DSK Legal
Knowledge Center
E-pharmacy – What’s the fuss really about?
Clothes and groceries aren’t the only items available online in this day and age. With
the e-commerce industry growing at a radical pace, it was only a matter of time before
E-pharmacies became a reality. And as usual, the law is playing catch up to the ever
evolving technological situation. E-Pharmacies have been in existence in India for
several years. However, they have only come into the limelight now.
2018 saw the largest number of private equity investments in E-Pharmacies.
Approximately USD 150 million was pumped into the sector as opposed to the USD 35
million in the previous year. The industry is touted to grow at an exponential rate in
the coming future.
In the absence of any legislation regulating E-Pharmacies, the Delhi and Madras High
Courts recently passed orders banning the sale of drugs online. Why now? And what
happens to the investments that have already been made into the companies running
E-Pharmacies? Just because the law makers are playing catch up, should the companies
running E-Pharmacies now be made to suffer?
The draft rules regulating E-Pharmacies were published on August 28th, 2018 by the
Ministry of Health and Family Welfare. Five months later, they’re still in draft form, and
E-Pharmacies are being made to pay the price for the slow functioning of the
legislature.
1
February 1, 2019
Today, there are no regulations other than the Drugs and Cosmetics Act, 1940 (“Act”)
and Drugs and Cosmetics Rules, 1945 (“Rules”). Since the Act and the Rules are old,
they do not specifically cover E-Pharmacies, and one wonders, why that would be
necessary.
While the pros and the cons of the existence of E-Pharmacies have been discussed in
great detail many a times before, it is pertinent to bear those in mind while discussing
the recent judgement of the High Courts of Delhi and Madras.
E-Pharmacies make it easier for people to access drugs, especially the elderly who find
it difficult to access physical stores. E-Pharmacies also allow individuals to buy drugs
at the best prices online, thereby making it cheaper than those being sold at brick and
mortar stores. This in turn allows individuals to buy drugs wherever they like, without
being pushed to buy drugs at a specific store in a hospital or at a specific chemist where
doctors make commissions. On the other hand, because there is no specific individual
you are dealing with online, it is easier for E-Pharmacies to get away with selling fake
drugs, drugs without prescription or selling drugs to minors and children. Theoretically,
it would also be possible for people to gain access to drugs that legally cannot be sold
without prescriptions from a registered medical practitioner.
But is banning E-Pharmacies altogether until the draft rules are in force really the
answer? Is the ban a move to help the consumer or pander to the requirements of the
association of druggists and chemists who fear loss of business to online stores? Why
haven’t they raised a hue a cry in all these years when E-Pharmacies have been
operating all along? An additional problem is that the orders of the High Courts do not
distinguish between E-Pharmacies that are acting merely as aggregators thereby
connecting buyers with chemists (i.e. physical stores) and E-Pharmacies that actually
sell retail to customers. No rationale has been provided by the Courts as to why both
should be painted with the same brush.
Now, let’s take a quick look at the draft rules. Each E-Pharmacy is required to procure
a registration certificate which will be valid for a period of 3 years. All E-Pharmacy
orders are required to receive orders for retail sale through an E-Pharmacy portal. The
E-Pharmacy registration holder is to provide the drugs only as per the prescription
received from the customer. The E-Pharmacy is also required to provide a facility for
customer support to answer any queries through the customer helpline. To ensure the
drugs are not spurious, the sale needs to be made against a cash and credit memo
which will document the license number of the licensee dispensing the drugs, the serial
number of the credit memo, the name of the drug, quantity and batch number along
with the date of expiry and the name of the manufacturer. The premises of the E-
pharmacy will be checked once every two years.
The irony of the situation is that the above rules do not really negate the issues that
have been flagged in selling drugs through E-Pharmacies. Even without the new draft
rules, the existing Rules applied to all sale of drugs. The existing Rules already state
that it is mandatory for retailers to obtain a license, that a valid prescription is
mandatory for sale of prescription drugs, that the sale should be dispensed under the
supervision of a pharmacist; so why are the existing Rules not enough to cover within
their ambit, the sale of drugs online? Is it not imperative for the E-Pharmacies to comply
with the existing Rules today? There is no exemption to E-Pharmacies just because
they are online. How does providing for an online portal, providing for customer service
and having to document details of the drug, curb any of the issues flagged in selling
drugs through E-Pharmacies?
The High Court of Madras states that “the growth of on-line purchase of medicines is
encouraged by the direct exposure to pharmaceutical advertisement. The increased
exposure to pharmaceutical products through all modes of communication like
television, radio, internet coupled with less face to face consultation has given patients
the false sense of empowerment. The practice of ‘self-diagnose’ by consumers drives
them to online pharmacies.” However, the High Court fails to recognize that this is no
different from individuals self-diagnosing and purchasing drugs from physical stores.
Surely, E-Pharmacies cannot be blamed for the availability of google and change in
general human behavior?
The High Court concludes by stating that “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”. This sets a dangerous precedent for times to come. The law can never
keep pace with technological advancement, and the law cannot become a hindrance
to the society advancing as a whole based on technology.
By itself, not having sufficient regulations cannot become a reason to stop a thriving
business, or to put consumers at a disadvantage.
Authored by Shoubhik Dasgupta

While the High Court of Madras discusses the arguments advanced by the E-Pharmacies
and the drug associations, it fails to provide sound reasoning for why E-Pharmacies
cannot continue within the ambit of the current law until the new draft guidelines are
notified and brought in force. The High Court states that “the important major risk of
purchasing drugs from an on-line store is the misuse of medical, financial and electronic
information of patients”. The High Court does not discuss why the current Rules which
provide for confidentiality are not enough for E-Pharmacies. The discussion in the order
around counterfeit drugs does not dwell into the fact that counterfeit drugs is also a
problem in brick and mortar stores and is a problem people have been dealing with for
years. How is that any different with E-Pharmacies? E-Pharmacies, just like physical
stores already require that prescription drugs be sold only when valid prescriptions are
provided, much like a patient would do when going to a physical store. Why is this not
enough for an E-Pharmacy to sell drugs if it is enough for brick and mortar stores?

2
 DSK Legal Knowledge Center

Contact Details for any queries: Knowledge.Management@dsklegal.com

MUMBAI OFFICE:
MUMBAI OFFICE: C-16, Dhanraj Mahal,
1203, One Indiabulls Centre, Tower 2-B, Chhatrapati Shivaji Marg,
Floor 12-B, 841, Senapati Bapat Marg, Apollo Bunder,
Elphinstone Road, Mumbai 400 001
Mumbai 400 013 Tel +91 22 6152 6000
Tel +91 22 6658 8000 Fax +91 22 6152 6001
Fax +91 22 6658 8001

DELHI OFFICE: PUNE OFFICE:

ESC House 155, 1 & 2nd Floor Office Number 301, Third Floor
Okhla Industrial Area, Phase 3, Power Point, Lane 6, North Main Road
New Delhi 110 020 Koregaon Park
Tel +91 11 46616666 Pune 411 001
Fax +91 11 46616600 Tel +91 20 69000930

DISCLAIMER
This document intends to provide general information on a particular subject/s and is not an exhaustive treatment of such subject/s and is intended merely to highlight
issues. It is not intended to be exhaustive or a substitute for legal/professional advice. The information is not intended to be relied upon as the basis for any decision
which may affect you or your business and does not constitute legal advice and should not be acted upon in any specific situation without appropriate legal advice. DSK
Legal shall not be responsible for any loss whatsoever sustained by any person relying on this material.