked.

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