India mulls a wholesale-retail pharmacy ratio to curb misuse

The government may fix a retail-wholesale pharmacy licence ratio based on population, disease burden and existing licence density to curb misuse of wholesale permits for retail sales and to bring greater uniformity across states.

New Delhi: The Centre plans to review how retail and wholesale drug licences are issued and, for the first time, is mulling an indicative ratio based on factors such as population, disease burden and existing licence density, according to two government officials and documents reviewed by Mint. The move could bring greater uniformity in drug licensing across states and curb misuse of wholesale licences for retail sales.

Currently, the Drugs Rules, 1945, do not prescribe numerical limits or demographic criteria for issuing these licences, leaving state licensing authorities (SLAs) with a broad discretion, resulting in wide variations in licensing density. The proposed framework could replace this with a more need-based approach to decide the number of retail and wholesale licences to be issued.

Retail and wholesale drug sale licences are issued entirely by state licensing authorities (SLAs) across states and Union Territories.

Key Takeaways

• The Centre is mulling an indicative ratio based on factors such as population, disease burden and existing licence density
• The move could bring greater uniformity in drug licensing across states and curb misuse of wholesale licences for retail sales.
• Currently, the Drugs Rules, 1945, do not prescribe numerical limits or demographic criteria for issuing drug licences.
• The absence of limits left state licensing authorities (SLAs) with a broad discretion, resulting in wide variations in licensing density.
• The proposed framework could replace this with a more need-based approach to decide the number of retail and wholesale licences to be issued.
• A pharmacists' association had proposed a ratio of 1:10, wherein there would be one licensed wholesaler per 10 retailers.

The move to introduce an objective licensing benchmark assumes significance for India’s $30 billion retail pharmacy market, with the domestic pharmaceutical distribution network comprising 1.24 million licensed chemists, retail pharmacies and wholesale distributors.

Discussed by CDSCO

The proposal was discussed at the 70th Drugs Consultative Committee meeting of the Central Drugs Standard Control Organisation (CDSCO) on 18 September following the Akhil Bhartiya Pharmacist Association's representation to the Drugs Controller General of India (DCGI) that flagged concern over widening disparity between the numbers of retail versus wholesale licences issued across states.

While both retail and wholesale categories mandate standard storage infrastructure and cold chain facilities, the former entails stricter operational conditions, including mandatory presence and direct supervision of a registered pharmacist to dispense medicines, while wholesale operations can be managed by any approved "competent person" such as a graduate.

“It is evident that the Drugs Rules, 1945, do not prescribe any statutory cap or clear criteria governing the number of wholesale and retail drug licences that may be issued in a district," according to a government document that was deliberated upon by the Drugs Controller General of India with states and UTs. "Consequently, state licensing authorities exercise wide discretionary powers in granting or refusing licences, resulting in significant interstate variation in licensing density and practices.”

The document said that state authorities currently issue retail and wholesale drug licences as per the prescribed norms that factor in "the average number of licences granted during the period of three years immediately preceding and the occupation, trade or business carried out by such applicant”.

“It is proposed to review the licensing requirements for retail and wholesale drug licences under the Drugs Rules, 1945, with a view to adopting an indicative retailer to-wholesaler ratio (e.g. based on population, disease burden, or existing density) to guide state licensing authorities (SLAs),” the government document said.

For adequate balance

The document further said the pharmacists' association had proposed a ratio of 1:10, wherein there would be one licensed wholesaler per 10 retailers, "with a view to ensuring an adequate balance and facilitating effective regulatory oversight”.

The pharmacists' body cited the ongoing misuse of the current rules. “We submitted a representation to the DCGI because wholesale licenses are being issued indiscriminately and misused to run retail counters, while medicines are being distributed unlawfully,” Shashi Bhushan, president of the Akhil Bharatiya Pharmacists Association, told Mint. "Under the Drugs and Cosmetics Act, drug handling, storage, and dispensing must remain strictly under registered pharmacists. Furthermore, a mandatory proportion must be fixed: one wholesale licence for every seven retail chemists in urban areas, and one for every ten in rural pockets. Diluting these norms fuels corruption and unauthorized medicine trade, which requires immediate regulatory intervention.”

Queries emailed to the spokespersons of health ministry and the DCGI office on Tuesday remained unanswered.

The proposal has found support. “Our primary concern is that wholesale licences must never be misused for retail operations. In wholesale, operations are handled by an approved qualified person, whereas retail drug dispensing strictly mandates a registered pharmacist. Since a qualified person is not a pharmacist, allowing wholesale channels to conduct retail dispensing compromises regulatory oversight. Both licenses serve entirely distinct functions,” said Rajiv Singhal, general secretary of the All India Organization of Chemists and Druggists (AIOCD) that represents 1.2 million stockists, wholesalers, and retailers.

Framework for uniformity

The framework will ensure uniformity across states, said Dr Narendra Kumar Jolly, senior consultant at Jolly Healthcare, a Jaipur-headquartered pharmaceutical company. “Any ratio of retailers to wholesalers needs to take into account the healthcare requirements, geographical reach, volume of prescriptions and availability of medicines in that particular region. Any failure to do so can lead to disparities in the disadvantaged regions,” he added.

Some health experts also urged for a balance and said that the access to medicines should not get affected.

“Any new ratio should improve the situation without making medicines harder to access. The focus should remain simple: better distribution, better availability and, above all, ensuring that patients do not face unnecessary difficulty in getting their medicines,” said Dr N.K. Pandey, chairman and managing director of Faridabad-based Asian Hospital.

Online pharmacy chains say the focus should remain on ensuring a safe, compliant and reliable supply chain, with adequate availability of quality-assured medicines for patients across geographies.

“While a data-driven assessment of the distribution network can help address regional gaps, prescribing a fixed mathematical ratio of retail to wholesale licences may not, by itself, address the underlying challenges,” Dr Rajeev Sharma, vice-president, TATA 1MG, told Mint. “The priority should be to ensure that every wholesaler and distributor meets a strong minimum threshold of compliance, including adherence to good distribution practices, appropriate temperature-controlled storage, robust traceability and track-and-trace systems, and quality-assured handling of medicines so that no substandard medicine enters the circulation.”

These measures entail investment and scale across the supply chain and should be measurably linked to licensing and renewal norms, he added.

About the Author

Priyanka Sharma is a journalist at Mint, where she covers the Union Ministry of Health and the pharmaceutical industry. Her work focuses on explaining government policies and how they impact healthcare and the medicine market in India. With 12 years of experience in journalism, she has built a reputation for providing clear and honest news on important health topics that affect the entire country.<br><br>Her educational background includes a journalism degree from the prestigious Indian Institute of Mass Communication (IIMC) and specialized training in public health from the Public Health Foundation of India. Before her current role at Mint, Priyanka worked with India Today, The Pioneer, and ANI. She also served as a lead consultant for the National Health Authority, which gave her firsthand knowledge of how the government manages large-scale health programmes.<br><br>Priyanka is based in New Delhi and is an avid traveller who loves visiting the mountains. She has a great interest in regional flavours, particularly South Indian food.