The Covid-19 pandemic along with lockdown restrictions in the entire country has highlighted the need for ease of access to medicines. In recent years, due to lack of specific guidelines on e-pharmacies, online sale and dispensation of drugs became a subject of dispute whereby courts imposed a complete ban on online sale of medicines. This article highlights the need for a specific law to permit and govern e-pharmacies in India. It is pertinent to note that over fifty Indian start-ups operating in e-pharmacy space have attracted over Rs 4,000 crore in foreign direct investments[1]. More pertinently, according to recent reports, India’s digital health market is likely to expand to $4.5 billion in this financial year, compared to $1.2 billion in FY20 and medicine delivery will continue to comprise a large majority of the market[2].
Existing market players such as Practo, Medlife, PharmEasy, Netmeds, BeatO and mfine continue to see a surge in demand and the trend is only increasing. The recent rise in demand in digital healthcare services can partly be attributed to the Government notifying the Telemedicine Practice Guidelines as well as the Ministry of Health and Family Welfare issuing a notification on March 26, 2020 to temporarily permit retail pharmacies who have already obtained retail sale license under the Drugs & Cosmetics Rules 1945 to deliver drugs against prescriptions received on email[3]. Prior to this notification, validity of digital prescriptions was ambiguous and home delivery models were challenged in courts as being violative of law.
Applicable law on prescription and dispensation of medicines
The sale of drugs in India is primarily regulated under the provisions of the Drugs and Cosmetics Act, 1940 (“D&C Act”) along with other laws applicable in relation to sale, import and manufacture of drugs, including specifically the Dangerous Drugs Act, 1930 (2 of 1930), the Drugs & Cosmetics Rules 1945 (“D&C Rules”), the Pharmacy Act and Pharmacy Practice Regulations, 2015 (“2015 Regulations”). The D&C Rules require each entity along the supply chain to obtain the relevant license to undertake sale of drugs[4]. To elaborate, the manufacturer, importer, wholesale dealer and retailer are each required to obtain licenses to engage in manufacture, import, wholesale and retail sale of drugs. Licenses are premise specific and also differ with respect to the category of drugs sold. Most pertinently, drugs specified in Schedules H, H1 and X of the D&C Rules cannot be sold except on, and in accordance with the prescription of a Registered Medical Practitioner and from licensed premises only.[5]
Under the applicable D&C Rules, drugs should only be dispensed directly to patients or their caretaker against a valid prescription. A valid prescription should be signed, dated and in writing, and should specify the details of the patient[6]. Further, the supply (other than by way of wholesale dealing), of any drug on the prescription of a Registered Medical Practitioner shall be effected only by or under the personal supervision of a registered Pharmacist[7] and courts have stressed on strict regulatory compliance with the D&C Rules and the Pharmacy Act[8].
Legal framework governing e-pharmacies in India
E-pharmacies in India are operating in uncertainty owing to strict rules on sale and dispensation of medicines, as explained above. In 2015, the Drugs Consultative Committee, an expert committee, in its report examined the issues in the sector. The committee submitted its recommendations to the Drugs Controller General of India (“DCGI”), India’s apex drug regulator, who in turn forwarded its recommendations to the Ministry of Health and Family Welfare (“Health Ministry”)[9]. Subsequently, in August 2018, the Health Ministry released draft rules proposing to regulate e-pharmacies under the ambit of D&C Act (“E-Pharmacy Rules”) for public consultation[10]. The E-Pharmacy Rules look to allow functioning of e-pharmacies in India in a regulated environment and apart from simplified registration requirements cover a wide ambit of concern areas such as privacy and disclosure of patient information, data localisation etc. Pertinently though, the Draft E-Pharmacy Rules only envisage entities directly undertaking online sale of drugs and do not explicitly contemplate the marketplace model under which certain e-pharmacies currently operate in India.
However, pending notification of the Draft E-Pharmacy Rules, the Madras High Court (in Tamil Nadu Chemists and Chemists and Druggists Association. vs Union of India)[11] and the Delhi High Court (in Zaheer Ahmed v. Union of India[12]) have both banned online medicine sales, though their orders were stayed later. Interestingly, in the Madras High Court order mentioned above, the petitioners contended that since e-pharmacies largely operate as a marketplace on which licensed pharmacies are registered and so far as the online sales are actually made facilitated by a licenced pharmacy, they should be allowed to operate. The court rejected this argument and held online business in drugs and cosmetics by e-pharmacies to be illegal pending notification of the E-Pharmacy Rules. The court relied on Section 18 of the D&C Act, which prohibits manufacture and sale including distribution, ‘stock or exhibit or offer for sale’ of drugs and cosmetics by any person without a license. While a division bench of the Madras High Court overturned the initial order, the Delhi High Court order relied on the Madras High Court’s original position and subsequently the DCGI issued an office letter on November 28, 2019 requiring all drug controllers across the country to enforce this order of the Delhi High Court.
While the proposed E-Pharmacy Rules were a ray of hope for this ‘almost necessary’ service, the Government, on June, 25, 2019 declared that since the matter is sub-judice before various High Courts in the country, no timeline for finalization of the E-Pharmacy Rules can be laid down yet[13].
From the above, it is fairly apparent that the Government and regulators are taking a rather conservative approach towards this sector and frankly the idea that a proposed legislation to regulate functioning of a critical sector are kept in abeyance because certain judicial authorities are in the process of opining on the matter, defeats logic. The arguments supporting the restriction on online sale of drugs are largely based around the fear of misuse and appear to be fairly weak, since the intent is only to provide for an ‘ease of delivery model’ and not expand the ambit of who can sell scheduled drugs. The arguments are further undermined in an online marketplace model.
Hopefully, the current crisis and lockdown measures act as a wakeup call for the Government and regulators to provide a robust yet effective framework for this industry to operate in and given that authorities have had a temporary opportunity to test waters pursuant to the March 26, 2020 relaxation, positive steps should be forthcoming.
– Richa Saxena (Of counsel, Bombay Law Chambers) and Karan Kalra (Founder, Bombay Law Chambers)
[1] Delay in notification of e-pharmacy draft rules causing concern in the sector: FICCI. Available at: https://www.financialexpress.com/industry/sme/delay-in-notification-of-e-pharmacy-draft-rules-causing-concern-in-the-sector-ficci/1825599/; (Last accessed May 26, 2020)
[2] The coming of age of e-health platforms. Available at: https://www.livemint.com/ (Last accessed May 26, 2020)
[3] Notification dated 26 March 2020. Available at: https://www.mohfw.gov.in/pdf/Doorstepdelivery26B.pdf
[4] Rule 61 of the D & C Rules provides for various forms of licenses, i.e., Forms 20, 20-A, 20-B, 20-F, 20-G, 21-A and 21-B, to be obtained for selling and distributing drugs.
[5] Rule 65 (9) (a) of the Rules
[6] Rule 65 (10) of the Rules
[7] Rule 65 (2) of the Rules
[8] Sabira.M. vs State Of Kerala (WP(C).No. 37156 of 2016)
[9] Report of the 48th Meeting of the Drugs Consultative Committee held on 24th July, 2015. New Delhi. Available at: https://cdsco.gov.in/opencms/opencms/system/modules/CDSCO.WEB/elements/common_download.jsp?num_id_pk=ODEw (last accessed December 26, 2019)
[10] Notification G.S.R. 817 (E) dated 28th August, 2018
[11] In W.P.No.28716/2018 and W.M.P.No.33542/2018
[12] W.P.(C) 11711/2018
[13] https://pib.gov.in/Pressreleaseshare.aspx?PRID=1575553
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