Centre Mulls Banning Online Pharmacies Over Data Privacy, Predatory Pricing Concerns

The Centre is reportedly looking at banning online pharmacies over concerns about misuse of user data.

Sources told Times Now that a Group of Ministers (GoM) has advocated shutting such platforms over alleged malpractices in the sector and concerns about data privacy, predatory pricing and sale of medicines without any prescriptions. 

The development will have a direct bearing on the healthtech space which is dominated by startups such as Tata 1mg, NetMeds, PharmEasy, Flipkart and Amazon 

“It’s very risky, the concession race makes the retail sector vulnerable…An epharmacy may collect data related to medicines which eventually will increase the risk involved with patient safety,” people familiar with the development told News18.

However, the report said that no concrete decision has been taken on the matter yet. It quoted a source as saying that it is important for the government to find solutions before giving a ‘go ahead’ to the industry. 

Industry In Choppy Waters

This comes a month after the Drugs Controller General of India (DCGI) issued notices to as many as 20 epharmacies for flouting norms related to the Drugs and Cosmetics Act, 1940. 

The notice, which was issued to almost all major epharmacies including Tata 1mg, Amazon, and Flipkart, sought clarification from these players as to why action should not be taken against them for violating the rules.

Close on the heels of that, reports said that the Ministry of Health was mulling stringent action, including a full ban, against online pharmacies for dispatching medicines without prescriptions and over data privacy concerns.

Earlier this month, Delhi-based South Chemists and Distributors Association (SCDA) said that it was looking at mounting a legal challenge against epharmacy Pharmallama and its investors  for illegally operating in the country, and sought its immediate closure. Pharmallama, which recently received funding from multiple investors on TV show Shark Tank India, is a full-servicing pharmacy and comprehensive medication management platform that sends medication to users in pre-sorted sachets.

The latest development comes amidst growing debate over the status of epharmacies in the country, especially with regards to the regulatory aspect. Currently, there are no specific laws that govern the space but certain aspects of operations of digital pharmacies are governed under the IT Act, 2000.

In a bid to address this issue, the Centre released the draft New Drugs, Medical Devices and Cosmetics Bill, 2022 in July last year that will govern epharmacies in the country and also usher in a licensing regime for digital pharmacies. 

Besides, the startups in the space are also saddled with losses. The recent past has also seen digital pharmacy PharmEasy shelve its IPO due to market volatility and negative market conditions. 

However, the digital pharmacy space in the country is poised to grow further and is estimated to reach a market size of INR 8,947 Cr by 2027.