E-Pharmacy & The Legal Framework

Chanchal K. Singla, Advocate
Managing Partner & R.S. Randhawa Founding Partner,
R&S Law Associates
Email Id : rnslawassociates@gmail.com

Date : 01/07/2020 - Location : SCO: 40-41, Level-III, Sector 17A, Chandigarh
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E-Pharmacy & The Legal Framework

E-Commerce supported by robust internet & mobile services is flourishing in India. However, E-Pharmacy a part of larger E-Commerce business is crippled by inefficiencies & lack of clarity. The biggest stumbling block in establishment of a flavorful Electronic Pharmacy model is the existence of obsolete laws led by The Drugs & Cosmetics Act, 1940 and its supporting rule that is "The Drugs & Cosmetics Rules, 1945". Evidently, the Act & Rules were framed at a time when one could not have imagined internet usage or such a sale model which makes medicine available at one's doorstep with the click of a button. However, even with obsolete Rules, various E-Pharmacies started establishing business in India, some of the notable names are Netmed, Medlife, PharmEasy & 1mg etc. These E-Pharmacies are made to conduct business under the old Act & Rules which were necessarily framed for a brick and mortar stores which have a minimum defined space for holding stock (Rule 61 of the Drugs & Cosmetics Rules, 1945) and has geographical limitations (Rule 62 of the Drugs & Cosmetics Rules, 1945). The Central & State Government do not distinguish between an E-Pharmacy & a Physical Pharmacy, this means every E-Pharmacy has to have a License under Section 18 read with Rule 61 issued in various formats attached with Rules, particularly Form 21, 21-A, 21-B which mandates stocking, exhibition, offer of sale in Retail & Wholesale of drugs specified in Schedules C and C(1) excluding those specified in Schedule X under the supervision of a qualified or competent person as the case may be. Thus, E-Pharmacies are able to run their business by (a) employing a pharmacist with valid License issued by a State Drug Authority to dispense medicines under Rule 65(2) of the Drugs & Cosmetics Rules, 1965 and 9.1 of the Pharmacy Practice Regulations, 2015; (b) by obtaining License of Pharmacy under Rule 61 of the Drugs & Cosmetics Rules, 1965; (c) by not selling, stocking drugs mentioned in Schedule X of the Rules; (d) against a proper prescription by a Registered Medical Practitioner.

A leading business newspaper reported that delay in notification of E-Pharmacy draft Rules is causing concern in the sector, such concern was raised by FICCI. Key figures from Federation (FICCI) opined that there is no violation of any existing act and rules in the current E-Pharmacy model. However, there are certain difficulties that the sector has been facing towards ease of doing business due to regulatory uncertainty. The above statement of FICCI lacks conviction in my humble opinion as the License to run a pharmacy is issued by State Government under Part VI of the Drugs & Cosmetic Rules, 1945. Every License is issued to a particular store having a minimum defined physical area to store drugs and above all the License is restricted to a particular geographical place. Before issuing License the licensing authority takes into consideration number of already existing Licenses in a particular area. Rule 62 of 1945 rules makes it mandatory to seek separate License for separate place in case of drugs being sold or stocked for sale at more than one place. It appears accepting & delivering orders by a single pharmacy outside geographical limitations contravenes the Rules and Pan India presence is practically impossible. Under current scenario, E-Pharmacy has to have separate Licenses for separate stores or have a tie up with local pharmacy for supply of drugs in the area where the pharmacy is located. Thus, the present legal framework is adversely proportional to ease of doing business and leads to bottlenecks and cost escalation. The above discussion has inadvertently lead to differentiating E-Pharmacy from a Pharmacy as former is essentially a marketplace connecting various pharmacies digitally and is more of a digital solution in patient, pharmacy coordination thereby increasing the cost efficiencies leading to win-win situation for both, having nothing to do with actual stock, store, sale of the Pharmaceutical drugs. Thus, FICCI is rightly worried at non-notification of Draft Rules for E-Pharmacy but the reasoning expressed does not articulate the real worries that is the contravention of law in case of direct supply of drugs outside the geographical limit of the licensed drug store of E-portal.

The Government of India came up with proposed amendments by notifying draft of certain rules further to Drugs & Cosmetic Rules, 1945, though Ministry of Health & Family Welfare vide gazette notification no. 602 dated 28.08.2018. The draft Rules seek to insert "Part VIB" titled as "Sale of Drugs by E-Pharmacy" in the existing Drugs and Cosmetics Rules. Rule 67-I deals with Definition, 67-J deals with Registration of E-Pharmacy, 67-K deals with Disclosure of information generated through E-Pharmacy portal, 67-L deals with Application for registration of E-Pharmacy, 67-M deals with Conditions for grant of E-Pharmacy and so on. "E-Pharmacy", "E-Pharmacy Portal" and "Sale by way of E-Pharmacy" are defined under these proposed amendments. As against a licensed pharmacy store, E-Pharmacy consists of (a) registered "E-Pharmacy" maintaining a E-Pharmacy/ Web Portal for obtaining and verifying orders (b) licensed drug stores for dispensing the drugs to patients after verification (c) shipment service for delivery of order from store to destination.

The Draft Rules are a welcome step in easing the working of E-Portals. Some of salient features are: (A) Compulsory Registration: All the existing and new E-Pharmacies shall apply for registration to Central Licensing Authority in Form 18AA with a fee of Rs. 50,000/-. (B) Protection of Privacy & Data localization: No information concerning customers shall be shared with anyone except the Central & State Drug Authorities and E-Pharmacy has to keep the entire data generated on its portal in India itself and no Data can be sent or stored outside India by any means. (C) Prohibition and Sale of Psychotropic substances: As per draft rules E-Pharmacies are prevented from selling drugs covered under the definition of Psychotropic substance under Narcotic Drugs and Psychotropic Substances Act, 1985, tranquilizers and drugs specified in Schedule X of the Drugs & Cosmetics Rules. (D) Verification by Registered Pharmacist: On receipt of order on E-Portal maintained by E-Pharmacy, the registered pharmacist of the E-Pharmacy shall verify the details of patient, Registered Medical Practitioner vis and vis E-Prescription (not yet defined in the Draft Rules) or Prescription as the case may be. Thereafter the drugs to be supplied to the customer after being procured from a licensed retail or wholesale store within the time specified to the patient at the time of procuring order. (E) Quality Control: All the details shall be mentioned on the sale memo which includes name, address and license number of the licensee dispensing the drugs. Serial number, date of memo, details of drug including quantity, batch number, expiry date, manufacturer name should also be mentioned on the memo. E-Pharmacies are required to maintain and update information regarding the drug availability, types of drugs offered for sale, supply chains or vendor lists, details of registered pharmacists and medical practitioners etc.

The draft rules cannot be said to be exhaustive but an important step ahead in tapping the E-Pharmacy business potential which is currently one percent of total drug sale in India and is expected to grow from 512 million USD (INR 3500 Crores) in 2018 to 3657 million USD (INR 25000 Crores) by 2022 growing @ CAGR of 63%. The sector has immense growth potential, which can be tapped easily, in case the Government moves swiftly. Pendency of draft rules for such a long time is an unlikely trait of the present regime which is known for its quick action. With the notification of rules, new players can conduct their business legally as one PAN India registration would be required for E-Pharmacy. Rules should also give clarification regarding "E-Prescription"/ right of the patient to demand the same from his/her doctor and regarding storage of drugs and its PAN India movement in the light of conflicting rules such as Rule 62 of the Drugs & Cosmetic Rules, 1945 which warrants separate license for separate places of stock, sale even though belonging to a single company. Misuse by drug peddlers is also an important issue as supply of narcotics through courier is not an unheard phenomenon.

With various healthcare measures in the kitty like Jan Aushadhi, TeleMedicine, E-Healthcare coupled with Digital India, Make-in-India, Ease of doing and One India, present regime is well set to perform in the sphere of E-Pharmacy making affordable and cheap medicine a reality, and that too easily accessible to everyone Further delay in notifying the amended draft Rules is unwarranted, not in the interest of growth, modernization as envisaged and promised.


1. The Drugs & Cosmetics Rules, 1945.

2. The Drugs & Cosmetics Act, 1940.

3. Draft Rules to amend The Drugs & Cosmetic Rules, 1945 notified by The Ministry of Health and Family Welfare vide its notification G.S.R. 817 (E) dated 28th August, 2018.

(Online available at:http://egazette.nic.in/WriteReadData/2018/189043.pdf)

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