E-pharmacies: Regulatory environment needs clarity

By Shubha Karra and Shreya Dalal, Link Legal India Law Services
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Technological innovations have paved the way for setting up e-pharmacies globally and India is not far behind with well-funded players such as Netmeds, 1mg, PharmEasy, etc. However, the regulatory environment for these companies is ambiguous as the laws did not anticipate such a technological disruption. There is an immediate need to draft rules and guidelines for e-pharmacies to create a well-defined regulatory framework and to prevent their misuse.

Shubha Karra Partner Link Legal India Law Services
Shubha Karra
Partner
Link Legal India Law Services

Currently, the government’s only rules on the subject are the Pharmacy Practice Regulations, 2015, where “e-pharmacy” is not defined. Therefore the definition of “pharmacy” in the practice regulations needs to be expanded to include e-pharmacies.

E-pharmacies should also be required to register with the government and obtain a licence, and details of their registration and licensing should be made publicly available. The Drugs and Cosmetics Act, 1940, and Drugs and Cosmetics Rules, 1945, need to provide for distinct licences for e-pharmacies.

The act and rules should also provide for a registry to maintain records of all the licensed e-pharmacies in the country. A supervisory body would need to be created to determine the terms and conditions for registration, the penalties for violating these during the validity of the registration, and the renewal procedure.

In addition, the definition of “prescription” needs to be reviewed. The practice regulations define prescription as “a written or electronic direction from a registered medical practitioner or other properly licensed practitioners … to a pharmacist to compound and dispense a specific type and quantity of preparation or prefabricated drug to a patient”. A literal interpretation of this would require that the doctor send the electronic direction directly to the e-pharmacy, which is not practical. Accordingly, the Drugs and Cosmetics Act, and the rules, need to be amended to permit patients to upload electronically scanned copies or photographs of a physical prescription made by a doctor on the e-pharmacy’s website.

Additionally, it is necessary to regulate the dispensing of drugs by an e-pharmacy. The e-pharmacy should dispense drugs only from a physical store registered with the government, under the supervision of a registered pharmacist. The dispensing of scheduled drugs should be against a valid prescription from a registered medical practitioner and undertaken under the direction and personal supervision of a registered pharmacist.

Rule 65(11) of the Drugs and Cosmetics Rules requires that for some drugs, the name and address of the seller and the date on which the prescription is dispensed must be noted on the prescription above the signature of the prescriber. For an e-pharmacy, this may not be practical. The rules should be amended to address this and all other aspects relevant to the operation of an e-pharmacy.

Shreya Dalal Associate Link Legal India Law Services
Shreya Dalal
Associate
Link Legal India Law Services

The rules may provide for some common conditions such as dispensing drugs only against an original prescription or scanned copy of an original prescription for both offline and online pharmacies. However, specific conditions as applicable to an e-pharmacy need to be notified as soon as possible in order to prevent abuse in the market.

Lastly, e-pharmacies also need to comply with regulations governing e-commerce. E-pharmacies may be based on a marketplace or inventory model of e-commerce, as provided for in the foreign direct investment policy. Where an e-pharmacy opts for a marketplace model, it will act as a facilitator between the buyer and seller on an electronic platform. Where an inventory model is adopted, a licensed pharmacy will operate with both offline and online platforms for supplying medicines to buyers.

A good regulatory framework will balance ease of doing business, revenue and growth expectations with concerns on misuse of drugs and spurious drugs. Bulk purchases by online pharmacies and efficient logistics chains have the potential to create significant savings for customers in India, where more than 75% of healthcare spending is from private individuals.

One only needs to look at the savings that are delivered by platforms such as Amazon and Flipkart to get a sense of the kind of savings that are possible. However, one hopes that the policy will be well thought out and not one that panders to political constituencies while stifling business growth.

While e-pharmacies in India are trying to comply with current regulations, it is important for the government to formulate cohesive and consistent policies that create a conducive environment for e-commerce businesses and business models to become spearheads of growth and inclusion.

Shubha Karra is a partner and Shreya Dalal is an associate at Link Legal India Law Services.

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