Are online pharmacies bound by HIPAA?

Most online pharmacies are bound by HIPAA, the Health Insurance Portability and Accountability Act, because they handle patients’ protected health information (PHI) when processing prescriptions, communicating with healthcare providers, or managing billing and insurance data. As covered entities under HIPAA, they must follow strict privacy, security, and breach notification rules to protect patient information.

However, not all online sellers fall under HIPAA’s scope. Websites that sell only over-the-counter medications or supplements without collecting prescriptions or medical details typically aren’t considered covered entities. Still, they remain subject to other privacy and consumer protection laws.

HIPAA and its purpose

The Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996 “to safeguard patient privacy and secure health information,” says an article on HIPAA compliance in StatPearls. “HIPAA sets strict standards for managing, transmitting, and storing protected health information… HIPAA regulations uphold patients' rights to confidentiality and empower them to control the disclosure of their health information, fostering trust in healthcare systems.”

Examples of PHI include:

• Prescription and medication details
• Patient names, addresses, or contact information
• Insurance claim data
• Medical histories or physician notes

HIPAA applies to two main groups:

• Covered entities: healthcare providers, health plans, and clearinghouses.
• Business associates: third-party vendors that process PHI on behalf of covered entities.

Online pharmacies can fall into one or both of these categories.

Read also: What is the key to HIPAA compliance?

Online pharmacies as covered entities

Most online pharmacies qualify as covered entities under HIPAA. If they dispense prescription drugs and transmit health information electronically, for example, by processing insurance claims or maintaining patient medication histories, they are legally obligated to comply with HIPAA’s Privacy, Security, and Breach Notification Rules.

This means they must:

• Protect the confidentiality and integrity of PHI.
• Implement administrative, physical, and technical safeguards (such as encryption and access controls).
• Limit disclosures of PHI to authorized personnel.
• Notify patients and the U.S. Department of Health and Human Services (HHS) in the event of a data breach.

Example

A licensed online pharmacy that fills prescriptions and maintains electronic health records for patients must store and transmit that data securely. As such, it is legally required to use secure servers, encrypted databases, and HIPAA compliant communication channels.

Online pharmacies as business associates

In some cases, online pharmacies may function as business associates rather than covered entities. This occurs when they handle PHI on behalf of another covered entity, such as a hospital, clinic, or telemedicine provider.

For example, an online pharmacy that fulfills prescriptions issued through a telehealth platform may be acting as a business associate of that healthcare provider. In this role, the pharmacy must:

• Use PHI only for the purposes authorized by the covered entity.
• Sign a business associate agreement (BAA) outlining each party’s responsibilities for protecting PHI.
• Maintain security measures that align with HIPAA’s Privacy and Security Rules.
• Report any data breaches or unauthorized disclosures promptly.

Business associate status doesn’t lessen the compliance burden; it simply changes the nature of the relationship. Whether an online pharmacy acts as a covered entity or business associate, it is still responsible for protecting patient data and can be held liable for violations.

Business associates and third-party vendors

Online pharmacies rarely operate alone. They often rely on third-party vendors for tasks such as:

• Cloud storage and database management
• Customer support systems
• Payment processing software
• Marketing and email communication

If these vendors access or handle PHI on behalf of the pharmacy, they are considered business associates under HIPAA. Each business associate must sign a BAA confirming they’ll follow the same privacy and security rules as the covered entity. According to the US Department of Health and Human Services (HHS), “the business associate contract also serves to clarify and limit, as appropriate, the permissible uses and disclosures of protected health information by the business associate, based on the relationship between the parties and the activities or services being performed by the business associate.”

Without a BAA in place, even a trusted vendor relationship could expose both parties to compliance violations.

When online pharmacies are not covered by HIPAA

According to DLA Piper’s Data Protection Laws of the World report, the United States does not have a single comprehensive federal privacy law; instead, it relies on a “complex patchwork of national, state and local privacy laws and regulations” that govern consumer data and unfair practices. Therefore, when online pharmacies sell over-the-counter (OTC) medications, vitamins, or wellness supplements directly to consumers without collecting or transmitting protected health information (PHI), they generally don’t qualify as covered entities or business associates under the Health Insurance Portability and Accountability Act (HIPAA).

However, they’re still subject to other privacy regulations designed to safeguard consumer information. These include:

• The Federal Trade Commission (FTC) Act, which prohibits unfair or deceptive data practices. The FTC enforces actions against companies that misrepresent how they collect, store, or use personal data. Businesses that handle sensitive consumer information must ensure transparency and accuracy in their privacy statements.
• State privacy laws, such as the California Consumer Privacy Act (CCPA), which grants California residents rights to access, delete, and restrict the sale of their personal information. Other states, including Virginia, Colorado, and Connecticut, have introduced similar privacy frameworks imposing consent, notice, and data-handling requirements.
• U.S. federal and sector-specific laws, as summarized by DLA Piper’s Data Protection Report, also apply. These include rules on electronic communications, such as the Electronic Communications Privacy Act, data breach notifications, and the FTC’s Health Breach Notification Rule. Collectively, these create a patchwork of federal and state obligations for companies that collect or process consumer data, even when HIPAA is not triggered.
• International laws, such as the General Data Protection Regulation (GDPR), apply to companies serving or tracking customers in the European Union, requiring lawful data processing and cross-border transfer safeguards.

So, while HIPAA may not apply, these businesses are still responsible for protecting consumer data and maintaining transparency about how it’s used.

Privacy and security risks in online pharmacies

The convenience of digital pharmacies comes with heightened data privacy and security risks. As these platforms increasingly store sensitive health information, such as prescription details, medical histories, and payment data, they have become prime targets for hackers and cybercriminals. The digital nature of transactions and remote access points also widens the attack surface, making online pharmacies more vulnerable than traditional brick-and-mortar counterparts.

Common threats include:

• Phishing and email-based attacks that trick employees into revealing login credentials or installing malware, giving attackers unauthorized access to patient accounts.
• Ransomware incidents, where cybercriminals encrypt critical systems or databases and demand payment to restore access, therefore disrupting medication fulfillment and patient care.
• Unauthorized access caused by weak passwords, outdated software, or misconfigured cloud storage, which can expose vast amounts of PHI.

HIPAA compliance helps mitigate these risks by establishing strict administrative, physical, and technical safeguards for PHI. These include implementing access controls, encryption, regular security audits, and employee training to prevent breaches. Beyond technical protection, HIPAA enforces accountability, requiring covered entities and business associates to promptly report breaches and take corrective actions.

Violations can result in civil fines, criminal penalties, and reputational damage. The Department of Health and Human Services’ Office for Civil Rights (OCR) has imposed high-paying settlements on healthcare organizations for failing to secure electronic PHI. For instance, breaches involving unsecured prescription data or unencrypted patient communications can lead to severe financial penalties and long-term loss of consumer trust

HIPAA compliant email and online pharmacies

Communication is a crucial aspect of pharmacy operations, encompassing everything from notifying patients about refills to confirming prescriptions and providing medication instructions. However, regular email is not inherently secure and can expose PHI if sent through unencrypted channels.

This is where HIPAA compliant email solutions, such as Paubox Email Suite, play a vital role.

They ensure:

• Seamless encryption, so emails remain secure from sender to recipient.
• Automatic encryption without requiring portals or passwords.
• Audit trails to track messages and meet compliance requirements.
• Business associate agreements (BAAs) that guarantee compliance for covered entities.

By using HIPAA compliant email, online pharmacies can securely:

• Send prescription updates and refill reminders.
• Share billing or insurance details.
• Communicate with healthcare providers or patients without risking data breaches.

Read more: 

• Features of Paubox Email Suite
• Features to look for in a HIPAA compliant email service provider

FAQS

What counts as protected health information (PHI) for online pharmacies?

PHI includes any personally identifiable information related to a person’s health status, medical treatment, or payment for healthcare. Examples include prescription details, patient names, addresses, and medical record numbers.

How can online pharmacies ensure compliance with HIPAA?

They should adopt administrative, technical, and physical safeguards such as encryption, access controls, employee training, and regular risk assessments. Partnering only with HIPAA compliant vendors or email services, like Paubox Email Suite, can also strengthen compliance.

How can online pharmacies demonstrate HIPAA compliance?

They can document their compliance through regular risk assessments, training programs, and audit reports. Maintaining updated policies and procedures, tracking access logs, and conducting vulnerability scans also help demonstrate compliance if audited by the Office for Civil Rights (OCR).