Financial Chronicle - - EDIT, OPED, THE WORKS -

An in­va­sion of armies can be re­sisted, but not an idea whose time has come.

- Victor Hugo

THIS fa­mous quote has al­ready gone down in the an­nals of In­dian his­tory to be as­so­ci­ated with the bud­get speech given in 1991 by the then fi­nance min­is­ter, lead­ing In­dia into the path of eco­nomic re­forms, mak­ing it into an IT pow­er­house. Over the past few years, the In­dian pharma sec­tor has been gain­ing trac­tion largely ow­ing to some of the key reg­u­la­tory and pol­icy changes that have been in­sti­tuted by the gov­ern­ment, in­clud­ing re­laxed FDI en­try caps, 100 per cent FDI in the med­i­cal de­vices sec­tor and en­force­ment of med­i­cal de­vices rules. Re­cently, the min­istry of health and fam­ily wel­fare has re­leased the draft rules per­tain­ing to sale of drugs by e-phar­macy with an aim to reg­u­late on­line sale of medicines. This is one of the oc­ca­sions where the law had to catch up with the in­dus­try as the mar­ket for on­line sale of medicines has been preva­lent in In­dia over the past few years with­out the ex­is­tence of ap­pro­pri­ate reg­u­la­tory frame­work.

Right from the in­cep­tion, the on­line phar­macy play­ers have faced hur­dles ow­ing to lack of clar­ity un­der the Drugs and Cos­met­ics Rules, 1945 re­gard­ing on­line sale of medicines. But off late, the gov­ern­ment has taken note that on­line sale is crit­i­cal for easy ac­cess to medicines. The draft phar­ma­ceu­ti­cal pol­icy re­leased in 2017 ac­knowl­edged the need to move into e-phar­macy space and for­mu­late guide­lines for en­cour­ag­ing it in the larger con­sumer in­ter­est. The draft pol­icy has also ac­knowl­edged that op­por­tu­ni­ties in the ephar­macy sec­tor can also be an area for at­tract­ing FDI.

As per the draft rules, no one is en­ti­tled distribute or sell, stock, ex­hibit or of­fer for sale of drugs through e-phar­macy portal un­less reg­is­tered with the cen­tral li­cens­ing author­ity (CLA). For run­ning an e-phar­macy busi­ness, only a sin­gle reg­is­tra­tion from CLA will be re­quired. This con­trasts with the regime con­cern­ing the brick and mor­tar stores, where a store spe­cific reg­is­tra­tion is re­quired from the lo­cal/state drug author­ity for sell­ing drugs. The rea­son for hav­ing a sin­gle reg­is­tra­tion from CLA is aimed to re­move any im­ped­i­ments on in­ter-state sale/dis­tri­bu­tion of drugs by the e-phar­macy reg­is­tra­tion holder. The draft rules also clar­i­fies that any sale of drugs over the ephar­macy portal will be made pur­suant to pre­scrip­tion re­ceived from cus­tomer, and only those drugs can be sold that don’t come within the purview of Nar­cotic Drugs & Psy­chotropic Sub­stances Act, 1985, tran­quilis­ers and sched­ule X drugs. These ex­clu­sions have been made keep­ing in mind pub­lic health con­cerns. The draft rules fur­ther stip­u­late e-phar­macy reg­is­tra­tion holder is re­quired to un­der­take var­i­ous com­pli­ance mea­sures like putting in place ad­e­quate cus­tomer griev­ance re­dres­sal mech­a­nism, com­ply with the In­for­ma­tion Tech­nol­ogy Act, 2000 in re­la­tion to cus­tomer data pro­tec­tion and stor­age of cus­tomer data in In­dia.

While some of stip­u­la­tions in the draft rules are a step in the right di­rec­tion, there are cer­tain in­fir­mi­ties that should be ad­dressed while fi­nal­is­ing rules.

First, pro­vi­sions un­der draft rules (in­clud­ing the def­i­ni­tion of ‘e-phar­macy’) don’t dis­tin­guish be­tween a mar­ket­place e-phar­macy busi­ness model and an in­ven­tory-based e-phar­macy model. It has de­fined ‘e-phar­macy’ to mean the ‘busi­ness of dis­tri­bu­tion or sale, stock, ex­hibit or of­fer for sale of drugs through web portal or any other elec­tronic mode’. From this def­i­ni­tion, it ap­pears both in­ven­tory-based and mar­ket­place-based models of e-phar­ma­cies are per­mit­ted. From a FDI pol­icy per­spec­tive, 100 per cent FDI in mar­ket­place e-com­merce busi­ness is al­lowed whereas FDI in in­ven­tory-based e-com­merce busi­ness is pro­hib­ited. Thus, it would be use­ful to align the def­i­ni­tion of e-phar­macy with the FDI pol­icy. While the in­tent of the regulator would be to al­low both kinds of ecom­merce busi­ness models to pre­vail, it would be use­ful to have clear dis­tinc­tion due to the rea­son that the types of busi­ness ar­range­ments to be put in place by the mar­ket place based e-phar­macy en­tity and an in­ven­tory based e-phar­macy en­tity would be sub­stan­tially dif­fer­ent.

Sec­ond, the pro­ce­dure for dis­tri­bu­tion/sale of drugs through e-phar­macy leaves scope for more de­tail and clar­ity. The pro­vi­sion un­der draft rules state that on re­ceipt of the pre­scrip­tion, the reg­is­tered phar­ma­cist be­long­ing to the e-phar­macy reg­is­tra­tion holder is re­quired to ver­ify de­tails of pa­tient and reg­is­tered med­i­cal prac­ti­tioner. The draft rules nei­ther stip­u­late the ba­sis on which such ver­i­fi­ca­tion can be con­ducted nor pro­vide the ephar­macy with any dis­cre­tion to adopt the mech­a­nism through which such ver­i­fi­ca­tion can be done. Con­sid­er­ing that quick or­der pro­cess­ing and de­liv­ery of drugs are of para­mount im­por­tance to e-phar­macy en­ti­ties, it would be use­ful if clar­ity on the as­pects of ver­i­fi­ca­tion can be in­cor­po­rated into it.

Third, the pro­ce­dure for dis­tri­bu­tion/sale of drugs through e-phar­macy also stip­u­lates that upon re­ceipt of pre­scrip­tion, e-phar­macy reg­is­tra­tion holder will be re­quired to dis­pense and make ar­range­ment for sup­ply of drugs from any re­tail or whole­sale li­censed premises un­der the Drugs and Cos­met­ics Act, 1940 and the rules made there un­der. This pro­vi­sion is am­bigu­ous as it en­tails that an e-phar­macy reg­is­tra­tion holder will be re­quired to source drugs from an­other phar­macy, which has the req­ui­site whole­sale/re­tail li­cence. In case where the e-phar­macy reg­is­tra­tion holder is it­self hold­ing in­ven­tory of drugs, the pro­vi­sion un­der the draft rules would re­quire the store/unit sup­ply­ing drugs to have a re­tail/whole­sale reg­is­tra­tion (which falls in the purview of the state li­cens­ing author­ity) in ad­di­tion to the cen­tral reg­is­tra­tion. It would mean the e-phar­macy would be on par with the brick & mor­tar stores, as far as sup­ply of drugs are con­cerned.

Fourth, per­haps the most ab­surd stip­u­la­tion un­der the draft rules is upon can­cel­la­tion of li­cence of the e-phar­macy reg­is­tra­tion holder in two or more states, the cen­tral li­cence will be deemed to be au­to­mat­i­cally can­celled. The draft rules don’t ex­pressly pro­vide for the re­quire­ment of an e-phar­macy reg­is­tra­tion holder to also ob­tain req­ui­site state li­cences. Thus, in the ab­sence of ex­press pro­vi­sions, the can­cel­la­tion of li­cence from the state li­cens­ing au­thor­i­ties con­se­quently lead­ing to can­cel­la­tion of cen­tral li­cence is con­fus­ing.

The is­suance of draft rules sig­nals the pos­i­tive in­tent of the gov­ern­ment to cater to de­mands on the on­line pharma in­dus­try. Con­sid­er­ing that In­dia is see­ing sig­nif­i­cant growth in e-com­merce with in­creas­ing in­ter­net pen­e­tra­tion, arm­ing e-phar­ma­cies with the right reg­u­la­tory en­vi­ron­ment would be a gamechanger for the pharma sec­tor and will en­sure wel­fare of pub­lic at large. A clearly drafted set of rules gov­ern­ing sale of drugs by e-phar­macy, de­void of am­bi­gu­i­ties, would go a long way in en­sur­ing it.

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