E-pharmacies welcome govt draft rules, say compliance shouldn't be a problem

Viswanath Pilla
Moneycontrol News

The Union Health Ministry recently released draft rules on sale of drugs by e-pharmacies. The draft rules will help regulate online sale of medicines across the country and provide patients the accessibility to genuine drugs from authentic online portals.

The draft proposes the Drug Controller General of India (DCGI) be the sole agency granting approvals to e-pharmacies with a validity of three years.

E-pharmacies are currently governed by state drug regulators.

The DCGI will be regulated under the Drugs and Cosmetics Rules 1945 as well as the Information Technology Act 2000.

The draft notes e-pharmacies will have to pay Rs 50,000 to renew licenses and the premises from where e-pharmacies operate will be inspected every two years.

The e-pharmacies are allowed to sell the medicines only against a prescription, a copy of which they will have to maintain.

The draft also stated the e-pharmacies will be mandated to conduct the sale of medicines through premises with valid retail licences and retain records of e-prescriptions of patients.

The e-pharmacies will be prohibited from selling medicines specified under the categories of the Narcotic and Psychotropic as referred to in the Narcotic Drugs and Psychotropic Substances Act, 1985 and Schedule X drugs.

In case of a suspicion of the drugs being sub-standard or spurious, the buyer can make complaints to the State Drugs Controller and seek relief under the Consumer Protection Act, 1986. The rules are open for public comments for 45 days.

Privacy and data security
The draft lays down some clear rules on data privacy and use of patient information.

> The firms conducting the e-pharmacy business should keep the data on local servers.

> E-pharmacies have to maintain and update information related to types and quantities of medicines, supply channels or vendor lists on their portals on a constant basis.

> The onus will be on e-pharmacies to safeguard the data of patients from misuse and they shall not divulge the patient data to a third-party, except to the central licensing authority for public health purposes only.

Sunshine segment

There are around 282 e-pharmacy start-ups in India, including some big ones like Netmeds, 1mg, Sasta Sundar, Pharmeasy, and Myrameds, according to data from start-up tracker Tracxn. Of the 282 players, 20 have been funded and the total money raised by the sector is $165 million.

Drug sales from e-pharmacies constitute around 5-6 percent of the little over Rs 1 lakh crore Indian pharmaceutical market.

Despite the dominance of brick and mortar stores in dispensing medicines, the e-pharmacies are growing at high double-digit growth rates.

Even though the license requirements are expected to be relaxed, the functionality of e-pharmacies will be closely monitored.

For rule violation, e-pharmacies could face stringent penalties. Any violation of rules will lead to suspension or cancellation of licenses after providing a reasonable opportunity of being heard.

Industry response

E-pharmacies and analysts welcomed the draft rules.

“The draft rules gave much needed regulatory clarity to e-pharmacies, and will make healthcare more accessible and affordable,” said Pradeep Dadha, CEO & Founder of Netmeds.com.

Dadha said his company sees no problems in complying with data protection rules.

“Indian user data is already stored in servers within India, and all existing data will be fully migrated to servers in India over time,” Dadha said.

"There doesn't appear to be any mention of the e-pharmacy being responsible for legal compliances of the eventual dispenser. In the previous draft this was a clearly discernible concern," said Sameer Sah, Associate Partner, Khaitan & Co.

"Something else has been introduced which indicates that if two states cancel the dispensing licenses, the central e-pharmacy license will also be revoked," Sah added.

Sah said the model covered in the revised draft rules still appears to be one that is more in the nature of a marketplace.

"The dispensation has to eventually be done from a licensed brick-and-mortar location. While the same company could have both a physical and virtual presence, for scale, it is bound to rely on more third-party chemists and locations," he added.