Will online pharmacies blink off in India?

The turf war between offline and online pharmacists continues. Many leading e-pharmacies, including Amazon, Apollo, Flipkart, Tata-1mg and PharmaEasy, received show-cause notices in February for allegedly selling schedule H, H1 and X medicines without valid licenses. The trigger was a warning by the All India Organisation of Chemists and Druggists (AIOCD) that they would launch a country-wide movement if the government failed to take cognizance of their concerns regarding alleged malpractices like unsustainable discounts, misuse of patient data, and fake prescriptions. They also allege that some of the online pharmacies do not have valid licences.

This was followed by a PTI report on the revised draft of the New Drugs, Medical Devices and Cosmetics Bill, 2023, which is currently doing the rounds of various concerned ministries. It seems that the group of ministers tasked with reviewing the revised draft of the bill raised concerns with the proposed draft and made changes. While a previous version of the draft bill required permission to operate an e-pharmacy, a revised version reads that the central government ”may regulate, restrict or prohibit the sale or distribution of any drug by online mode, by notification.” Thus, while the previous draft allowed for permission to operate an e-pharmacy, the revised draft bill does not have this clause.

After stepping up and meeting patients’ needs during the pandemic, online pharmacies were seen as a blessing. COVID-19 patients booked and paid online, and medicines were delivered within 24 hours, if not earlier. Discounts were the cherry on the cake. Investments flowed into the sector as India is a nascent market with room for growth in the under-served tier 3/4 towns.

Online pharmacies seem to have come full circle now, attracting the same mistrust as in pre-pandemic times. Ironically, it is discounts that are tripping up the online pharmacy sector. Going by the dictum, that there are no free lunches, discounts do have a downside. Cut-throat competition forces online pharmacies to keep offering deeper discounts, in the hopes of poaching/attracting and retaining more customers from rivals. This soon became a race to the bottom, with eroding profits of online pharmacies.

The discounts given by online pharmacies cause a lot of heartburn among traditional chemists as they wean away customers, forcing smaller chemists to either shut down or sell out to national chains of online chemists.

Patients too are realising the flip side of discounts. They are never sure how much of the health data they share is being kept confidential. Secondly, they suspect online pharmacy staff push unnecessary medicines, and expensive supplements. Many patients have complained that they try to upsell them to brands giving higher margins, as they are incentivised and need to meet high sales targets.

For their part, online pharmacies say that they are open to audits as they have already enough safeguards in place. Global PE investors in online pharmacies too are worried that their investments will go down the drain if the ban comes into effect. Many have reportedly sought meetings with the Commerce Ministry to explain their stance, reasoning that they partner with registered offline pharmacy stores with qualified pharmacists to dispense medicines against validated prescriptions.

For example, Devashish Singh, Co-founder and CEO of MrMed, an online pharmacy for super-speciality medicines, reiterates the stance of most e-pharmacy players, saying that MrMed welcomes laws governing e-pharmacies and hopes that these will be drafted keeping patients’ well-being first. He points out that today, there is no definition of an e-pharmacy/online pharmacy under any law in India and this needs to be defined.

Underlining the benefits of online pharmacies, he states that MrMed delivers to thousands of towns in India where the availability of medicines that help patients fight cancer, HIV and other life-threatening conditions, is limited. This access to speciality medicines in smaller towns is an important factor amongst a host of others that should be considered in the eventual release of regulations. Singh also hopes that these regulations, amongst other things, will also help address concerns related to data privacy, malpractices, and other issues that have been raised previously. He says his company is looking forward to working closely with regulatory authorities to ensure that their services meet all requirements.

Enforcing regulations has always been difficult, so is a ban on online pharmacies the only foolproof answer? At an industry level, the government is also bound to realise that this ban might hurt many start-ups in the sector and increase unemployment. At a policy level, it might send the wrong signals to global investors.

The rollback of unconditional support for online pharmacies during the pandemic could be criticised as indecision and policy paralysis of regulators. But it is actually sound governance. Tougher regulation, tighter rules will ultimately serve the Indian patient better in the long run. Weeding out unscrupulous online pharmacies will ensure a more ethical, trustworthy sector, with more sustainable revenues.

This is a storm that has been brewing for quite a few years. It is time all stakeholders get together, share concerns and find a middle path, keeping patient/consumer interest as the top priority.