DAMODARAM SANJIVAYYA

NATIONAL LAW UNIVERSITY

SABBAVARAM, VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE

PUBLIC HEALTH - SPURIOUS AND DANGEROUS DRUGS

SUBJECT

HEALTH LAWS

NAME OF THE FACULTY

Dr. P. Vara Lakshmi, B.A(Hons.) LLB, P.G.DCL and IPR, M.L., Ph.D.

Name of the Candidate: Rohith Gopu

Roll No: 2017028
Semester: IX

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 TABLE OF CONTENTS:

 Acknowledgment: .........................................................................................3

 Abstract:.........................................................................................................3

 Introduction:..................................................................................................3

 Spurious and Dangerous Drugs:..................................................................5

1. S.R. Pvt. Ltd vs. Prem Gupta, Drug Controller (India) New Delhi
2. Systopic Laboratories Pvt. Ltd. vs. Dr. Prem Gupta & Ors
3. Sidi Pharmacy Pvt. Ltd. vs. Union of India
4. AIDWA vs. Union of India
5. Vincent Panikulangara vs. Union of India
6. Sagar Medical Hall vs. State of Bihar
 Impact on public health and safety:............................................................8

 Case analysis:.................................................................................................9

1. Laxmikant vs. Union of India

2. Bharat Biotech International Ltd. vs. A.P. Health and Medical Housing and
Infrastructure Development Corporation
 Conclusion:.................................................................................................11

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 ACKNOWLEDGEMENT

I'd want to thank Dr. P. Vara Lakshmi ma'am in particular for guiding me and providing the
chance to work on the project " PUBLIC HEALTH - SPURIOUS AND DANGEROUS
DRUGS" which allowed me to perform a lot of study and identify a suitable subject to work on.

Abstract:

Globally, every country is the victim of substandard or spurious drugs, which result in life
threatening issues, financial loss of consumer and manufacturer and loss in trust on health
system. The aim of this enumerative review was to probe the extent on poor quality drugs with
their consequences on public health and the preventive measures taken by the Indian
pharmaceutical regulatory system. Government and non-government studies, literature and news
were gathered from journals and authentic websites. All data from 2000 to 2013 were compiled
and interpreted to reveal the real story of poor quality drugs in India. For minimizing
spurious/falsely-labelled/falsified/counterfeit drugs or not of standard quality drugs, there is
urgent requirement of more stringent regulation and legal action against the problem. However,
India has taken some preventive steps in the country to fight against the poor quality drugs for
protecting and promoting the public health.1

Introduction: The major purpose of enacting the Drugs and Cosmetics Act, 1940 was to ensure
quality of drugs and prevent sub standard drugs from flooding the markets. Apart from this are
the Patents Act and its recent amendments that increasingly play an important part in making the
right to health substantial for the people. The Drugs and Cosmetics Act regulates the quality of
drugs, its manufacture, distribution and sale. It applies to all variety of drugs such as ayurvedic,
unani, allopathic and homeopathic. The law also deals with cosmetics but in this chapter, we are

1
Dutta N. Kashmir fake drug scam: http://www.health.india.com/news/kashmir-fake-drug-scam-were-spurious-
drugsresponsible-for-high-infant-deaths-last-year/

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not concerned with that aspect. Drugs can be imported, manufactured, stocked and sold only
under certain strict conditions. What is a drug? Are vitamin tablets drugs or diet supplements?
Can cotton gauze be called a drug? Can condoms be classified as drugs? 2

A large amount of litigation has accumulated on what constitutes drugs. If an article does not
constitute a drug it can be manufactured, stocked and sold under highly relaxed conditions. So
the attempt of the private sector has been to somehow get out of the purview of the law.
However, under the Excise legislation the attempt of the private sector is to classify various
items as medicaments as there is tax exemption. The Drug Rules are very detailed. They spell out
the medicines which can be given only on prescription and those that do not require prescription.
The rules also specify when a particular drug will be treated as of standard quality. They provide
for detailed instructions concerning manufacture, storage and sale. There are also detailed
guidelines concerning the conduct of clinical trials. Quality control in drugs is sought to be
ensured through licensing and supervision procedures.

A large number of judgments pertain to conditions of licensing and revocation of licenses.

Chapter IV of the Act deals with the manufacture, sale and distribution of drugs. Section 16
stipulates that for the purpose of the Chapter that the expression ‘standard quality’ in relation to a
drug means that the drug should comply with the standard set out in Second Schedule. Section
17 of the Act defines ‘misbranded drugs’; Section 17-A ‘adulterated drugs’; and Section 17-B
‘spurious drugs’.3

Section 17B. Spurious Drugs- For the purposes of this Chapter, a drug shall be deemed to be
spurious- (a) If it is manufactured under a name which belongs to another drug; or (b) If it is an
imitation of, or is a substitute for, another drug or resembles another drug in a manner likely to
deceive or bears upon it or upon its label or container the name of another drug unless it is
plainly and conspicuously marked so as to reveal its true character and its lack of identity with
such other drug; or (c) If the label or container bears the name of an individual or company
purporting to be the manufacture of the drug, which individual or company is fictitious or does

2
New Delhi: Ministry of Health and Family Welfare, Government of India; 2009.
http://www.cdsco.nic.in/report_book_13-7-10.pdf . [Google Scholar]
3
India: 2010. PSM. Proposed methodology to conduct a study on the Extent of spurious drugs in the supply chain
of Indian market. http://www.safemedicinesindia.in/pdf/Methodology.pdf .

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not exist; or (d) If it has been substituted wholly or in part by another drug or substance; or (e) If
it purports to be the product of manufacture of whom it is truly a product.4

Spurious and Dangerous Drugs:

There are many occasions when the Government totally bans the manufacture or sale of certain
drugs. The question before the courts has been whether the Government can do so and further
what is the scope of the Court’s interference in such matters.

S.R. Pvt. Ltd vs. Prem Gupta, Drug Controller (India) New Delhi 5 was a case dealing with a
ban on spurious drugs. The petition challenged the order of Central Government under S. 26-A
of the Drugs and Cosmetics Act, 1940 which banned the manufacture and sale of fixed dose
combination steroids. Section 26-A of the Act empowers the Central Government to prohibit in
public interest the manufacture, sale or distribution of any drug if it is satisfied that the use of
such drug is likely to involve any risk to human beings or it does not have the therapeutic value
claimed or purported to be claimed in it.

The Act provides for the constitution of ‘Drugs Technical Advisory Board’ to advice Central and
State Government on any matter tending to secure uniformity throughout the country in the
administration of the Act. The Board is to comprise of persons with expertise in drugs along with
representatives from Central and State Government. The ban on fixed dose combinations of
steroids was imposed after consultation with the Technical Advisory Board. The issue before the
high court was whether the Central Government had acted arbitrarily or the opinion tendered by
the Board was arbitrary and without substance.

The court held that the advice tendered by the Board consisting of experts, who have special
knowledge and experience in respect of different kinds of drugs, and the opinion formed after
due exchange of views in itself ensures that the opinion given by the Board has a rational basis
and suffices for Central Government to issue notification in exercise of its power under S.26-A
of the Act. When such a high powered body consisting of experts arrives at such a decision after

4
PIB. Suspension of Drugs. Press Information Bureau of India. 2010. Available from:
http://www.pib.nic.in/newsite/erelease.aspx?relid=60818 .
5
AIR 1993 PH 28

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due consideration and exchange of views, we have to presume that the advice tendered is good in
the absence of any basis to characterize it as arbitrary.

In this case there is no material or basis to discard the opinion formed and the advice tendered by
the Board. Therefore, as the Central Government has exercised its power under S. 26A of the Act
on the advice tendered by the board, we are unable to agree that the impugned notification is
illegal, arbitrary or violation of Articles 14 and 19(g) of the Constitution. The court therefore
concluded that it would not ordinarily interfere with a decision taken by the State acting on the
recommendation of an expert body to prohibit a particular drug or combination.

In Systopic Laboratories Pvt. Ltd. vs. Dr. Prem Gupta & Ors 6. Various pharmaceutical
companies had challenged a notification by the Government banning the manufacture and sale of
corticosteroids with another drug for internal use for treatment of asthma under Section 26 A of
the Drugs Act. Expert committees were set up by the Government that found that no theraupatic
purpose would be served by such combinations. They went into the massive literature submitted
by the Companies but still came to the same conclusion. They also felt that no purpose would be
served by clinical trials. Accordingly, the expert committees recommended a total prohibition
and the Government agreed with this. The Supreme Court found nothing wrong with such a
prohibition and held that the Courts would not interfere in such matters when the Government
has acted on the advice of expert committees.

In Sidi Pharmacy Pvt. Ltd. vs. Union of India 7 the Supreme Court was considering a case
where upon the advice of an expert committee, the Government refused to grant license to a
company that wanted to manufacture ayurvedic injectibles. The Court refused to interfere in the
matter and held, "Whether to permit or not to permit Ayurvedic injections is a policy decision
requiring serious thought and consideration to be given to people’s health and treatment
methods. We do not think that adjudication of such issues falls within the scope of judicial
review and the jurisdiction of this Court".

The courts have especially refused to interfere in matters where the prohibition of manufacture or
sale of drugs by the Government has been based on expert committee reports. There have been
two reported cases where an organization had applied to the Court seeking a ban on the
6
(1994) Supp 1 SCC 160
7
(2004) 13 SCC 780

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manufacture and sale of a drug. In the case of AIDWA vs. Union of India 8, a women’s
organization filed a Petition in the Supreme Court seeking a ban on the use of quinacrine in the
form of pellets or otherwise as a method of sterilization. The Central Government filed an
Affidavit stating that they were in the process of prohibiting the import, manufacture and sale of
quinacrine for use a method of non surgical sterilization on women. In view of the Affidavit, the
Supreme Court disposed of the Petition.

In Vincent Panikulangara vs. Union of India 9 the Public Interest Law Service Society, Cochin,
filed a petition in the Supreme Court asking directions for banning import, manufacture, sale and
distribution of such drugs as had been recommended for banning by Drugs Consultative
Committee set up by the Government and also asked for the cancellation of licenses granted in
respect of these drugs. The Society also asked for the setting up of a high powered committee to
go into the hazards suffered by people due to these drugs and for the award of compensation to
such persons.

The Supreme Court has held that the Courts were not the appropriate forum to decide about such
issues that require expert opinions. The Court however expressed a hope that the Central
Government would have the issues concerning banning of specific drugs referred to a special
committee and deal with it expeditiously. Though Vincent‘s petition did not yield the desired
result, there was pressure on and in the government to ban more irrational and hazardous drugs.
Four more categories were banned in 1984, and three more in 1988 including high doses of E.P
Combination. By April 1992, a total 45 categories were banned by various gazette notifications,
but brand names and even generic names were not publicized widely.10

In Sagar Medical Hall vs. State of Bihar 11, a petition was filed against the order of State
Government restraining the regional licensing authorities from issuing or renewing licence for
the wholesale and retail sale of drugs. The State Government’s justification for its policy
decision was that the ban on the issuance of wholesale and retail drug licences was a temporary
measure to prevent the spurt of spurious drugs. There were adequate drug stores to meet public
8
(1998) 5 SCC 214
9
(1987) 2 SCC 165
10
Phadke Anant, Drug Supply and Use: Towards a Rational Drug Policy, pp.54
11
(CWJC) Patna HC dt. 7/12/01

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need. A mushrooming of drug stores would lead to a decline in turnover and loss, which would
cause drug stores to sell spurious drugs to sustain themselves.

The Petitioners contended that license cannot be refused when all the conditions attached to it
have been complied with. The Act does not impose any such ban or give power to impose such a
ban. Rule 64 provides for conditions subject to which a licence shall be granted or renewed. The
high court held that the grant and renewal of drug licence is governed by statutory rules and
nowhere do such rules provide that the license can be declined or renewal refused on the ground
that the State Government reckons that the number of shops are sufficient to meet demand of
public. Thus, executive decisions of the State cannot override the statutory provisions. The
growth of drug stores is to cater the needs of public. The State cannot regulate the grant of
license because they cannot efficiently control them. The State Government has an entire
department to control and prevent sale of spurious drugs.

Impact on public health and safety:

With a population of more than 1.24 billion, right to health is a fundamental right in India and
has been recognized in the national constitution and statutory laws as well as in international
laws. Globally, about 2 billion people, one third of the global population lack access to essential
medicines. As medicine are life saving entities and thus are more essential for the treatment,
while they account for 20-60% of care cost and 50-90% of this cost is being paid by the patient,
particularly in low and middle income countries. India is a developing country where more than
40% of the population survives on less than US $1 a day and if a patient needs medicines he has
to pay more than half of this. There are some schemes by Indian Government for distribution of
free generic medicines for certain categories of patients.12

In India, as per Drug and Cosmetic (D and C) act, 1940, under section 17, 17A and 17B poor
quality drug comprises of misbranded, spurious and adulterated drugs, respectively[13]. With the
2008 amendment of D and C act, Indian drug regulatory authority that is Central Drugs Standard
Control Organization (CDSCO) has categorised not of standard quality (NSQ) products in three

12
WHO. The right to health. 2008. Available from:
http://www.who.int/hhr/activities/Right_to_Health_factsheet31.pdf .

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categories A, B and C that is helpful in categorising the products during quality evaluation[14].
Category A incorporates spurious and adulterated drug products; which conceal the real identity
of the product or formulation and be similar to some well-known brand. These products may or
may not contain active ingredients and generally manufactured by unlicensed antisocial people
or sometimes by licensed manufacturers13. Products that consist of adulterant/substituted product
or incorporate some filth material are known as adulterated drugs. Category B include grossly
substandard drugs in which product fails the disintegration or dissolution test and where active
ingredient assay get below 70% and 5% of permitted limit for thermolabile and thermostable
product, respectively for tablets or capsules. In case of parenteral preparation, failing sterility,
pyrogen/endotoxin test or inappropriate toxicity, and fungus presence in any liquid preparation
hold such products in this substandard category. Category C involved products with minor
defects like emulsion cracking, change in formulation colour, small variation in net content,
sedimentation in clear liquid preparation, failing of weight variation test, spot or discolouration
on product, uneven coating, presence of foreign matter and labelling errors14.

Case analysis:

1. Laxmikant vs. Union of India15:

Facts: The Central Government, in exercise of its powers under Section 33EE of the Act, banned
in public interest the manufacture and sale of all ayurvedic drugs licensed as toothpaste/
toothpowders containing tobacco.

Issues: The Appellant contended that they used only 4 per cent of tobacco and there was no
conclusive evidence to show that such a minute quantity could pose a threat to health, and that

13
Ministry of Health and Family Welfare; 2005. Government of India, The Drugs and Cosmetics Act and Rules
(Amendment) Available from: http://www.cdsco.nic.in/forms/contentpage1.aspx?lid=1888 .
14
New Delhi: CDSCO report 2008; 2008. Guidelines for taking action on samples of drugs declared spurious or not
of standard qualityin the light of enhanced penalties under The Drug and Cosmetic (Amendment) Act; pp. 1–13.
Available from: http://www.cdsco.nic.in/writereaddata/Guidelines under new penal provisions9.pdf .
15
(1997) 4 SCC 739

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even the members of the Advisory Board under the Act held divergent views on it. Such ban was
arbitrary and violated their right to carry on trade.

Judgment: The Supreme Court held that the Central Government in consultation with the
Ayurvedic, Siddha and Unani Drugs Technical Advisory Board, an Expert Body constituted
under Section 33D of the Act, had arrived at a conclusion that tobacco contained carcinogenic
elements, and therefore, its use should be banned in toothpastes. A similar view was expressed at
an international conference held at AIIMS, New Delhi in collaboration with WHO.

Hence, the Court held that even though the ban offends the right to carry on trade, it is justified
in public interest and falls under Article 19(6) of the Constitution being a reasonable restriction
on the right to carry on trade or business.

2. Bharat Biotech International Ltd. vs. A.P. Health and Medical Housing and
Infrastructure Development Corporation16

Facts: A WHO pre-qualification was made an eligibility criterion for the tender for supply of
Hepatitis-B drugs.

Issue: This was challenged as arbitrary and with the intent to exclude competition in favour of
one manufacturer.

Judgment: The high court evaluated the provisions of Drugs and Cosmetics Act to determine if it
provided an efficient machinery to ensure standard quality of drugs or if WHO prequalification
actually set higher standards, which would justify the impugned decision. The high court
concluded that the State had failed to establish that WHO adopts standards that are higher than
the standards adopted by Indian law for assessing the quality of the product. It held that the
Indian laws were stringent in ensuring a high standard of drugs but has been futile because of
laxity on part of State in enforcing the law. Instead of rectifying the implementation of the Act,
the State cannot seek shelter in such a manner. Accordingly, such a prequalification was set
aside.

16
AP HC dt. 10/12/2002

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Conclusion:

Poor quality drugs affect the health of the public. Spurious or counterfeit drugs are involved in
both generic and branded products of every category throughout the world, which is growing and
expanding its roots and thus emerging as menace. Standard quality obligations are related to a
number of factors, including drug pricing, competition between sponsors, employment and
market transparency. Responding to the spreading public health crisis of spurious or substandard
drugs has led to the creation of transnational regulatory dimension. India is improving and
achieving its mission in drug regulation process on account of decline in number of SFFC or
NSQ drugs cases and by taking several important initiatives and preventive steps in the country
and stringent penalties as well to fight against the poor quality drugs for protecting and
promoting the public health. It is now the time to explore this matter more vigorously in the
times to come in order to safeguard the interests of the patient at large.

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