New pharma sector laws should focus on reforms

Currently, the Drugs and Cosmetics Act (DCA) of 1940, read with the Drugs and Cosmetics Rules of 1945, are the primary laws governing the import, manufacture, distribution and sale of drugs and cosmetics in India. In addition, there are other industry-specific rules and regulations around medical devices, prices of required notified drugs, narcotic and psychotropic drugs and substances, development of new drugs and conducting clinical trials. However, with the advancement of research and development, innovation and technology as well as challenges such as the covid pandemic, the pre-independence era DCA and the regulatory framework governing the sector in general need to keep pace, so that a conducive and can be provided. Business friendly environment for further growth and foreign investment in this sector.

New Drugs, Cosmetics and Medical Devices Act: The government appears to have considered representations made in the past for a fresh look at the decades-old law governing the pharmaceutical sector, and to set up a committee to conduct pre-legislative consultations on 27 August 2021. Order issued. Submit the draft documents for the DCA and the Drugs and Cosmetics Bill already drawn up, and then the de-novo Drugs, Cosmetics and Medical Devices Bill by 30 November 2021. This is the first step towards creating a new Drugs, Cosmetics and Medical Devices Act.

The committee is chaired by Dr VG Somani (Drugs Controller General of India) and includes Rajeev Wadhawan (Director, Drugs), Dr SE Reddy (Joint Drug Controller of India), AK Pradhan (also Joint Drug Controller), NL Meena . An Indian Administrative Service officer) and Drug Controller of Haryana, Gujarat and Maharashtra. It can also add panel members.

This development is a good move, given the country’s importance in the global pharmaceutical industry, a task that is very important for India as well as the rest of the world, and the new committee has finished its work in a relatively short period of time. prescribed time limit. India’s pharmaceutical industry has high expectations from the process, and while different stakeholders may have different preferences, here are some key aspects the committee may consider in the country’s proposed new legislation.

Digital Health: New-age technologies and Internet-based business models such as e-pharmacy are the major drivers of growth, but specific regulations for such business models are necessary to provide a clear and predictable regulatory framework that will aid further investment in this segment.

medical devices: While the 2017 Medical Devices Rules govern medical devices, there is still a reliance on DCA and the Central Drugs Standard Control Organization (CDSCO) regulating both drugs and medical devices. Efforts have been made in the past to create a separate law governing medical devices and the newly set-up committee may consider adopting a similar approach in the proposed legislation.

Licensing Issues: One of the conditions under various licenses issued under DCA is the need for a new license if there is a change in the constitution of the firm issued earlier. However, what changes the constitution has not been explained, often leading to conflicting interpretations by regulators in different states. Such ambiguity affects the modalities and timelines of mergers and acquisitions in this area, and so much clarity on this aspect can be provided in the proposed Bill.

Sandbox Arrangement: Regulators around the world are looking at new ways in which the startup ecosystem can be stimulated, and regulators in the sector may also adopt the approach of providing a ‘sandbox’ for innovation that surrounds it with an appropriate regulatory regime. supported by.

Foreign Direct Investment: FDI inflows continue to be of utmost importance for the growth of this sector and the economy of India at large. Our regulatory regime for FDI in this sector limits foreign investment in brownfield pharmaceutical enterprises to 74% equity under the automatic route and also includes sector-specific conditions such as no ‘non-compete’ restrictions, which can be knocked down. -On effect likely. on FDI inflows. While FDI-standard reforms do not come completely under the purview of the proposed Bill, this is another area on which the committee may consider further relaxation in this area to boost investment.

The above mentioned aspects are some of the points which the Committee may consider while proposing suitable reforms in consultation with various stakeholders. However, these are still early days and it remains to be seen what areas are finally considered in the proposed bill. This is at least a welcome start to what could be a complete reset of the legislative framework governing the sector in India.

Paridhi Adani and Ravi Shah are partners in the Ahmedabad office of Cyril Amarchand Mangaldas.