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.
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:
HIPAA applies to two main groups:
Online pharmacies can fall into one or both of these categories.
Read also: What is the key to HIPAA compliance?
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:
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.
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:
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.
Online pharmacies rarely operate alone. They often rely on third-party vendors for tasks such as:
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.
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:
So, while HIPAA may not apply, these businesses are still responsible for protecting consumer data and maintaining transparency about how it’s used.
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:
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
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:
By using HIPAA compliant email, online pharmacies can securely:
Read more:
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.
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.
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).