India: Essential Commodities (Control Of Unethical Practices In Marketing Of Drugs) Order, 2017 – An Overview

The need for governing the relationship between pharmaceutical companies and medical practitioners has been felt ever since the exponential growth of the pharmaceutical industry. With this in view, the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, as amended up to February 01, 2016, ("MCI Regulations") were implemented. Regulation 6 (Unethical Acts) of the MCI Regulations prescribes the code of conduct for medical practitioners in their relationship with Pharmaceutical & Allied Health Care Industry. However, the MCI Regulations are applicable only on medical practitioners.

Therefore, the Department of Pharmaceuticals ("DoP") on December 12, 2014, made the Uniform Code of Pharmaceuticals Marketing Practices ("UCPMP") applicable with effect from January 01, 2015, for a period of 6 months for voluntary adoption. The DoP, at the time of notifying UCPMP, clarified that it was a voluntary code for the Indian Pharmaceutical Industry and also cautioned that if it is found that UCPMP has not been implemented effectively by the Pharma Associations/Companies, then the Government may consider making it a statutory code. Thereafter, the DoP on August 30, 2016 extended UCPMP till further orders.

Although the UCPMP was the first of its kind and provided extensive regulations; since it was voluntary, the DoP sought to replace the voluntary code with mandatory guidelines. Accordingly, the DoP in July 2017 sent the draft Essential Commodities (Control of Unethical Practices in Marketing of Drugs) Order, 2017 ("Order") to the Law Ministry for final clearance.

However, the Order which is now sought to be enacted under the ambit of the Essential Commodities Act, 1955 is facing concerns from the Law Ministry. It is pertinent to highlight here, that the Order is outside the scope of the Essential Commodities Act, 1955 ("Act"), the objectives of which are specifically to control production, supply and distribution of essential commodities and not to regulate the marketing of drugs.

In 2015, UCPMP was extended to the medical devices industry, i.e. an industry worth over Rs 25,000 crore per year. However, since the DoP is in the process of drafting and releasing a separate code of marketing practices for the medical device industry (which would be voluntary for six months), the Order states that it will not apply to medical devices.

Like UCPMP, the Order prohibits pharmaceutical companies from offering cash, gifts and sponsorship or providing travel facility or paid vacations for doctors, chemists and pharmacists. Paragraph 3 of the Order prohibits offering of gifts, cash cards, hampers or any article that may generate monetary benefit or allow gains in kind to a medical practitioner or any retail chemist or pharmacists or their 'family members' by any pharmaceutical company or its agents. However, it allows the sponsorship of academic conferences organised by medical associations and screening camps or awareness campaigns to be organised in government owned healthcare facilities, while stipulating that these cannot be used as surrogate advertising.

Further, the Order also prohibits a pharmaceutical company or its agent to offer free samples to any medical practitioner. However, an exception to this rule has been created by allowing pharmaceutical companies to provide free samples up to a full course of medication for a maximum of three patients. But, three is a small number for any medical practitioner to understand and analyse the effects of a new drug on patients.

It is pertinent to highlight that the definition of the term "Agent" in paragraph 2(b) of the Order, is very wide and includes any personnel, company, society, non-government organisation or other institution, which has been employed or authorized, by third party who call on any healthcare facility regarding the promotion of drugs of a pharmaceutical company. The Order also mandates that the MD or CEO of a company shall be responsible for ensuring compliance of the Order.

Paragraph 5 of the Order, inter alia, provides that all complaints regarding violations of the Order shall be looked into by an Ethics Compliance Officer (ECO) appointed by the Government of India, who shall not be below the rank of a Joint Secretary to the Government of India.

It is to be noted that Paragraph 4 of the Order imposes a penalty on a company or its agent which fails to comply with the provisions of sub-paragraph (a) (b) (c) or (d) of paragraph 3 of the Order. Further, Paragraph 5(4) of the Order lays down the procedure for levying penalty by suspending the marketing of the violating company's highest selling product from the preceding 12 months, for a period of three months to one year.

The Order also provides that the companies could apply to commute the marketing suspension by paying a penalty ranging from Rs 5 Lakh to Rs 10 Lakh. As per the Order, the appellate authority will be the DoP Secretary, and the appeals from the orders of the Appellate authority shall lie with the courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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