How Indian E-pharmacies Operate and What are the Rules and Regulations Governing Them?

1. How Indian E- pharmacies Operate and What are the Rules and Regulations Governing Them? Many factors have contributed to the adoption, growth, and surge of e- pharmacies across the globe. Ever-changing customer preferences, COVID-19, increased technological awareness, and enhanced convenience is the most important factors that have enabled and sustained this growth in many countries. In India, however, wide adoption of digital services, health consciousness and a growing number of total smartphone users have further accelerated their acceptance in mainstream India. The reception e-pharmacies have received from the users in India post- covid period is nothing short of extraordinary. The current boom of demand in e-pharmacy platforms has led to many customers completely switching to online pharmacies. According to the white paper published by the Federation of Indian Chambers of Commerce and Industry (FICCI), “Among Patients with Chronic Diseases, the acceptability for e-Pharmacy as an important prospect has been found to be higher, with 94% of the respondents currently buying medicines for chronic diseases showing the inclination to accept e-Pharmacy in the future, reluctance toward the same being displayed by only 6% of the sample.” So it is clear that when it comes to the customers, they are not reluctant in buying their medications from the e-pharmacies. But how well the facilitators i.e. pharmacy owners respond to this rising demand remains to be seen. Most of the pharmacy owners want to incorporate online pharmacies into their existing business but are perplexed owing to the vague rules and lack of clarity about this particular business model. To

2. make things easier for the pharmacy owners, we have covered all the e- pharmacy rules that are in force in this article. Before we begin to delve into the rules and regulations concerning the e- pharmacies, it is better to take a brief look at the different models of e- pharmacies in India. The different models of e-pharmacies: 1. 'Online-only’ pharmacy: It sells medicines directly It has its inventory It requires a retail pharmacy license Workflow: Receive order > Verify prescription > Ship Order > Deliver Order 2. A digital twin of ‘Brick-and-Mortar’ pharmacy: Serves as an online extension of Brick-and-Mortar pharmacies It may or may not operate its delivery chain It requires a retail pharmacy license Workflow: Receive order > Verify prescription > Ship Order > Deliver Order 3. E-pharma marketplace: Doesn’t sell medicines directly, acts as a facilitator between a buyer and a seller It relies on third-party sellers It connects the local pharmacies to customers It delivers medicine from the local pharmacies It doesn’t require a retail pharmacy license

3. Workflow: Receive order > Forward the order to a pharmacy > Pharmacy verifies prescription > Receive confirmation > Ship Order > Deliver Order The e-pharmacies are not regulated by hard and fast rules and regulations, and there are no laws designed to govern e-pharmacies specifically. The absence of clear regulations leaves space for interpretation and this has created some misconception about the e- pharmacies. The need for clear regulations is catalyzed by the fact that in India several rules governing pharmacies and e-commerce are applied to the e- pharmacies. The list of relevant laws includes, but is not limited to the following rules: 1. Drugs and Cosmetics Act, 1940 (D&C Act) Defines the pharmacies and lays fundamental guidelines for the operation of drugs and cosmetics. It also mandates a retail license to sell the drugs on the basis 2. Drugs and Cosmetics Rules, 1945 (D&C Rule) of a valid prescription. Regulates manufacturing, sale, distribution, import, and advertisements of drugs and cosmetics. Prescribes 3. Pharmacy Act, 1948 and ensures product and labeling standards. Regulates the pharmacy profession as a whole and sets rules and extent of punishment 4. Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954 Regulates advertisements of drugs relating to certain conditions and diseases. 5. Narcotic Drug and Psychotropic Regulates operations, including sales, relating to narcotic drugs and for an offense. Substances Act, 1985

4. psychotropic substances, and provides stringent punishments for matters related thereof. 6. Information Technology Act, 2000 (IT Act) Regulates the bodies or persons who deal with sensitive data of all kinds. Implement measures to ensure data privacy and penalizes disclosure of personal information without consent. It was further amended in 2011 as Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 to include medical records and history, biometric information, physical, physiological and mental health condition; and other such sensitive data. 7. Indian Medical Council Code of Ethics Regulations, 2002 (MCI Code) Regulates professional conduct of registered medical practitioners in India, prescribes acceptable medical practices and provides penalties for the violation of these regulations. Before we set out to understand the draft rules for e-pharmacies, it is fruitful to get a brief overview of the various government agencies governing the pharmacy market. The list of such regulatory agencies is as follows: 1. Central Drug Standard Control Organisation (CDSCO) Responsibility: Setting and ensuring the quality of standards for drugs. 2. State Drug Standard Control Organisation Responsibility: Regulating the manufacturing, sale, and distribution of drugs in the respective states. 3.The Drug Controller General of India (DCGI) Responsibility: Heading the CDSCO and carries out the licensing and controlling function of CDSCO. The Ministry of Health and Family Welfare, in consultation with the Drugs Technical Advisory Board, released a draft vide its notification

5. G.S.R. 817(E), dated 28th August 2018 aiming to amend the Drugs and Cosmetics Rules,1945 to better govern the e-pharmacies. The ministry concerned had floated this draft and stipulated a time period of 45 days for objections and suggestions from all the stakeholders involved. But, the rules are yet to come into force. And therefore the e-pharmacies in India are still governed mostly by existing laws that govern brick-and-mortar pharmacies. In simpler terms, it means that the law doesn’t distinguish e-pharmacies from brick-and- mortar pharmacies. Although these rules are yet to be finalized and are yet to become a law, taking a deep dive into this draft will give us important insights into how the government intends to regulate e-pharmacies in the future. These draft rules aimed to properly define the online sale of medicines, e-prescription and sought clarity on what type of licenses e-pharmacies would need from regulators to operate. Some of the noteworthy revisions suggested in the draft rules are as follows: 1. Definition of ‘e-pharmacy’: For the first time, the term ‘e-pharmacy’ was defined; It was accurately defined as a business of distribution or sale, stock, exhibit or offer for sale of drugs through a web portal or any other electronic mode. 2. Registration of e-pharmacy: The rules require that any person intending to conduct an e- pharmacy business needs to mandatorily apply for registration to the central licensing authority by filling the form 18AA along with furnishing required documents and making a payment of INR 50,000. The validity of the registration would be three years from the date of issue. After the expiration, the pharmacist is required to renew the license. 3. Audit: The draft rules also make clear provision for a periodic inspection of the business. The e-pharmacy registration holder must allow the inspection by the authorized team of central licensing authority every two years.

6. 4. Data Localisation:  According to the draft, e-pharmacies are required to establish the e-pharmacy portal through which they conduct business in India and shall keep the data generated localized. These rules also specify that the data generated or mirrored through the e-pharmacy portal shall not be sent or stored outside India. 5. Confidentiality of the Information: The e-pharmacies are required to keep all the details of its customers discreetly. Further, they are also required to disclose these details to the concerned government for public health purposes. 6. Helpline and Grievance Redressal: The e-pharmacy registration holder will have to set up a support and grievance redressal mechanism for a minimum period of 12 hours a day for the 7 days of a week, and a registered pharmacist is required to answer the customer queries. 7. Central License: The draft rules mentioned a provision of a central license from the country’s apex drug regulator, to allow them to operate across the country. According to a report from the Indian Express, “India’s drug regulations mandate retailers to have a license to dispense medicines from the state in which they are being sold. This may have been a reason behind Amazon restricting its pharmacy operations to Bengaluru at present.” 8. Regulatory Authority: These draft rules propose to appoint a central licensing authority i.e. Drug Controller General of India (DCGI) to replace state drug regulators. DCGI will be the sole authority for granting approvals with a validity of three years. By the means of an extraordinary gazette vide CG-DL-E- 26032020-218928 dated 26th March 2020, the ministry of health and family welfare made some formal rules for the doorstep

7. delivery of drugs. It dictated that the drugs for which a prescription is required shall be sold based on receipt of prescription physically or through e-mail, subject to the licensee providing an email ID for registration. Furthermore, it decreed that the bill or cash memo shall be sent by the return email, and records of all such transactions shall be maintained by the licensee. What is the current status of this draft? In the same article from the Indian Express, it is reported that “In June- 2019, these draft rules were pushed to two expert committees by India’s apex drug regulatory body under the Central Drugs Standard Control Organisation.” But unfortunately, we are yet to see the outcome of the said meetings. Whatever the outcome may be, the pharmacists across the country would like to see the separate rules for the e-pharmacies be formed and implemented as soon as possible. The Federation of Indian Chambers of Commerce and Industry (FICCI) has encouraged the government, to define policies and guidelines for e- pharmacies and come up with a clear-cut operating model. Want guidance for e-pharmacies? Contact EMed Pharmatech, an indigenous pharma IT company and a global leader in e-pharmacy app development. We provide state-of-the- art iOS app, Android app, and a website to enable you to sell medicines online. So far, we have made more than 450 such projects and we have our presence in 35+ countries. To see why clients across the globe are relying on our services, get your free demo here. Contact us to develop your online pharmacy application: Call +91 97377 12429 / +91 72020 97862 Have a query? Mail us at info@emedstore.in