Regulatory woes of pharma SMEs

Action/ Reaction of drugs inspector on receipt of NSQ report

The drugs inspector (DI) relying on the bottom line of the test report, declaring the drug as Not of Standard Quality (NSQ), without examining the same, without studying relevant reference book(s), which are normally not available in his office, in majority of cases proceeds as below:

1. The action/reaction of DI varies from person to person and from state to state.
2. Sending of sample portion and original report to the manufacturer of alleged NSQ drug also depends on person to person and from state to state.
3. Copy of the report may also be forwarded to the Licensing Authority FDA of the manufacturing state.
4. Depending on his/her whims, DI after complying with provisions of the law may write to the manufacturer of disputed drug to forward copies of records of manufacturing, testing, sale, particulars of expert staff, constitution of the firm/ company etc.
5. Again depending upon the level of EGO/ DEAL, the DI may either drop further proceedings or refer the matter to the FDA of manufacturing state for further needful action or may launch criminal prosecution for contravention of sec. 18(a)(i) r/w sec. 27(d) of the ‘Act’, mostly in the sampling state which may be at a long distance from the manufacturing place. It is to be remembered that administrative action u/r 85 of Rules only by the manufacturing state legally possible.

It is matter of record that Drugs Consultative Committee (DCC) in its 26th meeting, held on September 14-15, 1989, vide item no.22 had resolved as under:

Jagmohan Rai Agarwal

“The members agreed that guidelines approved in 22nd DCC (1993 guidelines) meeting should be adhered to as far as possible. However, it should be left at the discretion of the concerned drugs controller to file a prosecution in his state or to refer the case to the drugs controller of manufacturing state as circumstances warranted. That every drugs controller should invariably supply the information sought by other drugs controller in case a prosecution is to be launched irrespective whether the drugs controller of manufacturing state agrees to the decision of the drugs controller where the sample has been drawn to launch prosecution.”

It is the above decision of DCC which resulted in launching of prosecutions in other than manufacturing states. In the name of investigation in majority cases copies of certain documents like manufacturing, testing, sale and constitution of firm/company etc are asked for. If this is being considered sufficient, investigation for fastening person(s) under criminal law for vicarious liability then there is no effective purpose of appointing qualified pharmacists in regulatory.

The guidelines formulated by the Central Government after Drugs and Cosmetics (Amendment) Act 2008 and forwarded as Directions u/s 33P to all state governments, just to satisfy the agitating SMEs, is nothing but lollypop.

Section 33P: The Central Government may give such directions to any state government as may appear to the Central Government to be necessary for carrying into execution in the state any of the provisions of this Act or any Rule or order made there under.

A drug manufactured in Madhya Pradesh and its sample reported NSQ in Karnataka proposed ‘Screening Committee’ of which state shall examine the matter and report to drugs controller of which state?

Important provisions inserted vide Amendment 2009:

1. Constitution of ‘Screening Committee’ of three senior officials not below the level of assistant drugs controller on whose written opinion the Controlling Authority shall decide course of criminal prosecution.
2. Criminal prosecution shall be launched by the DI after obtaining written permission of the Controlling Authority.

Drugs Consultative Committee (DCC)

1. In the year 1993 guidelines in respect of NSQ drugs were circulated among all State drug controllers.
2. NSQ drugs were divided into ‘Major’ and ‘Minor’ defects and guidelines were issued for taking appropriate actions.
3. Investigation is the important part of those guidelines before proposing any action whether administrative or legal.
4. Prosecution was stated to be last resort where all other remedial measures had failed.

Guidelines for taking action on samples of drugs declared spurious or not of standard quality in the light of enhanced penalties under the drugs and cosmetics (amendment) act, 2008 effective from 10.8.2009.

Legal/ administrative actions as required under the said Act and Rules for the violation of the provisions of the Act are taken by the State Licensing Authorities. The actions are normally initiated on the basis of test reports of government analysts declaring the drug samples as not of standard quality. The major categorisation of not of standard quality reports could be as under:-

Salient features

Category A (Spurious and Adulterated Drugs

Category B (Grossly sub-standard drugs)

Category C (Minor defects)

In the case of drugs manufactured by a licensed manufacturer under a valid manufacturing licence and has been found grossly sub-standard, the matter may be investigated at the manufacturer’s end, and where criminal intent or gross negligence has been established and if the merits of the case so demand, and where it is felt that administrative measures would not be sufficient to meet the ends of justice, the re-course to prosecution should be resorted to.

In the case of drugs manufactured by a licensed manufacturer under a valid manufacturing licence and found grossly sub-standard and where criminal intent or gross negligence is not established, weapon of prosecution should be used judiciously, where it is felt that administrative measures like suspension or cancellation of licenses or compounding of offences would not meet the ends of justice.

In the case of not of standard quality reports because of minor defects arising out of variations from the prescribed standards or contraventions of other provisions of chapter IV of the Act, administrative measures including suspension/ cancellation or compounding of offences may be resorted to. Prosecution may only be launched where it is justifiably felt that above measures would not meet the ends of justice.

The State Drug Control Departments shall constitute screening committees consisting of at least three senior officers not below the level of assistant drugs controllers or equivalent to examine the investigation reports of the cases where prosecutions are proposed to be launched. The committee may submit written opinion on the investigation reports regarding their feasibility of taking legal action.

The criminal intent or gross negligence should be taken into consideration while recommending actions like prosecution etc. Care should be taken that charges framed are not based on inappropriate provisions which may be difficult to prove in the court of law in the absence of proper justification or evidence. Cases of failing in assay, brand name disputes and non-renewal of manufacturing licence in time should be examined on their merits before recommending prosecution in such cases.

Prosecutions by the inspectors shall be launched on the basis of written permissions of the controlling authority and this authority in turn shall consider the opinion of the screening committee while taking final decision in the matter.

Prosecutions under section 18(a)(i) r/w sec. 27(d), in case drug is declared NSQ, barring some exceptions, are being launched against firms/ companies, mostly SMEs’, across the country, no body in the profession is objecting and raising the voice, judiciary is also taking cognizance of alleged offence and criminal matters attracting vicarious liability are dragging in various courts not only for years but for decades causing undue hardship to so called accused persons in addition to mental agony, torture, humiliation and financial burden.

If reporting of a drug as NSQ is the basis for launching the prosecution then nearly 10,000 samples reported to NSQ annually must result in prosecution in each and every case. But it does not happen so and the system of ‘pick and choose’ is being adopted depending on the ‘deal’, size and category of the company and its influence on the FDA, superior officials and political leadership.

The author is of the firm view that simply if a drug is declared as Not of Standard Quality (NSQ) and even if the test report either in form 13 or in form 2 is accepted as it is, there is no contravention of sec. 18(a) (i) and nor legislator has prescribed any punishment u/s 27(d) under such circumstances UNLESS:

It is established, on real investigation

1. That while the drug was manufactured and released for sale/ distribution, it was not properly manufactured/ tested for some or the other reason, either partially or wholly. OR
2. That the drug is NSQ and falls within the ambit of sec. 27(a) of the ‘Act’. OR
3. That the drug was being sold/ distributed even after receipt of adverse test report.

There is no provision in the ‘Act’ for punishment under sub-sections (a), (b), (c) and (d) of sec. 27 if the drug is allegedly declared as NSQ and if findings in the investigation, in above respect, is negative.

Hon’ble Supreme Court while dealing with a case on limitation (State of Rajasthan Vs Sanjay Kumar and Others Drug Cases 1998, SC, 7), under Para 9 have observed as under:

“On the date of collection of samples from respondent no. 16, on February 29, 1988, it could not have been said that any offence was committed as selling of drugs per se is no offence and the quality of drugs was not known to the Drugs Inspector, the complainant on that date. It is only, when the report of the Government Analyst was received, that it came to light that the provisions of the Act are violated and offence is committed.”

Thus it is only on receipt of the adverse test report by the DI, subject to investigation and scrutiny thereof technically, it could be attributed that the offence, if any, is committed. The responsibility could be fastened on person(s) after detailed investigation.

While disposing of bundle of criminal applications on the issue of tenability of Regular Criminal cases, Hon’ble Bombay High Court, Bench at Nagpur made the following observations:

“Looking to the scenario discussed by me above, I conclude that the Food and Drugs Department and its officers from the cadre of Food Inspectors to Joint Commissioner do not have any legal knowledge, legal skill and seriousness with which the provisions of these Acts concerning human health is required. They are casual, callous and hardly concerned. Relevant and concerned provisions/ amended provisions of Code of Criminal Procedure are not even known to them to make use thereof.

They are making cases only to show that cases are being prepared and instituted in courts and finally tell the people that courts have discharged or acquitted the accused persons and thus save their skin. In my opinion, the Government is simply wasting money on Food and Drugs Department and serious view for revamping this department will have to be taken by the Government with strict ‘accountability’ to be fixed for each and every officer”. (Bombay High Court, Nagpur Bench, Cr.Appl. Nos. 3439 of 2006 with Cr. Appl. Nos. 3440 of 2006, 3442 of 2006, 3444 of 2006, 3441 of 2006, 3445 of 2006, 1290 of 2008 and 3443 of 2006)

In the same matter Hon’ble Court, was pleased to direct as below, under Para 23, to the Secretary, Food and Drug Department:

“I have already pointed out in details in para 7, 8, 9, 19, 20 & 21 the acts of omissions and commissions on the part of the officers of the department and I clearly find that the officers of the Food and Drug Department in these cases who are public servants have disobeyed the law with intention to cause injury by their acts of omissions and commissions and thus they have committed offence punishable under section 166 of Indian Penal Code.

Since the offence is noncognizable, this court directs the Secretary, Food and Drug Department, Government of Maharashtra, to identify the concerned officers responsible for the acts of omissions and commissions in all these cases and cause filing of private complaint for the offence punishable under section 166 of Indian Penal Code against them in the Court of law, and report compliance about filing thereof to this Court on or before 31.7.2010”.(www.indiankanoon.com)

A Firm/ Company whose drug is alleged to have violated prohibitory provisions under section 18 (a) (i) is invariably sought to be punished under section 27 (d) of the ‘Act’.

Each and every licencee authorised to manufacture drugs for sale or distribution complies with mandatory provisions of Drugs and Cosmetics Rules 1945 (Rules) in as much as that every raw material is utilised in formulation only on its compliance with prescribed standards and the finished goods is released for sale/ distribution only when the batch is reported as of standard quality conforming with prescribed standards.

Every licencee maintains proper record of raw material and finished goods as prescribed under ‘Rules’. The testing of raw material and finished goods is conducted either in in-house laboratory of the licencee or in an institution duly approved by the SLAs under the provisions of the ‘Rules’.

In-house testing unit of the licencee and the institution approved by SLAs are subjected to FDA inspections periodically for maintenance of qualified staff, equipment, instruments, and methods of analysis adopted, chemicals/reagents, floor area etc.

Subsequently, on reporting of a drug/batch NSQ by the GA the process begins. The so called ‘Investigation’ carried out by Drugs Inspector (DI) concerned before launching of prosecution in the Court of Law, is nothing but collection of record related to manufacture, testing, sale, constitution of the firm, names and residential addresses of technical staff responsible for the manufacture and testing of disputed drug, licence copies with renewal, if any.

For collection of these records, some State Authorities have adopted a practice to visit the licencee, may be located in other states, with or without the local FDA Authorities. In the meanwhile, the SLA in whose jurisdiction the licencee operates normally serves Show Cause Notice (SCN), to such licencee, under rule 85 of ‘Rules’.

Thereafter depending of whims of concerned DI and his superior authorities, the private complaint (Prosecution) is launched in the Court of Law alleging contravention of sec. 18(a) (i) and seeking punishment u/s 27(d) of the ‘Act’. There is not a single known example in the country where the court did not take cognizance of the matter applying judicial mind as has been observed by high courts in number of judgments and dismissed the complaint ab-initio.

It is reiterated that solely on the basis of author’s interpretation of secs. 18(a) (i) and 27(d) that if a drug/ batch is reported as NSQ and even if the said report is accepted as it is, and if the relevant batch of the drug is not sold by the licencee thereafter, there is no contravention of sec. 18(a)(i) and sec. 27(d) does not prescribe any punishment in such circumstances.

This legal thought is being narrated in sequence as under:

1. The allegation that the accused have manufactured the drug/batch as NSQ and sold/distributed the same as such is unfounded, without any evidence to that effect. On the contrary the record related to manufacturing/testing may or may not be filed with the complaint goes to establish beyond any doubt that the drug/batch when was manufactured and released for sale/distribution, was of Standard Quality. There is practically no specific allegation that what material in those records would be treated as supportive to the allegation made in the complaint.
2. It is the test report issued by the GA opining that the drug/batch is NSQ at a subsequent date is the basis of presumption that the drug/batch must have been NSQ when manufactured and sold/distributed.
3. The Hon’ble Supreme Court of India in the matter between State of Rajasthan Vs Sanjay Kumar and Ors, (DC 1998, SC, 7) in Para 9 observed as
   “On the date of collection of samples from respondent no. 16, on Feb. 29, 1988, it could not have been said that any offence was committed as selling of drugs per se is no offence and the quality of drugs was not known to the DI, the complainant on that date. It is only when the report of the Government Analyst was received, it came to the light that the provisions of the Act are violated and offence is committed.”
4. Allegation of contravention of s.18 (a) (i) seeking punishment u/s 27(d) of the ‘Act’ could be possible only if:-

1. There is documentary evidence that at the time of release of drug/batch for sale/ distribution and based on manufacturing and testing record, the drug was in fact NSQ at that itself.
   There is not a single known example where allegation of violation of sec. 18(a) (i) is levied with aforesaid or any similar documentary evidence with the complaint or otherwise.
   The DI and all other superior officials in the Regulatory in the Centre and states, baring exceptions, are claiming to be qualified and experienced in the profession and therefore, in appropriate cases investigation on above technical aspect is definitely expected. Such officials are not supposed to act as Bada Babu and Babu.
2. The manufacturer-licencee continues sale/distribution of disputed drug even after receipt of adverse test report. Almost in each and every case no unsold stock of the disputed drug is available with the manufacturer-licencee, at the time when such adverse test report is received by it, therefore, question of sale/ distribution of disputed drug after receipt of adverse test report does not arise and any allegation to that effect is unlawful and unfounded.
   On the contrary in 100 per cent cases, the manufacturer-licencee, on being directed, as provided u/r 74(j), 78(i) by the State Licensing Authority, initiates effective steps to recall stocks of disputed drug/batch, as for as practical, from the market/institutions to whom the said drug was sold. The manufacturer-licencee is also required to intimate SLA of the quantity, if any, received back from the market and ensure its due destruction in presence of FDA official.

• e. The object of sec. 18(a) (i) also aims at dealers/institutions etc. who if ignore the intimation about adverse test report received either from the DI or manufacturer-licencee and continue the sale/distribution etc. of the disputed drug/batch. In such circumstances and if due investigation is carried out only such dealers/institutions are liable to be prosecuted.
• f. There is no provision in sec. 27 to punish any body even if a drug/batch is found NSQ, except as described above, and except as provided u/s 27 (a), if attracted, the relevant portion is abstracted here below:

“Solely on account of such drug being adulterated or spurious or not of standard quality, as the case may be,” which means any drug if is likely to cause death or is likely to cause such harm on the body as would amount to grievous hurt within the meaning of sec. 320 of Indian Penal Code solely on account of such drug being not of standard quality, is punishable. Sub-sections (b) and (c) of sec. 27 are not relevant to this article.

Sub-section (d) of sec. 27 being residual section is invariably applied seeking punishment for violation of sec. 18(a) (i) particularly for drug reported NSQ. This section provides punishment for any drug, other than a drug refered to clause (a) or clause (b) or clause (c) in contravention of any other provision of this chapter or any rule made there under.

Now if we relook at sec. 18(a) (i) which is prohibitory provision and as demonstrated above, there is hardly any evidence in support of allegation that the drug/batch when manufactured and sold was NSQ at that stage only; seeking of punishment u/s 27(d) is absolutely irrelevant. In other words sec. 27(d) does not prescribe any punishment even if drug/batch is reported NSQ unless and until prohibitory provision of sec. 18(a) (i) is contravened.

There is yet another landmark judgement reported in 2010(1) Drugs Cases 277, Allahabad, DB, (Brahmaji Vs State of U.P. & Ors). High Court issued the following directions:

1. that the Central Government and the State Government will both give a clear indication as to how they plan to take effective action for controlling menace of spurious drugs;
2. the State Government to ensure within two months all the requisite manpower and required infrastructure, i.e. creating adequate number of laboratories etc;
3. both the Central Government and State Government to inform this court as to what strategy they propose to adopt so that focused raids are conducted and samples taken so that effective measures can be made for identifying the manufacturers or dealers in spurious drugs;
4. the State Government to inform the court about the time frame in which the computerisation system of which the plan has been submitted by the NIC will be operational.

Note: Uttar Pradesh has 71 districts, 53 DI, 400 manufacturing units, 180 blood banks, 50,000 retail and 40,000 wholesale outlets.

The provisions of Drugs and Cosmetics Act 1940 and Rules 1945 made there under are well designed, except the latest amendment of 2009, but these are being misinterpreted, misguided, misused, wrongly targeted, abuse of powers vested in so-called experts in department of Drug Control whether Central or State. It is very convenient to demonstrate with evidence that these officials are involved in activities against the provisions of the ‘Act’ and ‘Rules’. They are least interested to safe guard public health even on written complaints with evidence, they prefer to negotiate with the erring person(s) and keep shut.

Such officials in majority cases are badly infected with CColi (Corrupto Coli) and could be for the time being be treated with veterinary dose of Mcillin Tabs. 10,000 mg S.S.

Therefore it is rightly said ‘POWER CORRUPTS AND ABSOLUTE POWER CORRUPTS ABSOLUTELY.

The author can be contacted at sharda_jollo@yahoo.co.in