E-pharmacies welcome govt’s draft rules but grey areas abound

Online pharmacies and experts across the board have largely welcomed the government’s draft regulations for the sector, which have been circulated among states for their opinion. However, grey areas remain such as monitoring of e-pharmacies, the definition of the marketplace model, and lack of elaboration by rules on last-mile delivery.

In the most welcome step, draft rules now talk of a formal recognition for e-pharmacies. These online pharmacies can now register themselves with the Central Licensing Authority, say draft rules.

“With this notice, at least the unfounded doubts on the legitimacy of e-pharmacy are fully put to rest," Prashant Tandon, founder of 1mg, told TechCircle.

Pradeep Dadha, co-founder of Netmeds, said that most of the recommendations from the industry have been considered, adding, "This has been enabling and understanding." 

"What we do is still a grey area. So these new draft rules are most welcome. The sector is regulated by both the Centre and the states. This complicates the whole process. The discussions gave a clear indication that this is going to be a well-thought-out regulation, giving parity to online players and bringing transparency in the monitoring of the overall sector," said Dharmil Sheth, co-founder of PharmEasy.

Grey areas

Monitoring, however, remains a grey area. The draft rules say monitoring is the responsibility of the state government. "While the registration has to be done only with one central authority, it is not clear how the states can monitor these companies," said an expert, who did not wish to be identified. 

Also, the rules do not make a clear distinction between an inventory model and a marketplace model for online commerce. Most of the regulatory norms have been made with the understanding that most e-pharmacies operate under a marketplace model, where the platforms likely source medicines from a medical store nearest to the customer. Licences for offline pharma outlets and pharmacists are given by the states.

"What is worrisome is that the marketplace would be responsible for legal compliance of the eventual dispenser. One will need to see the final rules to get a better understanding,” said Sameer Sah, associate partner, Khaitan & Co. In a country like India, where 25% of medicines sold are counterfeit, this adds another risk to e-pharmacy, Sah said.

However, Sah said that the government initiative needs to be appreciated as there is some framework to work on. "The draft rules are overall positive, addressing this business model – what will or will not be allowed is a matter of regulation and will no doubt evolve from time to time."

The regulations state that while prescription and a pharmacist’s involvement in online orders is a must, in the offline world, many medicines are sold over-the-counter, creating a non-level playing field. Also, the draft rules do not elaborate on last-mile delivery and associated complications, which form a core part of the overall business of these online marketplaces.

While many of these online firms were hoping for data-driven personalised advertisements for additional revenue, the government seems to think otherwise. “The draft rules indicate that data from e-pharmacies are not to be shared with anyone except the central government for public health purposes. This eliminates possibilities of these companies monetising this data,” said an expert.