Welcome to the July 2024 edition of our Life Sciences and Healthcare Newsletter, where we delve into the latest developments shaping the industry. This month, we explore a range of significant legal and regulatory updates, including the ongoing debate over the classification of nutraceuticals as drugs and the implications for the industry. We also highlight crucial amendments to healthcare marketing laws, draft regulations for drug labeling, and the restriction of advertisements for certain pharmaceuticals. In addition, we examine recent judicial decisions and government initiatives that impact the pharmaceutical, med-tech, and alternative medicine sectors. Stay informed on the evolving landscape with our comprehensive analysis and expert insights.
ARTICLES
1. Are Nutraceuticals Going to be Drugs?
As per an article published on 16 July 2024 in Economic Times, nutraceutical companies are opposing the proposal of the Indian Government to bring nutraceuticals under the regulatory framework of drug regulations.
Nutraceuticals are supposed to be products derived from food sources that provide extra health benefits beyond basic nutrition. They include dietary supplements, functional foods, and products that claim to prevent or treat diseases or enhance health and well-being. In India, the regulatory framework for nutraceuticals primarily falls under the purview of the Food Safety and Standards Authority of India (FSSAI) and the Ministry of Health & Family Welfare (MoHFW).
2. Navigating Indian Healthcare Marketing Laws: Why they matter for Global Marketers
The Indian healthcare sector presents a tantalizing prospect for foreign Multinational Corporations (MNCs). A burgeoning population, rising disposable incomes, and an expanding market base paints a picture of a market ripe for harvest. India is characterized as an international manufacturing, importing and exporting hub for the products in the healthcare sector which has led to multiple MNCs setting up their presence via wholly owned subsidiaries or through strategic joint ventures with Indian companies.
3. Draft Drugs and Cosmetics (Compounding of Offences) Rules, 2023
The Ministry of Health and Family Welfare, in consultation with the Drugs Technical Advisory Board, has released the draft Drugs and Cosmetics (Compounding of Offences) Rules, 2023 ("Draft Rules") to provide the option of compounding certain offences under the Drugs and Cosmetics Act, 1940 (the "Act") such as offences of non-maintenance of statutorily required records and registers under the Act.
4. Drugs Technical Advisory Board to restrict advertisement of Schedule G drugs
The Ministry of Health and Family Welfare in consultation with the Drugs Technical Advisory Board issued a notification on 10 July 2024 (the "Notification") to publish draft rules to amend the Drugs Rules, 1945.
The proposed amendment is aimed to restrict advertisement of drugs listed under Schedule G of the Drugs Rules, 1945.
5. Ministry of Information and Broadcasting (MIB) eases the self-declaration requirement for advertisements
In its latest advisory dated 03 July 2024, the Ministry of Information and Broadcasting ("MIB") has eased the self-declaration requirement for advertisements. As per the latest advisory, advertisers/advertising agencies releasing advertisements for food and health sector are required to file a single annual self-declaration stating their compliance with laws against misleading claims and all relevant regulatory guidelines, including those stipulated in Rule 7 of the Cable Television Networks Rules, 1994 and the Norms of Journalistic Conduct of Press Council of India.
SECTOR GENERAL UPDATES
PHARMACEUTICALS
LEGAL AND REGULATORY
1. Amendment proposed to change labeling requirements for drugs
The Ministry of Health and Family Welfare of India has issued a notification proposing amendments to the Drugs Rules, 1945. The draft rules, which aim to modify Rule 96, sub-rule (7), will introduce changes to the labeling requirements for drugs. Specifically, the amendments add a new requirement to include details of excipients on drug labels. The government has invited public feedback on these proposed changes, allowing a 30-day period for objections and suggestions to be submitted. The draft rules, titled Drugs (Amendment) Rules, 2024, will be finalized and published in the Official Gazette after considering any public input received.
2. Amendments proposed to restrict advertisement of Schedule G drugs
The Ministry of Health and Family Welfare has issued a notification proposing amendments to the Drugs and Cosmetics Rules, 1945. These changes involve inserting "Schedule G" into various rules, including rule 74, 74A, 74B, 78, and 78A. The amendment, when it comes into effect, will restrict the advertisement of Schedule G drugs; advertisement for such drugs will require prior permission from the Central Government. The draft rules are open for public comments for 45 days from the Gazette publication date, i.e., till 25 August 2024.
3. Draft Guidelines for Disinfectants and Antiseptics in Indian Pharmacopoeia
The Indian Pharmacopeia Commission (an autonomous institution of the Ministry and Health and Family Welfare) has released a draft proposal outlining standards for disinfectants and antiseptics used in pharmaceutical manufacturing to be included in the Indian Pharmacopoeia. The draft includes guidelines on selecting and testing chemical disinfectants, antiseptics, and sterilants to ensure effective microbial control. Stakeholders are invited to provide feedback on the draft by August 30, 2024.
GOVERNMENT INITIATIVES
1. Amendment proposed to allow compounding of offences under the Drugs and Cosmetics Act, 1940
The Ministry of Health and Family Welfare, in collaboration with the Drugs Technical Advisory Board, has released the draft Drugs and Cosmetics (Compounding of Offences) Rules, 2023. These draft rules propose a mechanism for compounding certain offences under the Drugs and Cosmetics Act, 1940, including failure to maintain required records and registers. The draft rules also outline a process for companies or individuals to apply for immunity from prosecution, which may be granted if the compounding authority is satisfied with the applicant's full and truthful disclosure of facts.
The draft is open for objections and suggestions till 25 August 2024.
INVESTMENT UPDATE
1. Torrent Pharmaceuticals in Talks to Acquire KKR's Majority Stake in JB Chemicals
Torrent Pharmaceuticals is reportedly in advanced discussions to acquire private equity firm KKR's nearly 54% stake in JB Chemicals and Pharmaceuticals, with the deal potentially valued at ₹17,000-18,000 crore or higher. KKR, which acquired its stake in JB Pharma in 2020 for ₹3,100 crore, has seen significant growth in the company's value, with JB Pharma's stock price and revenues more than doubling since then. This acquisition would bolster Torrent Pharma's position in the chronic therapies market and enhance synergies with its existing branded generics business, which focuses on cardiovascular, central nervous system, and gastrointestinal drugs, among others.
MED-TECH AND MEDICAL DEVICE
GOVERNMENT INITIATIVE
1. BIS approves 82 R&D projects, includes medical device projects
The Bureau of Indian Standards ("BIS") has approved 82 R&D projects, each with a budget of up to ten lakh rupees, focused on various areas including Medical Devices, Artificial Intelligence, and Digital Transformation, with the goal of developing standards that ensure consumer safety and the quality of innovative products. In collaboration with institutions like IITs and NITs, BIS aims to address the complexities of modern technology and industry practices. Additionally, 99 more projects are in the process of being allocated.
AYURVEDA, HOMEOPATHY AND UNANI MEDICINES
LEGAL AND REGULATORY
1. The Supreme Court of India stayed the order of the Ministry of Ayush that omitted Rule 170 of Drugs Rules, 1945
The Ministry of Ayush had issued a notification on 01 July 2024 to omit Rule 170 from the Drugs Rules, 1945, amidst ongoing litigation concerning misleading advertisements for Ayurvedic, Siddha and Unani products. Rule 170, introduced in 2018, required state drug regulators' permission for advertising Ayurvedic, Siddha, and Unani drugs. This decision, following the Ministry's April 2024 affidavit to the Supreme Court, was influenced by legal challenges in various High Courts and recommendations from the Ayurveda, Siddha, Unani Drugs Technical Advisory Board (ASUDTAB). The Ministry, defending the move, argued that misleading advertisements can be addressed under the existing Drugs & Magic Remedies (Objectionable Advertisement) Act, 1954. However, the Supreme Court of India has stayed the notification with immediate effect by an order dated 27 August 2024.
ALLIED SECTOR
LEGAL AND REGULATORY
1. Government proposes amending the applicability of Legal Metrology (Packaged Commodities) Rules, 2011
The Ministry of Consumer Affairs, Food and Public Distribution has proposed a change in the applicability of the Legal Metrology (Packaged Commodities) Rules, 2011. As per the draft amendment, the said Rules will be applicable to all packaged commodities sold in bags in retail except those that are meant for industrial or institutional consumers. The draft is open for comments and suggestions till 30 August 2024.
LITIGATION AND DISPUTES – CASE LAWS
1. Sandeep Vijh vs State through Drug Inspector Baramulla, (CRM (M) No.459 of 2021)
On 20th July 2024, the Jammu and Kashmir and Ladakh High Court clarified the scope of liability under Section 34 of the Drugs and Cosmetics Act, 1940 ("Act"). The Hon'ble Court delivered the judgment, addressing the issue of whether a person in charge of a company can be criminally prosecuted under the Act, even if such person was not personally involved for the offence committed.
The facts of the matter were such that the Petitioner who was the Managing Director of a drug manufacturing company namely M/s Knox Life Sciences ("Company") was charged for an alleged violation of Sections 18 (a) (i) and 27 of the Act by the Drug Inspector of Baramulla, i.e., the Respondent. Based on the alleged violations, a criminal complaint ("Complaint") was filed by the Respondent before the Principal Sessions Judge, Baramulla ("Trial Court"). Pursuant to which, the Trial Court took cognizance of the Complaint and issued process against the Petitioner for commission of offences under section 18 (a)(i) and section 27 of the Act. Aggrieved by the said order, the Petitioner filed the present Petition under section 482 Code of Criminal Procedure, 1973 (now Section 528, Bharatiya Nagarik Suraksha Sanhita, 2023), seeking quashing of the Complaint.
During the hearing, the Petitioner argued that the Complaint did not specify that the Petitioner was directly responsible for manufacturing of the drugs by the Company. The Petitioner argued that Section 34 of the Act necessitates proving that the Petitioner was responsible for the Company's conduct at the time of the alleged offence and the Petitioner cannot be implicated merely because he was holding a position in the Company. The Petitioner further argued that the Trial Court erred in taking cognizance, as the Complaint did not meet the legal prerequisites for prosecution under the Act and merely because the Petitioner was the Managing Director, it was insufficient to sustain criminal proceedings. The Petitioner also questioned the maintainability of the Complaint as there was a delay of nine-year in filing the Complaint by the Respondent.
The Respondent in its rebuttal contended that the complaint did outline a cognizable offence and therefore justified a trial of the Complaint, despite the delay. The Respondent also alleged that the Complaint sufficiently indicated the Petitioner's involvement in the Company's operations, meeting the conditions for liability under Section 34 of Act.
After hearing submissions of the parties, the Hon'ble Court while interpreting Section 34 of Act observed that the said Section holds both companies and their officers liable for offences, provided they were in charge or were responsible for the conduct of the business at the time of the offence. The Hon'ble Court emphasized that Section 34 of the Act requires specific allegations showing that the accused was responsible for the commission of the alleged offence.
Considering the interpretation of Section 34 of the Act, the Hon'ble Court observed that the Complaint against the Petitioner was vague and did not set out sufficient grounds to implicate the Petitioner for the alleged offence. Further, the Hon'ble Court observed that the complaint was belatedly filed by the Respondent. The Hon'ble Court held that the proceeding was an abuse of the legal process. Accordingly, the Hon'ble Court quashed the Complaint and the associated proceedings.
The judgment emphasises that criminal prosecution under Section 34 of the Act is contingent upon specific involvement in the alleged misconduct and cannot be based on a mere holding of a managerial position, thereby setting a precedent for future cases of criminal prosecution of persons in charge of a company under the Act.
Noel Thomas, Associate, contributed to this newsletter.
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