Online Drug War: A look at side effects of e-tailing drugs, regulation concerns & potential for abuse

The inroads cut by e-commerce into the formidable pharmaceutical retail industry has rattled its brick-and-mortar stores, who have been fidgeting for a few years now about a near-total takedown by their virtual counterparts. While Virtual Versus Physical is an old sport now, this time, the players are colossal. And the stakes run into tens of billions of dollars. 

It is because of the size of revenue that retail chemists and pharmacists were already sulking at the noticeable rise and growth of e-pharmacies. The Centre’s draft rules governing sale of drugs online has left them seething, as it legitimises the e-tailing of drugs. Clearly, the Health Ministry’s intent to ensure that the public can easily access genuine drugs from authentic online portals has stepped on the toes of traditional pharmacists, who cite a slew of reasons why there should be no online dealing of drugs at all.

Their paranoia is understandable. Online ventures are stripping brick-and-mortar stores the world over, and India is no exception, except that it is frequently left playing catch-up. Yet, in their self-serving resistance are rooted genuine concerns over authenticity, quality and legitimacy of pharmaceuticals. There are no assurances with the medication bought online, which could be expired, spurious or prohibited.      

At an emergency meeting on Wednesday, druggists from 28 states voiced these objections to e-pharmacies. “The authenticity of prescriptions provided on e-pharmacies cannot be cross-checked, which can lead to a supply of wrong medicines. We will launch a nationwide week-long agitation starting September 20, when all chemists will wear black ribbons,” said JS Shinde, president, All India Chemists and Druggists Association.

Nevertheless, going by the pattern of disruption wreaked by online players across sectors, e-pharmacies would be the steamroller in the pharma market. And for the same reason: they are cheaper. Besides, they harp on about how the patient data they glean could help raise a viable healthcare system.

Settle in for a long match. 

Consumer hook

E-pharmacy’s allure for the consumer is undeniable: handsome discounts ranging from 25 per cent to 60 per cent which make the corner drugstore chemist seem avaricious.

And the whopping discounts come from the business model of the e-pharmacies. 

The multi-billion-dollar Indian pharmaceutical retail market has, by dint of its size, always attracted investors, and online players get to bask in the bounty. Five of the 280-odd online pharmacies operating in the country today alone raised Rs 1,700 crore from venture capitalists across the globe in the last five years (see infographic).

A lion’s share of this has been poured into promotion and branding blitzkrieg to reel in consumers. Once the e-pharmacies have their attention, they offer concessions, derived from the very wide profit margins on sale of drugs. They claim to also have optimised the supply chain by verticalising various operations — procurement, storage, handling and delivery, managing the platform for orders.

The national drug watchdog’s approach is heartening for investors as well as entrepreneurs. In December last year, the then Drug Controller General of India (DGCI) formed a seven-member panel to look into the issue of online drug sales.

“We are very clear. We want this technology to ensure that patients get quick and quality service. We want to see how the issue can be addressed without compromising on safety. There are chances of abuse of technology and we want to plug that,” says GN Singh, former DCGI .

They give you this, but you pay for that?

Price advantage aside, are there any hidden costs that consumers might be in the dark about? To unravel that, we need to look at the regulatory framework governing e-pharmacies.   

Considering that pharma industry has a direct impact on public heath, e-pharmacies have been operating in a bit of a regulatory grey zone, which is only now being floodlit. 

As DNA reported in its Online Drug War series last week, brick-and-mortar stores are quick to point out that there are no dedicated well-defined laws for online pharma ventures in the country. 

While traditional pharmacies are governed by the Drugs and Cosmetics Act 1940 and a clutch of others, e-commerce is regulated by the Information Technology Act 2000, which is silent on e-pharmacies.

According to the drug laws, a qualified pharmacist (B. Pharma graduate) can dispense certain drugs only on a doctor’s prescription – bearing his name and registration, drug’s name, dosage, potency, and so on. They are expected to verify the authenticity of the prescription. Even over-the-counter drugs can be sold only by licensed retailers. 

There are limited ways to check if online pharmacies are adhering to these practices.

Then there are concerns over quality. Sale of substandard medicines, subpar storage conditions, and the risk of abuse or self-medication by patients are often cited to argue against online sale of medication.

“Online sale of medicines expands the scope for wrong practices and misuse of medicines compared to brick-and-mortar pharmacies. So we appeal to the government that if at all online model has to be permitted, then it should be first considered only for OTC medicines,” says Subhash Mandal, in-charge, regulatory affairs, Indian Pharmaceutical Association (IPA).

Product information is another knotty area. The Centre’s draft guidelines are mute on the rules for publicising MRP, expiry dates, and bases of discounts that e-pharmacies offer. These details were covered under a different notification by the Consumer Affairs Ministry, which stated that starting August 1, e-commerce firms were supposed to put up this information on the web page where the product is listed. But over a month after the deadline, the companies continue to operate as they have been for years, claiming that they are mere ‘aggregators’ and not retailers.

It is loopholes like this that drug authorities fear could be exploited by startups that want a bite out of the extremely lucrative pharmaceuticals industry. 

Why pharma is a special case

A differentiation needs to be made here between such online ‘aggregators’ in the tightly regulated and sensitive pharma industry and others such as food, fashion or consumer goods. For the latter, e-tailers work as mediators, partnering with existing restaurants, stores and boutiques, and delivering their products to the existing consumer base. E-pharmacies, on the other hand, are eroding, if not pilfering, the customer base of traditional pharmacies.       

It is unlike the conflict between, say, independently operating local bookstores and Amazon, which could easily take over from them as they were not organised and consolidated in the order that druggists boast. As such, it is tougher for e-pharmacies, which have to square up to a hostile nationwide association of chemists.     

Compounding the conflict is a potent global lobby for pharmaceuticals and the interconnected web of pharma concerns spanning the globe. The faceless lobby seems to have a bottomless pocket and expansive clout over policymakers at the local, state and central levels.

A watertight system such as this is unlikely to suffer breaches from “outsiders” puncturing in its profit base.   

Looking to the world

Despite the intricate conflict between traditional versus virtual, the fact is, Internet pharmacy is here to stay — and spread — because of the affordability and convenience it allows. And a balance needs to be struck.

“E-pharmacies will have a reach in small towns and villages where all types of medicines are not available. A lot of them would offer huge discounts, with transparency. And the quality wouldn’t be compromised as that is the manufacturer’s onus,” says Dr Eswara Reddy, Drug Controller General of India.

And fixes to regulatory issues could be borrowed from overseas. In many countries, legitimate players are given specific operating licenses, says Dharmil Sheth, founder and CEO, PharmEasy. “We should also incorporate such rules, since Internet pharmacy is a reality in the modern era,” he suggests.  

The Indian Internet Pharmacy Association (IIPA) says the government should focus on incorporating best practices followed the world over. “The National Association of Boards of Pharmacy (NABP), the apex pharmacy body in the US, provides registration and certification after verifying the functioning of e-pharmacies who can display the certification logo on their website. It helps consumers understand whether e-pharmacies are legal or not,” says Rajiv Gulati.

Law enforcement challenges

E-pharmacies have not only unsettled the redoubtable pharma retail sector, but also caused a flutter among anti-narcotics officials and food regulators.      

While law enforcement agencies worry that banned party drugs can easily be peddled online under the guise of generic medicines, the Food and Drug Administration is grappling with the problem of spurious drugs sold online.

While hailing the Centre’s fresh guidelines, they also think that a uniform policy needs to be adopted so online platforms are not abused by fringe parties.

“We are dealing with a sensitive issue and a sharp eye is required to check that genuine medicines are provided through online platforms. We frequently come across cases where some people misuse websites and sell narcotics to the consumers. Surprisingly, the number of consumers is not less in this regard,” says Ashok Jain, Deputy Director of the Narcotics Control Bureau.

He also underscored the fact that such online dealers are well versed in technology and organic and inorganic chemistry, which makes the curbing of such activities all the more difficult and vital. 

Cyber police voiced the concern over leaks and illegal sale of patient data. But there is a contrarian view which sees opportunities in analysing patient data in the online ecosphere.

A complement, not a replacement

For all the ease of transaction and surreal pricing e-pharmacies offer, they cannot be seen as an alternative to brick-and-mortar stores, but as a supplement. Medical services often entail an emergency, and in such exigent cases, it is imperative that the consumer has the option of heading to a neighbourhood store to address the immediate problem.  

If the sale of pharmacies is constricted to the Web and the Internet goes out of whack, the consumer would be left out on a limb.

(Inputs by Sanjay Jog, Cheena Kapoor and Dhananjay Khatri)

WHAT CENTRE’S DRAFT REGULATIONS SAY

• E-pharmacies need to register themselves with DCGI a Rs 50,000 fee, which will be valid for the three years. Registration will be cancelled if no renewal application is submitted within six months. 
   
• Narcotic drugs, tranquilizers, and Schedule X drugs cannot be sold through e-pharmacies. 
   
• They cannot advertise any drugs and will go through inspections every two years.