Phamaceutical companies will be allowed to escape legal proceedings for violations of the Drugs and Cosmetics Act, and settle matters out of court under draft rules that have been framed by the Central government.
Under these rules, to be notified shortly, any company or person can file an application for the compounding of offence – a mechanism that allows companies to avoid legal proceedings and settle the matter by paying a fine.
As a part of compounding offence rules, the Central government may appoint a compounding authority to take measures regarding matters arising from these rules.
The compounding authority will have the power grant immunity to a person or company from prosecution.
The draft rules say the immunity can be withdrawn, if the person or company fails to pay the penalty, or is found to have concealed any particular material or given false evidence.
This follows the notification of the Jan Vishwas Act 2023 which converts several fines to penalties, meaning legal prosecution is not necessary. It also removes imprisonment as a punishment for many offences. The stated objective of the Act is to de-criminalize certain offences to promote ease of doing business.
Jan Vishwas Act 2023 proposes amendments in the Drugs and Cosmetic Act, 1940, to do away with prison terms of up to two years and ₹10,000 fines, and replaced them with a minimum fine of ₹5 lakh.
Punishment for offenders
“The government can now appoint an officer as Compounding Authority to deal with the matters related to offences done by the person or company. However, only first-time offenders will be considered for penalty as per the rules; (for) habitual offenders there will be fine or imprisonment or both,” said an official aware of the matter, requesting anonymity
Sudarshan Jain, secretary-feneral of the Indian Pharmaceutical Alliance (IPA) said, “The government has very clear vision in terms of taking strict action against offences like quality and safety of medicines and licences have also been cancelled.
However, it is there is minor offence like mistake on label which is unintentional, such things should be fined and done away with and if they are not impacting to the life of the people and are not related to quality. What the government is trying to do is simplify the processes and take stricter action on serious offences concerning major products.”
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