Drug Regulation

A "Spurious" Definition: Need to Amend the Drug and Cosmetics Act


As many of you know, the latest amendment to the Drugs and Cosmetics Act came into force on August 10, 2009 vide Central Government notification no. S.O.2076(E). This bill was first introduced in Parliament in December 2003. It was passed as the (Drugs and Cosmetics (Amendment) Act, 2008) by both Houses in October 2008 and received Presidential assent in December 2008.
The fact that this 2008 amendment provides for increased penalties for trafficking in spurious drugs is laudable; however, the rather loose definition of “spurious” is likely to cause severe problems for home grown generic manufacturers. In fact, the recent Bayer vs Cipla drug patent linkage decision by the Delhi High court bears out this fear. Bayer advanced a rather preposterous legal argument claiming that Cipla’s generic version of Nexavar would qualify as a “spurious” drug under the Drugs and Cosmetics Act; therefore, it ought not to be approved. As the judge rightly noted, this absurd line of reasoning would effectively mean that no generic could be approved, as all of them would amount to “spurious” drugs. We had presented a similar argument on this blog in an earlier post.

In previous posts, we lauded government efforts that successfully thwarted attempts by the WHO led IMPACT to expand the definition of counterfeit to catch even legitimate generics. It will be a travesty if the government now fails to clean up its own backyard . Given that charity never really began at home, amends must be made to ensure that at least some charity is now shown to be done.

Drawing on the above concerns, Nina Mehta has a very interesting article in the Economic Times calling for an immediate amendment to the definition of “spurious” drugs. I reproduce the article below:

Lack of clarity in drugs Act may hit generic companies

By Nina Mehta

Ambiguity in the amended Drugs and Cosmetics Act over the definition of the terms ‘adulterated’ and ‘spurious’ drugs could affect Indian generic drug players. The amendment, which came into force on August 10 this year after receiving the Presidential assent in December 2008, could complicate both patent challenges as well as regulation of companies, industry observers said.

The amended law has provided for stricter punishment for companies charged with manufacturing ‘adulterated’ or ‘spurious’ drugs. Under the new law, evidence of both adulteration and manufacture of spurious drugs needs to be established for a person to be convicted.

However, the punishment for this has been increased to 10 years imprisonment from five years now, which could extend to life. The monetary fine has also been increased to Rs 1 lakh from Rs 10,000.

However, lawyers feel there is still some ambiguity in the Act, which needs to be addressed immediately. Shamnad Basheer, professor of intellectual property law at the National University of Juridical Sciences (NUJS), Kolkata, said, “Although the increase in penalties for dealing in spurious drugs may be welcome, the fact that the definition of ‘spurious’ remains substantially the same is a grave cause for concern. This definition could be interpreted to even catch within its fold legitimately-authorised generics of good quality and this is problematic.”

Loopholes in the law have been noticed both by intellectual property lawyers and companies alike. This was evident in the recent Bayer-Cipla case. Bayer, in the recent drug patent linkage case, suggested that Cipla’s generic version of Nexavar would qualify as ‘spurious’.

“Given that the government is fighting international efforts such as IMPACT which attempt to define counterfeiting broadly to even catch legitimate generics, the government must, as a first step, clean up its own backyard by redefining ‘spurious’. It must ensure that the term ‘spurious’ as used within the context of drug regulation be simply restricted to substandard drugs.

IP issues should not form part of this definition. And in any case, barring straightforward violations of identical trademarks, the DCGI often does not have the institutional competence to decide complex trademark disputes,” Mr Basheer said.

Another point in the law that is of concern is the non-binding power that it gives authorities. Milind Antani, co-head (pharma practice) at Nishith Desai Associates, said, “The purpose of the amendment is to curb the spread of adulterated drugs and that is a welcome move.

But the powers given to authorities like the state Food and Drug Administration are non-binding on them and there are concerns that these may be misused.” Not all adulterated drugs, he said, originate from the manufacturer. Some come in at various points in the supply chain and the concerns are that genuine companies may also be pulled up for such occurrences.

“With the lack of clarity on the definition of adulterated and spurious, large companies are more likely to use this as a way to block generic companies from challenging their patents and manufacturing generics. This could harm the generic industry as a whole and if it is not sorted out soon, we will see more lawsuits against Indian companies on such grounds,” said the CEO of a generic company who did not want to be named.

Shamnad Basheer

Shamnad Basheer

Prof (Dr) Shamnad Basheer founded SpicyIP in 2005. He is currently the Honorary Research Chair of IP Law at Nirma University and a visiting professor of law at the National Law School (NLS), Bangalore. He is also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof Amartya Sen. Professional History: After graduating from the NLS, Bangalore Professor Basheer joinedAnand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Prof Basheer has published widely and his articles have won awards, including those instituted by ATRIP and the Stanford Technology Law Review. He is consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also serves on several government committees.

8 comments.

  1. Manish Garg

    Dear Shamnad,

    I have just completed the review of the case of Bayer vs Cipla. It is very strange to note that Bayer terms Cipla’s product to be ‘spurious’ just because it infringes Bayer’s product. The term, ‘spurious’ has altogether different meaning. Spurious drug means that the drug bears name of manufacturer, but the said manufacturer has not actually manufactured. Such a step taken by Bayer will actually harm the generic companies in India.

    Linking patent with regulatory approval is only prevalent in countries like US and Europe but the same is not prevalent in India. Regulatory approval for a new pharmaceutical product is granted by DCGI in Delhi whereas suits of infringement of patent and/or revocation of patents are dealt by High Courts and IPAB. One cannot expect regulatory body to deny permission to a new product just because it is patented in India. There are no specific provisions under Act, where such permissions are to be denied. In fact, DCGI just asks for patent information on a pharmaceutical product, for which regulatory approval is sought.

    Reply
  2. mnbvcxzaq1

    dear shamnad,
    although in my comment to your last post on this topic (“Breaking News: Patent Linkage Killed by Delhi High Court and Bayer Fined”, dated 18-08-2009), i had criticized the bayer judgement on various grounds, yet i had taken care to ‘sweeten’ my criticism against the counsels for bayer. but now, 2 things have made me change my position a lil bit. (1)since u ve already called spade a spade, in this post of yours, i ve no option but to say that i couldnt ve agreed more. (2)this is even more so after i read the comment by “Anonymous” in your previous post (titled “Bayer vs UOI and Cipla: A “Spurious” Tale”, dated 28-02-2009) whose link u ve provided in the present post. that comment reflects the prevailing rot, regarding professional integrity/ethics.
    anyway, coming back to the issue of patent linkage, for the benefit of readers who r reading on this topic for the first time, let me take liberty to quote a small portion from my comment to your last post (titled “Breaking News: Patent Linkage Killed by Delhi High Court and Bayer Fined”, dated 18-08-2009):
    “…
    many of the bayer’s legal arguments were fundamentally wrong/ lacked strength, e.g. (i)that cipla’s drug is “spurious” and not “generic”, which in my view, is a fundamentally wrong interpretation of the term “generics” (was it deliberate or was it an outcome of imperfect understanding of the term, only bayer’s lawyers can tell; however, mine is not a comment on the lawyers – they might ve there own compulsions to advance some particular line of argument); (ii)that generic drugs can be produced only after the expiry the patent, if granted; (iii)that the legislative intent (by inference), too, was for patent linkage……”
    here, i agree that i should have added another point that bayer’s agument was based on fundamentally wrong interpretation/understanding not only of the term ‘generics’, but also of the term ‘spurious’.
    lastly, dear shamnad, i would like to enter into some intellectual discussion with u on the point that i ve raised in the last comment of your above-mentioned post, dated 18-08-2009. coz although i may appear to b advocating the pro-north position on patent linkage, but actually i am not. i am trying to evolve an optimum policy on the issue, a reasonable balance for all stakeholders. i am trying to evolve an unorthodox position, somewhere between pure nationalism and pure universalism (vis-a-vis patents). i dont belong to the academia n hence, dont personally know many scholars. am a lil handicap in this regard. thats why i am seeking opinion of scholars, like u. but this interaction cannot take place here, thru blog. is it possible for u to interact thru email? lemme know. thanx.

    Reply
  3. Anonymous

    Shamnad,

    Can we have the new / amended definition?
    Nina’s article does not touch the actual definition and putting this in context requires that.

    Frequently Anon.

    Reply
  4. Shamnad Basheer

    Dear mnbvc,

    Tks again for your insightful comments, which always add a lot of substance to our debates here. My apologies for not having responded earlier to your proposals on drug regulatory reform. I will certainly engage with them soon–its just that too many IP items to post on this week–and its hard to keep up with the comments as well.

    Reply
  5. mnbvcxzaq1

    dear shamnad,
    thanx for responding positively. i will wait to hear from u on the patent linkage issue (not on the merits/demerits of the current case, but at the higher level, i.e. policy-influencing level, so that v can propose some real/fair alternative to the extant provisions.) i just dont care who proposes the alternative; am more concerned with coming up with a sound ‘alternative’, per se. just like your suggested section 3(d). i had found it good, so much so that in my paper on section 3(d), i didnt think it necessary to undertake any juridical inquiry into it and advocated your proposed section 3(d) (my minor disagreements over some aspects notwithstanding). (fyi: in fact, it was that article of yours that put u in my good esteem n then i thought of contributing to your spicyip thru my comments, even if tidbits.)
    n i just hope that somehow, just somehow, the policy-makers get to know of these intellectual churnings n take them into account to improve upon the existing laws/provisions. till just a few months ago, at least some of the policy-makers n nistad people sought unorthodox views (like mine). but my sources have dried up (retired) now. i just hope that policy-makers still listen (at least read, if not agree) to unorthodox views!
    lastly, i am looking forward to the beginning of discussions thru email excahnges, with u..

    Reply
  6. Shamnad Basheer

    Thanks mnbvvcx,

    like you, my hope is that we manage to get some of this discussion across to our policy makers. At the very least, this is a point of view that they can consider.

    Thanks for your kind words on the 3.d article.

    Let’s certainly combine energies and keep at furthering these sort of discussions and adding to IP jurisprudence–even if it takes years and years to be heard…

    Reply

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