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Parliamentary Panel wants ‘stringent regulation’ of online pharmacies, makes recommendations

Online pharmacies like PharmEasy face challenges in court, by traders’ bodies, as well as scrutiny by a parliamentary panel over legality and regulations

“Stringent regulation of the e-health and e-pharmacy sector is essential in view of the potential harm it can cause to health of end user in case of misuse,” the Parliamentary Standing Committee on Commerce said in its findings published in the Seventy Second Report of the Committee on ‘Promotion and Regulation of E-Commerce in India’

Submitted to the Rajya Sabha secretariat on June 16th, the report looks at the regulatory landscape for e-commerce in the country such as the Open Network for Digital Commerce, Unified Payments Interface, and so on. In a section on e-Pharmacies, noting that the sector was booming in the country, the committee notes that it could lead to issues such as supply of counterfiet or illegal drugs, lack of confidentiality of prescriptions, improper packaging, intake of harmful drugs, etc. due to a lack of regulations around the same. The committee further urged the government to formulate and adopt definite regulations around the same soon.

Regulations surrounding online pharmacies has been a complicated area. In 2018, the Delhi High Court and Madras High Court passed orders prohibiting the online sale of medicines without a license. (However, the Madras High Court stayed its order in 2019). Meanwhile, the Drugs and Cosmetics Act, 1940, and Rules, 1945, do not have any provision regulating the online sale of drugs or, essentially, online pharmacies at present.

In August 2018, the Ministry of Health and Family Welfare had released the Draft E-pharmacy Rules 2018 for public consultation. However, in a response to an RTI application filed by MediaNama earlier this year, the ministry had said that they were still considering finalising of the rules and a timeline for the same couldn’t be given.

Why it matters? Last year, Delhi-based South Chemists and Distributors Association (SCDA) had asked regulators to reject the initial public offering (IPO) of PharmEasy, one of India’s largest online pharmacies, and investigate it as well on several grounds including that online pharmacies are not legal under Indian law. The Confederation of All India Traders (CAIT) also asked for the same stating that the online pharmacy’s business model is “entirely based on gross illegality.” These instances highlight the impact of the ambiguity surrounding regulation in the sector, and the need for their clarification.

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Comments made by the parliamentary committee on e-pharmacies

Institute guidelines for due diligence requirements, registration of pharmacies: The committee recommended that comprehensive guidelines be issued by the ministry, after consulting with industry stakeholders. This should lay out:

i) “Due diligence measures to be undertaken by the e-pharmacy/e-health platforms

ii) Mandatory registration with the appropriate authority for sale of drugs

iii) Assigning responsibility on such platforms for the sale of genuine drugs

iv) Regulating the sale of controlled drugs, etc,” the report says.

Implement draft E-pharmacy rules without delay: “The Committee is appalled to observe that the Draft E-Pharmacy Rules have not been finalised till date. The Committee reiterates that undue delay in adopting a definitive regulatory framework results in uncertainty which is not conducive for the fast pace digital markets,” the report says, urging the government to finalise and implement them without further delay.

Possibility of linking prescriptions with Aadhaar being explored: “The Indian Internet Pharmacies Association (IIPA), renamed as Digital Health Platforms (DHP), which is a consortium of entrepreneurs in the online pharmacy and health space is currently working actively with the Government to bring in changes to the regulations including the use of Aadhar-linked prescriptions to ensure there is no misuse and member pharmacies striving to self-regulate until the law of the land catches up to advancements,” the report says. It does not elaborate further on this proposal.

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‘Not legal under law’: SCDA’s arguments against PharmEasy in brief

In their aforementioned letter to the Securities Exchange Board of India, the SCDA made arguments against PharmEasy’s IPO on grounds of legality of their sector itself. Some of the key points in the letter are below:

  • E-pharmacies not legal under Indian law: SCDA argues in its letter that e-pharmacies are not legal under Indian law and that SEBI should not give approval to such a business and give it “a cloak of legality.” SCDA further states that online pharmacies must comply with the regulatory framework in place for traditional pharmacies such as the Drugs and Cosmetics Act, which states that “prescription medicines and drugs can be sold only through a licensed retailer under strict supervision.”
  • Delhi High Court 2018 order prohibits the online sale of medicines without a license: SCDA stated that the Delhi High Court on December 12, 2018, passed an order prohibiting the online sale of medicines without a license. This order is still in effect, SCDA noted. Furthermore, the Drugs Controller General of India has written to the State Drug Controllers on multiple occasions asking them to ensure compliance with the direction issued by the Delhi HC and there is a contempt petition pending before the court against various e-pharmacies that continue to operate in violation of the order, SCDA added.
  • Government still considering regulations: SCDA cited evidence from an affidavit filed by the Ministry of Health and Family Welfare in Delhi HC that states “at present the Drugs and Cosmetics Act, 1940 and Rules 1945 have no provision on the online sale of drugs” and “the issue relating to online sale of drugs is presently under the consideration of the Government.”

Key provisions proposed under the E-Pharmacy Rules

Some of the key provisions proposed in the rules are as follows:

  • Licensing: Online pharmacies have to register with the Central Licensing Authority (CLA) to operate, without which, no person or company can distribute, sell, stock or exhibit drugs through e-pharmacy portals. E-pharmacies have to pay a fee of Rs 50,000 to register for a three-year license. CLA is a body set up by the Union Government under the Drugs and Cosmetics Rules, 1945.
  • E-pharmacy portals: E-pharmacies will receive the orders for retail sales through their respective portals; the portals should furnish expansive details about the portal and controlling entities, details of the directors, partners, owners of the e-pharmacy, official logo, return policy, details of the logistics provider, name of the registered pharmacist, and pharmacy council thereof, contact details of e-pharmacy, and redressal grievance procedure.
  • Patient data localisation: Any information generated through the e-pharmacy portal, such as information from prescriptions, will not be disclosed to any other person for any other reason. Details of the patient have to be kept confidential. However, the e-pharmacy is duty-bound to disclose such information to the Central or State government if/when required for public health purposes. The draft policy also mandates localisation of data within the country, along the lines of the draft Data Protection Bill, 2018 released in July. Per the draft policy, even mirrored data cannot be stored outside India.

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Written By

I cover health technology for MediaNama but, really, love all things tech policy. Always willing to chat with a reader! Reach me at anushka@medianama.com

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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