Regulation of e-pharmacies: India can draw from global best practices

drug and pharma industry, e-pharmacies
India must strengthen laws governing drug and pharma industry in the aftermath of the cough syrup scandal.

The government and e-pharmacies are stuck in a deadlock with the former looking to regulate, restrict or prohibit sale, stocking or distribution of any drug by online pharmacies. The government continues to challenge the business model of e-pharmacies. Its tough stance is due to rising cases of data privacy misuse, fraudulent practices and irrational sales of drugs. The government now looks to shut down all online stores.

In February, over a dozen online companies including Tata 1mg, Amazon, Flipkart, NetMeds, MediBuddy, Practo, and Apollo were served show-cause notices by the Central Drugs Standard Control Organisation (CDSCO). These companies were also charged with operating without requisite licences. Online pharma companies have been seeking an audience with the health ministry, but to no avail.

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The New Drugs, Medical Devices and Cosmetics Bill proposes a new clause which will restrict online sales of drugs. The draft regulations are being circulated for internal consultations and are expected to replace the earlier legislative framework. This was released to the public in July 2022 for stakeholder comments.

The dark side of online drug sales

E-pharmacies have long been accused of operating in the shadows and undertaking unlicensed drug and medicine sales. The Drugs Controller General of India (DCGI) first banned the online sale of medicines in December 2015. The sector still continues to be a grey area. The government is also troubled by the Chinese connection of the industry. Chinese investors are estimated to have Rs 20,000 crore investment in online pharmacies.

Like in the case of other e-commerce players, e-pharmacies have also drawn the ire of trade bodies such as CAIT for indulging in predatory pricing and hence promoting unfair trade.

In response to the government notices over non-compliance of e-pharmacies, Tata 1mg co-founder and chief executive Prashant Tandon wrote a letter to the health ministry stating that all the-pharmacies are compliant to the provisions of the Drugs & Cosmetics Act. Tandon is also chair of the Federation of Indian Chambers of Commerce and Industry’s (FICCI) e-pharmacy working group. However, there is a space for regulating online sales of drugs which will help the sector keep pace with the innovations.

Global best practices

The regulation of e-pharmacies varies from country to country. Several countries have developed regulatory frameworks to ensure that e-pharmacies operate safely and effectively. In the United States, e-pharmacies must comply with the regulations of the Food and Drug Administration (FDA). The FDA requires e-pharmacies to obtain a licence to operate and follow certain rules and standards such as selling only FDA-approved medications and providing accurate labelling and dosage information.

In the European Union, e-pharmacies are subject to the regulations of the European Medicines Agency (EMA) and national regulatory authorities. These regulations cover aspects such as product quality, safety, and efficacy, as well as good manufacturing practices and traceability.

Canada and Australia also have regulatory frameworks in place for e-pharmacies. In general, these regulations look to protect public health by ensuring that e-pharmacies operate safely and responsibly.

Reaching the middle ground

There is no doubt that the space needs regulation. An outright ban on e-pharmacies spells disaster. There is a need to reach the middle ground as shutting down e-pharmacies goes against the government’s intent of building digital infrastructure as a key pillar driving India’s long-term growth strategy.

The Indian e-pharmacy sector is pegged at over $344 million. It is also expected to grow at 40–45% annually, thanks to improved internet connectivity, mobile phone penetration, rising consumer awareness, government initiatives and rising investments. While regulating drugs and medicines is crucial to public health and safety, the efficient and legitimate functioning of e-pharmacies can be ensured through comprehensive norms. It is the lack of unambiguous laws regulating, controlling and monitoring online players that can lead to an adverse effect on the health of the nation.

The new Drugs, Medical Devices and Cosmetics Bill

In July 2022, the Union government tabled The Drugs, Medical Devices and Cosmetics Bill 2022 in Parliament. The draft Bill aimed at replacing the Drugs and Cosmetics Act 1940, since the pre-independence legislation primarily didn’t say anything about medical devices or the equipment used for healthcare. The Bill drew criticism from health experts, who called it regressive.

The 2022 Bill introduced a section which gives the government the authority to regulate e-commerce for pharmaceutical companies. While the space needs regulation, the draft Bill does not cover all the queries of the stakeholders and is hence ambiguous. Some of these queries include how the authorities will make sure that the medicines being sold online are being stored at temperatures below 30 degrees Celsius, or in an environment with 70% humidity. There are also no provisions to ensure that people are not able to fake prescriptions and indulge in an overuse of medicines.

A major criticism of the Bill is that it was playing the devil’s advocate for the pharma industry. There are fears that it will allow the production and distribution of drugs even if they failed on certain quality parameters.