Checking The Pulse Recent Legal Developments In The Indian Healthcare And Pharma Sector (August 2025 - September 2025)

Introduction

In the past couple of months, the healthcare and pharmaceutical sectors have undergone a series of structural reforms and policy adjustments, highlighting a clear focus on enhancing patient-centricity, standardising quality benchmarks, and streamlining regulatory compliance.

In this regard, a significant development has been the introduction of a new classification framework for mental health establishments by the Central Mental Health Authority, a step intended to bring uniformity and strengthen regulatory oversight. Complementing this focus on healthcare access, the Goods and Services Tax Council announced a significant rationalisation of tax rates for essential medicines and medical devices, aiming to reduce healthcare costs and improve affordability for patients. On the industry front, the Department of Pharmaceuticals has amended the Uniform Code for Pharmaceutical Marketing Practices, 2024, signalling a shift towards a self-regulatory model designed to ease compliance while ensuring ethical marketing.

These developments collectively reflect a strategic push towards building a more robust, transparent, and accessible healthcare ecosystem in India.

In this edition of 'Checking the Pulse', we delve into key updates for the months of August 2025 and September 2025.

Government Initiatives

Central Mental Health Authority introduces a new classification framework for mental health establishments

On August 12, 2025, the Central Mental Health Authority ("CMHA") notified the Mental Healthcare (Central Mental Health Authority) Amendment Regulations, 2025 ("Amendment Regulations"), which amended the Mental Healthcare (Central Mental Health Authority) Regulations, 2020 ("Mental Healthcare Regulations") and introduced a framework for the classification of mental health establishments across India.¹

In India, the Mental Healthcare Act, 2017 ("MHC Act") and the Mental Healthcare Regulations serve as the primary legislations for the governance of mental health establishments. Under the MHC Act, the term 'mental health establishment' is defined broadly to mean any health facility, wholly or partly for the care of persons with mental illness, including establishments under traditional medicine systems such as Ayurveda, Yoga, Unani, Siddha, and Homoeopathy ("AYUSH"). Pertinently, Section 65(5) of the MHC Act empowers the CMHA to classify these establishments and specify different standards for each category with respect to the scope of services to be provided, the facilities to be maintained, as well as minimum qualifications for appointment of personnel, in these establishments.

In exercise of its powers, the CHMA has notified the Amendment Regulations to introduce the following 5 (five) categories of mental health establishments, with the objective of ensuring greater uniformity and standardisation in their registration and functioning:

1. Standalone Mental Health Establishments (Category A): Standalone and dedicated centres that exclusively provide in-patient mental health services without being part of a general or multi-speciality hospital setup. This includes standalone central or state-run mental hospitals as well as private mental hospitals and psychiatric nursing homes.
2. Psychiatric Department of Medical Colleges (Category B): Psychiatric departments integrated within government or private medical colleges, which provide clinical and academic services.
3. Psychiatric Wards of Multi-Speciality Hospitals (Category C): Psychiatric wards or units that are a part of a general or multi-specialty hospital, including facilities under the district mental health programme.
4. Standalone De-addiction Centres (Category D): Standalone centres specifically designed for inpatient treatment for substance use disorders, including integrated rehabilitation and addiction treatment facilities. Similar to Category A, these centres are not part of any other health or mental health institution.
5. Centres for Psychosocial Rehabilitation (Category E): Establishments providing residential psychosocial rehabilitation and long-term community-based care such as quarter-way homes, halfway homes, and long-stay homes.

The Amendment Regulations prescribe that all healthcare establishments falling under the aforementioned categories are required to register with either the CMHA or the relevant state mental health authority under Section 65 of the MHC Act. This mandate ensures that all facilities adhere to the operational standards prescribed for their respective categories, covering aspects like in-patient care, rehabilitation programs, and community support services.

Department of Pharmaceuticals amends the Uniform Code of Pharmaceutical Marketing Practices, 2024 to ease compliance

The Department of Pharmaceuticals ("DoP"), by way of a circular dated September 1, 2025 ("Circular"), has introduced amendments to the Uniform Code for Pharmaceutical Marketing Practices, 2024 ("UCPMP").²

The UCPMP is a framework of ethical guidelines to regulate the marketing practices of pharmaceutical companies in India. Initially introduced in 2015 as a voluntary code aimed at curbing unethical marketing practices, the UCPMP was significantly revised and reissued by the DoP in March 2024. This revision was driven by a growing concern over unethical marketing practices, and sought to enhance transparency in the interactions between pharmaceutical companies and healthcare professionals.

The key amendments to the UCPMP introduced pursuant to the Circular have been discussed below:

1. Clarification on valuation of free samples: Prior to the amendment, there was no clarity on the valuation of free medical samples supplied to healthcare professionals. To address this gap, a clear methodology for valuing free medical samples has now been introduced. For samples manufactured in-house, the value per unit will be the price charged to stockists or immediate customers. For samples that are purchased, the value will be recorded at their purchase price.
2. Complaint reporting mechanism and data retention framework: The Circular requires pharmaceutical industry associations to maintain complaint records on their respective websites. These records must detail the nature of the complaint, the company involved, and the action taken. Further, pharmaceutical associations are mandated to retain such records and establish systems for storing member data for a period of at least 5 (five) years, and make the information accessible to regulators, courts, or committees upon request. The Circular clarifies that only those companies which are affiliated with such associations are required to lodge complaints or make disclosures on these websites, while other companies shall continue submitting disclosures directly on the UCPMP portal.
3. Disclosure of marketing expenditure and self-declaration of compliance: Companies are now required to disclose their marketing expenditure in the form set out in the annexure to the Circular within 2 (two) months of the end of every financial year or upload the same on the website of the pharmaceutical industry association (in case of affiliation). In addition to the disclosure of marketing expenditure, companies are also required to provide an annual self-declaration of their compliance with the UCPMP within 2 (two) months of the end of every financial year.

These amendments signify a move towards a self-regulatory model, placing greater responsibility on pharmaceutical industry associations to ensure transparency and accountability.

Central Drugs Standard Control Organisation simplifies manufacturing approval process for early-stage genetic engineering research

The Central Drugs Standard Control Organisation ("CDSCO"), through a circular dated September 3, 2025, streamlined the regulatory pathway for biopharmaceutical research and development ("R&D") by simplifying the process for obtaining permission to manufacture test items for early-stage genetic engineering experiments.³

The key aspects of this regulatory update are outlined as follows:

1. Sufficiency of approval from Institutional Biosafety Committee for Form CT-10 submission: In accordance with the recommendations made during the 314th (three hundred and fourteenth) meeting of the Review Committee on Genetic Manipulation ("RCGM"), the circular clarifies that approval from an Institutional Biosafety Committee ("IBSC") is now sufficient for submitting a Form CT-10 application under the New Drugs and Clinical Trials Rules, 2019. This application is used to seek permission to manufacture products for testing and analysis of recombinant DNA. The relaxation applies to experiments classified under Category I and Category II of the Recombinant DNA Guidelines.
   Under the Recombinant DNA Guidelines, experiments are categorised based on risk levels and the extent of regulatory oversight required. Experiments with very low risk fall under Category I, while those with low to moderate risk are classified as Category II.
2. Elimination of prior RCGM clearance: The erstwhile requirement for applicants to obtain clearance from the RCGM before submitting a Form CT-10 application to the CDSCO has been removed. Under the Recombinant DNA Guidelines, IBSC functions as the first-level review and monitoring body within individual institutions conducting recombinant DNA work. It is responsible for categorising experiments as Category I or Category II based on risk levels and for ensuring that appropriate biosafety measures and facilities are in place. The RCGM, established under the Department of Biotechnology, operates at the national level and provides higher-level oversight, particularly for Category III and Category IV experiments, which involve greater biosafety risks.

The revised framework is expected to accelerate innovation in areas such as biopharmaceuticals, recombinant DNA products, and gene therapy research.

For manufacturers, particularly early-stage R&D entities and academic-industry collaborations, this regulatory shift offers significant operational advantages by introducing greater flexibility in the initial approval process.

Goods and Services Tax Council reduces applicable tax rates on medicines and medical devices

During the 56th (fifty-sixth) meeting of the Goods and Services Tax Council held on September 3, 2025, the finance minister announced a significant rationalisation of Goods and Services Tax ("GST") rates for various medicines and medical devices.⁴ This move is geared towards reducing overall healthcare costs and enhancing the affordability of treatment for patients across India.

The key tax revisions are as follows:

1. Tax exemption for life-saving drugs: GST has been fully exempted on a total of 33 (thirty-three) life-saving drugs, including Asciminib, Mepolizumab, Miglustat, and Alirocumab. Further, 3 (three) life-saving drugs used in the treatment of cancer, rare diseases, and other chronic conditions have also been exempted from taxation.
2. General reduction for other medicines: The GST rate on all other drugs and medicines has been uniformly reduced from 12% (twelve percent) to 5% (five percent).
3. Rate cut for medical devices: In a significant relief for the sector, the GST on medical devices and apparatus has been reduced from 18% (eighteen percent) to 5% (five percent).

The latest round of tax reduction builds on previous efforts to address anomalies in the indirect tax regime and is expected to mitigate long-standing industry concerns regarding inverted duty structures.

Industry stakeholders have welcomed the move, highlighting that it will not only enhance the affordability of healthcare but also strengthen the domestic pharmaceutical and medical device supply chain, supporting India's position as a global hub for life sciences innovation.

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Footnotes

1. The Amendment Regulations can be accessed at: https://teamleaseregtech.com/fileviewer/?f=https://avantiscdnprodstorage.blob.core.windows.net/legalupdatedocs/45588/Mental-Healthcare-Central-Mental-Health-Authority-Amendment-Regulations-2025-August142025.pdf

2. The Circular can be accessed at: https://pharma-dept.gov.in/sites/default/files/Circular%20No.%203%20of%202025%20and%20UCPMP%202024%20as%20amended_0.pdf

3. The circular can be accessed at: https://cdsco.gov.in/opencms/opencms/system/modules/CDSCO.WEB/elements/download_file_division.jsp?num_id=MTMyNzE=

4. The press release can be accessed at: https://gstcouncil.gov.in/sites/default/files/2025-09/press_release_press_information_bureau.pdf

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