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Pharmaceutical Regulations: Central Government forms a Five-Member Committee to review marketing practices of pharmaceutical companies

Co-authored by Rahul Dwarkadas (Partner) | Rohini Jaiswal (Senior Associate) | Sanaya Contractor (Senior Associate)

The Central Government of India has recently formed a High-Level Committee consisting of five members led by Mr. V K Paul, Member (Health) of NITI Aayog, to consider and examine the need for a legally enforceable mechanism to regulate the marketing practices of pharmaceutical companies. The Committee was constituted on the recommendation of Mr. Mansukh Mandaviya, the Union Minister of Health and Family Welfare, Chemicals and Fertilizers, to address the issue of inducements being given by the pharmaceutical companies for promoting their drugs and products.

The requirement of setting up of the Committee was triggered by the institution of proceedings in the Supreme Court by the Federation of Medical and Sales Representatives Associations of India (FMRAI) calling for greater regulation of the promotional practices of the pharmaceutical industry in relation to the medical fraternity in the wake of recent incidents of pharmaceutical companies (allegedly) bribing doctors to prescribe excessive and/or irrational drugs for the purpose of boosting their sales and for pushing high-cost and/or over-priced brands. By way of an instance, FMRAI has alleged that a particular pharmaceutical manufacturer, spent Rs 1,000 crore across divisions over several years, by offering freebies to doctors and medical officials to promote its drug.

Presently, marketing practices and promotion by pharmaceutical companies is supervised under the Uniform Code of Pharmaceutical Marketing Practices, 2015 (UCPMP), the Indian Medical Council Regulations, 2002, and also by the Central Board of Direct Tax.

It is pertinent to note that the UCPMP is a voluntary Code which aims to prevent unethical practices and misconduct by pharmaceutical companies and their medical representatives. The UCPMP governs the conduct of pharmaceutical companies and in terms of their marketing activities, covers various aspects including samples and gifts and sets out guidelines on provisions related to hospitality and cash or monetary grants to physicians and their families. Although the UCPMP has been adopted by most major pharmaceutical companies, the same is not enforceable as a law / statute and therefore pharmaceutical companies cannot be penalized for any violation of the same. The Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 formed under Indian Medical Council Act, 1956 (102 of 1956), regulates and sets out standards of conduct to be adhered to by doctors and professional associations of doctors in their relationship with the pharmaceutical and allied health sector industry. Under this, any complaint of professional misconduct of a medical practitioner or professional is to be addressed by the respective State Medical Councils. 

Further, as per the rules under Central Board of Direct Tax, pharmaceutical companies are required to submit details on the amount they spend on branding of their products. The Supreme Court also in a recent judgment upheld that pharmaceutical companies’ gifting freebies to doctors, etc. is clearly “prohibited by law”, and is not allowed to be claimed as a deduction under Section 37(1) of the Income Tax Act, 1961.

In the aforesaid background and circumstances, as there is presently no statute or law to govern all the aspects of marketing and promotional practices adopted by pharmaceutical companies in India, the Committee is tasked with examining the issue with a holistic approach to assess and understand the need for legally enforceable mechanisms for regulating such practices. The intent of the Committee is to align the various provisions into a consolidated statute to be complied with by all pharmaceutical companies after considering the needs of the various stakeholders in the industry. 

As per some media reports pharmaceutical companies could face legal action if they are found to be involved in unethical marketing practices. The committee is expected to submit its report to Union Minister of Health and Family Welfare, Chemicals and Fertilizers, Mansukh Mandaviya within 90 days’ time. A more detailed update will be provided as and if the said report is submitted and made available to the public.

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