Introduction
The Jan Vishwas (Amendment of Provisions) Act, 2023 (“JV Act”) was introduced with the aim of conveying ease of doing business and to amend certain enactments for decriminalising and rationalising offences, thereby promoting trust-based governance. The impact of the JV Act has reverberated across various sectors, including the pharmaceuticals and cosmetics industry. A key area of interest in relation to the JV Act’s amendments is their impact on the Drugs and Cosmetics Act, 1940 (“D&C Act”), which governs the regulation of drugs and cosmetics in India.
With the notification[1] by the Ministry of Health and Family Welfare on March 28, 2024, the implementation of the amendments to the D&C Act in terms of the JV Act has kickstarted and the amendments will take effect from December 31, 2024. In this blog post, we delve into implications of the JV Act on the pharmaceutical industry, particularly in the context of amendments to the D&C Act.
Amendments to the D&C Act under the JV Act
- Penalty for use of Government Analyst’s report for advertising[2] – “Whoever uses any report of a test or analysis made by the Central Drugs Laboratory or by a Government Analyst, or any extract from such report, for the purpose of advertising any drug or cosmetic, shall be punishable with fine which may extend to five thousand rupees”. The amendment entails that the words “punishable with fine which may extend to five thousand rupees” shall be substituted with the words “liable to penalty which may extend to one lakh rupees”. Accordingly, the JV Act increases the upper limit of the penalty under the D&C Act for using a Government analyst’s report for advertising from INR 5,000 to INR 100,000.
- Penalty for subsequent offences[3] – “Whoever, having been convicted of an offence under Section 29 is again convicted of an offence under the same section shall be punishable with imprisonment which may extend to two years, or with fine which shall not be less than ten thousand rupees or with both”. The amendment entails that the words “imprisonment which may extend to two years, or with fine which shall not be less than ten thousand rupees, or with both“, shall be substituted with the words “fine which shall not be less than five lakh rupees“. Through this amendment, the JV Act revises the penalties for subsequent offences from imprisonment (up to two years) or fine of at least INR 10,000 or both to a fine of at least INR 500,000. This revision thereby removes the imprisonment aspect of the penalty and increases the monetary fine which may be levied in the case of subsequent offences of using Government Analyst’s/ Central Drugs Laboratory reports or extracts thereof for advertising any drug or cosmetic.
- Compounding of certain offences[4] – “(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under clause (b) of sub-section (1) of Section 13, Section 28 and Section 28-A of this Act (whether committed by a company or any officer thereof), not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may, either before or after the instruction of any prosecution, be compounded by the Central Government or by any State Government or any officer authorised in this behalf by the Central Government or a State Government, on payment for credit to that Government of such sum as that Government may, by rules made in this behalf, specify; Provided that such sum shall not, in any case, exceed the maximum amount of the fine which may be imposed under this Act for the offence so compounded: Provided further that in cases of subsequent offences, the same shall not be compoundable”. The amendment entails that after the words and figures “of section 13,”, the words, brackets, letters and figures “clause (d) of section 27 and clause (ii) of section 27A,” shall be inserted. Penalty for manufacture, sale, etc., of drugs in contravention of this Chapter[5] – any drug, other than a drug referred to in clause (a) or clause (b) or clause (c), in contravention of any other provision of this Chapter or any rule made thereunder, shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to two years [and with fine which shall not be less than twenty thousand rupees; Provided that the Court may for any adequate and special reasons to be recorded in the judgment impose a sentence of imprisonment for a term of less than one year. Penalty for manufacture, sale, etc., of cosmetics in contravention of this Chapter[6] – any cosmetic other than a cosmetic referred to in clause (i) in contravention of any provisions of this Chapter or any rule made thereunder shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to twenty thousand rupees, or with both.
Analysis of the Key Amendments
Section 32-B of the D&C Act deals with the compounding of certain offences prescribed therein. The offences covered under these provisions have been amended to include penalties levied under section 27(d) and Section 27-A(ii). Under Section 32-B, any offence punishable under the included provisions (which now includes Section 27(d) and Section 27-A(ii)) not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may, either before or after the instruction of any prosecution, be compounded by the Central Government or by any State Government on payment for credit to that Government of a monetary sum.
This implies that offences punishable under Section 27(d) and Section 27-A(ii) of the D&C Act may be compounded by the Central/ State authorities to remove any imprisonment time for the offender in lieu of a monetary penalty. However, it is crucial to note that the quantum of punishment prescribed under Section 27(d) and Section 27-A(ii) of the D&C Act has not been reduced. If found guilty, the imprisonment terms for the offender still remains as a possible mode of punishment. The inclusion of these sections under the compounding regime of Section 32-B has not led to the decriminalisation of these offences rather compounding has been offered as a mechanism for resolution of any possible litigation. Further, it is important to note that Section 27(d) of the D&C Act covers the penalties for drugs other than:
- Adulterated or spurious drugs leading to death or grievous injury;
- Adulterated drugs other than those covered under Section 27(a) or drugs manufactured without a valid license; and
- Spurious drugs other than those drugs covered under Section 27(a).
Furthermore, it is prudent to understand that any drug which: (i) has failed the parameters and has been identified to be injurious to health or may cause bodily injury or death; (ii) contains toxic substances; (iii) is manufactured in unsanitary conditions; (iv) has been manufactured without a license; (v) contains any substance to reduce its quality or strength; (vi) manufactured under a name which belongs to another drug; (vii) contains labels or packaging to imitate another drug with an intent to deceive; or (viii) is manufactured in violation of any prohibitions shall not be covered under the JV Act amendment and will continue to attract the relevant provisions under the D&C Act.
It is also worth considering that Section 27-A(ii) of the D&C Act covers the penalties for cosmetics other than cosmetics deemed to be spurious under section 17-D or adulterated under section 17-E of the D&C Act.
Concluding Thoughts
The amendments of the JV Act hold the potential to significantly impact the pharmaceutical industry by reshaping the regulatory dynamics envisaged under the D&C Act. By deploying a twin pronged approach of decriminalising offences under the drugs and cosmetics regulatory regime while enhancing regulatory clarity, the JV Act seeks to create a more conducive environment for pharmaceutical businesses in India. However, as with all policy shifts, the full extent of the JV Act’s impact will depend on the implementation of its provisions and the interaction with the existing regulatory framework. As stakeholders adapt to the evolving regulatory landscape, continued monitoring and analysis will be crucial to assess the effectiveness and long-term implications of the amendments on the pharmaceuticals sector.
For further information, please contact:
Biplab Lenin, Partner, Cyril Amarchand Mangaldas
biplab.lenin@cyrilshroff.com
[1] cdsco.gov.in/opencms/opencms/system/modules/CDSCO.WEB/elements/download_file_division.jsp?num_id=MTEwMjk=
[2] Section 29 of the Drugs and Cosmetics Act, 1940
[3] Section 30(2) of the Drugs and Cosmetics Act, 1940
[4] Section 32-B of the Drugs and Cosmetics Act, 1940
[5] Section 27(d) of the Drugs and Cosmetics Act, 1940
[6] Section 27-A(ii) of the Drugs and Cosmetics Act, 1940
