INTRODUCTION

E-pharmacies witnessed a massive surge in demand due to lockdowns during the Covid-19 pandemic. 

The sale of medicines (including prescription and non-prescription medicines) through these pharmacies occurs through online orders from customers and patients. Orders are dispatched and delivered to recipients through courier, mail, or delivery. 

The benefits of e-pharmacies are multi-fold. They provide greater access and anonymity for consumers to healthcare, lower pricing than physical pharmacies, lower product costs, prescription validation through licenced pharmacists, doorstep delivery within a short time, media alerts and discounts, etc.

MODELS OF E-PHARMACIES

Currently, e-pharmacies in India mainly operate through the three business models below.

(a) Franchisee Model

This is a traditional pharmacy with franchisees across various locations. In this model, the franchisee provides customers the option to buy medicines through the franchisee’s website and mobile applications.

(b) Inventory Model

In this model, e-pharmacies have their own inventory of medicines, which is then sold to consumers through online platforms. Foreign direct investment (“FDI”) is prohibited under this model.

(c) Marketplace Model

In this model, e-pharmacies act as ‘intermediaries’ under the definition of Section 2(1)(w) of the Information Technology Act, 2000 (“IT Act”) and facilitate the online sale and delivery of medicines from physical pharmacies that the e-pharmacies have a tie-up with, to the consumers. 100% FDI is permitted in this model.

CURRENT REGULATORY FRAMEWORK

There are no specific regulations which deal with the online sale and distribution of medicines in India. However, a 2015 notice issued by the Office of Drugs Controller General stated that the provisions of the Drugs and Cosmetics Act, 1940 (“D&C Act”), read with the Drugs and Cosmetics Rules, 1945 (“D&C Rules”), would also apply to online sale of drugs. Therefore, a prescription from a registered medical practitioner is required for the sale of drugs through an online mode as per the list of drugs mentioned in the D&C Rules, and distribution can only be by a registered pharmacist as per the Pharmacy Act, 1942.

The IT Act also governs e-pharmacies and e-pharmacy portals, and the Consumer Protection (E-Commerce) Rules, 2020, provide requirements to operate an e-pharmacy portal and compliances for an e-commerce entity or marketplace e-commerce entity.

In 2016, the Federation of Indian Chambers of Commerce and Industry (FICCI) introduced the Self-Regulation Code of Conduct for regulating the conduct of e-pharmacies and dealt with matters such as the requirement of an e-pharmacy to dispense prescription medicines only upon proof of prescription and addressing the issue of counterfeit drugs. However, these regulations don’t have any force of law.

There are several judicial precedents regarding the online sale of medicines. In 2018, the Delhi High Court banned the online sale of medicines without a valid license. In January 2019, the Madras High Court stayed the order of a single judge bench banning the online sale of medicines while directing the Central Government to notify the Drugs and Cosmetics Amendment Rules, 2018 (“Draft Rules”).

In February 2023, the Central Drugs Standard Control Organization (CDSCO) issued show-cause notices to 20 online pharmacies, including Flipkart, Amazon, Tata 1mg, Healthcart, etc., alleging that these platforms were selling medicines that were prohibited from being sold without valid prescriptions. These platforms responded by stating the platform only acted as an intermediary between consumers and licensed pharmacies for facilitating the sale of medicines online and, therefore could not be held liable. There has been no further development on this matter.

The Delhi High Court, on 16 November 2023, directed the Central Government to frame a policy for the online sale of medicines within eight weeks and inform the High Court about the outcome of consultations with the various stakeholders on the Draft Rules. The court opined that the Draft Rules have been pending for over five years and must be expedited to define the regulatory compliances around e-pharmacies clearly. ​​​​ As the policy has not been framed within the stipulated eight weeks, the relevant joint secretary will need to appear before the High Court on 4 March 2024, the  next date of hearing. 

AMENDMENT TO D&C RULES, 2018

The Draft Rules were introduced to regulate the online sale of drugs. ‘E-pharmacy’ has been defined as the business of distribution or sale, stock, exhibit, or offer for sale of drugs through a web portal or any other electronic mode. The Draft Rules also define an ‘e-pharmacy portal’ as a web portal maintained by a registered e-pharmacy holder to conduct their e-pharmacy. 

However, the Draft Rules have not been notified yet. In December 2019, the Central Government of India ordered a halt to the sale of medicines through unlicensed online platforms until the Draft Rules are finalised.

Certain key requirements under the Draft Rules are as follows:

(a) Registration of E-Pharmacy and Customer Support

Any person who wishes to run an e-pharmacy must obtain registration under the Draft Rules. Further, a 24/7 customer support and grievance redressal facility at the e-pharmacy must be created.

(b) Disclosure of information generated through the E-Pharmacy portal

Any information the e-pharmacy obtains from consumers is confidential, must be stored only in India and can be disclosed solely for any public health reasons to the Government. 

(c) Periodic Inspection

There will be period inspections of the premises of the e-pharmacy by the Central or State Licensing Authority every 2 years.

(d) Prohibition of advertisement of drugs through E-Pharmacy

E-pharmacies cannot advertise medicines for any reason on television, radio, print, internet, etc.

(e) Suspension or Cancellation of Registration

This registration provided under the Draft Rules may be suspended or cancelled if the e-pharmacy registration holder contravenes any provision of the D&C Act or the D&C Rules.

DEMERITS OF THE DRAFT RULES

(a) Mechanisms for controlling unlicenced e-pharmacies

The Draft Rules do not cover the liability of illegal sites selling drugs online nor provide a mechanism to deal with such sites. 

(b) Prohibiting fake prescriptions

The Draft Rules only cover the obligation of e-pharmacies to check the legitimacy of prescriptions and do not deal with consumers providing fake prescriptions.

(c) Differentiation of models 

The Draft Rules do not differentiate between the different models of e-pharmacies, creating interpretational issues in relation to identifying restrictions on FDI in the inventory model and the marketplace model of e-pharmacies under the FDI Policy, 2020.

DRUGS, MEDICAL DEVICES AND COSMETICS BILL, 2022

The Drugs, Medical Devices and Cosmetics Bill, 2022 (“Draft Bill”) proposes to regulate e-pharmacies by introducing mandatory permissions and licencing requirements for e-pharmacies. 

Although no compliances are contained in the Draft Bill for e-pharmacies, the Central Government has the power to make rules for the regulation and restriction of the online sale or distribution of any drug and medical devices.

CONCLUSION

E-pharmacies have increased the accessibility of medicines and healthcare. This demand for e-pharmacies is, therefore, giving rise to a ripe market where more players are willing to invest. Since the legality of e-pharmacies is still being debated, the Central Government should pass the Draft Bill at the earliest and also introduce a regulatory framework to ensure that a definitive procedure is incorporated to identify illegal pharmacies and verify prescriptions to suspend any ambiguity with regard to the operations of e-pharmacies.