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Madras High Court Greenlights Online Sale of Drugs and Medical Devices in India

online_sale_of_drug_and _medical_devices

Introduction

The Division Bench of Madras High Court in its recent order has confirmed that online pharmacies and online marketplaces of medicines and medical devices can continue to operate under existing law i.e. Drugs and Cosmetics Act, 1940 and Rules, 1945.

In doing so, the Court reversed the order passed by a Single Judge Bench of the same Court in 2018, which had effectively ordered e-pharmacies and e-marketplaces to stop business.

In this article, we will discuss the developments leading up to the recent Court order.

Background of 2018 court order banning online sale of medicines

On 17.12.2018, The Single Judge Bench of Madras High Court surprised e-pharmacies and e-marketplaces by ordering that till the Central Government did not publish rules for regulation of e-pharmacies, “the on-line traders are bound not to proceed with their on-line business in drugs and cosmetics.”

The rationale behind such an order was that without any proper framework regulating the online sale of drugs, there may arise chances of potential misuse of health and safety. The Court felt that amendments to the Drugs Rules, 1945 were necessary before allowing the online sale of drugs. The Court also directed the state government to notify the proposed Drugs and Cosmetics Amendment Rules, 2018 in the state Gazette, latest by 31.01.2019, for online sale of drugs within the state.

However, after passing the order, at the request of e-pharmacies and e-marketplaces, the Court decided to defer the implementation of the order until 20.12.2018 so that they could prefer an appeal against the order.

Ad-interim stay of 2018 order

The e-pharmacies and e-marketplaces preferred an appeal against the order of the Single Judge, on 02.01.2019 the Division Bench temporarily stayed the operation of the Single Judge Bench.

The Bench felt that a sudden ban would disrupt access to medication for those who relied on online pharmacies, particularly for home deliveries. However, the Division Bench agreed with the Single Judge Bench on the need for appropriate regulation for the online sale of drugs and directed the Central Government to finalize a framework for the regulation of online sale of drugs.

Reversal of 2018 order

The Division Bench has now passed a final order in the appeal. It has explicitly allowed the online sale of drugs, with a condition that any online sale of drugs must be routed through licensed druggists and chemists only.

In doing so, it has endorsed the lawfulness of operation of e-pharmacies and e-marketplaces, which are currently doing business through dealers and retailers who have a license for sale or distribution of drugs under Drugs Rules, 1945.

The Court decided to dispose of the appeal primarily on the grounds that the Delhi High Court is already hearing a matter with identical issues and the Central government is in the process of preparing a new policy for the online sale of drugs.

Order from Delhi High Court

The Delhi High Court is currently hearing a batch of writ petitions in which the petitioners have challenged the legality of the online sale of drugs and medical devices. Unlike the Madras High Court, the Delhi High Court has never held that the online sale of medicines is bad in law. The Delhi High Court has always maintained a position that the online sale of medicines and medical devices by licensed retailers is not unlawful. However, the Delhi High Court has time and again expressed concerns that the Central Government is yet to finalize a framework for the regulation of online sale of drugs and medical devices, despite the fact that the draft rules for the regulation of online sale of drugs were published in 2018 for comments and the Central Government has already received comments. The Court has now given the Central Government a last opportunity to put in place a policy framework for online drug sales by July 2024.

Conclusion

The order of the Madras High Court is welcome as it removes the ambiguity that existed in relation to the legality of the online sale of drugs and medical devices. Now, the fate of e-pharmacies and online marketplaces for medicines and medical devices is inextricably linked to the outcome of the petition filed in the Delhi High Court and the decision of the Central Government to introduce (or delay the introduction of) a framework for online sale of drugs and medical devices.

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