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 Table of Contents    
Year : 2019  |  Volume : 61  |  Issue : 10  |  Page : 786-790
Sale of medicines by Registered Medical Practitioners at their clinics: Legal and ethical issues

1 Department of Psychiatry, National Institute of Mental Health and Neuro Sciences (NIMHANS), Bengaluru, Karnataka, India
2 Department of Psychiatry, Spandana Health Care, Bengaluru, Karnataka, India

Click here for correspondence address and email

Date of Web Publication8-Apr-2019


In India, manufacturing, storing, transportation, distribution, and dispensing of drugs are licensed and regulated under the drugs and cosmetic act, 1940; Indian Medical Council Act, 1956; the Pharmacy Act, 1948; and the Narcotic Drugs and Psychotropic Substances Act, 1985. Prescribing and dispensing medicines at the same time to their patients by registered medical practitioners (RMPs) is a well-known practice in all systems of medicine across the country. Further, the kind of branded medicines a patient gets from the clinics will come wrapped in a huge profit margin for RMPs, and this has been an alternative source of income to them. Dispensing and selling of medicines by RMPs at their clinics to their patients may represent a significant potential conflict of interest with the medical ethical principles, namely autonomy, beneficence, and non-maleficence and it raises various ethical and legal challenges. This article focuses on the ethical and legal issues of this practice and emphasizes the need for a proactive and dynamic approach to meet the rising demand for quality healthcare in India.

Keywords: Dispensing of medicines, Ethics, India, In-house pharmacy, Legal, Registered medical practitioners

How to cite this article:
Math SB, Manjunatha N, Kumar CN, Gowda GS, Philip S, Enara A, Gowda M. Sale of medicines by Registered Medical Practitioners at their clinics: Legal and ethical issues. Indian J Psychiatry 2019;61, Suppl S4:786-90

How to cite this URL:
Math SB, Manjunatha N, Kumar CN, Gowda GS, Philip S, Enara A, Gowda M. Sale of medicines by Registered Medical Practitioners at their clinics: Legal and ethical issues. Indian J Psychiatry [serial online] 2019 [cited 2020 Sep 19];61, Suppl S4:786-90. Available from:

   Introduction Top

The World Health Organization describes “Dispensing” as a process of preparing and giving medicine to a named person on the basis of a prescription from a registered practitioner. However, it is not uncommon to see the registered medical practitioners (RMPs) performing both the dual role of prescribing and dispensing medicine. This dual role of prescribing and dispensing of medication is common in all system of practice. This also includes home visits done by (RMPs), when medicines are carried in a doctor's bag to dispense to their patients.[1] Although this practice is decreasing in major cities, it continues to be prevalent in semi-urban and rural areas. A recent trend noted in metropolitan cities is that many RMPs are doing home visits to treat patients, especially in disabled and geriatric services. Initially, this provision was intended to address the needs of communities where there were no pharmacists.[2],[3] This practice of dispensing of medicine by RMPs was allowed so that consultation, prescription, treatment-related materials, and medicines are available inside the clinic so that a patient does not have to run to the pharmacy to get medicines that have been prescribed.[2]

By purchasing medicines from the RMPs, the patient can almost be sure that the prescription will not be misread and that the RMPs will help clarify and provide counsel about how the medicine needs to be administered such as frequency, precautions, and side effects. Further, purchasing medicines at the RMPs dispensary save a patient the time and effort.[2] On the other hand, dispensing medicines by the RMPs can limit the freedom of choice of the patient in various aspects of buying the medicines. The patient will be coerced to buy what is offered by the RMPs dispensary and is left with no choice even if the prescribed medicine is expensive and alternative medicine and brand is available outside for a lesser price. An RMPs may also prescribe unnecessary medicines which a patient does not require, just to increase the sales, thereby resulting in a profit for their dispensary. The real problem was not so much with the “ownership” but the cost of the prescribed medication and thereby the profit made by the physician in selling them. Further, the kind of branded medicines, a patient gets from the clinics will come wrapped in a huge profit margin for the RMPs, and this has been an alternative source of income.[1],[2],[4] Above suspicions have been justified by a study that compared the quality of healthcare provided by doctors who dispense medicines versus nondispensing doctors. The findings suggest that with dispensing doctors, the quality of health care provided was less when compared to nondispensing doctors in terms of number of drugs prescribed, time spent per patient, patient safety, and treatment cost.[4]

Each country maintains its own unique set of rules and laws regarding RMPs dispensing medicines to patients. This issue is very common and is present in many countries.[2],[3],[4],[5] Often, state law may permit an RMPs to compound medication in the office/clinic for a patient's immediate needs. However, most of the laws regarding the dispensing of medicine across the world endorse the basic rule that selling of medicines should be through a licensed pharmacist.[3] In medical teaching institutions, additional concerns include how students and residents perceive this activity. Does selling medicines negatively affect professionalism in an academic environment? This issue of the dual role of prescribing and dispensing medicine by practitioners raises serious ethical concerns and also questionable role modeling to medical students and junior residents in academic institutes.[6] Although prescribing and dispensing medicines by RMPs in their clinic are a relief for a patient, at the same time, it raises a lot of legal concerns. This article focuses on the ethical and legal issue of dispensing medicines by RMPs in their office or clinic.

   Ethical Issues in Registered Medical Practitioners Selling Medicines at Their Clinics Top

RMPs selling medicines at their clinics to their patients may represent a significant potential conflict of interest against the medical ethical principles of autonomy, beneficence, and non-maleficence.[7],[8]


Patients basically have the right to determine their own health care. From this ethical principle, if access to equally effective alternative products exists, RMPs should not restrict patients' access to alternative, more economical brand or generic drugs. The RMPs should not misleadingly imply that products sold in the office are the best.[8],[9] The RMPs should not coercively suggest that continued quality care is contingent on purchasing medical products directly from their clinics. Further, not providing the prescription or chemical name or prescribed medicine name to the patients seriously impacts the autonomy of the patients.[9] By doing this, the patient is forced to buy medicines from their clinic only and also makes the patient dependent on them for medicine refilling. This is a serious legal and ethical issue.[8]


Medical practitioners are to act in a way that contributes to the patient's health and well-being and have to refrain from doing anything that would cause harm to the patient, including financial damages. It is manipulative for RMPs to exploit patients' trust to leverage personal financial gain by selling medicines at their office.[8],[9] RMPs occupy a powerful position with respect to patients. RMPs nevertheless have a fiduciary responsibility to the patient in all aspects of their clinical care and practice. This fiduciary responsibility of RMPs flows from the medical knowledge about the illness, medicine, rehabilitation, license to prescribe medicine, and autonomy to choose medicines of varying prices or brands gives a disproportionate advantage over patients.[9],[10]


This ethical principle revolves around that the RMPs are not harming the patient. The greed of selling more expensive medicine should not compromise the patient's health. The RMPs also should not sell or promote agents or devices as being therapeutic without adequate evidence about the medical benefit.

The decision to make products available through office sales leads to a complex ethical dilemma. Ethical issues revolve around the physician's financial conflict of interest.[9],[10],[11] This places undue stress on the patient's autonomy, erodes patient trust, violates the fiduciary relationships, and undermines the primary obligation of RMPs to serve the interests of patients before their own.[10],[11] It is ethically good to respect the choices that people make in marketplaces, and it is generally better to avoid paternalism.[8],[9],[10],[11] The ethical guideline does prohibit the sale of medicines by practitioners.[12] To summarize, the RMPs' fiduciary responsibility requires that such decisions adhere to the fundamental ethical principles: autonomy, nonmaleficence (avoidance of harm), and beneficence (promotion of the patient's welfare).

   Legal Issues in Registered Medical Practitioners Selling Medicines at Their Clinics Top

Manufacturing, storing, transporting, distribution, and dispensing of drugs are licensed and regulated under the Drugs and Cosmetic Act, 1940. However, under Schedule K of Drugs and Cosmetics Rules, 1945, the RMPs are exempted from taking a license from the Drugs Control Department for the stocking and dispensing of drugs to their patients.[13] Drugs supplied by an RMPs to his/her patient or any drug specified in Schedule C supplied by an RMPs at the request of another such practitioner if it is specially prepared with reference to the condition and for the use of an individual patient, provided the RMP is not (a) keeping an open shop or (b) selling across the counter or (c) engaged in the importation, manufacture, distribution or sale of drugs in India to a degree which renders him liable to the provisions of Chapter IV of the Act and the rules.[13] The RMPs also needs to fulfill the following conditions (as per Chapter IV of the Act and the Rules): The drugs shall be purchased only from a dealer or from a licensed manufacturer and records of such purchases indicating the names and quantities of such drugs with their batch numbers and the names and addresses of the manufacturers shall be maintained. Such records shall be open to inspection by an Inspector appointed under the Act.[13] If the dispensed medicine belongs to Schedule G, H, or X, the following additional conditions shall be complied with (a) the medicine shall be labeled with the name and address of the RMPs by whom it is supplied; (b) the route of administration shall be labeled; (c) the name of the medicine or ingredients of the preparation and the quantities thereof, the dose prescribed, the name of the patient and the date of supply and the name of the person who gave the prescription shall be entered at the time of supply in the register to be maintained; (d) the entry in the register shall be given a number and that number shall be entered on the label of the container, and (e) the register and the prescription, if any, on which the medicines are issued shall be preserved for not <2 years from the date of the last entry in the register or the date of the prescription and the drug will be stored under proper storage conditions as directed on the label.[13]

If the drugs dispensed is a controlled drug mentioned under the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act 1985),[14] the RMPs need to apply for license to procure, transport, stock, and dispense the same under the NDPS Act 1985 and Drugs and Cosmetics Act 1940 (Schedule H1). NDPS Rule 52H and 52R mandates that every RMPs shall register and maintain a separate record in Form No. 3E for each patient. He/she shall also maintain day-to-day accounts in respect of all transactions of essential narcotic drugs in Form No. 3D, maintain record of all receipts and disbursements of essential drugs in Forms No. 3H, and also file return for a calendar year on or before the March 31st of the subsequent year in Form No. 3-I to the Controller of Drugs.[14] All the above documents, records of the daily accounts, and medical records shall be preserved for minimum 2 years from the date of the last entry. The drugs can be sold only by the registered pharmacist under the Pharmacy Act 1948, and as per the license obtained under the Drugs and Cosmetics Act, 1940 and the Rules, 1945.[15] The High Court of Kerala, in a landmark judgment, said that no person other than a registered pharmacist should compound, prepare, mix or “dispense” any medicine on the prescription of a medical practitioner. However, the said provision shall not apply to dispense by a medical practitioner of medicine for his/her own patients, or with the general or special sanction of the state government for the patients of another medical practitioner.[16] This issue of dispensing of drugs by the practitioners is a contentious issue, and each state has formed its own rules to govern depending on the availability of the workforce in the state.

   Indian Medical Council Act, 1956 Top

Many medical ethics guidelines took the position that RMPs selling drugs through his/her own pharmacy was prohibited because of “conflict of interest,” and it amounts ethical violation under “fee-splitting.”[3],[6],[7] The Indian Medical Council Act, 1956 (102 of 1956), section 20A, read with section 33 (m) the Medical Council of India with the prior approval of the Central Government, have notified the regulations relating to the Professional Conduct, Etiquette and Ethics for RMPs and it is titled “Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (Amended on 2016).”[17] In the above regulations, section 6.3 clearly states that an RMPs should not run an open shop for sale of medicine for dispensing prescriptions prescribed by RMPs other than himself or for sale of medical or surgical appliances.[17] It is not unethical for RMPs to prescribe or supply drugs, remedies or appliances as long as there is no exploitation of the patient. Drugs prescribed by an RMPs for a patient should explicitly state the proprietary formulae as well as the generic name of the drug. Further, in 2016, the amendment was done to the MCI section 1.5, which emphasized that “Every RMPs should prescribe drugs with generic names, legibly and preferably in capital letters and he/she shall ensure that there are a rational prescription and use of drugs.”[17] Though this regulation is in place, the implementation of the same has been poor.

   Newer Challenges and Opportunities Top

Systemic problem in society

Practitioners are an important source of information and trusted advisors for their patients. They should appropriately guide patient decisions regarding the purchase of health-related items, ranging from over-the-counter supplements to expensive medications or appliances.[18] The challenges faced in the healthcare system cannot be viewed in isolation. A thorough evaluation indicates that corruption, in general, has pervaded the very fabric of society and is reflected in the medical profession also. Other major contributors are the commercialization of the medical education, gradual deterioration of the public health system, and poor political will to address this issue. The opportunities are as follows: investing in health, abolishing medical education based on the capitation fee, enhancing the rural population's access to quality health care, leveraging innovative technologies such as telemedicine to provide clinical care, improving the basic health infrastructure in rural areas, controlling corruption in the health sector, stopping the supply of substandard equipment and medications, encouraging online pharmacy, and stricter law.[19]

Role of the Registered Medical Practitioners

In order to curtail this conflict of interest, RMPs should satisfy the following conditions before they embark on dispensing medicines to their patients: Apart from the following law of the land, RMPs need to provide full information to the patient on (a) the chemical/pharmacological name of the medicine, (b) efficacy of the prescribed medicine, (c) side-effects of prescribed medicine, (d) available alternative economical medicines or brands; (e) the RMPs takes no share in profit from their sale; and (f) sales are conducted in such a way as to assure that patients are not pressured into making purchases.[7] The Indian Medical Association has also requested the Government to come out with an urgent ordinance for “one drug, one company-one price” rule to curtail this practice and provide benefit to the patient.

Role of the government

In order to bring in parity to the retail price of drugs sold to the consumers and for the larger public interest, the Drug Price Control Order (DPCO) was passed in 1995 under section 3 of the Essential Commodities Act, 1955.[20] Later, the DPCO was notified in 2013 to regulate the price of the drugs. This order says: “Notwithstanding anything contained in this order, the Government may, in case of extraordinary circumstances, if it considers necessary so to do in public interest, fix the ceiling price or retail price of any drug for such period, as it may deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the Government may allow an increase or decrease in the ceiling price or the retail price, as the case may be, irrespective of annual wholesale price index for that year.” To enforce this order, the National Pharmaceutical Pricing Authority was formed and entrusted with the task of fixation of prices of pharmaceutical products and monitoring of the prices of drugs in the country. Unfortunately, not all the drugs marketed in the country are under price control: Only the National List of Essential Medicines (NLEM) are the scheduled medicines for the purpose of price control.[21] A Core-Committee was constituted for NLEM by the ministry of health and family welfare, Government of India. The committee drafted the criteria for inclusion and deletion of medicines in the NLEM. The primary purpose of NLEM is to promote the rational use of medicines considering the three important aspects, i.e., cost, safety, and efficacy. Furthermore, it promotes prescription by generic names.[21] At present, 376 drugs are included in NLEM.[22] The ceiling price is determined by a simple formula. The ceiling price is the average of prices of all brands of medicine with more than 1% market share and then adding a notional retailer margin of 16% to it.[22],[23] There is an urgent need to bring all medicines under price control to benefit the population at large.

Role of pharmaceuticals

In the era of consumerism, the primary aim of providing “health service to poor patients” by the medical practitioners is lost amid profit and other monetary gains. The unholy nexus between pharmaceuticals and doctors are taking new shapes and challenges. The list of drugs stocked in a chemist's shop depended on the negotiation between the chemists and the drug company, and how well the drugs were promoted with doctors.[24] Further, these conflicts of interest can arise between physicians and pharmaceutical industry in the form of direct or indirect payment. These conflicts include costly gifts, honorariums for speaking in conference, free meal, travel, sponsoring for conferences, payment for participating in clinic-based research, referrals to medical resources, a foreign vacation in exotic locations and lured with a certain margin of profit of the product share.[24],[25],[26],[27],[28],[29],[30] The pharmaceutical companies will simply pass on this burden to poor and ignorant patients.[26]

To curtail such practices the Physician Payments Sunshine Act, 2010 of the United States health-care law was enacted to increase transparency of financial relationships between health care providers and pharmaceutical manufacturers. However, the Act does not “ban” any payments but simply requires reporting of payments and transfers of value. This legislation excludes reporting of physician investing of the stocks drug company. This loophole may be a breeding space for further exploitation.[24],[25],[26],[27],[28],[29] Similar effort was done in India in the form of the Central Government had published a set of guidelines in December 2014 called “Uniform Code of Pharmaceutical Marketing Practices” as guidance to the industry for promotion and marketing of drugs and medical devices. However, these guidelines are voluntary and do not have the force of law, at present.[31] However, the government showed its power only on individual doctors in the notification published on February 1, 2016, in Gazette of India in Medical Council of India, 6.8 Code of conduct for doctors in their relationship with pharmaceutical and allied health sector industry.[17] This poor political will to enforce the code of conduct on giant pharmaceuticals companies, not bringing all medicines under essential list for price control and only flexing muscle on individual doctors explains the prevailing unfortunate situation and double standards.


E-pharmacies or online pharmacy are recent entrants in the Indian e-commerce industry landscape. In April 2018, the Health Ministry of Government of India came out with the draft proposal to amend the Drugs and Cosmetics Rules 1945 for regulating the “Sale of drugs by e-pharmacy” which will legalize the e-pharmacies in the country.[32] As per the draft rules “e-pharmacy” or “online pharmacy” is business of distribution or sale, stock, exhibit, or offer for sale of drugs through web portal or any other electronic media and prescription as instruction from a RMPs to a pharmacist, written by hand or in electronic mode duly signed to dispense a drug and the quantity to a patient.[32] E-pharmacies may have the potential to alter the existing practice of making a huge profit from poor patients.[32],[33],[34] However, this places a huge responsibility on the government to regulate and monitor the online pharmacy.[32],[33],[34] E-Pharmacies should be encouraged only after a proper legal and regulatory framework is in place.[33],[34]

To conclude, doctor–patient relationships are of trust and confidence, where the fiduciary must act in the interests of the beneficiary and stop this in-house pharmacy phenomenon. There are many medicines where the price varies across brands because they are not under price control. The price of the nonessential drugs has been left to the greed of the market. The cost of medicines makes treatment less affordable for most of the population. To curtail the nonuniform cost across the company, there is a need for strong political will to enforce “one medicine, one price” across all brands. E-pharmacy is a new avenue may have the potential to alter the existing in-house pharmacy practice of making a huge profit margin from patients.

Financial support and sponsorship


Conflicts of interest

There are no conflicts of interest.

   References Top

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Correspondence Address:
Dr. Guru S Gowda
Department of Psychiatry, National Institute of Mental Health and Neuro Sciences, Bengaluru - 560 029, Karnataka
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Source of Support: None, Conflict of Interest: None

DOI: 10.4103/psychiatry.IndianJPsychiatry_89_19

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