On 5th May, the High Court of Himachal Pradesh in an astonishing judgment delivered in the case of Salus Pharmaceuticals v. Union of India ruled that drug inspectors of the Central Drugs Standard Control Organisation (CDSCO) – the country’s national drug regulator – cannot conduct inspections or launch prosecutions of pharmaceutical companies under the Drugs & Cosmetics Act, 1940 (DCA). This ruling will have the effect of grinding to a halt inspections and prosecutions of pharmaceutical companies being conducted by the CDSCO across the country, leaving domestic and foreign consumers of Indian medicine reliant entirely on the mostly under-resourced state drug regulators to ensure quality of drugs.
The stunning aspect of this judgment is that the High Court entirely missed the statutory definition of “inspectors” in the DCA, which includes inspectors appointed by both the state and central government. The law is clear that all inspectors appointed under the DCA will have the powers to inspect and prosecute pharmaceutical manufacturers. There is nothing in the law that allows only inspectors appointed by the state government to inspect and prosecute pharmaceutical companies, as has been concluded by the High Court through a convoluted reading of the law.
Unfortunately, this is not the first time where the courts have acted as obstacles to improving drug quality in India. This has been happening for some time now and the problem can be divided into two categories.
Corporate lawfare
The first category are cases where key regulatory policy decisions applicable to the entire pharmaceutical industry are blocked from implementation because of calculated “lawfare” by industry lobbies. Typically, one industry association will challenge the legality of a policy decision taken by the government before one High Court, which may grant a temporary stay on the implementation of the policy until the case can be heard on final arguments. This stay will then be used by other industry lobbies to file similar petitions before other High Courts which are then likely to issue similar stays. Soon the government is mired in multiple litigations across the country. Instead of proactively driving the matter to a resolution, the government typically consolidates the litigation before the Supreme Court, where cases can languish for years given the court’s backlog. This time is then used by the industry to lobby for a reversal of policy, often successfully.
A perfect example of such litigation involves Rule 106B which was introduced in the mid-nineties to limit the amount of alcohol that can be used in Homeopathic products. The legality of this rule was challenged in 2015 by industry lobbies on the ground that the government had not placed the enacted rule before the Parliament, as required by the law, for a period of 30 days. The Calcutta High Court granted a stay on the implementation of the rule in 2015 until a final resolution of the case. This was followed by four other High Courts which granted similar stays. The government was destined to lose all these cases since a statutory requirement was not met. In an ideal world, the government’s lawyers would have advised the Ministry of Health to place the rule before Parliament thereby rendering all five lawsuits infructuous; clearing the way for implementation of a crucial public health decision. Instead, the government decided to consolidate all litigation on this issue before the Supreme Court via transfer petitions, where the matter has been pending since 2017 with no resolution. Thus, a decade later, a key public health policy remains unenforced on the ground.
Another such case where High Courts stepped into grant temporary stays as soon as the rule came into effect, involves Rule 170 (which was meant to help the government better regulate advertisements for dubious traditional medicine). Rather than contest the stays issued by the High Courts, the government lawyers adopted a passive approach, doing nothing to get the stay reversed. In the meantime, industry associations used the pause to lobby for reversals of the policy decisions. After incessant lobbying by the industry, the rule was repealed five years later without being implemented for even a single day due to stays by the courts.
Judicial interference in regulatory decisions
The second category of cases are those where High Courts overrule decisions taken by drug regulators who are experts in the field. The traditional standard of judicial review in such cases requires judges to defer to experts who have taken the decision. Only in a very narrow set of circumstances where principles of natural justice are not followed or where a decision lacks any factual basis, can the courts interfere with a regulatory decision.
Except, over the years, High Courts have assumed the role of experts and interfered with regulatory decisions even in cases with serious public health implications. For example, when the state drug regulator in Himachal Pradesh cancelled the manufacturing licences of the pharmaceutical company implicated in the cough syrup tragedy in Jammu in 2020 where 12 children lost their lives, the High Court stepped in to restore the licences for all drug products with the exception of cough syrups. In doing so, the High Court appeared to have missed the fact that one of the conditions of granting a manufacturing licence is compliance with the Code of Good Manufacturing Practice (GMP), which requires mandatory testing of ingredients used to manufacture drugs. The pharmaceutical company in this case did not conduct the required tests on solvents used to manufacture the cough syrups because of which, they failed to detect the presence of toxins which killed 12 children in Jammu. A failure to conduct this testing meant that the company failed to comply with the GMP code. This failure to meet with a basic tenet of the GMP code, justified the decision by the drug regulator to cancel the remaining drug manufacturing licences held by the company. Except, the High Court over-ruled the regulator’s decision. The court decided that the cancellation of the remaining licences for drugs other than cough syrups was unjustified. No other country approaches drug regulation in this manner.
Part science, Part law
In most of these cases where drug regulators lose seemingly simple cases before courts, it is often difficult to fix accountability for the legal defeat. Since transcripts of oral arguments and legal pleadings before High Courts are unavailable to the public, it is not possible to ascertain whether government lawyers made the correct arguments or whether the judge erred despite being informed of the correct legal position. More transparency in the court’s functioning, including the availability of transcripts of oral arguments will help fix accountability.
In the mean-while, the Ministry of Health should realise that regulatory law is part science and part law. Both these concerns must be addressed for effectively regulating the pharmaceutical industry. It should consider putting in place a policy which ensures that it gets effective litigation support for its legal battles with a well-resourced adversary like the pharmaceutical industry. As always, more transparency by making public, a list of pending litigation and pleadings before courts will open the door to more accountability.
In the short run though, it is crucial for the Ministry to work towards overturning the decision in Salus Pharmaceuticals. Leaving the critical issue of inspections and prosecutions of pharmaceutical companies to the state drug regulators, will inevitably lead to more tragedies in India and foreign countries which import medicines from India.