What cannot be permitted can be regulated.

What cannot be permitted can be regulated:

This seems to be the Mantra of the Central and State Governments. But the rapid growth of e-commerce continues to present challenges to the State and Central Governments in the trade of on-line pharmacy. The protests made, when Amazon, Flipkart and Snapdeal, entered in general /retail, are being continued in retail medicine. The Central Government continues to lag in passing a specific legislation aimed at the On-line pharmacy industry. 

As the Internet evolved and pervaded into the Country, the retail market had adopted a new technology adding one more medium to reach the consumers. When offering products including food items and other consumables are accepted, the trading of on-line medicine alone is challenged now. With lower price and easy accessibility, the members of the petitioner-Association feel hurt and threatened.

On-line prices are certainly 10-30% lower ( or even more ) than the purchasing price from brick and mortar stores . The reasons are the on-line vendors cut so many of the overheads like real estate, inventory, salary to employees, agencies etc. However, the only challenge faced by them is the timely delivery of the same to the right persons.

In on-line trading of medicine, the requirement imposed on a customer is the prescription of a drug, but it is alleged by the petitioner that on-line pharmacists do not comply with the laws and are selling prescription drugs and controlled substances without valid prescription and they are also offering discounts for bulk purchases of prescription drugs.

However, before we analyse the impact of the application of the existing legal framework to E-pharmacy business, it is imperative to understand the different business models in which an E-pharmacy business is typically structured.

1. Like any other e-commerce enterprise, E-pharmacy is structured as a marketplace, as a B2C (business to consumer) direct retail platform (i.e. the inventory model) or a combination of both.
2. In a marketplace model, E-pharmacy is conducted on a platform (say a website such as Amazon.com), which acts a facilitator for the sale of medicines and drugs by pharmacies/chemists to end consumers.
3. The products sold on the platform are owned by the pharmacies/chemists and the marketplace acts as a mere intermediary between the pharmacies and the consumers in the matter of price discovery, promotional offers and logistics.
4. On the other hand, in an inventory model, a pharmacist/chemist sells the products that are owned by such pharmacist/chemist online to the end consumers through its own website/app (such as Medicart)

Advantages to a purchaser of on-line.

It is uniformly contended that purchasing the medicines through on-line is physically easier than going to the pharmacies.

• For the senior citizens, i.e., the age group that spends most on drugs, the consideration is an important one.
• The on-line medium offers modern medical care tools and as such, their reminder information about the medicines and also render round the clock assistance.
• On-line pharmacies allowed the patients to purchase the drugs discreetly without face to face interactions.
• The rise in on-line pharmacies also creates more supply options for the purchasers to find the best service and price.
• The above benefits undoubtedly have contributed to the growth of the on-line trading, of-course, without licence.
• On-line vending provides convenience. For the elderly and those who have mobility issues, the on-line delivery medium is crucial.

While considering the benefits and advantages in the online trading, there are also several risks which are unique to the online trading.

Disadvantages to a purchaser of on-line.

•  A patient receives a prescription drug based on on-line questionnaire instead of a valid prescription, which may result in serious side effects and this may be the most common risk without any regulation.
• The on-line selling of medicines does not require valid prescription, even when selling the prescription drugs.
• The chance of the prescription drugs are delivered without any information to the patients.
•  Yet another risk is that the patient may receive the counterfeit drugs, which are sub-standard.
•  The sale of medicines through Internet intermediaries and the State and Central Governments cannot control the illegal sales.

 Pharmacies and Retailers have long sought to shield their market from on-line traders of medicines protecting consumers in the process. There are no distinction between legitimate and illegitimate on-line medical store. Intermediaries, who profit from dealing with online pharmacies, have no regulations. It is their broad reach and function, they are able to balance their interests. Another crucial lifeline in Internet commerce is the financial intermediary. They impose their own condition of use. Again, here only a handful of companies dominate the majority of the market.

 The growth of on-line purchase of medicines is encouraged also by the direct exposure to pharmaceutical advertisement. The increased exposure to pharmaceutical products through all modes of communication like Television, Radio, Internet, etc. coupled with less face to face consultation has given patients a false sense of empowerment. The practice of "self-diagnose" by consumers also drive them to on-line pharmacies. On-line pharmacies provide consumers the ability to compare the price and availability also. While it is time-efficient, it affords more privacy than the brick and mortar pharmacy. 

Therefore, as on date, there are no proper rules or regulations for on-line trading of medicines.

The State Government has conveniently shirked the responsibility stating that as the D & C Act is a central legislation, any addition/deletion/amendment under the provisions of the D & C Act, can be done only by the Central Government. At this juncture, it is to be stated that Section 18 of the D & C Act, prohibits manufacture and sale of certain drugs and cosmetics and Clause (c) of Section 18 reads as follows :

 Prohibition of manufacture and sale of certain drugs and cosmetics - From such date as may be fixed by the State Government by notification in the Official Gazette in this behalf, no person shall himself or by any other person on his behalf - ........ (c) manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale, or distribute any drug or cosmetic, except under, and in accordance with the conditions of, a license issued for such purpose under this Chapter.

 According to the,

1.  Rule 61 of the D & C Rules provides for various forms of licenses, i.e., Forms 20, 20-A, 20-B, 20-F, 20-G, 21-A and 21-B, to be obtained for selling and distributing drugs.

2.  Relying upon Rule 62 of the D & C Rules, it is contended that if drugs are sold or stored for sale at more than one place, separate application shall be made and a separate license shall be obtained in respect of each such place.

3.   Rule 65 of the D & C Rules provides the conditions of licenses stating as to how sale and supply should be made in accordance with the license conditions and only in the presence of a registered Pharmacist.

4.    Chapter III of the D & C Act deals with import of drugs and cosmetics, while

5.   Chapter IV takes care of manufacture, sale and distribution of drugs and cosmetics.

6.      Sections 12 and 33 of the said Act fall under the above Chapters respectively empower the Central Government to make rules concerning the said aspects. In exercise of such power, the present notification was issued.

•  Rule 67-I of the proposed rules contains definition clauses defining 'e-pharmacy', 'e-pharmacy portal', 'Central Licensing Authority', ' prescription' and 'sale by way of e-pharmacy'.
•  Rule 67-J mandates the registration of e-pharmacy, while
• Rule 67-K speaks about the disclosure of information generated through e-pharmacy portal.
• Rules 67-L and 67-M specify the application for registration and conditions of registration respectively.
•  According to Rule 67-Q, the registration issued to any person shall remain valid for a period of three years, which can be renewed under Rule 67-R.
• Rule 67-N provides for granting registration.
•  Rule 67-O empowers the Central Licensing Authority to depute officers for periodic inspection.
•  Rule 67-P lays down procedure for distribution or sale of drugs through e-Pharmacy.
•  Under Rule 67-S prohibition of advertisement of drugs is imposed .
•  Rule 67-T empowers the Central Licensing Authority to suspend or https://www.judis.nic.in 26 cancel the registration with provisions to appeal and deemed cancellation.
• Rule 67-U and 67-V deal with complaint redressal mechanism and monitoring of e-Pharmacies. These provisions are intended to regulate the on-line trade of drugs and cosmetics and to prevent abuse of drugs. 

Public notice way back in March 2011 was issued inviting comments from various stakeholders. The Union of India also seems to have received numerous comments and suggestions from various stakeholders, including the All India Chemists and Druggists Association, wherein, the petitioner association is a member, and the Indian Internet Pharmacies Association. After deliberations on the concerns raised by the stakeholders, the Central Government decided to bring a regulatory framework for the sale of on-line medicines.

Notification in August 2018 was issued by the Ministry of Health and Family Welfare, Government of India, publishing the draft rules to amend the D & C Rules, once again calling for objections and suggestions from all the stakeholders to be considered by the Central Government. The comments and suggestions were received and after due deliberations, the draft rules have to be published for finalisation in the official Gazette. 

Association of the Tamilnadu Chemists and Druggists,who were the the petitioner in Madras High court has filed a petition for blocking the link of all such websites from India, who are doing on-line sale of Schedule H, H1 and Schedule X medicines in violation of Rules 65 and 97 of the Drugs and Cosmetics Rules, 1945 (in short "D & C Rules"), till the licenses are granted to sell medicines through on-line.

At the outset, there was a preliminary objection raised by the respondents contending that the Writ Petition is barred by the principles .The very same petitioner had filed for an identical prayer directing the respondents to block the link of all such websites from India who are selling the on-line medicines. The said Writ Petition was taken up along with another Writ Petition which was filed for banning of such websites from selling Schedule H medicines in violation of the D and C Rules and the following common order was passed in Dec 2016 by a Division Bench & It was stated that the Sub-Committee constituted by the Drugs Consultative Committee (DCC) to examine the issue relating to the sale of drugs over the internet has submitted its report to the DCC, which, in turn had accepted the report and the same had been forwarded to Ministry of Health and Family Welfare for consideration.

 The above Writ Petitions were closed on the undertaking given by the Central Government/first respondent therein that the Rules will be published in the public domain within a period of three months.

The contention of the petitioner was that the Central Government has not passed the rules and regulations, but the respondents continue to sell the medicines through on-line.

Therefore, permitting sale of drugs through Internet/on-line defeats the purpose of the provisions of the Drugs and Cosmetics Act, 1940 and the D & C Rules framed there under to safeguard the public interest, which regulates the manufacture and sale to ensure quality and availability under prescribed storage conditions by qualified pharmacists.

It is averred in the petition that there are provisions under the D & C Act for recalling drugs due to very serious side-effects from the market and this would be possible only if the medicines are sold by the pharmacists, who are aware of the movement of the medicines till it reaches the patients. There is no guarantee for data privacy if the medicines are sold on-line. Disease and treatment are the private information of the patients, which cannot be made available for data mining and for commercial use by on-line pharmacists.

The earlier Writ Petitions were filed and disposed of as above and the on-line trading of medicines has been continuing. The Division Bench had only granted time to the first respondent to bring the Rules in a time bound manner. It is only thereafter, the private respondents would get/obtain licence. The Division Bench of this Court did not ban the continuance of on-line selling of medicines despite being aware of the prayer made in the Writ Petitions and the fact that the Rules were not in place and the respondents would contend that only if the Rules are notified, there can be compliance of the same.

In the given case, all the private respondents were not parties to the previous case. The said writ petition was also not decided on merits. Therefore, the issue of law was not decided and also not between the same parties. Hence, the matter has been adjudicated by a competent court and therefore may not be pursued further by the same parties.

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 17.12.2018 CORAM THE HONOURABLE JUSTICE passed an order where The Tamil Nadu Chemists and Druggists Association were the Petitioner vs 13 respondents and had prayed a writ petition filed under Article 226 of the Constitution of India directing the respondents to block the link of all such websites, who are carrying on online sale of Schedule H,H1 and Schedule X medicines in violation of Rules 65 and 97 of the Drugs and Cosmetics Rules, 1945, till the licences are granted to sell medicine through online.

In this case as in developed countries like USA, though there is a statute, the regulatory rules are yet to be notified, in the wake of advancement of technology. Unless the legislation keeps pace with the technology, the commerce based on technology has to lag behind. While the draft rules are published in the Gazette, they are yet to be notified. Once it is notified, there is bound to be disagreement between law makers, drug companies, on-line traders and finally the consumers. In the absence of any Central or State Government legislation or rules, on-line sale of prescription drugs could hardly be curbed

The Central Government had already been given a longer rope by the order of the Division Bench, which was passed as early as on 20.12.2016. Though around two years have passed from the date of the said judgement, the rules are still at the draft stage.

 For the reasons it becomes necessary for the Central Government to notify the rules at the earliest in the interest of public and the on-line drug trade. Accordingly, couple of respondents were directed to notify the proposed Drugs and Cosmetics Amendment Rules, 2018 in the Gazette at the earliest, however, not later than 31.01.2019.

Thereafter, the concerned stakeholders, namely, persons doing trade in on-line pharmacy have to obtain their licences in the manner prescribed in the rules to be notified, within a period of two months from the date of such notification.

  As the draft rules are framed by the Central Government, after deliberations including the stakeholders, till the aforesaid rules are notified, the on-line traders are bound not to proceed with their on-line business in drugs and cosmetics.

Countries like U.S.A. which has the new laws in place also finds the enforcement of the same as a difficult challenge. While the pros and cons of the on-line pharmacy is debated, the stakeholders and the Central and State Governments are aware of the need for a cohesive system of regulation to be notified regulating on-line drugs trade. 

 More than a month after granting an interim stay on the online sale of drugs and medicines, the Madras high court on 17th December 18 refused to vacate the stay, thereby banning the sales through e-pharmacies.The development comes just three days after the Delhi high court stayed the sale of drugs and prescribed medicines by online pharmacies.

Justice Puspha Sathyanarayana directed the Union government to notify rules related to the online sale of drugs and medicines by 31st January and ordered a ban on the online sales till then.

The order was passed following a writ petition filed by the Tamil Nadu Chemists and Druggists Association that sought a blanket ban on online portals that sell medicines, until the Centre implements a set of rules for permitting such sales. The affidavit said that according to the law, “it is not permitted to ship, mail or provide door delivery of prescribed medicines”.

Any person who intends to conduct business of e-pharmacy shall apply for the grant of registration to the Central Licensing Authority in Form 18AA through the online portal of the central government.

While currently no provisions exist for the registration of any of these online pharmacies, the new rules mandate all e-pharmacy holders be registered with the Drugs Controller General of India (DCGI), and the State drug regulator. Periodic inspection of the premises too will be on the cards.

Some estimates put the total number of online pharmacies at 250, with at least 50-60 of them termed as large players. The domestic e-pharmacy market is poised to touch Rs 25,000 crore by 2022, at a robust CAGR of 63%, buoyed by an increased access of medicines to a majority of under-served population, long term drug compliance for chronic conditions, and rising internet penetration. Online sale of medicines, now at Rs 3,500 crore, could account for 15-20% of total pharma sales over the next 10 years — due to multiple factors including ‘Digital India’, e-healthcare initiatives, increasing health insurance, and schemes like Ayushman Bharat — says a report by Frost & Sullivan.

The attraction of the online pharmacy, for many, is the fancy discounts that are available, up to 60%, besides free home delivery and sometimes, other value-added services.

Online portals cannot sell narcotic drugs, tranquillisers and Schedule X drugs, and cannot advertise their services, as under the Drugs and Cosmetics Act. Under the new rules, complete information on the medicines will have to be provided by the e-pharmacy holders, and a 24/7 helpline should be made available.

The top-level Drugs Technical Advisory Board also recently approved the draft rules to allow the operation of e-pharmacies. DCGI Dr S Eswara Reddy had said on television that the draft rules have nearly been finalised and would be published soon and a list might be available of all registered online pharmacists.

Co-founder of one digital platform said the priority would be to make clarifications to the court. The Central Drugs Standard Control Organisation has already spoken extremely positively about the online pharmacy model (in the counter to the petition at the Madras High Court) and hoping against hope they expect the draft is released soon so that there is continuous supply of medicines to millions of families which are now dependent on online platforms for purchasing monthly medicines & are spread across the country - right from tier one cities to a small taluka in a remote area.

So there will be push for early publication of rules to help regulate e-medicines market & Online pharmacies considering legal recourse against ban.

So what is likely to happen is an appeal against the verdict.

The legal process will take its course and the affected companies will come together to make sure that on line model is understood well and the court clarifies the order.

The year 2019 will start with a raise your voice programme by AIOCD who on behalf of 8.5 lacs chemists & druggists in India will hold a nationwide "HALLA BOL" campaign against e-pharmacy on 8th Jan 2019. Under the campaign --district level associations will bring out rallies and hand over memorandum to FDA & Collectors of 719 districts in the country . Same will also be carried by state associations who will submit MEMORANDUM to state health ministers and state FDA Authorities .

As quoted by Mr Singhal ( General Secretary , AIOCD ) Online pharmacies may facilitate easy entry of drug mafias / spurious drugs severely impacting the health and wealth of common man and in particular youth of India.

AIOCD would also submit a memorandum to DCGI seeking action against E-Pharmacies .

Added on 3rd Jan 2018:

The Madras High Court  stayed the single judge order banning the online sales of drugs and cosmetics until it announces a decision in the matter.The same bench last month provided temporary relief by suspending the single judge order and today passed its final order in the same matter.

 While the ban has been stayed by the bench, the single judge's direction to the central government to notify the rule before January 31st remains in force.

Overall, organised pharma retail market valued around Rs 1.3 lakh crore is the third-largest in volume terms and the 13th-largest in value, globally. It grew from $28.5 billion in 2014 to nearly $30 billion in 2017, and is expected to clock a CAGR of 11.3% to reach $55 billion by 2020.

Research And Markets estimates that the e-pharmacy market potential is very high with giants like Amazon, Flipkart, and more than 30 startups trying to grab a slice of the pie. The e-platform is led by Medlife ,Netmeds, 1MG, PharmEasy, Myra, CareOnGo and Pharmasafe.

News reports also suggest that the Government of India will soon be formulating regulations for governing E-pharmacies18. While the draft rules are not yet available in the public domain, one interesting proposal that is being mooted is to allow E-pharmacies to obtain a single registration from the Central Drugs Standard Control Organisation, instead of obtaining different registrations from each state where such E-pharmacy will operate.

While it remains to be seen how these regulations will address the aforementioned identified concerns and challenges, the recent move on part of the Government to encourage this sector and to introduce a specific legal regime for governing online sale of drugs has been welcomed as a favourable step by E-pharmacies.

Note: Courtesy -- Secondary Research and web copy of judgement