INTRODUCTION
The recent developments in the healthcare and pharma industry primarily focuses on high quality pharmacy education and equitable access to healthcare coupled with classification of certain new medical devices. This edition of 'Checking the Pulse' delves into crucial updates spanning from October to November 2023 in the healthcare and pharma sector and briefly talks about major deals which drew attention from the industry.
RECENT LEGAL & REGULATORY DEVELOPMENTS
Delhi High Court directs Government of India to formulate a policy framework on online sale of drugs
In an order dated November 23, 2023, the Delhi High Court has directed the Government of India ("GOI") to formulate a policy framework for regulating online sale of drugs within a period of 8 weeks. This order comes pursuant to the petitions filed by the South Chemists and Distributors Association ("SCDA") and others1 seeking a ban on online sale of drugs by pharmacies. While the GOI had released draft rules to amend the Drugs and Cosmetics Rules, 1945 in 2018,2 no rules have been adopted to regulate online sale of drugs. The next hearing is scheduled to be held on March 4, 2024.3
The Ministry of Health and Family Welfare has released the Draft National Pharmacy Commission Bill, 2023
In a public notice dated November 10, 2023, the Ministry of Health and Family Welfare ("Health Ministry") has released the Draft National Pharmacy Commission Bill, 2023 ("Draft Pharmacy Bill") seeking comments from the general public and stakeholders.4
The Draft Pharmacy Bill proposes to repeal the Pharmacy Act, 1948, and set up a National Pharmacy Commission, consisting of 13 ex-officio and 14 part-time members. The aim of the Draft Pharmacy Bill is to establish a framework to provide affordable and high-quality pharmacy education as well as promote equitable access to healthcare. The Draft Pharmacy Bill envisages to establish 3 boards, namely: (a) the Pharmacy Education Board5; (b) the Pharmacy Assessment and Rating Board6; and (c) the Pharmacy Ethics and Registration Board.7
Delhi High Court has held that GOI cannot monitor maximum retail price of nonscheduled formulations
In relation to certain non-scheduled formulations (i.e., formulations not included in Schedule 1 of Drugs (Price Control) Order, 2013 ("DPCO")), the National Pharmaceuticals Pricing Authority ("NPPA") had served demand notices to pharmaceutical companies8 for overcharging consumers. However, in a judgment dated November 8, 20239, the Delhi HC has clarified that GOI does not have the power to decide or revise the maximum retail price for nonscheduled formulations. GOI can only monitor the maximum retail price of non-scheduled formulations.10
Approach paper on draft National Pharmaceuticals Policy, 2023 ("NPP 2023"), released by Department of Pharmaceuticals, GOI
On October 31, 2023, the Department of Pharmaceuticals, GOI has released an approach paper on the draft NPP 2023 for stakeholder consultations.11 The NPP 2023 aims to address the various challenges faced by the pharmaceuticals industry, such as: (a) high degree of import dependence on active pharmaceutical ingredients, and key starting materials; (b) staggered development of biologics, biosimilars and other emerging products; (c) inefficiencies in regulatory processes; (d) lack of adequate and skill human resources; and (e) lack of adequate funding for research and innovation.
CDSCO updates list of medical devices under the Medical Devices Rules, 2017, to include devices for diagnosis of COVID-19, and DNA and RNA extraction kits
Under the Medical Devices Rules, 2017, the CDSCO has the power to classify In-Vitro Diagnostic Medical Devices ("IVDs") under different categories basis their intended use, risk associated with the device, and other allied parameters. In exercise of the aforesaid power, through a notice dated October 25, 2023, the CDSCO has revised the list of IVDs. The following annexures have been updated: (a) Annexure A (IVD Analyzers); (b) Annexure B (IVD Instruments). Further, CDSCO has added 2 new annexures, that are, Annexure D (IVD- Specimen receptacle) and Annexure E (List of IVDs under rule 4(2) of the Medical Devices Rules, 2017) to the list of IVDs.12
NPPA's Multidisciplinary Committee of Experts recommends exemption of formulations by Cadila Pharmaceuticals and Panacea Biotech from price control for a period of 5 year
The provisions of the DPCO, are not applicable to a manufacturer producing a new drug which has been patented under the Patents Act, 1970, for 5 years from the date of its commercial marketing in the country. In a meeting convened recently, NPPA has recommended grant of exemption to Cadila Pharmaceuticals Limited and Panacea Biotech Limited from complying with the provisions relating to price control under the DPCO.13 The exemption are with respect to the formulations "Cholecalciferol Aqueous Injection 6,00,000 IU/2ml (Vitamin D3 Injection)" ("Formulation 1")14 and EasyforPol vaccine containing "Adsorbed Diphtheria, Tetanus, Pertussis, Poliomyelitis (Inactivated) and Haemophilus Influenzae Type b Conjugate Vaccine IP" ("Formulation 2")15, respectively.
Formulation 1 has been granted a patent for an invention titled "an aqueous parenteral composition of Vitamin D3" for twenty years from February 3, 2018; while Formulation 2 has been granted a patent for an invention titled "novel combination vaccines with whole cell pertussis and method of manufacturing the same".
CDSCO issues circular regarding regulation of Class C and D medical devices
The Health Ministry had issued a notification on February 11, 2020, classifying all medical devices as 'drugs' under the Drugs and Cosmetics Act, 1940 ("Drugs Act").16 Further, via another notification17 published on the same date, the Health Ministry had provided for the regulation of medical devices under the Drugs Act in a phased manner, with Class C and D medical devices being brought under the licensing regime of the Drugs Act from October 1, 2023.
In a circular18 issued on October 12, 2023, the CDSCO has decided that an existing manufacturer or importer of Class C and D medical devices who has submitted an application for grant of license to the Central Licensing Authority under the Medical Devices Rules, 2017, can continue the manufacture and import of such devices upto 6 months from October 12, 2023, or till the time a decision has been taken on the application for grant of license, whichever is earlier.
Directorate General of Trade Remedies initiates anti-dumping investigation regarding imports of API 'Epichlorohydrin' from Korea, Thailand, and China
Pursuant to an application filed by Meghmani Finechem Limited (the sole producer of Epichlorohydrin in India), the Directorate General of Trade Remedies ("DGTR") has issued a notification dated September 26, 2023, initiating anti-dumping investigations against the Republic of Korea, Kingdom of Thailand, and the People's Republic of China.19 In the notification, the DGTR has indicated that a prima facie case exists against the aforesaid countries for causing injury to the domestic industry due to their dumping of Epichlorohydrin in the Indian market.
The DGTR will initiate anti-dumping investigations and consider recommending levying of an anti-dumping duty on import of Epichlorohydrin from the aforesaid countries. Importers and users of Epichlorohydrin in India, as well as any other interested party may file relevant information with the DGTR within 30 days from receipt of notice under Rule 6(4) of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995.
Allahabad High Court upholds workmen status of medical representatives under Industrial Disputes Act
The Allahabad High Court recently upheld the classification of medical representatives as "workmen" under the Industrial Disputes Act, 1947.20 The Allahabad High Court held that pursuant to the enactment of the Sales Promotion Employees (Conditions of Services) Act, 1976 ("SPE Act") all medical representatives are deemed to be workmen.
Delhi High Court modifies Mankind Pharma Limited's advertisement following Advertising Standards Council of India dispute
The Advertising Standards Council of India ("ASCI") had received a complaint against Mankind Pharma Limited ("Mankind") alleging that Mankind was advertising its use of Active Pharmaceutical Ingredients ("APIs") with Drug Master File ("DMF") number21 and such an advertisement may mislead the public regarding the safety of other drugs not using DMF numbers. Pursuant to the aforesaid complaint, ASCI's advisory expert body had made a recommendation against Mankind. Mankind filed an application for injunction against ASCI from taking any further action.
In this regard, in an preliminary order dated November 28, 2023, the Delhi High Court has directed Mankind to: (a) run its original advertisement in a modified form with the disclaimer that DMF is not mandated under Indian law and is not a quality norm for products in India; and (b) make representations before ASCI's independent review panel and undergo an 'Independent Review Process'.22 The next date of hearing is January 9, 2024.
MAJOR DEALS IN INDIA IN THE PHARMA AND HEALTHCARE INDUSTRY
The following are the key deals announced during the months of October and November 2023, in the pharma and healthcare industry:23
Mumbai-based healthcare solutions provider Inventurus Knowledge Solutions Limited, which operates the healthcare platform IKS Health, has acquired Aquity Solutions Private Limited ("Aquity"), a Mumbai-based company providing medical transcription services, and medical coding services for a consideration of INR 1,665 crores.24
API Holdings Limited, which operates the online healthcare platform Pharmeasy, has raised an amount of INR 3,500 crore through rights issue, from existing investors including Temasek Holdings Limited, TPG Inc., Prosus N.V., and Eight Roads.25
Eris Lifesciences Limited ("Eris"), a Gujrat- based pharmaceuticals company, has agreed to purchase the dermatology and nephrology business units of Biocon Biologics Limited ("Biocon"), a Bengaluru-based manufacturer of biosimilar products, for INR 366 crores. The transaction will enable Eris to expand its business offerings, while allowing Biocon to re-route its focus on its core assets such as the diabetes, oncology and immunology verticals.26
Fortis Healthcare Limited ("Fortis"), a Mohali- based integrated healthcare services provider, is in the process of sale of its stake in Fortis Malar Hospital Limited ("Fortis Malar") to MGM Healthcare Private Limited for a consideration of INR 128 crore. This transaction will see Fortis divesting its 62.7% stake in Fortis Malar.27
International life sciences services company GBA Group has acquired a significant stake in Eureka Analytical Services Private Limited, a Bengaluru- based company providing testing, inspection and audit services for pharmaceuticals and nutraceuticals.28
Healthmap Diagnostics Private Limited ("HDPL"), a Mumbai-based company operating diagnostic centres across the country, has acquired 16% stake in Medcis Path Labs India Private Limited ("MPL"), a Telangana-based healthcare services provider. HDPL had previously acquired 84% stake in MPL in 2022, for a consideration of INR 100 crore.29
IQuest Enterprises ("IQuest"), a multi-sector investment company, has entered into a definitive agreement with Viatris Inc., a Pennsylvania-based global pharmaceutical and healthcare company, to acquire the latter's active pharmaceutical ingredients operations, including 6 manufacturing facilities, a research and development facility, as well as sales to third parties. This is IQuest's largest investment in the healthcare and pharmaceuticals sector.30
Apex Kidney Care Private Limited ("AKCL"), a company engaged in providing kidney-care services, has raised an amount of INR 83.3 crore from Tata Capital Healthcare Fund, the growth stage healthcare and life sciences-focussed segment of Tata Capital Limited, a private equity firm. AKCL will use the fund raised to expand its business operations in India.31
Asia Healthcare Holdings, a healthcare platform company, has acquired a majority stake in Asian Institute of Nephrology and Urology, a urology and nephrology-focused tertiary care hospital.
Footnotes
1. Dr. Zaheer Ahmed v. Union of India (W.P.(C) 11711/2018 & CM APPL. 45307/2018).
2. CDSCO notification dated August 28, 2018, available at: https://cdsco. gov.in/opencms/resources/UploadCDSCOWeb/2018/UploadGazette_NotificationsFiles/2018.08.28_Draft%20GSR%20817(E)_Sale%20of%20 Drugs%20by%20E-Pharmacy.pdf
3. Article published by Indian Express on November 16, 2023, available at: https://indianexpress.com/article/cities/delhi/frame-policy-online-saledrugs-delhi-high-court-centre-9029188/
4. Health Ministry's public notice dated November 10, 2023, available at: https://main.mohfw.gov.in/sites/default/files/Public%20notice%20Draft%20 National%20Pharmacy%20Commission%20Bill.pdf
5. The Pharmacy Education Board will among other things determine the minimum requirements and standards of pharmacy education and examination at undergraduate level and postgraduate level.
6. The Pharmacy Assessment and Rating Board will among other things grant permission for establishment of a new pharmacy institution, or to start any postgraduate level or higher qualification course.
7. The Pharmacy Ethics and Registration Board will among other things maintain an online National Pharmacy Register containing the name, address and recognised qualifications of a registered pharmacy professional.
8. The petitioners were Bharat Serums and Vaccines Limited, Cipla Limited, Bard Healthcare India Private Limited, and Poly Medicure Limited.
9. Union of India v. Bharat Serums and Vaccines Limited and others, LPA 118/2023 & C.M. No. 7868/2023, C.M. No. 7871/2023.
10. As per paragraph 20 of the DPCO, MRP of all drugs, including non-scheduled formulations, must be monitored by the GOI, to ensure that their MRP does not increase by more than 10% of the MRP during the preceding 12 months. In case the increase in MRP is more than 10%, the manufacturer must deposit the amount so overcharged, along with interest, from the date of increase in price.
11. Approach Paper on National Pharmaceuticals Policy [2023] – Draft for Discussions, available at: https://pharmaceuticals.gov.in/sites/default/ files/31.10.23%20Draft%20National%20Pharmaceuticals%20Policy.pdf
12. CDSCO's notice dated October 25, 2023, available at: https://cdsco.gov.in/ opencms/opencms/system/modules/CDSCO.WEB/elements/download_ file_division.jsp?num_id=MTA1ODc=
13. Minutes of the 54th meeting of the multidisciplinary committee of experts convened on September 15, 2023, available at: 54th-MDC-Minutes.pdf (nppaindia.nic.in).
14. Formulation 1 is used to treat or prevent conditions caused by a lack of vitamin D.
15. Formulation 2 is a combination vaccine that is given to protect against infections caused by diphtheria, tetanus (lockjaw), pertussis (whooping cough), poliovirus, and Haemophilus influenzae Type b.
16. Health Ministry's notification dated February 11, 2020, available at 216073. pdf (egazette.gov.in).
17. Health Ministry's notification dated February 11, 2020, available at 216075. pdf (egazette.gov.in).
18. CDSCO's circular dated October 12, 2023, available at https://cdsco.gov. in/opencms/opencms/system/modules/CDSCO.WEB/elements/download_ file_division.jsp?num_id=MTA1NzM=
19. DGTR's initiation notification dated September 26, 2023, available at: https://www.dgtr.gov.in/sites/default/files/English%20Initiation%20ECH.pdf
20. High Court of Allahabad, Judgement dated November 23, 2023, available at https://www.livelaw.in/pdf_upload/nicholas-piramal-lko-506294.pdf
21. The DMF has all the information on the manufacturing, stability, quality, packaging, purity and impurity profile of Active Pharmaceutical Ingredients, for authorities to ensure that medicines of higher quality.
22. Delhi High Court- Mankind Pharma Limited v. The Advertising Standards Council of India, CS(OS) 768 of 2023, decided on November 28, 2023.
23. To the extent any transactions involve clients of INDUSLAW, the information herein is based on statements in the media and not our professional knowledge of the relevant transaction.
24. https://www.vccircle.com/rareenterprises-backed-iks-health-acquires-usbased-aquity-solutions
25. https://www.vccircle.com/temasekbacked-pharmeasy-s-rights-issueoversubscribed-raises-420-mn
26. https://www.vccircle.com/erislifesciences-acquires-two-businesses-frombiocon-arm
27. https://www.vccircle.com/ihhhealthcare-backed-fortis-sells-chennai-facilityto-mgm-healthcare
28. https://www.vccircle.com/pebacked-gba-group-buys-into-indian-food-andpharma-testing-startup
29. https://economictimes.indiatimes.com/industry/healthcare/biotech/ healthcare/manipal-healthmap-completes-acquisition-of-hyderabad-basedmedcis-pathlabs/articleshow/104522882.cms
30. https://www.livemint.com/companies/news/iquest-enterprises-acquiresviatris-indian-api-operations-11696248578209.html
31. https://www.livemint.com/news/india/tata-capital-s-healthcare-arm-invests10-million-in-apex-kidney-care-11697007979331.html
32. https://www.business-standard.com/companies/news/asia-healthcareacquires-majority-stake-in-ainu-to-invest-rs-600-cr-123092000337_1.html
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