A petition seeking de-linking of a website, namely www.aarogyasetumitr.in, from the Aarogya Setu application, has been filed before the Delhi High Court.1 It is contended that the linking of the website, which lists out various e-pharmacies (including MedLife, PharmEasy, 1mg, and NetMeds), to the application is highly arbitrary and discriminatory, since the website exclusively promotes and acts as a marketing tool for e-pharmacies but snubs individual retailers who offer home delivery of medicines. More importantly, it is alleged that the operation of e-pharmacies is (i) illegal under law, and (ii) in contravention of an injunction order passed by the Delhi High Court. On the same note, the All India Organisation of Chemists and Druggists, in a letter addressed to Prime Minister Narendra Modi, has asked the government to delink the Aarogya Setu Mitr portal from the application, and termed the operation of such e-pharmacies illegal.2
A pressing question in this regard is the accuracy of the contention that operation of e-pharmacies is illegal in India, specifically, in light of commercial and private establishments involved in the ‘delivery of all essential goods including foods, pharmaceuticals, medical equipment through e-commerce' being allowed to continue their operations in the March 24 order issued by the Ministry of Home Affairs (“MHA”).3 Additionally, in a subsequent order, it was noted that ‘all facilities in the supply chain of essential goods, whether involved in manufacturing, wholesale or retail of such goods through local stores, large brick and mortar stores or e-commerce companies' should be allowed to operate.4
- Present Regulatory Regime
The main legislation governing the manufacture, sale and distribution of drugs and cosmetics in India is the Drugs and Cosmetics Act, 1940 (“D&C Act”), read with the Drugs and Cosmetics Rules, 1945 (“D&C Rules”) (collectively, the “D&C Act and Rules”), and the Pharmacy Act, 1948. The D&C Act and Rules contain several provisions to ensure the quality and standard of the drugs. Significantly, no person can manufacture for sale or distribution, sell, distribute, or stock, exhibit or offer for sale (i) any drug other than under and in accordance with the conditions of an issued licence5, and / or (ii) any drug which is adulterated, misbranded or spurious, or is not of a standard quality.6 Contravention of the aforesaid provisions can lead to imposition of penalty, in the form of monetary fine and imprisonment.7 Specifically, the drugs specified in Schedule H, Schedule H1 or Schedule X of the D&C Rules can be sold by retail only on production of and in accordance with a prescription of a registered medical practitioner.8 In addition, only a registered pharmacist can dispense any medicine on the prescription of a medical practitioner.9
It is clear that the current legislative framework does not contain any provisions in relation to the online sale or distribution of medicines. However, it is important to note that while the D&C Act and Rules do not validate the legal status of e-pharmacies, there is nothing in them which renders the operation of e-pharmacies illegal either.
- Regulation and Legality of Operation of E-Pharmacies
A sub-committee was constituted to examine issues pertaining to sale of drugs on the internet in the 48th Drugs Consultative Committee (“DCC”) meeting.10 Its recommendation to allow online sale of drugs with elaborate regulations was considered in the 50th DCC meeting, and was, thereafter, forwarded to the government as well.11 This led to the draft Drugs and Cosmetics (Amendment) Rules, 2018 (“Draft E-Pharmacy Rules”), which have not yet been notified.).12 The Draft E-Pharmacy Rules define an e-pharmacy to mean ‘business of distribution or sale, stock, exhibit or offer for sale of drugs through web portal or any other electronic mode', and requires any person who wishes to distribute, sell, stock, exhibit, or offer for sale drugs through an electronic method to obtain a registration certificate (which is valid for a period of three years) from the licensing authority. Further, the sale of drugs that qualify as ‘narcotic' and ‘psychotropic' under Narcotic Drugs and Psychotropic Substances Act, 1985, tranquilizers and other drugs covered under Schedule X of the D&C Rules are prohibited under the Draft E-Pharmacy Rules.
The lack of specific rules and regulations does not explain the continued operation (and recognition) of entities engaged in the online sale and distribution of medicines either. This can be explained on reading the notice issued to the state and union territory drug controllers by the Office of Drugs Controller General in December 2015.13 The notice rendered the provisions of the D&C Rules applicable even in the online sale of drugs on noting that the provisions of the said rules need to be complied in both online and offline sale of drugs. Essentially, the notice paved way for the issuance of licences for e-pharmacies as well. Certain e-pharmacies have adopted an inventory model, wherein they stock their own medicines and then sell it to customers. On the other hand, other e-pharmacies have adopted a marketplace model; such e-pharmacies qualify as ‘intermediaries' under Section 2(1)(w) of the Information Technology Act, 2000 (“IT Act”) for they facilitate the online sale and delivery of drugs from the physical registered pharmacies they have a tie-up with.
However, the prevailing confusion caused to the absence of specific rules and regulations governing the online sale of drugs coupled with the legal sanction accorded by the notice issued in December 2015 led to a series of litigation in this regard. Notably, in a petition filed by Dr. Zaheer Ahmed before the Delhi High Court, it was argued that the online sale of drugs is prohibited under law. In this case, the Delhi High Court granted an interim injunction against ‘online sale of medicines without licence.'14 Subsequently, the Drugs Control General of India directed all the states and union territories to take necessary action to comply with the Delhi High Court injunction order.15 Due to the continued online sale of medicines, a contempt petition has been filed before the Delhi High Court.16
A similar petition was filed before the Madras High Court, where, in the first instance, a Single Judge directed online retailers to not proceed with online sales of drugs till the Draft E-Pharmacy Rules are notified.17 An appeal was filed before the Division Bench of the Madras High Court, wherein e-pharmacies, which follow an inventory model, argued that their operations are valid under law since they have the requisite wholesale and retail licences, and supply drugs through registered pharmacists. Since they have the valid licences and are subject to the conditions imposed therein, it was argued that the licensing authority may prosecute the persons violating the D&C Act and Rules. On the other hand, the e-pharmacies following a marketplace model argued that they merely provide a technology platform to connect customers to the third-party pharmacies who are licensed and registered under the D&C Act and Rules. Thus, the Division Bench stayed the order of the Single Judge on the reasoning that the authorities constituted under the D&C Act and Rules 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.18
It is necessary to examine the accuracy of the argument undertaken by certain e-pharmacies, such as 1mg and PharmEasy, that they do not require any licence for their operation as they are covered under the IT Act, for they merely facilitate sale of drugs from licensed pharmacies and do not themselves engage in online sale of medicines.19 To the contrary, in the D&C Act, the requirement of license is not merely limited to entities undertaking sale or distribution of such drugs but also extends to exhibition or offering for sale any drugs.20 On the same note, exhibition or offering for sale any drug which is not of a standard quality, or is misbranded, adulterated or spurious is prohibited too.21 Similarly, under the Draft E-Pharmacy Rules, any e-pharmacy seeking to distribute, sell, stock, exhibit or offer for sale drugs through the electronic mode should obtain a registration from the licensing authority.22 Further, a notification issued by the Ministry of Health and Family Welfare on 26 March 2020 casts a doubt on the legality of the such e-pharmacies that act as an intermediary without a licence.23 Under the said notification, only a person holding the mandated licence in Form-20 or Form-21 under the D&C Rules to sell, stock or exhibit or offer for sale, or distribute drugs by retail, can sell a drug specified in Schedule H, by retail with doorstep delivery of the same, on receipt of a prescription physically or through e-mail, on fulfilling the conditions mentioned therein. Interestingly, the injunction order of the Delhi High Court is also limited to sale of medicines through unlicensed online platforms.24 Thus, the e-pharmacies that are operating in accordance with the issued licence are not in breach of the statutory provisions; however, the same cannot be said for unlicensed e-pharmacies that have adopted either the inventory or the marketplace model, or both.
Interestingly, the saga of online sale of medicines is quite similar to the online sale of liquor. The Karnataka High Court passed an order against the online sale of liquor.25 In this case, Hip Bar challenged that it does not need a licence under the Karnataka Excise Act, 1965 since it is not engaged in the manufacture, possession and sale of alcohol, and merely acts as a facilitator for the sale of liquor by a licensee to the end customer. Significantly, the court took an expansive interpretation of the term ‘sale' of liquor, and held that placing an order for liquor from licence holders, and transporting the same to end users on receiving the required amount constitutes as ‘sale'. It was held that sale or purchase made through any mode other than the ones prescribed under the statute is illegal. Thus, it was held that online delivery of liquor is not permitted in the state of Karnataka in the absence of an enabling provision under the statute to grant such licence. However, the Supreme Court of India encouraged states to consider online sale of liquor in order to maintain social distancing norms. 26 Similarly, several states, such as West Bengal and Chhattisgarh, have warmed up to online delivery of alcohol in light of the covid scare.27 In addition, on noting that the covid induced lockdown has the potential to disrupt business for the rest of the year, the All India Brewers Association have written to various state governments seeking creation of special licences to facilitate sale of beer through e-commerce platforms such as Swiggy and Zomato.28
E-pharmacies maintain that the drugs are supplied only after the registered medical pharmacists verify the prescriptions uploaded online, along with due authentication of the persons who placed an online order. In addition, they state that sufficient records are maintained and a proper monitoring system is in place to prevent any infraction or illegality. Relying on the goodwill of e-pharmacy players, a voluntary code of conduct has been issued by the Indian Internet Pharmacy Association, wherein e-pharmacies have been encouraged to, inter alia, process medicines only against prescription from a registered medical practitioner, not sell Schedule X drugs, and dispense medicines only through licensed pharmacies.29 Still, there are several challenges and risks posed by online sales of drugs, including (a) misuse of medical and other personal information, (b) usage of fake prescriptions to avail drugs, and (c) supply of prescription drugs on the basis of a nondescript online questionnaire.
However, this is not to say that e-pharmacies do not offer any unique benefits and advantages. Particularly, e-pharmacies have the potential to ease the access to medicines by providing home delivery of medicines to, specifically, vulnerable persons, such as senior citizens, and differently abled. Technology advancements in e-pharmacy models also make it easier to track previous orders and set reminders for medicines, making it customer friendly. Likewise, it enables transparency, thereby, making it is easier to track wrongful supply of drugs, prevent abuse, promote supply of quality drugs, and ensure proper payment of tax. It is not surprising that the online health sector has been one of the biggest beneficiaries of the covid driven lockdown, and online sales of health products are estimated to grow by four times this year.30 Significantly, the covid induced lockdown has stressed the importance of e-commerce players in maintaining social distancing norms and providing delivery of essential goods in critical times. Appreciably, post-covid, the online health market has been estimated to expand by $25 billion across all segments, but particularly in prescription drugs and e-consultations, as compared to the pre-covid estimate of $16 billion.31 Thus, in order to reap the benefits of the e-pharmacies but also control its misuse, the e-pharmacies should be given a level playing field to compete and thrive in the market. While the MHA orders recognising and allowing online delivery of medicines during the lockdown is a welcome step in this direction, the need of the hour is a specific framework recognising the legal status of e-pharmacies and governing the operation of e-pharmacies and counteract the prevailing confusion caused due to an existing legal loophole.
1 South Chemists & Distributors Association & Anr. v. Union of India & Ors., W.P.(C) 3139 of 2020.
2 E-pharmacies operating illegally via site linked to Aarogya Setu: Chemists to govt, https://tech.economictimes.indiatimes.com/news/internet/e-pharmacies-operating-illegally-via-site-linked-to-aarogya-setu-chemists-to-govt/75817525.
3 Annexure to Order No. 40-3/2020-D, Guidelines on the measures to be taken by Ministers / Departments of Government of India, State / Union Territory Governments and State/Union Territory Authorities for containment of COVID-19 epidemic in the country, Government of India, Ministry of Home Affairs, 24 March 2020, https://www.mha.gov.in/sites/default/files/Guidelines.pdf.
4 Order No. 40-3/2020-DM-I(A), Government of India, Ministry of Home Affairs, 15 April 2020, https://www.mha.gov.in/sites/default/files/MHA%20order%20dt%2015.04.2020%2C%20with%20Revised%20Consolidated%20Guidelines_compressed%20%283%29.pdf
5 Section 18(a), Drugs and Cosmetics Act, 1940.
6 Section 18(c), Drugs and Cosmetics Act, 1940.
7 Section 27, Drugs and Cosmetics Act, 1940.
8 Rule 65(9), Drugs and Cosmetics Rules, 1945.
9 Section 42(1), Pharmacy Act, 1948.
10 Report of the 48th Meeting of the Drugs Consultative Committee, 2015.
11 Report of the 50th Meeting of the Drugs Consultative Committee, 2016.
12 G.S.R. 817(E), Draft Drugs and Cosmetics (Amendment) Rules, 2018, Ministry of Health and Family Welfare, 28 August 2018.
13 No.7-5/2015/Misc/e-Governance/091, Office of Drugs Controller General (India), 30 December 2015.
14 Dr. Zaheer Ahmed v. The Union of India & Ors., W.P.(C) No. 11711 of 2018 & CM APPL. No. 45307 of 2018.
15 Blow to e-pharmacies as Centre orders a halt to sales, https://www.livemint.com/news/india/government-directs-states-to-take-action-against-unlicensed-online-pharmacies-11575376011403.html.
16 Dr. Zaheer Ahmed v. Preeti Sudan Secretary, Union of India & Ors., CONT.CAS(C) 355 of 2019.
17 The Tamil Nadu Chemists and Druggists Association v. The Union of India & Ors., W.P. No. 28716 of 2018 and W.M.P. No. 33542 of 2018.
18 M/S. Practo Technologies Pvt. Ltd. v. The Tamil Nadu Chemists and Druggists Association & Ors., CMP. Nos. 23341, 23345, 23346, 23350, 23369 and 23435 of 2018 in W.A. Nos. 2807, 2808, 2809, 2810, 2814 and 2818 of 2018.
19We're just aggregators, e-pharmacies tell Madras High Court, https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/were-just-aggregators-e-pharmacies-tell-madras-high-court/articleshow/66506342.cms?from=mdr.
20 Section 18(c), Drugs and Cosmetics Act, 1940.
21 Section 18(a), Drugs and Cosmetics Act, 1940.
22 Rule 67, Draft Drugs and Cosmetics (Amendment) Rules, 2018.
23 Notification, Ministry of Health and Family Welfare, 26 March 2020, http://egazette.nic.in/WriteReadData/2020/218928.pdf.
24 Supra note 25.
25 Hip Bar Pvt. Ltd. v. State of Karnataka, 2020 (1) KarLJ 578.
26 Guruswamy Nataraj v. Union of India, W.P.(C) No. 474/2020.
27States, UTs cautiously explore home delivery option for liquor, https://economictimes.indiatimes.com/industry/cons-products/liquor/states-uts-cautiously-explore-home-delivery-option-for-liquor/articleshow/75707967.cms?from=mdr.
28Brewers seek nod for home delivery, https://economictimes.indiatimes.com/industry/cons-products/liquor/brewers-seek-nod-for-home-delivery/articleshow/75397908.cms.
29 Self-Regulation Code of Conduct for the E-pharmacy Sector in the Interest of Consumer, 2016, http://ficci.in/pressrelease/2600/ficci-press-nov21-e-pharmacy.pdf.
30 India EHealth – COVID-19 Impact and Way Forward, https://redseer.com/newsletters/india-ehealth-covid-19-impact-and-way-forward/.
Originally published 21 July, 2020
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