A few days ago the Central Drugs Standard Control Organization (CDSCO) sent out notices to 20 online pharmacies. The ones you’re probably used to buying medicines from ― Tata 1mg, Netmeds, Apollo, etc. The Chemists Association threatened to go on a strike against e-pharmacies too. And this could compel the government to take action. The reason? Flouting drug regulations.

So in today’s Finshots, we tell you why e-pharmacies are receiving so much flak.

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The Story

In 2021, PharmEasy’s parent API Holdings filed its DRHP (Draft Red Herring Prospectus ― a document in which a company breaks down its business to prospective investors) with the SEBI (Securities and Exchange Board of India). It intended to take its online pharmacy public and raise about ₹6,250 crores.

But the IPO (Initial Public Offering) became a magnet for protests. The Confederation of All Indian Traders (CAIT) and the South Chemist & Distributors Association made one confident claim ― that selling medicines online was illegal.

That meant questioning the legality of operations of not just PharmEasy, but all other drug e-tailers. And although PharmEasy withdrew its IPO plan last year blaming market conditions, the war against online pharmacies continues.

And these wars aren’t new. They’ve existed ever since online pharmacies took shape in India. In fact, drug associations have also filed pleas in high courts to restrict online pharmacies from continuing business because they weren’t operating legally.

In 2018 both the Madras and Delhi High Courts temporarily ordered online pharmacies to stop selling medicines until specific regulations were drafted to regulate them. And although the Madras High Court flipped its decision later on, the latter did not.

This begs the question ‘How can online pharmacies be illegal?’

To understand this we’ll have to dig into the regulations that govern online pharmacies. Look, there are various Acts and Rules that pharmacies have to abide by. The major ones are the Drugs and Cosmetics Act of 1940 and the Drugs and Cosmetic Rules of 1945. These regulations only centrally governed drug imports. So, if pharmacies had to manufacture, distribute or sell medicines they had to obtain valid licenses from State Drug Control Authorities.

But you see, these regulations are as old as time. The word ‘online’ didn’t exist back then. So if you look at it technically, online pharmacies are unregulated. That doesn’t mean they can operate as per their own whims and fancies. They’re still a pharmacy. So just like their brick-and-mortar counterparts, they need a license to operate.

But here’s the thing. E-pharmacies don’t operate in a single state. Many of them are spread all across India. Does that mean that they have to apply for licenses in each and every state they set foot in? That’s something even the regulations aren’t certain about.

Moreover, not all online pharmacies sell medicines directly. Some of them including PharmEasy and 1mg are just aggregators. All they do is take orders, pick these medicines from licensed offline pharmacies and drop them off at your doorstep. A lot like food aggregators such as Swiggy or Zomato. And according to a response filed by these drug aggregators in the Madras High Court in 2018, that doesn’t require a license because there’s no direct selling involved.

Yet, there are other problems that come with this defence ― the sale of prescription drugs.

See, Indian drug regulations don’t allow for the supply of medicines requiring prescriptions if you aren’t a registered pharmacist. If you’ve ever placed an online order for medicines, you would have uploaded a doctor’s prescription unless you bought over-the-counter drugs that didn’t need one.

This means that even if some of these online pharmacies just claim to be mediators, they’re still violating norms as they cannot supply prescription drugs without a license to sell. Sure, they may be registered with the CDSCO, the central drug regulator. But it’s the states that regulate drug sales and distribution. So, in a way there’s rule-breaking. And that’s the focus of most of the complaints against online pharmacies.

If there’s so much confusion with pharmacy laws, then why haven’t they changed to keep up with the times, you ask?

Well, the Federation of Indian Chambers of Commerce & Industry came up with a Self-Regulation Code for e-pharmacies back in 2016. And it did clarify a lot of things like prohibiting medicine sales without valid prescriptions, ensuring dispensation of medicines only through registered pharmacies and how to handle customer grievances. But it still wasn’t a law.

So in 2018, the government came up with a set of draft regulations to govern e-pharmacies. But they’re still moving at a snail’s pace.

In its response to an RTI (Right to Information) request filed by Medianama last year, the Ministry of Health and Family Welfare stated “In response to the draft rules, a number of comments/suggestions objections from stakeholders were received from the stakeholders. Finalisation proposal is extensively being examined by the Central Government and it may not be possible to say any timelines at this stage for finalization of the draft rules.

And as if there aren’t enough problems already, delayed laws only add fuel to the fire.

Look, e-pharmacies are convenient. And if you were down with a terrible fever, you’d prefer the convenience of an online drug store. And that’s what many of us choose today. But with it come the dangers of drug quality. Some medicines have to be stored at certain temperatures. And in the process of the medicines travelling to your doorstep, the drug could alter quite a bit.

Then there’s easy access. Anyone, kids included can use an online pharmacy. And if they order cough syrups or other easily available medicines to misuse them, then it could be a serious drug abuse issue.

And the biggest one that beats these issues is how online pharmacies harvest customer data. Your health conditions must only be private to you. A data breach in an online pharmacy can compromise the confidentiality of your personal information.

Last of all, without specific regulations directed towards e-pharmacies, attracting foreign direct investments could be hard.

The bottom line ― timely regulations with clarity can solve a lot if not everything. Without that, online pharmacies could remain a business model that authorities continue to question.

Until then…

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