The Jan Vishwas Bill’s enactment presents a complex interplay between economic growth, ease of doing business, and consumer protection. While the bill’s intent is to enhance ease of doing business, particularly in the pharmaceutical sector, concerns arise about potential implications for drug quality and patient safety
By Shivanand Pandit
- Change in the Jan Vishwas Bill will accelerate streamlining criminal clauses and confirm that businesses would function without anxiety
- Entrepreneurs can deliver the millions of jobs that country needs. They do not need govt subsidies, but the liberty and trust that begins with ending criminalisation
- Average enterprise in the manufacturing sector with more than 150 employees deals with 500-900 compliances a year that cost nearly ₹12-18 lakh per annum
- The modifications to the Drugs and Cosmetics Act, which oversees the excellence of Indian drugs, may have tilted too far in favour of manufacturers
ONE of the significant Bills approved as an important piece of legislation in the recently concluded Monsoon Session of Parliament 2023 was the Jan Vishwas Bill. This Bill aims to redefine the supervisory environment of the country by eliminating criminal penalties for minor offences. It plans to modify numerous provisions under 42 Central Acts overseen by 19 ministries or departments including finance, agriculture, commerce, environment, road transport and highways, food production and distribution, and electronics and information and technology.
What Does The Bill Propose?
The Bill proposed to decriminalise minor offences by levying monetary penalties under certain Acts like The Industries (Development and Regulation) Act, of 1951, The High Denomination Bank Notes (Demonetisation) Act, of 1978, The Food Safety and Standards Act, of 2006, The Trade Marks Act, 1999, The Agricultural Produce (Grading & Marking) Act, 1937, The Patents Act, 1970, The Cinematograph Act, 1952, The Railways Act, 1989, The Motor Vehicles Act, 1988, The Copyright Act, 1957, The Environment (Protection) Act, 1986, The Drugs and Cosmetics Act, 1940, The Information Technology Act, 2000, The Air (Prevention and Control of Pollution) Act, 1981 and The Indian Forest Act, 1927. The Bill proposes to change some of the punishments in certain provisions from imprisonment and/or fines to penalties. The penalties will be decided by officials appointed by the relevant Ministries/Departments. The Bill also allows for some offences to be compounded, which means that the offenders can avoid a court trial by paying a certain amount. The Bill ensures that the fines and penalties are updated every three years, with an increase of 10% of the minimum amount for various offences in the specified Acts.
It also targets to lessen the compliance burden and encourage a more comfortable way of living and doing business in India. Besides ‘decriminalisation’ the Bill is also targeted at reducing judicial burden. As per the National Judicial Data Grid, as of July 2023, out of a total of 4.4 crore pending cases, 3.3 crore cases are criminal proceedings.
The Bill was tabled in Parliament by the Union Ministry of Commerce and Industry in December 2022 and was later referred to a Joint Parliamentary Committee (JPC) for appraisal. The JPC submitted its report with seven general suggestions to Parliament during the Budget Session in March 2023, and most of the suggestions of the JPC were approved by the Union Cabinet, clearing the way for its passing. At last, the Bill was passed in Lok Sabha through a voice vote on July 27, 2023, and passed in Rajya Sabha on August 2, 2023.
Easing Compliance Burden
Since independence, Indian businesspersons have been victims of over-regulation. The perpendicular magnitude of the compliance environment is mind-numbing. The imprisonment clauses implanted in the rules that supervise the running of the business in India further worsen the crisis. While the 21st century presents distinguishing opportunities and challenges, the nation’s employer-compliance framework has mainly remained frozen in the 19th and 20th centuries.
Although the Jan Vishwas Bill was introduced to improve the ease of doing business in India, the drug law modifications have sparked controversy. The amendments fundamentally decriminalise the production of drugs that are not of standard quality, allowing manufacturers to get away with a fine with no imprisonment
Micro, small and medium-scale businesses are the mainstay of the Indian economy and contribute considerably to the Gross Domestic Product (GDP). For these organisations to make a shift to the recognised sector and create jobs and income, there must be effectual and efficient business rules and regulations in place that eradicate unnecessary red tape or formalities. Hence, to decrease the compliance burden and erase the anxiety of imprisonment for minor offences, to motivate businesses and to enhance ease of doing business and living, the Jan Vishwas Bill was introduced by the government.
Presently, 1,536 laws decode into approximately 70,000 compliances that administrate doing business in India. Among the 69,233 distinctive compliances that govern business in India, 26,134 have imprisonment clauses as a penalty for non-compliance. The law, rules and regulations ratified by the Union and State governments have generated barricades to the smooth flow of thoughts, organisation, money, and entrepreneurship and, through them the generation of jobs, wealth and GDP. An average enterprise in the manufacturing sector with more than 150 employees deals with 500-900 compliances a year that cost nearly ₹12-18 lakh per annum. It has been witnessed that around 40% of compliances carry imprisonment clauses. These unwarranted or unnecessary compliances have confirmed burdensome for business enterprises, especially Micro, Small & Medium Enterprises (MSMEs). Also, the regulatory burden poses ample restraints for investors.
Reducing Fear of Criminal Prosecution
India @100 is not very far. Our legacy economic strategy framework ignored entrepreneurs, watched business with suspicion, and employed criminal provisions as a weapon for control. Over the past 76 years, this extreme criminalisation has raised corruption, dampened formal employment, and generated a large number of economic shadows. India’s entrepreneurs can deliver the millions of well-paying jobs that she needs. They do not need government subsidies, but the liberty and trust that begins with ending unnecessary criminalisation.
Expectantly, the change in the Jan Vishwas Bill will further accelerate streamlining criminal clauses and confirm that businesses would function without the anxiety of imprisonment for negligible, technical or procedural gaps. Effectual business rules are imperative to decrease corruption and erase unwarranted red tape. Perhaps bringing all business restructurings under a single all-embracing legislation will instil dignity in an entrepreneur, which is key to economic development and job creation.
Amendments in Drug-Related Laws
Although the Bill was introduced to improve the ease of doing business in India, the drug law modifications have sparked controversy. The amendments fundamentally decriminalise the production of drugs that are not of standard quality, allowing manufacturers to get away with a fine with no imprisonment. The superiority of drugs in India has at present been under scrutiny, with the latest deaths of dozens of children in at least two countries, Gambia and Uzbekistan, being associated with contaminated cough syrups produced in India. However, while such instances of contaminated drugs can attract penal provisions, the bigger problem of inferior quality drugs that may not work effectively on a patient, potentially making the patient worse, is not dealt with strictly. It is possibly a big problem as the Indian pharmaceutical industry, estimated to be worth about USD 41 billion, is one of the largest in the world and provides drugs to several developing countries.
The Bill proposes amending Section 42(2) to remove the imprisonment clause and substitute it with a mere penalty of Rs1 lakh. The Bill also recommends making Section 27(d) compoundable on payment of Rs 5 lakh, meaning that if the proprietor of the drugstore is ready to cough up Rs 5 lakhs, they do not have to go to jail
Thus, the Bill is in the news for its mild approach to the crime of manufacturing ‘not of standard quality’ (NSQ) drugs. Nonetheless, somewhat a smaller amount of attention is being paid to the unfavourable influence that the law will have on an equally serious matter which is the regulation of pharmacies that have a chief role to play in India’s drug supply.
Dilution of the Regulation of Pharmacies
First of all, pharmacies must guarantee they purchase drugs from only authorised or licensed distributors and store those drugs in appropriate conditions until dispensed to patients who give legitimate prescriptions. Drugstores are also required to preserve extensive records and reports of the purchase and sale of drugs to assure supply chain integrity.
Pharmacies in India require a trained pharmacist to dispense drugs according to the prescription provided by the doctor. The pharmacist is required to ensure that the correct brand of medication is given to the patient. This task can be challenging since different drug formulations have similar or identical brand names in India, leading to record levels of pharmaceutical trademark litigation. Apart from dispensing medication, pharmacists should also counsel patients on how to store and administer drugs as well as on possible side effects or adverse reactions. These functions are critical to maintaining drug quality and ensuring patient safety. Therefore, the Pharmacy Act of 1948 and the Drugs & Cosmetics Act of 1940 require pharmacies to employ a registered pharmacist.
Section 42 of Pharmacy Act
According to Section 42 of the Pharmacy Act, the Pharmacy Council of India has given registered pharmacists the authority to compound, prepare, mix or dispense any medicine prescribed by a medical practitioner. Only registered medical practitioners are allowed to practise this profession besides registered pharmacists.
The journey of Section 42 has been long and winding. In 1948, Parliament gave the state government the power to implement Section 42. The state government had the freedom to choose the effective date for this provision. This decision was likely made because pharmacy colleges needed to be established to train professional pharmacists. Almost 30 years later, many states did not enact the provision into law. To address this the Parliament amended the Pharmacy Act during the Emergency in 1976 to enforce Section 42 in all states within five years. However, when the deadline expired in 1981 and faced strikes by chemists and druggists, Parliament granted another three-year extension. Consequently, Section 42 finally came into effect in 1984.
If Section 42 is violated, the consequences can be severe, including imprisonment for up to six months or a fine of up to ₹1,000. This punishment is necessary because dispensing drugs is a critical matter that can affect the life and health of patients. Even a petty mistake such as improper storage or dispensing the wrong drug, can result in severe harm or even death. Therefore, only trained pharmacists must handle the dispensing of drugs to ensure patient safety.
Regulation Enforcement Difficulties
Although Section 42 has been in effect across India since 1984, there have been a few legal cases invoking it. It is because most prosecutions of pharmacies for operating without a registered pharmacist occur under the Drugs & Cosmetics Act, of 1940. This Act requires a registered pharmacist to supervise the dispensing of drugs as a condition of obtaining a pharmacy licence under Rule 65 of the Drugs & Cosmetics Rules, 1945. Violations of Rule 65 are prosecuted under Section 18(c) in conjunction with Section 27(d) of the Drugs & Cosmetics Act. The maximum penalty for a violation is two years imprisonment and a minimum of one year, with special exceptions and a fine of ₹20,000.
In April 2023, the Central Drugs Standard Control Organisation’s verification identified 48 universally consumed and popular brands, including antacids, antibiotics, and blood pressure-lowering drugs, to be substandard. The US Food and Drugs Administration also pulled up numerous of India’s famous drug manufacturers that were distributing generics to the USA
It has been discovered that numerous pharmacies across different states in India are operating without employing registered pharmacists, despite it being a legal requirement under two legislations. In other words, operating without a registered pharmacist is a violation of two legislations that carry criminal penalties, yet many pharmacies choose to do so. Reports of this violation have been made in Maharashtra, Telangana, West Bengal and Tamil Nadu, with drug inspectors admitting to receiving complaints. The Pharmacy Council of India has clarified that the shortage of pharmacists is not the reason for this, but rather the reluctance of pharmacy proprietors to pay the higher salaries demanded by registered pharmacists compared to non-registered workers in the neighbourhood workers.
Now the question is, why current criminal penalties under the law are not effectively deterring such behaviours? It may be due to two main factors. Firstly, drug inspectors under the Drugs & Cosmetics Act are not effectively prosecuting cases which often leads to acquittals. Secondly, many criminal courts in India tend to show leniency towards pharmacy owners, allowing them to avoid the minimum one-year prison time outlined in Section 27(d) by paying a penalty of ₹20,000. It is done by invoking the “special reasons exception” provision.
Although Section 42 has been in effect across India since 1984, there have been a few legal cases invoking it. It is because most prosecutions of pharmacies for operating without a registered pharmacist occur under the Drugs & Cosmetics Act, of 1940
For instance, in the case of State vs Indulal Bogilal Shaha, where the owner of a pharmacy pled culpable before the Court of the Judicial Magistrate First Class, Raigad, for running a drugstore without a registered pharmacist. The court just sentenced the owner to “simple imprisonment till the rising of the court” permitting him to leave once the judge rose from the bench and a fine of ₹ 20,000. When the legislation is already so indulgent, it is shocking for the government to suggest through the Jan Vishwas Bill 2023, the decriminalisation of both Section 42 of the Pharmacy Act, 1948, and Section 27(d) of the Drugs & Cosmetics Act, 1940.
Debate Stirred by Amendments
The Bill proposes amending Section 42(2) to remove the imprisonment clause and substitute it with a mere penalty of Rs1 lakh. The Bill also recommends making Section 27(d) compoundable on payment of Rs 5 lakh, meaning that if the proprietor of the drugstore is ready to cough up Rs 5 lakhs, they do not have to go to jail. Apart from the clear question as to why a similar offence is punishable with Rs 1 lakh under one law and Rs 5 lakh under a different law, is the moral insolvency of granting businesses involved in dangerous behaviour towards patients to escape without prison time.
Unfortunately, this debate does not stop with drugstores functioning without pharmacists since Section 27(d) is also the provision invoked in suits of pharmacies operating in infringements of the licence terms mentioned in Rule 65 of the Drugs & Cosmetics Rules. It includes failure to maintain sufficient storage conditions of drugs, the failure to preserve records and reports of purchase and sale, the act of dispensing schedule H and X drugs without a prescription, and maintenance of a prescription register.
Contraventions of these several stipulations in Rule 65 can have a mixture of injurious inferences for public health. For instance, drugs not accurately stored will degrade or debase. A failure to preserve records will make it very difficult for drug inspectors to convincingly prove the chain of supply to the manufacturer in cases where the manufacturer of not of standard quality drugs is being sued. The failure to dispense drugs only as per prescriptions will lead to prescription misuse leading to either drug addiction or probably increased antibiotic resistance. The failure to preserve a precise prescription register will make the already difficult task of drug recalls impossible.
Despite this, regrettably, the modifications to the Drugs and Cosmetics Act, which oversees the excellence of Indian drugs, by the Jan Vishwas legislation may have tilted too far in favour of manufacturers, while not bearing in mind the consequences it may have for consumers
While the government does not issue any data or information on convictions under this law, it has been witnessed that a fair portion of cases ending in exculpation or enormously kind verdicts where the alleged escapes any jail time. For instance, in the case of State of Maharashtra vs Mahendra Champala Jain, Proprietor of KM Medical Stores before the Court of Chief Judicial Magistrate, Pune where the prosecuting drug inspector failed to establish a single charge against the accused. This included serious charges like improper storage of drugs, failure to maintain purchase records, manipulation of records etc. Another instance of a case that ended in conviction but a kind verdict is the case of State vs Dhinakaran, Proprietor of Dheena Medicals before the Court of the Chief Judicial Magistrate, Chengalpattu. The proprietor of the drugstore pled guilty to operating the drugstore in the nonexistence of the registered pharmacist, that prescription drugs were sold without the presence of the registered pharmacist and that the prescription register was not maintained properly.
Not a Booster Dose for Consumers
There is a hope that, when the Bill becomes law, it will make life simpler for entrepreneurs in many businesses, and the pharmaceutical industry is one of them. Although some of the alterations in the Drugs & Cosmetics Act will be greeted by the drug producers, Indian consumers of medicines may not have as much to cheer about. Before the Bill entered the Lok Sabha for acceptance, the Indian drug industry’s manufacturing and quality control customs had come under severe examination due to various reasons.
In April 2023, the Central Drugs Standard Control Organisation’s verification identified 48 universally consumed and popular brands, including antacids, antibiotics, and blood pressure-lowering drugs, to be substandard. The US Food and Drugs Administration also pulled up numerous of India’s famous drug manufacturers that were distributing generics to the USA. It pointed to manifold problems in industrial units producing these generics – varying from unhygienic manufacturing conditions, adulterated drugs, and shredded paperwork.
Furthermore, as mentioned earlier, there was news of deaths of children in Gambia and Uzbekistan related to cough syrups manufactured by an Indian manufacturer. A task force established by the Gambian President Adama Barrow has suggested suing not only Maiden Pharma – the entity that produced the contaminated cough syrups – but also the Government of India. In the meantime, Sri Lanka has declared that it will not purchase eye drops made by an Indian entity based in Gujarat because they were linked to vision loss. Even before, Nepal had banned 16 Indian drug entities for the inferior quality of their medicines.
Considering these concerns, there was a necessity to revalue the Indian rules and regulations meant to guarantee quality control norms and see if they could be made superior. There have been many calls to reinforce the laws and make things tougher for wayward firms. The case for stringent laws is significant for two major reasons.
Firstly, the health privileges of the Indian citizen are required to be conferred the maximum importance. People paying for medicines want assurance that the medicines will work as expected and not harm them. Secondly, India has become known as the pharmacy of the world for being able to supply first-rate generics internationally after the change in the patent regime in 2005. The government can ill-afford to squander that goodwill. While the US FDA has strict quality inspections to assure that the drugs that are supplied by Indian firms to the USA are of good quality, for other countries, such as Gambia, Uzbekistan, and Sri Lanka, India’s reputation as a hub of superior generic manufacturing has been enough till now.
Despite this, regrettably, the modifications to the Drugs and Cosmetics Act, which oversees the excellence of Indian drugs, by the Jan Vishwas legislation may have tilted too far in favour of manufacturers, while not bearing in mind the consequences it may have for consumers. The ease of doing business in India does need to progress, and it can be done in countless manners – from guaranteeing the constancy of policies and taxes, including input import duties, to giving inducements to invest in high-quality machinery. It should not come at the cost of patient rights and safety.
On the whole, an analysis of the provisions of the Bill discloses that emphasis has been on the substitute of imprisonment clauses with fines. This can barely be named ‘decriminalisation’. There is much that is required for the efforts aimed at decriminalisation to be set in any momentous manner. The goal of the Bill is purely to guarantee that imprisonment is substituted with fines for as many offences as possible. The range to which it thrives in ‘decriminalising’ offences, however, is questionable. If these blunders are to be corrected, it is important that a more comprehensive workout is undertaken and that the government prioritise the needs and requirements of the criminal justice system.