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Delhi High Court ban on e-pharmacies puts $300 mn of VC money at risk
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The Delhi High Court on Wednesday issued a ruling prohibiting e-pharmacies from selling medicines online without a valid licence across the country, a media report said. The court has directed the Centre and the Aam Aadmi Party to implement the order immediately, The Economic Times reported.

The order came two days after the Madras High Court also reserved its order on a plea seeking a ban on the online sale of medicines.

The order was passed by Chief Justice Rajendra Menon and Justice V K Rao in response to a public interest litigation filed by Delhi-based dermatologist Zaheer Ahmed who argued that a lack of regulation in the online sale of drugs poses a massive risk to both patients and doctors, the ET report stated.

Ahmed said that the Drugs and Cosmetics Act, 1940 and The Pharmacy Act, 1948 prohibited the online sale of medicines. He further argued that lakhs of medicines are sold online, often without prescription even though the Drug Controller General of India had clearly ordered state drug controllers in 2015 to restrain such online sales in view of public health and safety.

He added that many e-pharmacies operate without a licence and the absence of regulation can lead to increased risk of fake, misbranded and substandard drugs being sold. This puts a large set of internet users including children and people without much knowledge of medicines at risk of using the wrong medication.

Online pharmacies are required to register with the Central Drugs Standard Control Organisation (CDSCO), the country's apex drug regulator and central licensing authority, from whom they can obtain a trade licence.   

A spokesperson from Netmeds said the order will not negatively impact them and that it is not stopping operations.

“We were informed about the court ruling through the media and we are awaiting a copy of the order that has been passed by the Delhi High Court,” Pradeep Dadha, founder and chief executive of Netmeds, said.

Faizan Aziz, co-founder and CEO of Myra Medicines too said that his firm is yet to receive the official court order. “Once we have some clarity on the order, we will decide on our next course of action,” he added.
 
Email queries and WhatsApp messages sent to e-pharmacies 1mg and PharmEasy seeking comments on the high court ban have not elicited a response at the time of filing this report.

In October, the Madras High Court issued an injunction prohibiting online vendors from selling drugs online. Justice R Mahadevan granted the injunction in response to a plea filed by the Tamil Nadu Chemists and Druggists Association (TNCDA), which was seeking a direction to block the links of all websites selling Schedule H, H1 and Schedule X medicines.

The court had later clarified that the ban is applicable only to firms that sell drugs online without valid licences. However, on Monday, Justice Puspha Sathyanarayana reserved her orders on this case, without mentioning any date, The Times of India reported.

In response to the court’s directions, the state government recently said that it doesn’t possess the right to block or pull out the websites of e-pharmacies for not following the rules.

State governments have no power to amend the Drugs and Cosmetics Act, 1940, which specifies that online retailers can only sell medicines with a valid prescription and under the supervision of a registered pharmacist who has a licence.

The central government had released a draft bill in August this year, legitimising the sale of drugs on e-commerce websites for registered pharmacists with a licence. The Centre is yet to ratify this draft rule.

The consequences for e-pharmacies

The immediate and long-term implications of this order on the health of the country’s burgeoning e-pharmacy business are undoubtedly far-reaching.

Internet startups engaged in the online sale of medicines have been seeking support for their business from regulatory authorities. However, offline chemists and pharmacists have been putting up a tough fight across the country against the government’s move to regularise online pharmacies. The All India Organisation of Chemists and Druggists (AIOCD) had organised a nationwide strike opposing the government's decision. It argued that e-pharmacies increase the risk of drug abuse while posing a serious threat to their business.

The e-pharmacy space has attracted considerable investor interest with the impending announcement of the bill.

TechCircle recently reported that online pharmacy 1mg Technologies Pvt. Ltd is in talks with private investors to raise up to $60 million in its largest funding round till date.

In September, online pharmacy NetMeds raised $35 million from Daun Penh Cambodia Group in Singapore and others and drug delivery platform PharmEasy raised $50 million led by Eight Roads Ventures.

Bengaluru-based pharmacy app Myra raised Rs 8.75 crore ($1.2 million) in additional capital from existing investors Matrix Partners and Times Internet Ltd.

In early October, the Internet and Mobile Association of India (IAMAI) had sought clarification on whether the e-Pharmacy Bill was applicable to small offline retailers who act as sellers on pharmacy marketplaces. The industry body had also suggested amending a clause in the draft bill pertaining to the centralised registration of e-pharmacies, which can be canceled by the state governments if periodic inspections prove unsatisfactory. The IAMAI has requested a single centralised registration and monitoring mechanism.

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