Introduction
The Indian pharmaceutical market was estimated to be at INR 4100 crores in 2021 and retained the third spot in the global market in terms of amount/volume and the 13th in value. It is predicted to advance to INR 6500 crores by 2024.1 Over the last decade, there has been a steady incline in online pharmacies throughout India. These online pharmacies, often known as e-pharmacies, offer customers a platform via which they get prescription medications and other e-services, enabling them to receive their medications or other services at home quickly and comfortably.2
Due to various start-ups efforts and considerable attention from investors to provide Indian citizens with high quality healthcare services at reasonable cost, e-pharmacies gained popularity. Their number rose from 23% in 2013 to over 59% in 2018. As per a 2018 Report by Frost and Sullivan, the pharmaceutical sector in India will grow at a compound annual growth rate (CAGR) of 63%.3
Three different business models are used by online pharmacies. First, the inventory model, in which the e-pharmacies own the medications and sell them directly to customers through their website or mobile app; second, the marketplace model, in which the e-pharmacies serve as a platform and an intermediary and links the customer to a physical pharmacy; and third, a hybrid model that is, a combination of both.4 Some examples of online pharmacies are Netmeds, Tata1mg, Medlife and PharmEasy. But all is not hunky-dory within the e-pharmacy sector as is evident from the recent show-cause notice sent by the Central Drugs Standard Control Organisation (CDSCO) to 31 online pharmacy companies expressing their concerns about the selling of pharmaceuticals online or through other electronic platforms in violation of the Drugs and Cosmetics Act of 1940.5
Legal background (what is all the confusion around e-pharmacies)
The Drugs and Cosmetics Act, 19406 (D&C Act) read with the Drugs and Cosmetics Rules, 19457 (D&C Rules) and the Pharmacy Act, 19488 are the primary legislation governing the manufacture, sale, and distribution of pharmaceuticals and cosmetics in India.
The current statutory framework makes no provision for the online sale or distribution of medications. However, it is crucial to remember that, while the D&C Act and Rules do not validate the legal status of the pharmacies, they do not make their operation illegal either.
The Indian Government proposed the Drugs and Cosmetics (Amendment) Rules, 2018 (Draft E-pharmacy Rules)9, which are yet to be notified. According to these Rules, anyone who desires to distribute, sell, stock, show, or offer for sale medicines by electronic means must get a registration certificate (valid for three years) from the licensing authority.
In addition, the office of Drugs Controller General issued a notice to State and Union Territory Drug Controllers in December 201510 stating that the D&C Rules are relevant even in the online sale of medications, stressing that the provisions of the abovementioned rules must be followed in both online and offline sale of drugs. The announcement in essence paved the way for issuing licences to e-pharmacies.
In 2018, a case was filed before the Delhi High Court titled, Zaheer Ahmed v. Union of India11, to restrict the sale of pharmaceuticals online via these e-pharmacies. The Court issued an interim injunction against the unlicensed online sale of medicines.
However, a similar petition titled T.N. Chemists and Druggists Assn. v. Union of India,12 was filed before the Madras High Court, and there, a Single Judge ordered online retailers to hold off the selling of drugs online until the “Draft E-pharmacy Rules, 2018” are notified. The pharmacies, which use an inventory model, filed an appeal against this decision before the Division Bench of the Madras High Court arguing that their operations are legal given the fact that they hold the necessary wholesale and retail licences and provide medications through licensed pharmacists. The marketplace-based e-pharmacies, on the other hand, countered that they just provide a technological conduit between customers and independent pharmacies that are duly registered and licensed in accordance with the D&C Act and Rules. They are operating legally like any other e-commerce business as per the Information Technology Act, 200013. The Division Bench stayed the Single Judge order on the grounds that the agencies established by the D&C Act and Rules are qualified to take appropriate action in response to violations of pertinent legal requirements and that an abrupt ban on online sales would be extremely difficult for the affected patients who purchase their medications online.
The Central Government on 15-3-2023 told the Delhi High Court that a proposal for framing rules to regulate the pharmacies was under consideration and some more time was needed.14
The Delhi High Court in its 22-5-2023 order has directed the Government of India to report the outcome of consultations and deliberations with the stakeholders related to the draft e-pharmacy rules to regulate online sale of drugs within six weeks and inform the Court of the final stand of the Government on the matter. The matter has now been listed for hearing on 28-8-2023.15
So clearly, there are no proper rules and regulations when it comes to the governance of the e-pharmacies within India.
Legal framework regulating e-pharmacies
In 2018, the Ministry of Health and Family Welfare came up with the Draft E-pharmacy Rules, 2018 to make way for the operation of the online pharmacies. However, these are yet to be notified in the Official Gazette.
Some of the highlights of these Rules are:
Definition.— E-pharmacy means the business of distribution or sale, stock, exhibit or offer for sale of drugs through a web portal or any other electronic mode.16
Registration.— According to the Draft Rules, anybody who wants to operate an online pharmacy must register with the Central licensing authority. This registration may be renewed for an additional period of three years.17
Suspension or cancellation of registration.— If the e-pharmacy registration holder violates any provision of the D&C Act or Section VI-B of the D&C Rules, his/her registration may be suspended or revoked.18
Customer support.— The e-pharmacy must provide a mechanism for handling complaints and customer service issues at all times. A licensed pharmacist should also be available to respond to the client’s questions or any doubts.19
Confidentiality of information generated through the portal.— The e-pharmacies must keep the customer information private and safe. They are only obligated to disclose any information to the State or the Central Government that is necessary for the protection of public health. Additionally, they must keep all their data within India.20
Inspection and monitoring.— The Central or State licensing authorities must investigate the location from which the e-pharmacy company is operated after an interval of every two years.21
Procedure for distribution or sale of drugs.— On receiving the prescription, the licensed pharmacist hired by the e-pharmacy must verify the patient’s and registered medical practitioners’ authenticity and only after that can start the process of medication dispensation. The D&C Act requires the e-pharmacy to distribute and arrange for the delivery of medications from any authorised establishment. Furthermore, the details of the medication supplied, and the patient records must be stored by the e-pharmacy.22
Prohibition on advertisement.— Online pharmacies are not permitted to advertise their medicines in any print or digital media.23
Complaint redressal.— In the event that low quality, contaminated, or fake pharmaceuticals are supplied, the Rules also include a process for complaint resolution.24
Certain conditions of registration to be fulfilled by e-pharmacy.— The online pharmacies must also comply with the provisions of the Information Technology Act, 2000.25
Supply.— The medicines must be supplied to the consumers against a cash or credit note, and a record of these transactions must be kept by the online pharmacies.26
Change in the Constitution.— If the structure of an e-pharmacy changes, it must notify the Central licensing authority about such change.27
Prohibited drugs.— The e-pharmacy is not allowed to sell tranquilizers, Schedule X medications or any of the substances listed in the Narcotic Drugs and Psychotropic Substances Act of 198528.29
Disclosure.— The e-pharmacies are required to publish information on their portal, such as their registration number, official logo, logistics service provider information, return policy for drugs dispersed, name of the registered pharmacist, contact information and the process for filing complaints.30
Further, there is a concern from medical industry that the D&C Act, being a pre-independence era legislation, has lost its relevance in today’s time and thus it needs to be amended in line with the expectations of the industry as well as that of the consumers and the Government. Therefore, the Ministry of Health and Family Welfare came up with the Draft Drugs, Cosmetics and Medical Devices Bill, 2022 (Draft Bill, 2022) which would replace the present Drugs and Cosmetics Act, 1940.
In relation to e-pharmacies, the Draft Bill, 2022 states that a person himself or herself or by any other person on their behalf can sell, stock, exhibit, offer for sale or distribute any drugs online only after getting a licence or permission from the authority concerned in such manner as will be prescribed by the Government.31
Also, in the case of certain Ayurvedic, Homeopathic, Sowa Rigpa bath and Siddha and Unani drugs and cosmetics, the Draft Bill, 2022 says that if a person wants to sell, stock, exhibit, offer for sale or distribute via online mode, he/she can do so only in such manner as will be prescribed by the Government.32
So, it can be inferred that through this Draft Bill, 2022 the Central Government wanted to notify in future the Draft Drugs and Cosmetics (Amendment) Rules, 2018 in order to regulate the e-pharmacies, but going by the recent reports, things have gone down south for online pharmacies. As previously mentioned, the Central Drugs Standard Control Organisation (CDSCO) issued a show-cause notice to 31 online pharmacies asking them to explain why no action should be taken against them for selling drugs online or through other electronic platforms in violation of the provisions of the D&C Act due to intense pressure from the All-India Organisation of Chemists and Druggists (AIOCD), an association of retailers.
Further, as per the available information, the Central Government has recently revised the provisions in the Draft Bill, 2022 regarding e-pharmacies by way of a new Bill. The new Draft Bill, 2023 has been currently sent for interministerial consultation and will be uploaded on the Union Ministry of Health and Family Welfare’s website in July for comments and objections from the public and relevant stakeholders.33
The new Draft Bill, 2023 says that “The Central Government may regulate, restrict or prohibit the sale or distribution of any drug by online mode, by notification”. Therefore, the Government has removed the provisions permitting the licensed operation of e-pharmacies in the Draft Bill, 2022 and has modified the language in such a way that will give unfettered powers to the Central Government itself to regulate, restrict or even completely prohibit the sale or distribution of drugs online.
Current challenges regarding the regulation of e-pharmacies
Apart from all the confusion about whether e-pharmacies are operating legally or are just taking advantage of the unclear laws in relation to their governance, there are also some other pressing issues. Such challenges also need to be dealt with seriously so that it does not adversely affect society at large.
Some of the issues are:
Sale of drugs.— Only registered pharmacists can distribute drugs on the prescription of a medical practitioner, according to the Pharmacy Act of 1948.34 As a result, the online pharmacies will need to adopt a model in which drugs are only offered through a certified pharmacist. Furthermore, the Pharmacy Practice Regulations, 201535 require a pharmacist to counsel a patient on drug usage, adverse effects, and so on while acquiring pharmaceuticals.
Fake prescriptions.— The prescription given by a registered medical practitioner can be easily doctored, manipulated, and misused by anyone. Currently there is no procedure to authenticate the prescriptions, like by way of digital signatures.
Drug abuse.— The uploading of a single prescription to different online pharmacies might potentially result in drug misuse. The 1945 Drugs and Cosmetics Rules36 stipulate that an annotation indicating the delivery of the pharmaceuticals must be put on the prescription. Also, there is no system to verify that the same prescription is used again on multiple e-pharmacies while ordering from them.
Data privacy.— Every person has a fundamental right to privacy.37 But the current laws are silent on as to how the personal data of patients, which these e-pharmacies will be having access to, will be regulated. In today’s world, data is the new gold, so the Government needs to ensure that such data will not be misused.
Regulatory mechanism.— The sale of drugs and registration of pharmacies is governed by the State licensing authorities.38 But when it comes to online pharmacies, they can register at one particular place and operate all over India. So, the question arises, how various State regulators will regulate such e-pharmacies? Therefore, rules need to be framed with respect to the business operation of e-pharmacies.
Inter-State sale.— Additionally, it is possible that medications that are legal in one State may be banned in other States. Since the Mumbai Food and Drug Administration has already reported one similar incident, the regulators will have a difficult time keeping track of the sources from which such drugs are ordered or supplied.39
Anti-competitive practices.— The brick-and-mortar pharmacies, through their association All India Organisation of Chemists & Druggists (AIOCD), are protesting against the online pharmacies agitating that they are operating in contravention of the laws of the land and are using anti-competitive practices by offering deep discounts to the consumers which totally undermines the fair-market principles.40
Position in other countries
USA
In the United States, the pharmaceutical sector is primarily governed by two laws; the Controlled Substances Act of 197041 (CSA) and the Federal Food, Drugs and Cosmetics Act of 190642 (FD&C Act). In 2008, a teenager named Ryan Haight overdosed on the pharmaceutical medication Vicodin after purchasing it online. This led to the enactment of the Ryan Haight Online Pharmacy Consumer Protection Act, 200843 (Ryan Haight Act). This Act amended the CSA in order to regulate online pharmacies.
The Ryan Haight Act states that e-pharmacies can sell drugs online only on the basis of a valid prescription.44
Also, the patient must upload this valid prescription on the e-pharmacy portal. Furthermore, a prescription’s legitimacy cannot be determined simply by the fact that a doctor signed it; rather, the prescription will be allowed only after the patient has undergone an in-person examination at the pharmacy.45
UK
All pharmacies in the UK, including online pharmacies, are required to register with the General Pharmaceutical Council (GPhC) and adhere to its requirements.
Some of the standards are:
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Before beginning to offer a service, pharmacies must collect information regarding the hazards associated with each unique service, medication, and medical device that they provide remotely, including online.
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When a pharmacy service is divided into components that are performed at many locations (such as in a “hub and spoke” or “click and collect” service), it must be clear which pharmacist is accountable and responsible for each portion of the service, as well as which pharmacy technician and other personnel are engaged.
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Depending on the type of pharmaceutical services they offer, pharmacies must maintain the relevant records. Pharmacies should only collect the information they need.
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Pharmacies that sell and provide medications online must ensure that they are only listed for sale on websites connected to legitimate pharmacies. Additionally, the pharmacy’s website needs to have safe tools for gathering, utilising, and storing information about customers as well as a secure connection for accepting credit card payments.
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The GPhC mandates that all online pharmacies must have a procedure in place for verification before supplying the correct medication. The GPhC does not specify a technical procedure for identity verification; rather, it leaves this to the e-pharmacies to have a reliable and effective mechanism in place.46
Comparative table regarding approaches of regulatory agencies around the world to regulate online sale of pharmaceutical products47
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Brief explanation |
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The RA uses a “buyers beware” strategy to alert customers to the danger associated with online drug purchases. |
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Conclusion
Clearly the online pharmacy market has already been entrenched deep into the business of online sales of drugs. Going by the figures and broader scenario, it looks like the e-pharmacies have passed the face of experimentation and are becoming a reality. Live example of this is how the e-pharmacies immensely helped during the time of Covid-19.48
Further, as can be seen from an infinite number of examples from the past, whenever technology has advanced (for good), the law needs to keep pace with such advancements. But going by the recent reports, like CDSCO giving show-cause notice to e-pharmacies and the Government tweaking the provision relating to e-pharmacies in the Draft Bill, 2022, uncertainty has prevailed regarding the fate of e-pharmacies.
One argument is that since the e-pharmacies following the marketplace model are not having a registered pharmacist licence, they cannot exhibit drugs on their website as the law says that only licence holders can do so, but the e-pharmacies operating on the marketplace model say that they are just intermediaries as per Information Technology Act, 2000 and are only connecting buyers with sellers.49 But then the question arises, whether they can display drugs on their website? It is such obstacles which the Government needs to correct but tweaking the pre-independence era laws.
Instead of thinking about banning e-pharmacies, the Government could develop a strong strategy and offer clear-cut legislation to address some of the current issues like bogus prescriptions, inter-State sales, etc. and foster an atmosphere that is favourable for the current participants. Additionally, it will spur the entry of more investors and advance the growth of India’s online pharmaceutical market.
†Partner at Seven Seas Partners. Author can be reached at nilanjan@sevenseasllp.com.
††Partner at Seven Seas Partners.
†††Consultant at Seven Seas Partners. Author can be reached at shubhamay@sevenseasllp.com.
††††Intern with Seven Seas Partners. Author can be reached at varunpathania321@gmail.com.
1. Alison C. Dcruz et al., “The Rise of E-Pharmacy in India: Benefits, Challenges, and the Road Ahead”, (ncbi.gov) National Center for Biotechnology Information, Indian J. Pharmacol 2022 Jul-Aug; 54(4): 282-291.
2. Alison C. Dcruz et al., “The Rise of E-Pharmacy in India: Benefits, Challenges, and the Road Ahead”, (ncbi.gov) National Center for Biotechnology Information, Indian J. Pharmacol 2022 Jul-Aug; 54(4): 282-291.
3. Alison C. Dcruz et al., “The Rise of E-Pharmacy in India: Benefits, Challenges, and the Road Ahead”, (ncbi.gov) National Center for Biotechnology Information, Indian J. Pharmacol 2022 Jul-Aug; 54(4): 282-291.
4. Shebani Bhargava, “E-Pharmacies In India: The Need For Regulation”, India Law Journal. https://www.indialawjournal.org/e-pharmacies-in-india.php.(not
5. “DCGI Sends Notices to E-pharmacies for Selling Drugs without Licence”, The Economic Times (11-2-2023).
6. Drugs and Cosmetics Act, 1940.
9. Draft Drugs and Cosmetics (Amendment) Rules, 2018. <https://cdsco.gov.in/opencms/opencms/system/modules/CDSCO.WEB/elements/download_file_division.jsp?num_id=MTkzOQ==>.
10. Drugs Controller General of India, Reference No. 7-5/2015/Misc/e-Governance/091 (issued on 30-12-2015).
11. WP No. 11711 of 2018, order dated 12-12-2018 (Del).
13. Information Technology Act, 2000.
14. “Rules to Regulate E-pharmacies Need Some More Time: Centre to Delhi HC”, Business Standard (25-3-2023).
15. “SysImmune Doses First Patient in Phase 1 Clinical Trial of BL-B0181 for Treatment of Metastatic Non-Small Cell Lung Cancer”, (pharmabiz.com13-10-2023).
16. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(I)a).
17. Draft Drugs and Cosmetics (Amendment) Rules, 2018, Rr. 67(J)(1), 67(Q) and (R).
18. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(T).
19. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(J)(4).
20. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(K).
21. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(O).
22. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(P).
23. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(S).
24. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(U).
25. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(M)(1).
26. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(M)(3).
27. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(M)(4).
28. Narcotic Drugs and Psychotropic Substances Act, 1985.
29. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(M)(5).
30. Draft Drugs and Cosmetics (Amendment) Rules, 2018, R. 67(M)(6).
31. Draft Drugs, Medical Devices and Cosmetics Bill, 2022, S. 41(2).
32. Draft Drugs, Medical Devices and Cosmetics Bill, 2022, S. 102(3).
33. News Report – Ayushman Kumar, “Prohibition on Cards for Online Pharmacies Health Ministry Sets the Ball Rolling for Regulation” (Moneycontrol.com,14-3-2023).
35. Pharmacy Practice Regulations, 2015.
36. Drugs Rules, 1945, R. 65(3).
37. K. Puttaswamy v. Union of India, (2019) 1 SCC 1.
38. Drugs Rules, 1945, R. 59(1).
39. Alison C. Dcruz et al., “The Rise of E-Pharmacy in India: Benefits, Challenges, and the Road Ahead”, (ncbi.gov) National Center for Biotechnology Information, Indian J. Pharmacol 2022 Jul-Aug; 54(4): 282-291.
40. Alison C. Dcruz et al., “The Rise of E-Pharmacy in India: Benefits, Challenges, and the Road Ahead”, (ncbi.gov) National Center for Biotechnology Information, Indian J. Pharmacol 2022 Jul-Aug; 54(4): 282-291.
41. Controlled Substances Act, 1970 (US).
42. Federal Food, Drugs and Cosmetics Act,1906.
43. Ryan Haight Online Pharmacy Consumer Protection Act, 2008.
44. Ryan Haight Online Pharmacy Consumer Protection Act, 2008, S. 2.
45. Ryan Haight Online Pharmacy Consumer Protection Act, 2008, S. 2.
46. Guidance for Registered Pharmacies Providing Pharmacy Services at a Distance, Including on the Internet, (pharmacyregulation.org) (March 2022) <https://www.pharmacyregulation.org/sites/default/files/document/guidance-for-registered-pharmacies-providing-pharmacy-services-at-a-distance-including-on-the-internet-march-2022.pdf>.
47. Comparison Table —- Sia Chong Hock et al., “Regulating Online Pharmacies and Medicinal Product E-Commerce”, (ispe.org) (November-December 2019)
48. A. Minhas, “Value of E-pharmacy Market Across India in 2020, with an Estimate for 2026 (in Billion Indian Rupees)”, Statista (12-7-2023)
<https://www.statista.com/statistics/1344355/india-market-value-of-e-pharmacy/>.
49. Jay Parikh and Priyanka Sunjay, “India: E-Pharmacies: The Stories So Far & the Way Forward”, Mondaq (22-7-2020) Luthra and Luthra Law Offices India <https://www.mondaq.com/india/healthcare/968136/e-pharmacies-the-story-so-far–the-way-forward?login=true&debug-domain=.mondaq.com>.
