The e-pharmacy space has been heating up in the backdrop of Covid-19 pandemic with Reliance Retail buying majority stake in Netmeds, PharmEasy merging with Medlife and the launch of Cloudtail, Amazon’s online drug delivery services. The All India Organisation of Chemists and Druggists (AIOCD) wrote detailed letters to Amazon CEO Jeff Bezos and RIL chairman Mukesh Ambani in August 2020, cautioning them that e-pharmacies are not recognised under the Drugs and Cosmetics Act and, therefore, is illegal. The letter also states AIOCD has provided comments to the draft e-pharmacy rules in June 2019, opposing the conditions prescribed on e-prescription. The legality of the online pharmacy business has also been questioned by the Madras and Delhi High Courts, says the letter.
This article examines the above contentions and delve into the policy as well as the legal and regulatory mechanisms in play.
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Retail pharmacies (mostly unorganised) are the dominant distribution channel accounting for more than 90% of the pharmaceutical sales in India. However, 8.5 lakhs pharmacies are grossly inadequate in a country with 60% market remains underserved. Rural India remains grossly underserved. At one point, post offices — India had 156,600 of them with 90% of them in rural areas — were considered for dispensing drugs. Jan Aushadhi stores were launched to make drugs affordable and accessible. Novartis’s Arogya Parivar and Sanofi’s Prayas are initiatives to increase the reach of drugs among the rural population.
Further, several medicines remain unavailable in second and third tier cities. I used to buy medicines in Delhi for my mother who lived in Guwahati and courier them. During the pandemic, I resorted to using netmeds.com. I had to upload the prescription for placing an online order and thereafter a doctor called to verify the medicine details. It took 20 days for the medicines to reach home.
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Compare this situation to the reach of internet and mobile telephony. Fall in smartphone prices and data rates led to an exponential increase in internet adoption – 86% urban users and 87% of rural users consider mobile phones as the primary device for accessing the internet.
e-pharmacy along with teleconsultation and e-prescriptions can provide access to quality healthcare to patients, especially from remote areas. India is moving towards universal healthcare coverage and the government is embracing digital technology to fix healthcare constraints to increase accessibility and enhance affordability. Some pre-Covid initiatives are National Health Stack and National Digital Health Blueprint 2019.
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To enable access and affordability, the government is working on over-the-counter (OTC) regulations as well. As a harbinger, the health ministry on March 6 this year permitted brick and mortar pharmacies (with licences in Form 20 or 21) to make doorstep delivery of certain drugs (not included in Schedule X and H1) on receipt of prescription physically or through email.
During the pandemic/lockdown and with people avoiding unnecessary interactions and practicing social distancing, healthcare delivery has truly gone digital. The pandemic has accelerated the adoption of teleconsultation and resort to e-pharmacies.
The lockdown rules issued on March 24, 2020 allowed “delivery of all essential goods including foods, pharmaceuticals, medical equipment through e-commerce”. Telemedicine guidelines were issued on March 25 and the Medical Council of India (MCI) released ethics regulations allowing medical practitioners to consult online on May 12, 2020. Aarogya Setu, contact tracing mobile app from the government of India, promoted healthcare digitisation. Swasth Stack by Swasth Alliance promoted teleconsultation and hospital care by digitising patient’s healthcare data.
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Manufacture, sale, offering for sale, stocking, exhibiting and distribution of drugs in India are regulated under the Drugs and Cosmetics Act 1940 (DCA) and Rules 1945 (DCR) as amended from time to time.
- Brick and mortar pharmacies are regulated under Part VI (Rule 61) of DCR which requires wholesale or retail licences to be obtained from State FDAs and conditions to be complied.
- Restricted retail licence to sell drugs which do not require the supervision of a registered pharmacist (Schedule K drugs loosely considered OTC under the current regime. OTC regulations are actively under consideration).
- Schedule H general prescription drugs can be sold under supervision of pharmacists.
- Schedule H1 drugs like antibiotics, anti-TB and habit-forming drugs can be sold by prescription only and under the supervision of pharmacists.
- Schedule C and CI drugs like vaccines, insulin, non-injectables like vitamins that require cold storage, Schedule X habit forming and narcotics drugs, Schedule G like hormonal drugs, antihistamines, medicated skin creams (doorstep delivery not allowed, last case – Warning has been prescribed in labels that such drugs may be dangerous if not taken under medical supervision) doorstep delivery not allowed.
The objective of these elaborate rules is that medicines ought to be regulated, not misused. keeping patient’s safety in mind. While DCA/DCR does not validate the legal status of e-pharmacies, there is nothing in them that renders the operation of e-pharmacies illegal either.
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It is important to note that in the current market place model, e-pharmacies do not sell drugs online but merely provide a technology platform to connect customers to third party brick and mortar licensed pharmacies and act as an INTERMEDIARY under Section 2(1) (w) of the Information Technology Act, 2000. Inventory based model will, however, bring such players under the scope of Part VI of DCR.
The union ministry of health published draft e-pharmacy rules on August 28, 2018 which proposed to insert Part VI B (rules 67 I to 67 W (15 provisions) plus new forms – basically all DCA/DCR safeguard provisions are made to apply to e-pharmacies. It defines e-pharmacy as business of distribution or sale, stock, exhibit or offer for sale of drugs through web portal (e-pharmacy portal) or any other electronic mode and introduces the concept of prescription issued electronically
The key departures are that while pharmacies require licences to be obtained from state FDAs, the draft rules make the CDSCO the one-stop licensing authority to register e-pharmacy for pan-India. Further, Schedule X habit forming and narcotics drugs are not allowed to be sold.
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The basis of AIOCD’s opposition is that e-pharmacies pose ethical, legal and quality challenges on the grounds that important safeguards like patient examination by physician, review of prescription by a licensed pharmacist who can guide the patient on medication will be skipped, leading to self-medication and indiscriminate use of prescription drugs like antibiotics and habit-forming drugs. Further it brings up data privacy and confidentiality issues.
Two writ petitions (both pending) were filed before the Delhi and Madras High Courts, praying that Union government take action against entities distributing, selling, offering to sell, exhibiting drugs on the internet. The division bench of the Delhi High Court passed an interim order on December 12, 2018, directing the Union government to ensure that online sale of drugs without licence is prohibited.
A single judge of the Madras High Court passed an order on December 17, 2018, stating in Para 38 that till the e-pharmacy rules are notified, online traders will not proceed with their business in drugs after 10.30 am of December 20, 2018. This order was stayed by the division bench on January 2, 2019 which observed: “authorities constituted under the DCA and DCR are competent to take appropriate action on violation of relevant statutory provisions and a sudden prohibition on online sales will cause grave hardship to the concerned patients who order medicines online.”
It is important to reiterate that the DCA and DCR do not prevent the operation of e-pharmacies per se and that in any case e-pharmacies using the digital market place model are in compliance with the law as they merely provide a technology platform to connect customers to third party brick and mortar licensed pharmacies. In fact, e-pharmacies give marketplace sellers additional reach and streams of revenue. Interestingly, AIOCD letters to all Chemists dated August 22, 2020 called them to boycott online purchases (all products), but did not call upon them to boycott listing and selling their drugs through these platforms. Nevertheless, a policy vacuum is not desirable and therefore, the draft e-pharmacy rules of August 2018 (albeit with checks and balances) should be notified soon. The issue of whether allowing hegemony of a couple of players in this space in medium to long run (like in the US) is desirable in a country like India is a matter of another discussion.
(Krishna Sarma is a Delhi-based lawyer. She is the managing partner of Corporate Law Group.)