July 2019 is certainly going to be remembered as an interesting time in the evolution of e-pharmacy regulations, with e-pharmacy companies making the plea before the Delhi High Court that e-pharmacies could only be comparable to food delivery apps such as Swiggy. This submission has been made in connection with a writ filed before the Court, seeking action by the government against e-pharmacies in India.

The argument goes further by saying that just like Swiggy does not keep a restaurant license while delivering food (since it is not a restaurant itself), e-pharmacies are not running the pharmacy themselves and consequently they cannot be regulated under the current framework of the Drugs & Cosmetics Act 1940 (“DCA”).

The Central Government, for its part simply stated that a framework to regulate e-pharmacies was being framed.

At the outset, the subject of regulation of e-pharmacies highlights a crucial missing element in the DCA, namely that, unlike several other statutes, the DCA was not immediately amended after the passing of the Information Technology Act 2000, unlike various other statutes.

This delay (which is being slowly rectified) has served to generate a lot of grey areas in the confluence of new businesses and technologies in the realm of healthcare and drug industries.

Next, and more crucially, e-pharmacies are taking the view that the DCA recognizes a difference between a seller of a drug and the agent facilitating the sale of the drug (i.e. online pharmacies).

While the law recognizes obligations in respect of the seller for the sale of a drug, a middle party that is not affecting the sale on its own name and is only providing specific technological, logistical and ancillary support cannot be treated as a seller of a pharmaceutical product, from the point of view of such e-pharmacies.

Such a middle party could, at best be treated as a persona non grata from a regulatory perspective, creating a large void on the intended dos and donts for the e-pharmacy industry as a whole. On the other hand, such a middle party would fall straight in the crosshairs or any ban or restrictions under the current framework.

This view raised by e-pharmacies before court inherently assumes that the DCA in of itself does not prevent the use of an intermediary for the sale of a drug or pharmaceutical; that it is possible for a licensed pharmacist to sell drugs through any agent, including an online platform.

However, in this writer’s humble opinion, a plain reading of Section 18 of the DCA and Section 42 of the Pharmacy Act 1948 (“PA”) do not create such a clear basis for taking such a view. Both of these provisions could be interpreted so as to require that the sale of drugs happen from a registered seller (i.e. a pharmacist) and administration of such drug further happen as per their directions (if so directed by the physician).

The Pharmacy Practice Regulations further set out a basis on which a pharmacist has to ensure that patients purchasing drugs from their establishment are duly examined and suitably counselled on their medication and treatment, based on the physician’s feedback and prescription. There further is a prohibition on pharmacies using any kinds of agents or touts to promote sales of the products.

In spite of the above legal challenges, there still remains a large grey area, which in a manner of speaking neither truly bans nor permits the involvement of an intermediary in the sale of a drug. This ambiguity here lies, purely by accident, since these regulations would have never contemplated a world that allowed for online transacting and purchases. While the regulations do contemplate more of the traditional brick and mortar establishments being the intended registered sellers of drugs, whether there is a restriction to truly prevent the sale of drugs online, is in a lot of ways, debatable.

A determined and resolute actor in such an instance can easily work such ambiguities to their advantage, which can create further and more crucial challenges for the industry, where parties could either choose to be extremely cautious in navigating the regulations or take a full blown laissez faire approach, in contending that these regulations were never meant to apply to them and consequently the e-pharmacy industry should be seen as totally unregulated and very much the wild west of business prospecting.

If seen in this light, and considering the delays in the introduction of the Drugs & Cosmetics Amendment Rules 2018 (which intend to create a legal basis for e-pharmacies), the question that arises for immediate thought is what should the legal position of such e-pharmacies be at this point in time?

If regulations are intended to be brought in to create the legal basis for the industry, is it by implication, a view that the e-pharmacy industry, which is reaping the benefit of large-scale PE investments right now, is currently a grey industry which in a more responsive and proactive regulatory framework, would have faced far more severe sanction from the government?

This comes back the original challenge created by the plea made before the Delhi High Court; if such a plea were to be accepted, does it in the long run dilute the regulatory framework under the DCA by creating a precedent in the healthcare industry that everything is unregulated until somebody wakes up and pleads for government intervention?

The reason this is crucial to ponder on is because if we take the view that every new idea in healthcare can be started as an unregulated business until something goes wrong or somebody wakes up, then are we instilling the necessary confidence in the public in the law-making process for this industry?

There are enough and more PILs that are being filed in various courts across India on a range of issues affecting the healthcare industry; while these PILs do not create any clear impact on investment patterns in the Indian healthcare space (case in point – e-pharmacy companies raising so much cash in spite of the lack of regulations), does this approach of ‘create a business and lets regulate it later’, really serve a meaningful purpose?

A great deal of the PILs and legal challenges, not just against e-pharmacies but also against other players in the healthcare industry often circle on the point that there is a lack of regulation or no policy on the subject matter of the PIL or writ.

In this backdrop, initiating regulations in such a hurried and seemingly haphazard manner would only create the basis of further unusual challenges, and equally perplexing arguments being made before the judiciary.

The idea behind this argument is not to question new businesses from coming up in the healthcare space.

It is to ensure that entrepreneurs looking at these new and revolutionary steps take a full lay of the land, from a regulatory perspective, and attempt to understand the long-term impact of their businesses and ideas better, instead of just taking knee jerk calls to say that the industry in question is unregulated. This would ensure that the rule making process (which in the short term in India is inevitably going to tail behind market trends) is implemented in a careful and systematic manner.