The New Drugs, Medical Devices and Cosmetics Bill, 2022, issued by the health ministry for comments, presented a great opportunity to fix long-standing issues pertaining to the licensing of pharmacies. Licensing has a direct impact on the quality and price of drugs. Unfortunately, the Bill is underwhelming, if not negligent on both counts.

The journey of a drug from the manufacturing facility to the pharmacy can be long and arduous in India where temperatures in most parts of the country can easily touch 40° C (10° C more than the stability requirements mandated in the law), with humidity along the long coastlines often touching 90%. Unless drugs are properly stored in such circumstances, with the temperature and humidity constantly monitored through the course of the supply chain, including during transport, many categories of drugs will degrade and lose their therapeutic efficacy.

Incredibly enough, India does not have any regulations governing storage requirements for drugs during factory-to-pharmacy transit. Citizens are largely at mercy of transporters and distributors. Even for drug storage at the pharmacy, pertinent regulations only require that the pharmacy be ‘equipped with proper storage accommodation for preserving the properties of the drugs to which the licence applies’. There is no mention of pharmacies having to be mandatorily equipped with temperature and humidity sensors, or other modern equipment to ensure that the drugs do not degrade.

It is not like these lacunae are news to GoI. The issue was flagged by the Supreme Court in ‘Swantraj v. State of Maharashtra’ in 1974. Speaking for the court, Justice Krishna Iyer said, ‘Indeed, storage in transit must also be licensed so that medicines do not suffer in the process. At present, no rules take care of transit by road or rail. Actually, cold storage or air-conditioned facilities for sensitive medicines are scarce in nationalised and private transport services and the drugs legislation winks at it.’

Subsequently, a parliamentary committee flagged this issue in 2012. In response, GoI discussed the possibility of enacting a ‘Good Distribution Practices’ (GDP) code, which it had lifted from the WHO’s guidelines. The Drugs Consultative Committee (DCC), comprising state drug controllers and the Drugs Controller General of India (DCGI), rejected the proposal to give the GDP code a legal, binding status. DCC felt it would be too ‘difficult to implement’. The consequences of drug degradation during transit are felt by not just patients but also pharmaceutical companies who end up being prosecuted when drugs fail quality tests in government laboratories. The proposed Bill is shockingly silent on this issue.

Another long-standing issue has been the viability of online pharmacies. This has been vociferously opposed by trade associations representing brick-and-mortar pharmacies. Studies by the likes of Ajay Bhaskarabatla at Erasmus School of Economics, the Netherlands, have demonstrated how price-fixing through cartelisation, rather than competition, through trade associations like the All India Organisation of Chemists and Druggists (AIOCD) has led to higher prices for drugs.

The Competition Commission of India (CCI) has also found many such trade associations of pharmacists to be indulging in cartel-like behaviour. This is the reason your neighbourhood pharmacy can, at times, offer discounts of up to 30%. Online pharmacies, backed by the deep pockets of venture capital (VC), are unlikely to play by the rules and offer deep discounts to capture more of the market. For that reason alone, it makes sense to welcome online pharmacies but subject to stringent regulations.

Three specific issues in the context of online pharmacies that need addressing:

Prescription abuse. The US is moving towards e-prescriptions that minimise the possibility of abuse by patients recycling the prescription multiple times. Online pharmacies also present a great opportunity to tackle the long-standing issue of accuracy of doctor’s prescriptions.

Patient privacy. Regardless of whether Parliament enacts a data protection law soon or not, the health ministry must ensure specific privacy rules for online pharmacies, just like RBI has taken the lead on enacting data regulations for the financial sector. Any leak of sensitive health data stored by online pharmacies will be a disaster.

Transit storage for home delivery. Since much of the online pharmacy business is based on a home-delivery model, GoI must mandate very specific transit regulations governing the manner in which delivery personnel transport drugs from the pharmacy to homes. This is especially necessary for places that experience high temperatures and humidity.

In its current form, the New Drugs, Medical Devices and Cosmetics Bill, 2022, represents a continuation of the depressing status quo.

(Dinesh Thakur was the whistleblower in the Ranbaxy case.)


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