e-Pharmacies: On regulating online sale of drugs in India

Why in News?

Recently, the Union Ministry of Health and Family Welfare (MoH&FW) pulled up at least twenty companies including Tata-1mg, Flipkart, Apollo, PharmEasy, for selling medicines online.
This happened after the All-India Organisation of Chemists and Druggists (AIOCD), a powerful lobby of over 12 lakh pharmacists, threatened to launch a country-wide agitation if the government didn’t act.

What’s in Today’s Article?

What is the Legislative Framework for e-Pharmacies in India?

As of now, no exact rules are in place for E-drug stores in India, and this is a significant inhibitor to the online drug store market in India.
At present, E-pharmacies in India follow the Drugs and Cosmetics Act 1940, the Drugs and Cosmetics Rules 1945, the Pharmacy Act 1948 and the Indian Medical Act 1956.
However, the electronic sale of physician-prescribed drugs from online drug store sites is expressed under the IT Act, 2000.
E-pharmacies are managed by state drug controllers and approvals for E-pharmacies should be given by the Drug Controller General of India (DCGI).
The MoH&FW in 2018 came out with draft rules to control the online offer of medications and availability of genuine drugs from certifiable online sites.
But, after being sent to a group of ministers, the proposal was immediately put on hold.
Since then, multiple court orders and the 172nd Parliamentary Standing Committee report have called for regulating e-pharmacies.
An administrative structure to oversee/regulate the e-pharmacy sector is necessary when antimicrobial resistance (AMR), criminal and risky movement of drugs, is on the rise.

How are e-Pharmacies Competing with Chemist Shops?

Flushed with billions of dollars of private equity, e-pharmacies started offering hefty discounts on medicines in a bid to garner more market share.
e-Pharmacies call themselves facilitate doorstep delivery.
Companies like PharmEasy are building a supply chain from the ground up by buying out big and small wholesale drug distributors like Ascent Health, Desai Pharma, etc.
But this aggressive growth is coming at a cost. Since 2015, e-pharmacies have recorded losses year-on-year. For example, Tata-1 Mg posted a loss of ₹146 crore in FY22.

Is Banning e-Pharmacies a Viable Option?

The demand for online delivery of drugs is burgeoning.
The year 2020 marked a watershed moment for the growth of e-pharmacies as it saw nearly 8.8 million households using home delivery services during lockdown.
There is a possibility that some of these businesses will go underground if banned.

What Lies Ahead - A hybrid Model of e-Pharmacies and Brick and Mortar Stores?

In a climate where drug delivery is driven by consumer sentiments, it is futile to stick to any one way of doing business.
For acute care and emergency, patients still rely on their neighbourhood pharmacy stores.
- This has led e-pharmacy players to now open capital-intensive brick and mortar stores.
Stiff competition has forced chemist shops to also offer home delivery options over their own store apps/Whatsapp.
In an ecosystem that is moving towards a hybrid mode, all eyes are on the government which will have to effectively regulate the new way of doing e-commerce in the drug space.