Authors:

Ayush Anand, Partner, Atharva Legal

Dheeraj Kumar, Intern, Atharva Legal

The Drugs and Cosmetics Act, 1940 in brief talks about maintaining the quality of cosmetics and drugs, establishment of a board of technical experts which can further advise the central and the state governments on the technical matters. This Act in particular, provides for the guidelines about distribution, manufacture, import and sale of cosmetics and drugs. The regulation of Ayurveda, Siddha and Unani drugs and provisions related to the same are also incorporated under this Act.

1. Introduction

Moreover, in two separate schedules attributed to the Act, the requirements for the manufacture, sale, distribution and import of drugs and cosmetics have been specified. Guidelines on the storage, display for the selling and distribution of cosmetics were also given. In short, the Act is an effort to ensure that no substandard medicines or cosmetics are sold on the market, and without a license, no one can even sell a legitimate drug.[1]

According to the Act, any individual or registered consumer group is entitled to send any medication or cosmetic to the government analyst for testing or review and to obtain a report thereof. This provision can be used by consumer groups to protect consumers, especially to prevent the flow of spurious and adulterated drugs marketed to government departments or used in state-owned hospitals.[2] Consumer agencies’ role in the implementation of regulations has, therefore, since it is absolutely necessary for the effective execution of the provisions of the Act, it is rightly provided for under the Act.

2. Drugs and Cosmetics covered under the Act

The definition of the word “drug”[3] in the Act is sufficiently detailed to include not only medicines but also substances for which it is intended to be used for the care of diseases of animals or human beings. This description introduces a distinction between medicines and substances that are not purely so-called drugs. Therefore, the term “substances” must be anything other than medications that are used for treatment. For example, since these items are used for or in care, bandages and gauze are the substances that fall under the context of the said word. Consequently, the term was expanded to include substances which are necessary aids for the treatment of surgery or other situations.[4] The drug description also includes substances that may be used for the preparation of medicinal products.[5] The word “cosmetic”[6] refers to any item intended to be rubbed, poured, sprinkled or sprayed on, or inserted into, or otherwise added to, the item. For cleansing, beautifying, encouraging beauty or improving the appearance of the human body or any part of it and includes any article intended for or use as a cosmetic part.

On the other hand, the concept of manufacturing includes any procedure or part of a process for the manufacture, alteration, ornamentation, finishing, packaging, marking, break-up or otherwise Treatment or administration of any drug or cosmetic in order to sell or administer it. However, the compounding or dispensing of any medications or the dispensing of any drugs does not require it. In the usual course of retail industry, the packing of every drug or cosmetic.[7] But, whether a medicine or substance is used exclusively or prepared for use exclusively in accordance with the ayurvedic or unani systems of medicine is a question of fact and its decision would depend on expert evidence.[8]

3. Regulation of Drugs and Cosmetics other than Ayurvedic, Siddha and Unani Drugs

Section 5 of the Act empowers the central government to constitute the Drugs Technical Advisory Board to advise it and the state governments on technical matters arising out of the administration of the present Act and to carry out the functions assigned to them thereunder.

1. 1. The Drugs Technical Advisory Board

Talking about the members and the organogram, the Board is to consist of 18 members, of whom 8 are ex-officio members, 5 nominated members and 5 elected members. The Director-General of Health Services is the ex-officio chairman of the Board. The nominated and elected members hold office for three years but they are eligible for re-nomination or re-election, as the case may be. The central government appoints a secretary to the Board and provides other necessary staff. The functions of the Board may be carried out in spite of there being a vacancy on the Board.

1. 2. The Central Drugs Laboratory

The central government is also empowered to establish a Central Drugs Laboratory under the control of a director to carry out the functions entrusted to it by or under the Act. The central government may require the functions of the Central Drugs Laboratory, in respect of any drugs or cosmetics, be carried out by the Central Research Institute, Kasauli, or by any other prescribed laboratory. In such a case the functions of the director of the Central Drugs Laboratory in respect of such drug or class of drugs or such cosmetic or class of cosmetics can be exercised by the director of that institution or of that other laboratory. The central government is authorized, after consultation with the Advisory Board, to make rules prescribing the functions of the Central Drugs Laboratory and the procedure for the submission to the said laboratory samples of drugs or cosmetics for analysis or test.[9]

1. 3. Drugs Consultative Committee

The central government is authorised to constitute an advisory committee, namely the Drugs Consultative Committee to advise it and the state governments and the Drugs Technical Advisory Board on matters tending to secure nationwide uniformity in the administration of the Act. The committee comprises two representative nominees of the central government and one representative nominee of each state government.[10]

4. Regulations about import of drugs and cosmetics
   1. Standards of Quality

For the purposes of imports, the term ‘standard quality’ in relation to medicines and cosmetics means that they should comply with the specifications of imports. Standards set out in the Act’s second timetable and any other standards that may be recommended.[11] After consultation with the Board, the central government will, within three months,[12] amend the second timetable for that reason. Sections 12 and 13 of the Act grant the central government the power to create rules prescribing the testing or examination methods to be used to assess the standard quality of any medication.[13]

For the purposes of import of drugs and cosmetics, some other terms have also been explained in the Act. Section 9 provides that a drug would be deemed to be a misbranded drug, a spurious drug, misbranded cosmetic, spurious cosmetics. Further, section 10 enables the central government to ban the importation of any medicines or cosmetics that are not of standard quality or misbranded, adulterated or spurious. No drug or cosmetic product for which a license is prescribed for importation may be imported without such a license.

1. 2. Rulemaking about import of drugs and cosmetics

Laws for the importation of medicinal products and cosmetics may be drawn up by the central government after consultation with or following a recommendation of the Board and in the official gazette following prior notice.[14] Such regulations which define the drugs or the classes of drugs or cosmetics or the classes of cosmetics for which a license is issued for importation. The form and conditions for the issuance, suspension or revocation of licenses, the authority approved to do so, and the fees payable are demanded and prescribed.[15]

1. 3. Penalties for importing prohibited drugs or cosmetics

Section 13 of the aforementioned Act talks about the importation of any adulterated or counterfeit drug or cosmetic is punishable by imprisonment for a period of up to three years and fines of up to three years. It could stretch to five thousand rupees. For importing any medicine or cosmetic that includes dangerous ingredients, the same penalty is prescribed. Further, the punishments so provided are in addition to any penalty to which the offender may be liable under the Sea Customs Act. In particular, section 14 of the act talks about the consignment of any drug or cosmetic, in respect of which the offence has been committed, is liable to confiscation. Supporting this, the Calcutta High Court, in Sherwal Jain v. Collector of Central Excise,[16] held that even if the person who has smuggled the goods is not traceable, they can be confiscated without proceeding against any person. These offences are not triable by any court inferior to that of a metropolitan magistrate or of a judicial magistrate of the first class.

5. Restrictions about manufacture, sale and distribution of drugs and cosmetics

Section 18 of the Act restricts manufacture, sale and distribution of certain drugs and cosmetics of a non-standard quality or misbranded, adulterated or spurious type. The restriction refers to any patent or patented medicinal product on which a true formula or list of its active ingredients, containing the quantity thereof, has not been shown on the label or container. In addition, the manufacture of any medical product or cosmetic for sale or distribution or sale should take place only in compliance with the conditions of licence given for that reason. Those limitations are not applicable to the creation of small amounts of any medicinal product or cosmetic for the purpose of study, research or review.[17]

For the purposes of extension of prohibitions under section 18 of the Act, a drug or cosmetic cannot be considered misbranded, adulterated, fraudulent or to be of below standard quality only by reason of the fact that any innocuous material or component has been added to it or because, for the manufacture or preparation of a drug or cosmetic, the same is needed as an item of commerce in a state fit for transport or consumption and does not increase the length, weight or measurement of the drug or cosmetic or conceal its inferior quality or defects. A medicine or cosmetic may also not be considered to be misbranded or so, if any foreign material has eventually been inter-mixed with it in the course of processing, preparation or conveyance. This clause does not extend to any selling or delivery of the drug or cosmetic that happens after the seller or distributor has become aware of the inter-mixture.[18]

6. Inspection of drugs and cosmetics

The central and state governments are empowered to nominate inspectors for the purposes of inspection of drugs and cosmetics, having the necessary qualifications, in various areas with such powers and obligations as may be prescribed. However, it is not possible to nominate any person who has any financial interest in importing, producing or selling drugs or cosmetics as an inspector.

1. 1. Powers, Role of an Inspector and the procedure of Inspection

Here, every Inspector is deemed to be a public servant within the meaning of section 21 IPC and is officially subordinate to the authority, specified by the appointing government. According to section 22 of the act, which defines the powers of inspectors, they have multifarious powers including power to inspect, conduct search, examine samples, call records etc. They can, therefore, inspect any premises wherein any drug or cosmetic is being manufactured, sold, stocked or exhibited or offered for sale or distribution or where any other related action is being taken with respect to them. Further, an inspector can, on reasonable belief, search any person who may have secreted any drug or cosmetic or enter and search any place on a similar belief. Moreover, the provisions of Cr.P.C. apply to any such search or seizure as they apply to any search or seizure made under the authority of a warrant issued under section 94 of the Code.

The Procedure of Inspection has been defined under section 23 of the act, it explains the different course of inspection for different scenarios. Such as, the procedure on taking sample of a drug or cosmetic for the purpose of test or analysis, where the sample is taken from manufacturing premises and where an Inspector conducts search on person, place or a vehicle regarding any secreted drugs or cosmetics. After all the aforementioned prerequisites are covered under the procedure of Inspection, Section 25 requires for a government analyst to whom a sample of any drug or cosmetic has to be submitted. And, the same shall be received by any person or any recognized consumer association.[19]

7. Prohibition on manufacture of drugs in public interest and penalties for contravention

The Central government has powers to prohibit the manufacture, sale or distribution of any drug or cosmetic, the use of which is likely to involve any risk to human beings or animals or it does not have the therapeutic value as claimed or contains ingredients in a quantity without therapeutic justification.[20] Furthermore, satisfaction of the central government as to whether a drug should be prohibited or not on the ground that the same is injurious to public health is essentially a matter dealing with a policy decision, and thus, compliance with the principles of natural justice must be held to be excluded in such a situation.

Under section 27 of the Act, the sale, stocking, exhibition or distribution of any adulterated, spurious and sub-standard drugs or any such drug, which if used by any person is likely to cause his death or harm his body amounting to grievous hurt, is punishable with imprisonment for a term of five years to a term of life and with fine of not less than ten thousand rupees. Penalties for contraventions regarding manufacture, sale etc. of cosmetics have been separately prescribed under section 27A. According to that, any manufacture, sale, stocking, or distribution of any spurious cosmetic is punishable with imprisonment for a term which may extend to three years and with fine. The burden of proof for contraventions under the Act lies on the prosecution.[21]

8. Confiscation and cognizance of offences

Section 31 of the Act permits confiscation of stock of drugs or cosmetics in respect of which any contravention has taken place under the provisions of the Act. Also, where the court is satisfied on the application of an inspector or otherwise and after it has been established through any enquiry that the drug or cosmetic is not of a standard quality or is a misbranded, adulterated or spurious drug or cosmetic, such a drug or cosmetic is liable to confiscation.[22]

The prosecution can be instituted only by an inspector or by the person aggrieved or by a recognized consumer association whether such person is a member of that association or not. No court inferior to that of a metropolitan magistrate or of a judicial magistrate of first class can try the offence made punishable herein. Prosecution of any act punishable under any other law would not be affected by these provisions.

Note: The above provisions do not apply to ayurvedic and siddha. These are governed by a separate set of provisions under the Act.

9. Regulations about Ayurvedic, Siddha and Unani Drugs

A separate regulatory mechanism has been provided under the Act for controlling the manufacture and sale of ayurvedic, siddha and unani drugs. It provides for establishment of a separate board and committees for this purpose.

• the Regulating bodies that cover Ayurvedic, Siddha and Unani Drugs

1. Ayurvedic, Siddha and Unani Drugs Technical Advisory Board

Section 33C of the Act authorizes the central government to constitute a board to be called the Ayurvedic, Siddha and Unani Drugs Technical Advisory Board to advise the central and the state governments on technical matters relating to regulation oi ayurvedic, siddha and unani drugs, and to carry out any other functions required for this purpose.

2. The Ayurvedic, Siddha and Unani Drugs Consultative Committee

Section 33D of the Act empowers the central government to constitute an advisory committee, to be called the Ayurvedic, Siddha and Unani Drugs Consultative Committee, to advise the central government, the state governments and the Ayurvedic, Siddha and Unani Drugs Technical Advisory Board on any matter related to ayurvedic, siddha or unani drugs

• The Control mechanism for Ayurvedic, Siddha and Unani Drugs

The central or a state government may appoint analysts and inspectors, having the prescribed qualifications, to act as government analyst for various areas under the Act, as per need. Any person who has any financial interest in the manufacture or sale of any drug is not to be appointed as a government analyst[23].

Looking back, there is no doubt that whole journey of this particular act has been exciting for the pharmaceutical and life sciences industry in particular. Moreover, It is important to realize that these legal, regulatory and policy measures when implemented will bring unique legal and regulatory challenges. Therefore, it is important to be aware of these developments and be prepared for the challenges in advance. Lastly, with the growing technology, the implementation and the execution of law as per schedules given in the Drug & Cosmetics Act shall be strictly adhered. These days, one shall also understand about the few significant sub-categories like, various storage conditions of the drugs, their shelf life (e.g. expiry dates) and other various factors affecting the potency of drug during storage and in last section about labelling and packaging of medicines.