Impact of Jan Vishwas Act on Food, Drug, and Pharmacy Industry

Indian legislation recently witnessed a momentous event when the Jan Vishwas (Amendment of Provisions) Act, 2023, (hereinafter referred to as the “Act”) was passed by the Indian Parliament in August 2023.

The government with the means of the Act, intended to achieve overall confidence amongst the masses towards living and doing business in India. The Act aims to encourage trust-based governance by way of decriminalizing and rationalizing the penalties through the amendment of 183 provisions across 42 laws, which includes the Drugs and Cosmetics Act, of 1940, the Food Safety and Standards Act, of 2006, and the Pharmacy Act, of 1948.

In this write-up, we intend to throw light on the amendments introduced by the Act specifically with respect to laws governing, the food, cosmetics, and pharmaceutical industry. It is an established fact that the food, cosmetics, and pharmaceutical industries, affect each and every Indian citizen given their incessant demand for subsistence which keeps rising with the rise in population making these industries lucrative for businesspeople and investors alike.

Brief overview of amendments in Food, Drug, and Pharmacy Law

1. The Food Safety and Standards Act, 2006

   The Food Safety and Standards Act, 2006 (“FSSA”) in India holds great significance amongst food industry participants and potential foreign investors. It was formulated with the aim to ensure the safety and quality of food products, and consumer interests, and to help grow the Indian food industry. By way of this enactment, the Indian government has not only safeguarded public health, but it has also, catalyzed the expansion of the food industry by way of establishing uniform regulations, harmonizing with international standards, and streamlining processes. Thereby, provisions and operation of the FSSA coupled with factors such as the Indian food industry's diversity, offers rewarding opportunities for investment, innovation, and sustainable business ventures.

Notably, under the Act, Section 59, 61, and 63 of the FSSA has been altered to rationalize the penal provisions as per the prevalent global industry standards while keeping in mind the present requirement of the industry and rising inflation, as discussed in detail herein.

• Section 59 of the FSSA deals with the punishment for the sale, storage, distribution, manufacturing for sale, or import of any food article that is unsafe for human consumption. Under subclause (i) of Section 59 it is specified that if there is a failure to abide by this standard by any person, nonetheless if the same does not result in injury to any person, then such person contravening this section will be punished with imprisonment for a term extending to six (6) months along with fine of INR 1,00,000 (Indian National Rupees one lakh).

As per the amendment, the maximum term of imprisonment has now been relaxed to three (3) months, whereas the fine has been now increased to INR 3,00,000 (Indian National Rupees three lakh).

• The terms under Section 61 which specified the punishment in case a person delivers false or misleading information or document, on being asked to produce such material under the FSSA shall be liable to imprisonment for a term extending to three (3) months along with fine which may extend to INR 2,00,000 (Indian National Rupees two lakh). However, post the amendment the punishment has now been amended to a maximum penalty of INR 10,00,000 (Indian National Rupees ten lakh).
• Further Section 63 of the FSSA specified the penalty for any person (except for exempted persons) who is involved in any segment of the food industry requiring a license to operate, is found to be operating without any license shall be liable to imprisonment for a term which may extend to six (6) months along with fine which may extend to INR 5 (Indian National Rupees five lakh).

Whereas post amendment such person is now made to be penalized in a manner where they shall only be liable to a maximum penalty of INR 10,00,000 (Indian National Rupees ten lakh).

1. The Drugs and Cosmetics Act, 1940

   The pharmaceutical and cosmetics industry in India is majorly governed by the Drugs and Cosmetics Act, of 1940 (“DCA”) which regulates the manufacturing, sale, and distribution of drugs and cosmetics in India. This legislation aims to guard public health by ensuring that the safety, quality, and efficacy of pharmaceutical products is maintained through regulations and penalty.  It is pertinent to note that India is a country that is hailed as the "pharmacy of the world" due to its pharmaceutical manufacturing capabilities, therefore, legislation such as DCA becomes germane to regulate and support business and investors within the sector. This sector not only attracts global investors but also acts as a major contributor to the nation’s economy, making it an attractive destination for both domestic and foreign investments.

Further, given the recent market trends, changing consumer preferences, and a growing awareness of personal grooming, the cosmetic sector now offers even greater opportunities for businesses and investors alike.

Keeping the aforementioned in mind the Act has introduced a few amendments to Section 29, Section 30 (2), and Section 32B (1) of DCA, with the aim to relax penalties for attracting investors and keeping in mind the rise in inflation, to streamline provisions as per prevalent industry standards, while upholding the basic standards of consumer safety, as elaborated below.

• The legislative body has now amended Section 29 which specified the penalty in case a person was found to be using a Government Analyst's report (or an extract) for the advertising purpose of any drug or cosmetic to be liable to a maximum penalty of INR 1,00,000 (Indian National Rupees one lakh) which is an increased amount as compared to the previous penalty which was limited to a maximum amount of INR 5,000 (Indian National Rupees five thousand).
• In Section 30, the amendment has now relaxed the punishment keeping the same limited to a penalty instead of serving imprisonment along with payment of penalty (as was the case earlier). Hence, as per the amendment, in case of repetition of an offence under Section 29 of DCA, the same shall be punishable under Section 30, with a minimum fine of INR 5,00,000 (Indian National Rupees five lakh).
• Further Section 32-B which deals with the compounding of certain offenses, whether committed by a company or its officers states that any offence which is not punishable with imprisonment, or a combination of imprisonment and fines can be settled either before or after prosecution by the Central Government, State Government, or authorized officers upon payment of a specified amount, which should not exceed the maximum fine for such offense. Also, it has been specified under this section that any subsequent offenses are not eligible for compounding. The amendment has now included Section 27 (d), and Section 27A (ii) under the list of offenses that are compoundable offenses under this Section, thereby providing relaxation to industry participants.

• The Pharmacy Act, 1948

  As elaborated in part II hereinabove, it is given to understand how important the Indian pharmaceutical industry is on the global platform as well as with respect to India’s economy. The Act intends to make the Pharmacy Act's provisions reformed enough to uphold stringent quality control measures along with justifying the regulatory framework as an essential measure for ensuring the industry's growth, sustainability, and global competitiveness, making it a fundamental factor for businesses and investors seeking opportunities in India.

The Act introduces the following amendments to the Pharmacy Act 1948:

• The PA under Section 18 grants the authority to the Central Council (appointed under Chapter II of PA) with the Central Government's approval, to create regulations that align with the provisions of the PA to fulfill the objective of governance. These regulations can include specific provisions to support these objectives which have been enlisted within Section 18. Through the amendment, the list of provisions shall now include the subject manner of holding an inquiry and imposing a penalty for adjudication of penalties in case of obstruction of an inspector by any person, along with the form and manner of preferring an appeal under PA.
• The Section 26A which lays punishment in relation to obstruction caused to an inspector appointed under the provisions of PA while he carries out his duties has now been amended in a manner wherein the punitive measures which previously extended to punish offender with imprisonment for a maximum term of six (6) months, or with fine up to INR 1,000 (Indian National Rupees one thousand), or with both, has now been restricted to punitive measures as a punishment requiring payment of INR 1,00,000 (Indian National Rupees one lakh).
• Penalty for false registration claim as mentioned under Section 41, specified such act to be punishable with a fine of up to INR 500 (Indian National Rupees five hundred) on the first conviction and imprisonment, or a maximum fine up to INR 1,000 (Indian National Rupees one thousand) on subsequent convictions, with a defence available if an application for registration in the state was pending. However, the same has now been amended to reflect more stringent penalties. It is now stated that such false claims are now punishable with a fine of up to INR 1,00,000 (Indian National Rupees one lakh) on the first conviction and on the second conviction to be punishable with imprisonment for up to three (3) months or with a maximum fine of INR 2,00,000 (Indian National Rupees two lakh) or both. Provision of defence is retained in case it is claimed and proved that the application for a license is pending for registration in the register of another state.
• It is pertinent to mention that Section 42 regulates the distribution of prescribed medicine only through registered pharmacists. The previous penalties under Section 42 (2) included imprisonment for up to six (6) months, or a fine not exceeding INR 1,000 (Indian National Rupees one thousand), or both. The amendment under the Act now updates these penalties to imprisonment for up to three (3) months or a fine that can go up to INR 2,00,000 (Indian National Rupees two lakh), or both.
• Lastly Section 43, is now succeeded by insertion of Section 43A, which delves into the adjudication of penalties in case of violations of Section 26A (which regulates inspection by appointed inspector). In case of a violation, it now authorizes the President of the State Council, to act as the adjudicating officer, to conduct inquiries and impose penalties as particularly prescribed under Section 18. Appeal to the adjudicating officer's order can be made to the President of the Central Council within forty-five (45) days and the timeline for resolution shall be achieved within ninety (90) days. Further, it has been now specified that in case any penalty is unpaid as per the order, the same can be recovered by the authority as an arrear of land revenue.

Conclusion

As the only constant is change, hence, keeping in mind the global evolution and revolution in the pharma, cosmetics, and food industries, it becomes essential that legal frameworks also should adapt to address emerging challenges. The amended provisions, and inclusions in relation to food, drug, and pharmacy laws, will play a pivotal role in increased accountability, and streamlined regulatory processes, resulting in better public health outcomes and increased consumer protection.