Legal prescription for e-pharmacy

Progressive legislation and improved regulatory framework needed for success of fast-emerging business

Brick-and-mortar pharmacies are gearing up for stiff competition from the new kid on the block — online pharmacy stores. Numerous e-pharmacy players have already entered this fledgling yet lucrative market space, promising greater convenience, access and affordability to customers. Experts say e-pharmacy could soon cater to up to 15 per cent of the entire pharmaceutical market.

A number of concerns have already come to the fore regarding regulation of e-pharmacy enterprises. Issues related to quality, safety, privacy, risk of fraud and misuse of addictive drugs have been highlighted by the government as well as activists. To add to the worry of e-pharmacy firms, traditional pharmacy players have questioned the legality of the online players and accused them of trying to take over the market.

The lack of legislative framework in the e-pharmacy space has added to the concerns. As of now, India does not have any clear guidelines for the e-pharmacy market; current drug laws do not discern any distinction between e-pharmacy and brick-and-mortar entities. This has led to several gaps in the regulation of the fast-evolving e-pharmacy market, creating ambiguities around the very legitimacy of it.

The present regulatory framework in the pharmaceutical sector is governed by the Drugs and Cosmetics Act, 1940, (the Act) and Drugs and Cosmetics Rules 1945 (the Rules). The Act contemplates a three-tier framework of governance at the central, state and local levels. Section 18 of the Act requires all pharmaceutical sellers to obtain licences for sale of drugs, while the Rules prescribe the requirements for obtaining such licences.

Rule 62 prescribes the requirement of obtaining separate licences for each point of sale, while Rule 65 mandates the supply of medicines to be stamped on original copies of prescriptions. As the Rules do not encompass e-pharmacy directly, their compliance becomes a challenge for the online industry. If sales are to be considered at customer doorsteps and medicines to be sold on scanned prescriptions, the e-pharmacy players could be deemed to be violating the Rules. "In today's times when business and entrepreneurship should be encouraged, e-pharmacy players like us are being forced to fight bureaucratic battles and the licence regime," said Siddharth Singhal, spokesperson of Indian Internet Pharmacy Association, and founder of e-pharma company, Vibcare.

The present legal ambiguity has led to several first information reports (FIRs) and show-cause notices being issued against various e-pharmacy entities, especially after a Drug Controller General of India (DCGI) letter, requiring strict compliance of the Act and Rules by all pharmaceutical players. The controversy caused by the letter and the subsequent approach by authorities have created an air of mistrust around the e-pharmacy space, creating further barriers for new entrants.

"Given that these compliance requirements arise from the drugs rules alone, the central government could, by virtue of the powers accorded by the Act, amend these rules, and specifically regulate online pharmacies," said Vaibhav Kakkar, partner, Luthra & Luthra.

The ultimate answer to the present conundrum lies in the framing of specific guidelines in consultation with authorities to encompass the e-pharmacy business. Recognition and implementation of safeguards will go a long way in dissuading the controversies associated with the business and make proper regulation of the sector a reality.

E-pharmacy has gained prominence in many parts of the world, including the US, the UK, Canada and Brazil. Most follow a centralised electronic health record-based method and provide for clear guidelines. The situation in India is vastly different and the lack of a framework has forced the e-pharmacy players to adopt self-regulatory guidelines.

The DCGI recently said the government was working towards drafting of a new legislation on the topic, which would enshrine e-pharmacy guidelines. According to Bejon Misra, founder, Consumer Online Foundation, the new Act must bring clarity on the topic of e-pharmacy and clearly define the role and responsibility of the regulator. “While a positive stance must be taken towards online pharmacies, under no circumstances can the safety and quality of medicines be compromised,” said Misra.

While the industry has been quick to welcome this move, many are critical of the government's approach towards the new business model. Proposals such as allowing only e-prescription based method and the restriction of sales within a state, have alarmed e-pharmacy stakeholders. E-pharmacy players feel these proposals could make their business unviable. Experts say the only way forward for this fledgling business to take wings is to have a progressive legislation and improved regulatory framework.