THE DRUGS and COSMETICS ACT, 1940

Amendments, Clinical Trials and Consumer Protection- An Analysis.

A seminar paper submitted in the partial fulfillment of B.A LL.B (Hons.) VIII th Semester
course at Dr. Ram Manohar Lohiya National Law University, Lucknow

Submitted To-

Mr. Prasenjit Kundu

Faculty of Health Law

Submitted by-

TANYA VERMA

B.A.LL.B. (Hons.)

VIIIth Semester

Roll No. - 147

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 TABLE OF CONTENTS

 Introduction…………………………………………………………….. 03-04

 Drugs and Cosmetics (Amendment) Bill, 2007………………………… 05-12

 Drugs and Cosmetics (Amendment) Bill, 2008………………………… 12-17

 Clinical Trials…………………………………………………………… 18-22

 Consumer Protection……………………………………………………. 22-25

 Conclusion………………………………………………………………. 26-28

 Bibliography…………………………………………………………….. 29.

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INTRODUCTION

In the beginning of the current century, Drug Industry was practically non-existent in India
and pharmaceuticals were being imported from abroad. The First World War changed the
situation and not only were finished and cheap drugs imported in increasing volume, the
demand for indigenous products also were voiced from all sides. Both Indian and Foreign
manufacturing concerns sprang up to produce pharmaceuticals at cheaper rates to compete
with imported products. Naturally some of these were of inferior quality and harmful for
public health. The Government was, therefore, called upon to take notice of the situation and
consider the matter of introducing legislation to control the manufacture, distribution and sale
of drugs and medicines.

Two of the laws, The Poisons Act and the Dangerous Drugs Act were passed in 1919 and
1930 respectively. But to have a comprehensive legislation, which the rapid expansion of the
pharmaceutical production and drug market required by the end of the second decade for its
control, the Indian Government appointed, in 1931, a Drugs Enquiry Committee under the
Chairmanship Lt. Col. R. N. Chopra which was asked to make sifting enquiries into the
whole matter of drug production, distribution and sale by inviting opinions and meeting
concerned people. The Committee was asked to make recommendations about the ways and
means of controlling the production and sale of drugs and pharmaceuticals in the interest of
public health. The Committee submitted a voluminous report to government suggesting
creation of drug control machinery at the centre with branches in all provinces.
For an efficient and speedy working of the controlling department the committee also
recommended the establishment of a well-equipped Central Drugs Laboratory with
competent staff and experts in various branches for data standardization work. Under the
guidance of the Central Laboratory, it was suggested, small laboratories would work, in the
provinces
The outbreak of the Second World War in 1939 delayed the introduction of legislation on the
lines suggested by the Chopra Committee which the Indian government contemplated and
considered as urgent. However, the Drugs Act was passed in 1940 partly implementing the
Chopra recommendations

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The object of the Act is to regulate the import, manufacture, distribution and sale of drugs.

Under the provisions of this Act, the Central Government appoints the Drugs Technical
Advisory Board to advise the Central Government and the State Governments on technical
matters arising out of the administration of this Act. The board can constitute subcommittees
for the consideration of a particular matter.

This Seminar Paper deals with major amendments and its impact on the Act including the
aspect regarding Clinical Trials and also the part played by the consumers in this Act,
namely, The Drugs and Cosmetics Act, 1940.

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THE DRUGS and COSMETICS (Amendment) BILL, 2007

Medical drugs and pharmaceuticals are regulated by a range of laws in India with the import,
manufacture, distribution and sale of drugs and cosmetics being regulated by the Drugs and
Cosmetics Act, 1940. The amendment to the law attempts to increase penalties for a number
of offences and sets up a regulator to licence drugs as well as set standards for drug testing.

India is on the threshold of becoming the hub of clinical trials because of its high quality of
research combined with low cost. The Bill strengthens the drug regulatory infrastructure in
general and the laws related to clinical trials in order to prevent any kind of exploitation. The
government introduced the Bill to amend the Drugs and Cosmetics Act, 1940 in order to
establish a Central Drugs Authority and regulate clinical trials.

Over the years, various government-appointed committees and other institutions have
suggested ways to improve the drug regulatory system in the country. Some of the
recommendations were incorporated in the Drug Policy, 1986 and 1994, and the
Pharmaceutical Policy, 2002. In 2003, the central government constituted an expert
committee under Dr. R.A. Mashelkar to review the drug regulatory infrastructure. The
Committee recommended changes in drug regulation, a system of centralised licensing,
enhancement of penalties, etc. A Bill, based on these recommendations, was introduced in
2003 but it lapsed due to the dissolution of Lok Sabha.
The Drugs and Cosmetics (Amendment) Bill, 2007 seeks to implement some other
recommendations of the Mashelkar Committee. These include establishment of the Central
Drugs Authority and regulation of clinical trials.

The Drugs and Cosmetics (Amendment) Bill, 2007 seeks to replace the Drugs Technical
Advisory Boards for allopathic and Indian systems of medicine with the Central Drugs
Authority (CDA). Drug consultative committees may be established to advise the CDA and
central and state governments.

The 2007 Bill expands the definition of “drugs” to include medical devices. It also defines
“clinical trial”, states that all clinical trials require the approval of the CDA, and prescribes
penalties for any person violating this provision.
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KEY ISSUES AND ANALYSIS

 The CDA shall be the licensing authority for the manufacture, sale or stocking of
drugs and cosmetics. Currently, these functions are delegated to state governments.
 The 2007 Bill does not mandate medical and scientific experts in the CDA. A member
can be any person with special knowledge of and a minimum of 15 years professional
experience in the pharmaceutical industry, public administration, finance or law.
 The Mashelkar Committee made various recommendations with regard to
strengthening the drug regulatory system and the problem of adulterated and spurious
drugs. Whereas several of these recommendations are being implemented through
these Bills, neither Bill addresses the recommendations related to strengthening drug
regulation at the state level.

KEY FEATURES OF 2007 BILL (Amendments to the Principal Act Proposed by the Drugs
and Cosmetics (Amendment) Bill, 2007)

Structure for Regulation of Drugs and Cosmetics

 Drugs and Cosmetics Act, 1940-
o The central government shall establish a Drugs Technical Advisory Board
and an Ayurvedic, Siddha and Unani Drugs Technical Advisory Board.
o The central government may establish a Drugs Consultative Committee to
advise the central and state government and the Drugs Technical Advisory
Boards. The members shall be nominated by central and state governments

 Drugs and Cosmetics (Amendment) Bill, 2007-

o The central government shall establish a Central Drugs Authority (CDA)
which replaces both Drug Technical Advisory Boards. It shall consist of a
Chairperson and 3 to 5 members. The CDA shall appoint a Drugs
Controller (India) who shall be the Chief Executive Officer and the legal
representative of the CDA. The CDA shall recommend to the central
government standards for drugs and cosmetics, the Central Drugs
Laboratories for testing drugs and cosmetics, measures to regulate import,
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 export, manufacture for sale, and distribution of drugs and cosmetics,
measures to regulate clinical trials etc; and may appoint Government
Analysts and Inspectors.
o The central government may establish a Drugs Consultative Committee
and an Ayurvedic, Siddha and Unani Drugs Consultative Committee.
These committees may advise the CDA as well as the central and state
governments on matters related to uniformity in the administration of the
law. Both Committees are to be composed of representatives of the central
and state governments, industry, consumer groups, etc.

Licensing
 Drugs and Cosmetics Act, 1940-
o Central government to prescribe in the Rules the authority that would issue
licenses. License for manufacture of drugs in Schedules C and C1 and imports,
shall be issued by the Central License Approving Authority (Drug Controller,
India). License for manufacture and sale of other drugs and manufacture of
cosmetics shall be issued by Licensing Authorities appointed by state
governments.

 Drugs and Cosmetics (Amendment) Bill, 2007-

o The CDA will be the sole licensing authority for manufacturing for sale,
export, import distribution or stocking of certain drugs and cosmetics.

Definition
 Drugs and Cosmetics Act, 1940-
o The definition of “drug” includes, among other items, devices intended for
internal or external use in the diagnosis or treatment of disease in human
beings or animals, as may be specified by the central government.

 Drugs and Cosmetics (Amendment) Bill, 2007-

o The definition of “drug” expanded to include medical device, instrument, and
software needed for their application, as may be specified by the central govt
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 after consultation with the CDA. The device may be used for the purpose of
diagnosis of any disease; diagnosis of or compensation for any injury or
handicap or control of conception.

Creation of Fund
 Drugs and Cosmetics Act, 1940-
o No fund

 Drugs and Cosmetics (Amendment) Bill, 2007-

o The central government shall set up a Central Drugs Authority of India Fund.
It shall include all grants and fees received by the CDA. It shall be used for
salaries of the members and employees of the CDA and for the
implementation of the Bill.

Regulation of Clinical Trials

 Drugs and Cosmetics Act, 1940-

o Clinical trial is not defined in the Act but is detailed in the Rules. Clinical trial
means “a systematic study of new drugs in human subjects… with the
objective of determining safety and/or efficacy of the new drug.”
o Clinical trials shall be conducted only with the permission of the Drug
Controller, (India) and an ethics committee of the testing institution. The
ethics committee should have a Chairperson who is outside the institution and
a mix of medical and non-medical persons.
o No penalty prescribed for violating this provision.

 Drugs and Cosmetics (Amendment) Bill, 2007-

o “Clinical trial” means systematic study of any drug or cosmetic [not just ‘new’
drugs].
o Clinical trial can be conducted only with the permission of the CDA.

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 o If a person contravenes this provision, he shall be punished with imprisonment
for a maximum term of five years and a fine of up to Rs 10 lakh. On
subsequent conviction for the same offence, the person shall be punished with
imprisonment up to 10 years and a fine which may extend to Rs 20 lakh. A
person can be prosecuted only on a complaint made in writing by an officer
authorised by the CDA.

The Mashelkar Committee recommended that license for manufacture of drugs should be
approved by the CDA. It cited that U.S.A., Australia, China, etc. have a centralized licensing
authority. However, it did not discuss the issue of centralizing the licensing of sales and
distribution of drugs.
The Bill proposes to establish the CDA as the licensing authority for manufacture, import,
export, sale or stocking of drugs and cosmetics. Thus, the power to issue licenses to
manufacturers, distributors and retailers shall be shifted from state governments to the CDA
(headquartered in Delhi). This will have cost and time implications for license applicants.
The CDA may establish offices at state and district level. However, the Financial
Memorandum to the Bill does not provide for funding of such offices (Clause 5F (1)).

The 2007 Bill states that the central government shall appoint the Chairperson and members
of the CDA with special knowledge of and at least 15 years of professional experience in the
pharmaceutical industry, research or teaching, or public administration, finance or law. It is
possible to constitute the CDA without any medical and scientific experts since the
proportion of members from each field has not been specified. The Drugs and Cosmetics
Rules of the Principal Act prescribe minimum qualifications of a Licensing Authority which
include at least a graduation degree in Pharmacy or Pharmaceutical Chemistry or Medicine
with specialisation in clinical pharmacology and microbiology [Clause 5(3) and Clause 5A].

The 2007 Bill was introduced in Rajya Sabha on August 21, 2007. The status of Bill is that it
is still pending.

The CPI (M) alleges that the Drugs and Cosmetics (Amendment) Bill-2007 is an attempt to
“encroach upon state governments’ rights, and said that the legislation provides no measures
to check manufacturing and selling of spurious drugs. The party also said that its views will
be “put forward” at the Parliamentary Standing Committee on health, which is studying the
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Bill at present. It also maintained that the “whole purpose of the Bill is to hand over the
Central Drugs Authority to MNCs and big drug companies said that the legislation provides
no measures to check manufacturing and selling of spurious drugs. The party also said that its
views will be “put forward” at the Parliamentary Standing Committee on health, which is
studying the Bill at present. It also maintained that the “whole purpose of the Bill is to hand
over the Central Drugs Authority to MNCs and big drug companies. The Bill neither contains
any clause to check manufacturing and selling of spurious drugs nor there is any deterrent
clause providing stronger punishment for these. The Bill only proposes central licensing. This
Bill proposes to take over the drug licensing right from the state government and hand it over
to the central government. If this amendment is passed by the parliament and drug licensing
is centralised, thousands of small and medium sector drug manufacturing companies all over
India will not be able to get their licenses and will be forced to close down; thousands of
workers will lose jobs, and the self-employed will be deprived of their livelihood. Moreover
the state governments will face difficulties in procurement of generic medicines and their
health programmes will be seriously affected. Multinational and big companies will be
monopolising the drug market.

A senior leader of the CPI (M) said that the party will not allow the Bill to be passed in
Parliament. At present the Bill is at the Standing Committee. Left MPs in the committee will
put forward our views in the committee.
The implications of the Bill are far reaching. It also raises the question on the future role of
the State drug control mechanism; the licensing and control on drug distribution and sale etc.
The critical area of outsourced clinical trials will be in the hands of CDA controlled and
directed by drug companies. It will seriously affect national and states’ health programmes.

Standing committee report on DRUGS and COSMETICS (Amendment) Bill, 2007

The Standing Committee on Health and Family Welfare submitted its 30th Report on ‘The
Drugs and Cosmetics (Amendment) Bill, 2007’ on October 21, 2008.
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  The Committee feels that the physiological and therapeutic impact of drugs and
cosmetics on human bodies is completely different. Therefore, trials for drugs should
be separate from that of cosmetics. The Committee thus recommends that there
should be a separate set of provisions for clinical trials for regulating the
dermatological safety of cosmetics. The Committee also suggests that a separate
definition of clinical trial for medical devices may be included in the Bill. The
Committee also feels that only new drugs should be subjected to clinical trials.

 The Committee strongly recommends that a dedicated division (as per Mashelkar
Committee report) may be set up to deal with regulation, licensing, surveillance and
monitoring of medical devices. The definition of medical devices should also be
brought in line with the definition of Global Harmonisation Task Force.

 The Mashelkar Committee had recommended that the existing Central Drugs
Standard and Control Organisation (CDSCO) be strengthened and equipped properly
rather than creating a new authority. The Committee, thus, recommends that the
CDSCO be strengthened and restructured as a Central Drug Administration, which
shall be an independent body under the Ministry of Health and Family Welfare.
 The Mashelkar Committee had drawn a roadmap for centralisation of licensing in
three phases. It had stated that the exercise should be complete within three years.
However, the Ministry indicated that it might take five to 10 years to switch to the
centralised licensing system. The Committee recommends that the roadmap drawn by
the Mashelkar Committee be followed for a speedy switchover.

 The Committee suggests that the appellate authority for grievance redressal should be
placed in the zonal and sub-zonal offices of the licensing authority so that small scale
pharma units do not face any problems.

 The Committee is of the opinion that the central government would need to put
substantive additional funds to strengthen the CDSCO.

 The Committee recommends that the Drugs Technical Advisory Board should be
retained since it’s a technical body with representation of experts from various fields
whose main function is to advise the government.

THE DRUGS and COSMETICS (Amendment) Bill, 2008

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Spurious or imitation drug products are drug formulations manufactured concealing the true
identity of the product and made to resemble another drug, especially some popular brand, to
deceive the buyer and cash on the popularity of original product. The product may or may not
contain the active ingredients. Spurious drugs are usually manufactured by unlicensed anti-
social elements but sometimes licensed manufacturers may also be involved. The adulterated
drugs are those drugs which are found to contain an adulterant/substituted product or
contaminated with filth rendering it injurious to health.
There were reports of availability of spurious drugs in the country which shake the
confidence of indigenous as well as foreign buyers. So to make the laws relating to its
manufacture and sale more stringent, The Drugs and Cosmetics (Amendment) Bill, 2008 was
passed by the Parliament on 5th December, 2008. It is also known as The Spurious Drugs Bill.
It provides deterrent penalties for offences relating to manufacture of spurious or adulterated
drugs which have serious implications on public health. It will help regulatory authorities to
handle anti-social elements involved in the manufacture of such drugs. The penalty for
manufacture of spurious or adulterated drugs has been enhanced to an imprisonment for a
term which shall not be less than ten years but which may extend to imprisonment for life and
shall also be liable to fine which shall not be less than ten lakh rupees or three times the value
of the drug confiscated, whichever is more

The following amendments were brought upon by the Bill:

 Insertion of new section 17E which laid down the conditions when a cosmetic shall be
deemed to be adulterated.
 Section 18 was amended i.e., clause (a) sub-clause (ii) was amended and it read “any
cosmetic which is not a standard quality, or is misbranded, adulterated or spurious.”
 Amendment of Section 26A. In that section, for the word ‘prohibit’, the words
‘regulate, restrict or prohibit’ shall be substituted.
 Insertion of new section 26B which stated the Power of the Central Government to
regulate or restrict, manufacture, etc. of drug in Public interest.
 Amendment of Section 27. The punishment in clause (a) was amended from
‘imprisonment not less than five years which may extend to a term of life and with
fine not less than ten thousand rupees’ and substituted with ‘imprisonment not less
than ten years which may extend to imprisonment for life and shall also be liable to

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 fine not less than ten lakh rupees or three times the value of drugs confiscated,
whichever is more. Also a proviso and explanation to clause (a) was added which read
that the fine imposed on and released from the person convicted shall be by way of
compensation to the person who had used the spurious drug. If the person who had
used the spurious drug died due to such consumption, the compensation shall be paid
to the relative of the deceased. In clause (b), the term of imprisonment for invalid
licence was amended from ‘not less than one year but may extend to three years and
fine shall not be less than five thousand rupees’ and substituted with ‘imprisonment
not less than three years but may extend to five years and fine shall not be less than
one lakh rupees or three times the value of drugs confiscated, whichever is more. In
the proviso, ‘less than one year and of fine of less than five thousand rupees’ was
substituted with ‘less than three years and of fine of less than one lakh rupees’. In
clause (c), the term of imprisonment for a spurious drug was amended from ‘not less
than three years but may extend to five years and fine not less than five thousand
rupees’ and substituted with ‘not less than seven years but may extend to
imprisonment for life and with fine not less than three lakh rupees or three times the
value of the drugs confiscated, whichever is more’.
 Section 27A was amended. In clause (i) ‘section 17C’ was substituted with ‘section
17D or adulterated under section 17E’. The amount of fine was added which shall not
be less than fifty thousand rupees or three times the value of cosmetics confiscated,
whichever is more. In clause (ii), the amount of fine was amended from ‘one thousand
rupees’ to ‘twenty thousand rupees’.
 Both section 28 and 28A were amended and the amount of fine from one thousand
rupees was substituted with ‘not less than twenty thousand rupees’.
 In section 29, ‘five hundred rupees’ was substituted with ‘five thousand rupees’.
 In section 30, subsection (1), clause (a), the words ‘not be less than two years but
which may extend to six years and with fine which shall not be less than ten thousand
rupees’, was substituted with ‘not be less than seven years but which may extend to
ten years and with fine-which shall not be less than two lakh rupees’. In clause (b), the
words, ‘shall not be less than six years but which may extend to ten years and with
fine which shall not be less than ten thousand rupees’ was substituted with ‘ shall not
be less than ten years but which may extend to imprisonment for life and fine which
shall not be less than three lakh rupees.’ In clause (c), the words ‘five thousand

13
 rupees’ was substituted with ‘fifty thousand rupees’. In subsection (2), the words ‘ten
years, or with fine, or with both’ was substituted with ‘two years, or with fine which
shall not be less than ten thousand rupees or with both’.
 Section 32, sub-sections (1) and (2) were also amended.
 Insertion of new section 32B which dealt with compounding of certain offences.
 Section 33 sub-sections (2), section 33-I, sub-section (1), clause (a) and clause (b)
were amended. In section 33-I, sub-section (1), clause (c) was inserted.
 Section 33J was amended. In clause (a), the word ‘two thousand rupees’ was
substituted with ‘fifty thousand rupees or three times the value of the drugs
confiscated, or whichever is more’ , in clause (b), ‘five thousand rupees’ was
substituted with ‘one lakh rupees or three times the value of drugs confiscated,
whichever is more’ and in clause (c), ‘six months and with fine which shall not be less
than one thousand rupees’ was substituted with ‘one year and with fine which shall
not be less than twenty thousand rupees or three times the value of drugs confiscated,
whichever is more.’
 Section 33KA which deals with disclosure of name of manufacturer, etc. and section
33KB which deals with maintenance of records and furnishing of information; were
inserted.
 Section 33N, subsection (2), clause (gga) amended and clause (ggb) inserted.
 Section 36A amended.
 Section 36AB, dealing with special courts, Section 36AC dealing with offences to be
cognizable and non-bailable in certain cases, Section 36AD dealing with application
of CPC, 1973 to proceedings before Special Court, and Section 36AE dealing with
appeal and revision, was inserted.

Under the Drugs and Cosmetics Act, 1940 control over manufacture and sale of drugs is
exercised by the State Licensing Authorities. Licenses for drug manufacturing
establishments and sale premises are granted by the said authorities. Inspections/raids are
carried out by the Drug Inspectors appointed by the States to ensure compliance of the
conditions of licenses. Samples are drawn by Drug Inspectors to check the quality of drugs
marketed in the country. Legal/administrative actions as required under the said Act and

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Rules for the violation of the provisions of the Act are taken by the State Licensing
Authorities. There are certain guidelines under the new provisions. While implementing the
new provisions, the State Regulatory Authorities should ensure that the law is implemented in
a comprehensive way. In order to effectively use the said instrument of law, it is necessary to
have Standard Operative Procedures set in each State to examine and process various
violations of the provision of the Act. The State Drug Control Organizations should have
internal mechanism of checks and balances to ensure that law abiding manufacturers and
sellers of drugs are not harassed or put to a disadvantageous position. Care should be taken
that while violations with criminal intent or gross negligence leading to serious defects are
dealt with heavy hand, the violations involving minor variations in quality by licensed
manufacturers are resolved through administrative measures.

Principle for Institution of Prosecution under Drugs and Cosmetics Act:

The weapon for prosecution should be used sparingly and judiciously but due regard to merits
of the case be given as a prudent measure. Prosecution should be launched where
administrative measures have failed to have desired effects. However, while deciding to
prosecute, due regard should be given to the nature of contraventions.
The persistent defaulter should be prosecuted but minor omissions may not form the basis of
prosecution. Administrative action should be initiated wherever possible to ensure preventive
measures to safeguard public health. A broad classification of cases where prosecutions
should be launched is given below:
1. Where a spurious drug of drug falling within the meaning of
adulterated/spurious/misbranded under Section 17(A), 17(B) and 17 of Drugs and
Cosmetics Act is manufactured, sold or stocked or exhibited for sale or is distributed.
2. Cosmetic falling within the meaning of spurious cosmetics under Section 17(D) and
misbranded under Section 17(C).
3. Where drugs/Cosmetics are manufactured without a licence.
4. Where a parenteral preparation is reported by the Government Analyst to be non-
sterile, pyrogenci or toxic and provided on investigation is found to be substandard
due to lack of adequate quality control and adherence to the provisions of GMP in the
manufacturing processes.
5. Where a drug is found grossly sub-standard repeatedly.
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Initiative taken by the Government to Enforce Drugs and Cosmetics Act More
Effectively

i. Whistle blower scheme

Whistle Blower Scheme has been announced by Government of India to encourage vigilant
public participation in the detection of movement of spurious drugs in the country. Under this
policy the informers would be suitably rewarded for providing concrete information in
respect of movement of spurious drugs to the regulatory authorities.

ii. Guidelines for taking action on test reports in the light of enhanced penalties
In the 40th meeting of Drugs Consultative Committee (DCC) consisting of the DCGI and all
State Drug Controllers held on 29.6.2009, guidelines for taking action on samples of drugs
declared spurious or not of standard quality in the light of enhanced penalties under the Drugs
& Cosmetics (Amendment) Act, 2008 were adopted for the purpose of uniform
implementation of the Drugs and Cosmetic Act in the country. The guidelines with approval
of the Ministry of Health were forwarded to the State Drugs Controllers for information and
compliance

iii. Strengthening of drug testing laboratories

Under a Capacity Building Project through World Bank, assistance was provided to upgrade
testing facilities and to establish new drug testing laboratories in the country so as to enhance
the capacity of the laboratories to test large number of samples.

iv. Good manufacturing practices

Schedule M to the Drugs and Cosmetics Rules, 1945, pertaining to Good Manufacturing
Practices was amended to make it at par with the international standards and it is mandatory
for the manufacturers of drugs to comply with the requirements of this Schedule for quality
control of the drugs manufactured by them.

v. Other Measures

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 a) To take care of the quality of import/export consignments of drugs which are
presently kept along with food stuff, meat and other general cargo, it has been decided
to set up exclusive pharmaceutical zones with dedicated area for storage of drugs
meant for export/import at Delhi, Hyderabad and Mumbai Airport.' CDSCO is
involved in negotiation/consultation with the port authorities in the matter.
b) To take care of increased traffic of import and export of drugs, two Sub-Zonal offices
at Hyderabad and Ahmadabad airport have been converted into Zonal offices. A new
Sub-Zonal office at Bangalore airport has also been set up to cope up the situation of
increased traffic of import and export of drugs in that region. It has also been decided
to set up a sub zonal office at Chandigarh as northern India has become a major
Pharma hub due to setting up of large no. of drug manufacturing units in the excise
free zones.
c) Detailed guidelines have been issued to the State Govts. To undertake focused
surveillance over possible movement of spurious drugs.
d) Training programme for regulatory officials of State Govts. On logistics of
intelligence, surveillance, prosecutions, etc. has been conducted with the assistance of
FDA, Maharashtra.
e) Pharma industry and traders has been motivated to fight menace of spurious drugs as
a shared responsibility. No. Of cases could be successfully detected through the
initiative taken by Pharma industry involving hiring of retired intelligence officers.

CLINICAL TRIALS

Clinical research is the key to the discovery of latest diagnostic methods and to develop
modern drugs for treatment of diseases. Drug development is a process that calls for utmost
care. An error can cause fatal result. Clinical trials are developed in such a way that it not
only helps the discovery of new drugs but also ensures safety profile of such drugs.

17
A clinical trial in simple terms can be defined as a set of practice that helps certify a new drug
molecule as safe and efficacious before reaching the market.
In fact "any research study that prospectively assigns human participants or groups of humans
to one or more health-related interventions to evaluate the effects on health outcomes" can be
defined as a clinical trial.
To determine the safety and efficacy of drug research on humans is always warranted, but
one needs to be cautious and vigilant about the process. Adherence to the principles of good
clinical practices or GCPs, including adequate human subject protection universally
recognized as a critical requirement to the conduct of research involving human subjects.
Most countries have adopted good clinical practice principles as laws or regulations. In India,
compliance with GCP guidelines issued by the Central Drugs Standard Control Organization
or the CDSCO is recommended.

It has been widely recognized that India offers unique opportunities for conducting clinical
trials in view of the large patient pool, well- trained and enthusiastic investigators and
premiere medical institutes available in the country along with considerable low per patient
trial cost, as compared to developed countries.

A need was, however, felt to develop our own Indian Guidelines to ensure uniform quality of
clinical research throughout the country and to generate data for registration for new drugs
before use in the Indian population. In India, regulations pertaining to clinical trials are
placed in Schedule "Y" of the Drugs and Cosmetics Act 1940, and the rules framed
thereunder. It deals with regulations relating to clinical trial requirements for the import,
manufacture and obtaining marketing approval for a new drug in India. Earlier, it required
that all foreign drugs be retested at one phase below the highest phase of testing abroad. But,
after the 2005 amendment to the Schedule Y of the Act, parallel global clinical trials are
possible and India now permits concomitant phase 2 and phase 3 trials.

New chemical entities cannot be administered to human subjects in a clinical trial without
permission from the Drugs Controller General of India. Such permission may be obtained by
submitting to the DCGI an application for a clinical trial. The application must include a
protocol for the study, a draft of the Informed Consent Document, a list of proposed
investigators who have agreed to participate in the study, and background information about
the drug in accordance with Schedule Y of the Drugs & Cosmetics Rules.

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It takes almost 12 weeks to obtain permission for a clinical trial for most investigatory drugs.
The duration may be longer for drugs with special significance to the healthcare concerns of
the country or those that may be considered controversial since these are liable to be referred
to the Indian Council of Medical Research for comments. If clinical supplies are to be
imported, a "Test-Import License" must also be applied for. Import and manufacture of
clinical trial supplies is governed by Rules 33 & 34 and provisions contained in Part X-A of
the rules.

Regulation of Trials

In conducting research, informed consent is the most basic and complex principle of clinical
research ethics. An ethically valid informed consent has four key components: disclosure,
understanding, voluntariness, and competence. In that case, the usual question that arises is
whether the concept of informed consent extends to research involving the critically ill,
because in many cases, critically ill patients are incompetent or unable to make a sound
decision. Sometimes, the family members may not know the patient's wishes, or may not be
legally authorized to give consent for the patient's involvement in research. All such issues
create challenges for researchers in pediatrics, psychiatry, emergency and critical care
medicine.

The Drugs Controller General of India or the DCGI is responsible for regulatory approvals of
clinical trials in India. The DCGI's office depends on external experts and other government
agencies for advice. The ICMR has a Central Ethics Committee on Human Research. This
committee audits the functioning of this Institutional Ethics Committee or the IEC. The
recently amended Schedule Y of Drugs and Cosmetic Rules order the composition of the IEC
as per the ICMR guidelines.

Compliance with GCP guidelines issued by the Central Drugs Standard Control Organization
or the CDSCO is recommended although this does not have statutory status at the present
time. A report on the status of the study with details of enrolment and safety issues also needs
to be submitted annually and on completion of every study.

These measures suggest that India do have guidelines and regulations at par with the
international standards; but, the insufficiency lies with regard to the implementation of these

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control mechanisms. The shortfall is mainly due to the lack of sanction attached to such
provisions in case of violations. The regulatory mechanisms available in the country are
scattered in various guidelines having less or sometimes no force of sanction.

Shocking Violation of Human Rights

Informed consent is an essential requirement of medical trials, which denotes that the patient
undergoing treatment as part of the study should be made aware of the trial being conducted,
the drugs being administered on him and its possible side effects.
In 1999, without obtaining consent of the patients who were under treatment in the
government-run Regional Cancer Centre in Trivandrum, an experimental drug tetraglycinyl
nor-dihydro-guaiaretic acid was administered on them. Though there was an established
treatment for their condition, they were not informed that they were taking part in an
experiment or that they were being denied an established treatment.
In 2003, Mumbai-based Sun Pharmaceutical Industries Ltd. launched a promotional-cum-
research programme by getting private doctors to prescribe the anti-cancer drug Letrozole to
more than 400 women as a fertility drug for ovulation induction. The company then
publicized the doctors' reports to other doctors as "research", using their network of medical
representatives. The drug was prescribed despite the fact that it was known to be toxic to
embryos.
In 2010, government and private doctors in Indore, Madhya Pradesh, reportedly carried out
clinical trials of various medicines on around 233 patients who went to them seeking
psychiatric treatment. The trials, to test medicines produced by pharmaceutical companies,
were conducted between January, 2008 and October, 2010 without following proper
guidelines. Following a huge media uproar, 12 Doctors including six involved in the trials on
mentally ill patients were fined just Rs. 5,000 each for not informing the parent hospital about
the conduct of trials and for ignoring protocols.
The matter pertaining to the drug trials on mental patients in contravention of Schedule Y of
the Drugs and Cosmetics Act, which has explicit guidelines for clinical trials involving the
mentally ill, and the Indian Council of Medical Research's (ICMR) Ethical Guidelines for
Biomedical Research on Human Participants, was raised by a former resident doctor of MGM
Memorial Medical College in January 2011 who wrote to the NHRC, which in turn referred
his complaint to the State Human Rights Commission.

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In the third week of November 2011, the Union Ministry of Health and Family Welfare
proposed amendments to the Drugs and Cosmetics Rules, 1945, relating to regulations in
clinical trials. The amendments had been approved by the Drug Technical Advisory Board, a
statutory committee under the Drugs and Cosmetics Act, 1940. The notification dated
November 18, 2011, pertaining to the draft rules called the Drugs and Cosmetics (3rd
Amendment) Rules, 2011, seeks to strengthen the regulations in favour of trial subjects but
has many loopholes. Moreover, it was not given adequate publicity to elicit responses.

The draft rules claim to have incorporated effective provisions to provide financial
compensation to trial subjects in case of trial-related injury or death; enhance the
responsibilities of the ethics committees, the sponsor and the investigator to ensure financial
compensation and medical care to trial subjects who suffer injury or death; and amend the
format for obtaining consent to include details such as address and occupation, and annual
income of the subject so as to have information of the socio-economic status of the trial
subjects.

Barring certain weak and cosmetic changes to the Drugs and Cosmetics Rules, relating to
compensation in case of injuries to and death of trial subjects, no measures have been taken
to strengthen the system in favour of those undergoing trials.
Notwithstanding the Ethical Guidelines for Biomedical Research on Human Participants
framed by the ICMR in 2006, norms continue to be flouted by both the public and private
sectors in health care. The framework to deal with issues of compensation, consent and
transparency is considered very weak, leading to several allegations, many of which seem to
be well-founded, of exploitation of the poorer sections.

These are only a few of the numerous shocking human rights violations that have been
exposed in the area of clinical trials. These instances throws light on the lacunae in the Indian
legal system for penalizing drug companies that violate norms and mess up while conducting
global clinical trials.

CONSUMER PROTECTION

We can trace the Indian tradition of protecting consumer interest from its historical past. We
can find the references of consumer protection against exploitation by the trade and industry,
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short weighment and measures, adulteration and punishment for these offences in Kautilya‟s
Arthashastra20. Prior to independence, the main laws under which the consumer interests
were considered were the Indian Penal Code, Agriculture Production, Grading and Marketing
Act, 1937, Drugs and Cosmetics Act, 1940.

In order to defend the cause of consumer in the area of drugs and cosmetic industries in India,
Drugs and cosmetic act of 1940 was enacted so as to regulate the airport, distribution and sale
of drugs.
In pursuance to the recommendations the pharmaceutical enquiry committee appointed by the
Government of India, the drugs and cosmetics act, 1940 empowers the central government to
control the manufacture of drugs, to appoint inspectors for inspecting manufacturing premises
and taking samples of drugs, to appoint government analysts to whom samples drawn by such
inspectors could be sent for analysis and to issue the state government for carrying into any of
the provisions of the Act.

The contemporary era is marked as the era of consumers. No country can knowingly or
unknowingly disregard the interest of the consumers. This can be argued on the basis of fast
enactment of consumer protection laws in almost all part of the world.

Cosmetics are substances which are defined under the Drugs and Cosmetics Act 1940 and
Rules 1945 as “Articles which are meant to be rubbed, poured, sprinkled, or sprayed on or
introduced into or otherwise applied to the human body for the purpose of cleansing,
beautifying, promoting attractiveness or altering the appearance.”
Cosmetics are luxury articles and for the past few years, usage of cosmetics has increased
multifold, resulting into an increased production, import, distribution and sale of cosmetics.
These items may contain some ingredients, the constant use of which might prove to be
harmful and hence needs control.
The safety of cosmetic products is of prime importance for the general consumers.
The Drugs and Cosmetics Act 1940 is a Consumer Protection Legislation which is mainly
concerned with the standards and quality of drugs and cosmetics manufactured and sold in
India.

The cosmetic products have to be formulated and manufactured in accordance with Schedule
M-II of Drugs and Cosmetics Act 1940 and Rules 1945.
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Cosmetic products are now considered no less than pharmaceutical products (medicines) in
terms of ingredient selection and its quality control. They are also required to follow good
manufacturing practices. Validation of processes and equipments, labeling requirement,
shelf-life testing, animal testing, etc. are now an essential part of cosmetic manufacturing.
Certification from standards regulating bodies like BIS (Bureau of Indian Standards) and ISO
(International Organization of Standards) adds to the reputation of the cosmetic
manufacturing company.

Sale of Cosmetics in India

Cosmetics are exempted from any sales licence, provided that the cosmetics, if of Indian
origin, are manufactured by the licensed manufacturers. But there is a prohibition on the
manufacture and sale of certain cosmetics, viz.
i) Any cosmetic, which is not of a standard quality or is misbranded or spurious, or
ii) Any cosmetic containing any ingredient which may render it unsafe or harmful for use,
viz, containing hexachlorophene, mercury, lead or arsenic compounds as colourants
or those containing colours other than prescribed.
iii) Manufacture and sale of cosmetics is also prohibited unless those have been manufactured
in accordance with the condition of a licence issued for the purpose or have been imported in
contravention of any legal provision.

Manufacture of Cosmetics

A person licensed to manufacture cosmetics should comply with the following conditions, as
specified in schedule M-II of the Drugs and Cosmetics Act 1940 and Rules 1945. The factory
premises should be situated in hygienic surroundings and kept clean and should be distinct
and separate from premises used for residential purposes. The license should possess
adequate space, building and equipment for the manufacturing process.

As per the conditions of the license, any change in the technical staff should be reported to
the licensing authority. The Drugs and Cosmetics Act 1940 is a punitive Act. Anybody
manufacturing cosmetics in contravention of the Act and the Rules is punishable with
imprisonment upto one year or fine upto Rupees 1000/- or with both on first conviction and
for the manufacture of spurious cosmetics, imprisonment upto three years and with fine. The
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penalty for subsequent offences in both the case is imprisonment upto 2 years or fine upto
Rupees 2000/- or with both (subject to revisions or amendments).

Cosmetics and Consumers

Out of the 28 cosmetics that are listed in Schedule ‘S’ of the Drugs and Cosmetic Rules 1945,
they can be categorized widely as

• Commonly used cosmetics: Toothpowders, Toothpastes, Hair Oils, Cold creams,

Henna, Depilatories, Shampoos, and Hair Dyes.
• Cosmetics used by men: Shaving creams, after shave lotions, Colognes, Hair creams,
Brilliantine’s.
• Cosmetics used by women: Lipsticks, Face powder, Nail lacquer, Bindi.

Children are also consumers of cosmetics, for example, Baby oil, Baby shampoos, Baby
creams, Baby lotions, etc.
Recent media reports about a consumer complaint to Maharashtra FDA against Johnson and
Johnson’s Baby Oil has adequately attracted the public attention to the safety issues of
cosmetics used in this country. Complaints from consumers, like in the Johnson and Johnson
case, bring to fore that there is certainly a need to look at the adequacy of existing rules on
cosmetics and their proper implementation. Since there is not system of granting premarket
approval for cosmetics in India, as it is done in case of medicines, companies producing
cosmetics and toiletry preparations are marketing them without any toxicity studies and
clinical trials.

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CONCLUSION

The Drugs and Cosmetics (Amendment) Bill, 2007 has not been passed yet. It was introduced
in the Rajya Sabha on 21st August, 2007.
The Drugs and Cosmetics (Amendment) Bill, 2008 has been passes by the Parliament.

There is ambiguity in the amended Drugs and Cosmetics Act over the definition of the terms
‘adulterated’ and ‘spurious’ drugs could affect Indian generic drug players. The amendment
could complicate both patent challenges as well as regulation of companies, according to
industry observers. The amended law has provided for stricter punishment for companies
charged with manufacturing ‘adulterated’ or ‘spurious’ drugs. Under the new law, evidence
of both adulteration and manufacture of spurious drugs needs to be established for a person to
be convicted. However, there is still some ambiguity in the Act, which needs to be addressed
immediately.  Although the increase in penalties for dealing in spurious drugs may be
welcome, the fact that the definition of ‘spurious’ remains substantially the same is a grave
cause for concern. This definition could be interpreted to even catch within its fold
legitimately-authorised generics of good quality and this is problematic. Loopholes in the law
have been noticed both by intellectual property lawyers and companies alike. This was

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evident in the recent Bayer-Cipla case. Bayer, in the recent drug patent linkage case,
suggested that Cipla’s generic version of Nexavar would qualify as ‘spurious’. “Given that
the government is fighting international efforts such as IMPACT which attempt to define
counterfeiting broadly to even catch legitimate generics, the government must, as a first step,
clean up its own backyard by redefining ‘spurious’. It must ensure that the term ‘spurious’ as
used within the context of drug regulation be simply restricted to substandard drugs. IP issues
should not form part of this definition. And in any case, barring straightforward violations of
identical trademarks, the DCGI often does not have the institutional competence to decide
complex trademark disputes. Another point in the law that is of concern is the non-binding
power that it gives authorities. The purpose of the amendment is to curb the spread of
adulterated drugs and that is a welcome move. But the powers given to authorities like the
state Food and Drug Administration are non-binding on them and there are concerns that
these may be misused. With the lack of clarity on the definition of adulterated and spurious,
large companies are more likely to use this as a way to block generic companies from
challenging their patents and manufacturing generics. This could harm the generic industry as
a whole and if it is not sorted out soon.

With an exponentially growing clinical trial market, India promises to be one of the major
destinations for global clinical trials. But, at the same time, to rely simply on minimum
standards of non-binding and vague medical ethics is both naive and culturally insensitive. To
address the challenges and key issues, India should devise policies and ensure
implementation in legislative, Intellectual Property Rights structure and regulatory issues.

As per an amendment proposed by the Drug Controller General of India (DCGI) in the Drugs
and Cosmetics Rules, failure to provide compensation for injuries related to the clinic trial, or
to the heir in case of death, may lead to “suspension” or “cancellation” of the trial. Foreign
sponsors may “not be allowed” to conduct trials in India if they fail to pay compensation.

There is also a need to develop Clinical Research Organizations with adequate capacity and
competency in carrying out research activities in compliance with ICH/GCP guidelines.
What are required are speedy implementation and, necessary investment and infrastructure
support. India should realize the fact that laws alone would not suffice; there should be a
proper administrative and monitory mechanism to ensure its working.
Lack of regulatory jurisdiction over private trial sites and absence of uniform application of
the need for informed consent and proper ethics review have raised concerns about trials
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conducted in India. What is needed is to establish authorities such as the proposed Central
Drug Authority and central licensing mechanism for manufacturing approvals. This would
essentially help keep a check over the activities of firms conducting drug trials in India.

Lastly, The Drugs and Cosmetic Act 1940 is a pre-independence legislation and is expected
to regulate two highly profit making industries in India that is the medicines and cosmetics.
As substandard medicines are life threatening, drug regulatory bodies, maintain more strict
vigil and monitoring is routinely exercised. Unfortunately, cosmetic regulations are not very
strictly followed. But it should not be forgotten that use of a spurious or irrationally produced
cosmetic product could also seriously harm different parts of the human body. It is quite
possible that there could be numerous cases of harmful effects of cosmetics going unreported
to authorities.
There is a strong requirement for implementation and enforcement of provisions of Drugs
and Cosmetic Act 1940 and Rules 1945 in the country which will cover the sale,
manufacture, import and labeling of cosmetics. In order to have reasonable safety for
cosmetic products, it is also now realized that certain new standards should be laid down to
test for the safety of ingredients added in cosmetic products, specially, baby cosmetics.

In the present socio economic scenario we find that the consumer is a victim of many unfair
and unethical tactics adopted in the market place. The untrained consumer is no match for the
businessman marketing goods and services on an organized basis and by trained
professionals. He is very often cheated in the quality, quantity and price of the goods or
services. In recent years, there has been a greater public concern over the consumer
protection issues all over the world. Taking into account the interest and needs of the
consumers in all countries, particularly those in developing countries, the consumer
protection measures should essentially be concerned with – (i) the protection from hazards to
health and safety; (ii) the promotion and protection of economic interests; (iii) access to
adequate information; (iv) control on misleading advertisements and deceptive
representation; (v) consumer education and (vi) effective consumer redress.

Therefore, the Drugs and Cosmetics Act, 1940 is an Act to regulate the import, manufacture,
distribution and sale of Drugs and Cosmetics. Though it has been subjected to a lot of
amendments, it is still not flawless. There are loopholes in the Act which are to be covered

27
but it has still made the laws relating sale and manufacture of drugs strict enough to
encompass in its scope any violation made by the sellers and the manufacturers but it still has
to incorporate laws regarding liability of doctors in unethical trials and make laws regarding
consumer protection more rigid.

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BIBLIOGRAPHY

Books

 Vijay Malik, ‘Laws Relating to Drugs and Cosmetics’, 22nd Edn.

Websites
 www.prsindia.org
 www.legalserviceindia.com
 www.majumdarindia.com
 www.consumereducation.in
 www.medindia.net
 www.kppub.com
 www.ssrn.com
 www.lawyersclubindia.com
 www.rajswasthya.nic.in
 www.cdsco.nic.in
 www.indiaoppi.com
 www.post.jagran.com
 www.scribd.com
 www.articlesofadvocate.blogspot.in

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