New draft rules make life easy for e-pharmacies, but grey areas still remain


Finally after a long wait the government has circulated a new set of draft rules relating to the e-pharmacies that allows them to function without much fuss. At the same time, it has incorporated strong penal provisions to punish those found violating the rules.

The objective of the draft rules is to ensure that the patients are able to procure medicines from genuine and duly authenticated e-pharmacies. The nascent e-pharmacy sector has been grappling with ambiguous rules and is regulated by both the Centre and states. The draft stated that e-pharmacies will only be regulated by the Drug Controller General of India (DCGI).

There are around 282 e-pharmacy start-ups in India, including some big ones like Netmeds, 1mg, Sasta Sundary, 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, indicating dominance of brick and mortar stores in dispensing medicines.

The e-pharmacies draft proposes DCGI to be the sole agency granting approvals to e-pharmacies which would be valid for three years. Earlier e-pharmacies were governed by state drug regulators.

e-pharmacies will have to pay Rs 50,000 for renewal of licence. A periodic inspection of the e-pharmacy’s operational premises will be conducted every two years to ensure no violation of rules.

Even though the licence requirements will 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 licences after providing a reasonable opportunity of being heard.

Draft rules have scrapped a proposal to create a central server with the intent to route all online prescriptions to individual e-pharmacy portals as a measure to curb potential abuse of prescription medicines by patients. The draft also stated that e-pharmacies will be mandated to conduct sale of medicines through premises with valid retail licences and to retain records of e-prescriptions of patients.

Information related to types and quantities of medicines, supply channels or vendor lists will have to be updated by e-pharmacies on their portals on a constant basis. Onus will be on e-pharmacies to safeguard the data of patients from misuse and they shall not divulge the patient data to any third-party, except to the central licensing authority for public health purposes only.

e-pharmacies will be required to establish customer support operating for at least 12 hours every day. No advertisement of any drugs over the radio or television by e-pharmacies would be made. They will be governed by regulations under the Drugs and Cosmetics Rules, 1945, the Information Technology Act, 2000 and the Narcotic Drugs and Psychotropic Substances Act, 1985.

e-pharmacies and analysts welcomed the draft rules but pointed out to some grey areas in legal compliance, data sharing and promotion. “The sector is regulated by both the Centre and the states. This complicates the whole process. The discussions gave a clear indication that this was going to be a well-thought-out regulation, giving parity to online players and bringing transparency in the monitoring of the overall sector,” Dharmil Sheth, co-founder of PharmEasy told Techcirlce.

“The draft rules are overall a positive move as now there will be some framework available, specifically addressing this business model. What will or will not be allowed is a matter of regulation and will no doubt evolve from time to time” said Sameer Sah, Associate Partner, Khaitan Co.

“The model covered in the draft rules appears to be one that is more in the nature of a market place as opposed to an actual sales website as the dispensation has to eventually be done from a licenced premises while the same company could have both a physical and virtual presence, but for scale it is bound to rely on more third-party chemists and locations. What is worrisome is that the market place would be responsible for legal compliances of the eventual dispenser. One will need to see the final rules to gauge a better understanding” Sah stated.

On draft rules indicating the data from e-pharmacies not to be shared with anyone except the Central government for public health purposes, Sah said this eliminates the possibilities of these companies monetising this data. “One wonders how IMS or other agencies will gather pricing and sales data from the e-pharmacies. “The draft rules do not elaborate on last mile delivery and associated complications as that forms a core part of the overall business – that is an obvious miss – along with it arise things such as endorsing the prescription, etc.” he added.