In the midst of severe restrictions on physical movement necessitated by the coronavirus (Covid-19) pandemic, e-pharmacies have played an important role in supplying essential medicines to citizens across India. With a significant increase in demand during the pandemic, e-pharmacies have ramped up hiring and also tied up with non-essential delivery service providers and food delivery companies to manage an unprecedented situation. Strategic changes have also started taking place in the e-pharmacy sector with some notable consolidation and M&A activities in 2020: Reliance Retail has acquired a majority stake in Netmeds, while Medlife and PharmEasy have entered into a merger agreement.
Due to the hectic pace of activity and high growth potential, major players are venturing into India's e-pharmacy market. In August 2020, Amazon launched its online medicine delivery service – Amazon Pharmacy – in Bengaluru. Online pharmacies, which were already poised to grow significantly over the next few years, have received an unexpected boost due to the Covid-19 pandemic and the resulting change in consumer behaviours. Despite these positive developments, the e-pharmacy sector is still in a nascent stage. A key reason hampering growth is the absence of specific and unambiguous government-mandated guidelines and regulations.
The absence of a regulatory framework has meant that online pharmacies have been operating in a grey zone, with the result that they often face legal hurdles. In December 2018, a Delhi High Court ruling ordered a ban on online sale of medicines across the country citing violation of the Drugs and Cosmetics Act, 1940. The court also contended that since a large internet user-base comprised children/minors and rural citizens, they could become "victims of wrong medication while ordering medicines online." Despite this ban, followed by a ban on unlicensed online pharmacies imposed by the Drugs Controller General of India, e-pharmacies have continued operating as usual.
With most mainstream activities moving to a digital environment in the aftermath of the coronavirus pandemic, there is an urgent need to enact clear and specific legislation to remove ambiguities afflicting the e-pharmacy sector.
India's pharmacy law framework mainly comprises the Drugs and Cosmetics Act, 1940, the Drugs and Cosmetics Rule, 1945, the Pharmacy Act, 1948, and the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954. Since these laws were enacted several decades ago, much before the emergence of internet commerce, their provisions are better suited to an offline model of dispensing medicines. In the absence of specific legislation, most online pharmacies are justifying their operating model by classifying themselves as "intermediaries" within the meaning of the Information Technology Act, 2000.
In August 2018, the Ministry of Health and Family Welfare (MoHFW) published draft rules designed to amend the Drugs and Cosmetics Rules, 1945 to accommodate the operations of e-pharmacies. Key rules were proposed regarding various provisions, including mandatory registration of e-pharmacies (to be valid for three years at a time), supply of medicines only after compulsory verification of prescriptions, and rules regarding confidentiality/privacy of patient data. The draft rules also proposed that e-pharmacies could not sell drugs listed under the Narcotic Drugs and Psychotropic Substances Act, 1985 or under Schedule X of the Drugs and Cosmetics Rules.
However, the draft rules are silent on aspects such as registration of e-pharmacies operating as a marketplace, and methods to be adopted for verifying doctor-patient details before dispensing medicines. There is also ambiguity regarding licensing requirements: will e-pharmacies be eligible for a central license (which will allow them to operate across India) or will they need to obtain licenses in each state (a factor which has led Amazon to launch its online pharmacy only in Bengaluru)? The term 'prescription' has also not been defined clearly, which will lead to more ambiguity if the draft rules in their current form are notified.
With the draft rules remaining unapproved, e-pharmacies continue operating under a cloud. The sector, which presents significant opportunities with regard to investments and job creation, can achieve its full potential only if the regulatory environment is conducive. This requires the government to move with greater speed and urgency.
The pharmacy market in India is a fragmented one comprising over 8 lakh pharmacies. Despite such a large presence, traditional pharmacies face challenges in last-mile delivery and in supplying life-saving or essential medicines to rural areas. Due to these hurdles, there is a large unmet need for a sizable population in the country. Given the ongoing pandemic and the benefits which will accrue to millions of citizens, the government should spearhead efforts to notify specific and unambiguous rules for e-pharmacies on an urgent basis. Even if comprehensive legislation cannot be enacted, interim rules should be notified to tide over the current crisis.
On a long-term basis, it is incumbent upon the government to dispel misconceptions and fears of traditional brick-and-mortar pharmacies by creating awareness about the symbiotic role that e-pharmacies can play. For India to realise its Digital India dream, e-health will need to be a key focus area, and e-pharmacies are a key component of e-health. By creating an enabling environment for e-pharmacies through proper regulation, the needs of millions of Indians, especially those living in rural areas, can be fulfilled.
The regulation of pharmacies, including e-pharmacies, can be entrusted to an independent statutory body under the aegis of the MoHFW which can frame rules from time-to-time based on how the sector is evolving. Western economies, particularly the United States and Canada, have implemented several successful measures to regulate the e-pharmacy model by formulating rules designed to prevent the misuse of prescription drugs. By adopting best practices from countries where the e-pharmacy model has been successfully established, India's e-pharmacies will be able to operate in a conducive environment and achieve their full potential.
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