As the COVID-19 pandemic continues, the pharmaceutical sector has adapted to major, fast-moving changes. While the pandemic has pushed certain developments to the backseat, it has accelerated various others. Major developments among others, include more stringent medical device regulations and an overhauled consumer protection regime . As the year comes to a close, we take a look at key developments that have shaped the pharmaceutical industry against the backdrop of the COVID-19 pandemic.
New Consumer Protection Law
In July 2020, new consumer legislation came into force in India, replacing the Consumer Protection Act, 1986 and bringing in stronger protections to consumers and contemporising the law in India. Prior to the Consumer Protection Act, 2019 ("2019 Act"), product liability had not been addressed adequately by relevant legislations (such as the Consumer Protection Act, 1986, Drugs and Cosmetics Act, 1945, Sale of Goods Act, 1930, Indian Contract Act, 1872) or broad principles of duty of care, equity, justice, and good conscience etc. The 2019 Act now vests the manufacturer, seller and the service provider with the liability to compensate for any harm that a defective product or service causes to a consumer.
The inclusion of e-commerce, more stringent penalties for misleading advertisements, constraints on celebrity endorsements are among the other key changes. Given the new amendments, compliance will now be a critical area requiring continued focus to safeguard companies against potential product liability claims. This will also impact the kind of insurance coverage companies should maintain.
Changes to Medical Device Regulations
The import or manufacture of medical devices in India is governed by the Medical Devices Rules, 2017 ("MDR") which came into force on January 1, 2018. Under the MDR, the central government could notify certain categories of medical devices which would then be treated as "drugs", thus bringing them within the ambit of the regulations. The medical devices or categories of medical devices not notified were left unregulated by the Government. The regulator typically notified a few devices at a time. However, from 1 April 2020 the Ministry of Health and Family Welfare notified all medical devices falling within a catch-all definition as medical devices. It also added chapter IIIA to the MDR which made registration with the Drugs Controller General of India mandatory for all Medical Devices before 1 October 2021, through an online portal ("Provisional Registration"). Upon obtaining Provisional Registration the device would enjoy regulatory exemptions from key provisions of the MDR (including clinical investigation, clinical performance evaluation, import, manufacture, sale, and quality control requirements). In other words, while voluntary in nature, in the event that such importers or manufacturers did not register their devices by 1 April 2020 they would face the compliance burden of all of the provisions of the MDR and be treated like an already notified medical device (prior to the amendments).
At the time of registration, manufacturers and importers would be required to specify the Class of medical device (Class A to D). However, due to interruptions caused by the COVID-19 crisis, the newly notified devices remained unclassified by the CDSCO with no online portal for registration set up. Therefore, while the amendments do call for companies to obtain a Provisional Registration for their devices on 1 April 2020, companies were unable to make the applications.
In September 2020, as a first step in facilitating the online registration requirement, the CDSCO then released draft classifications for 1,866 newly notified medical devices and 80 in-vitro diagnostic devices. Devices are now classified into 24 categories per international norms and divided into Classes based on risk. Currently, the document is in the form of a draft, pending stakeholder comments and finalisation within 30 days from the date of issue of the notification. As on the date of this article, the draft classifications are yet to be finalised. What is noteworthy is that several commonly used products included in the list such as spectacles (frames and lenses), contact lenses, public respirator masks (2 and 3 ply), would all be regulated as medical devices.
Given the importance of the industry, we hope to receive more clarity with respect to devices that will be regulated moving forward.
Telemedicine Now Permitted
In an effort to ensure timely access to doctors for patients (even for serious health concerns other than COVID-19) during the pandemic, the Indian government released the Telemedicine Practice Guidelines on 25 March 2020 (under the Indian Medical Council Act, 1956). The guidelines clarify the law on teleconsultation in India, encouraging registered medical practitioners enrolled in the State or the Indian Medical Register to use telemedicine in their regular course of practice. It enables written documentation, providing additional legal protection for both the patients and the doctors.
Practitioners may provide services through video conferencing, telephone calls, or even chat platforms, as determined by the practitioner. There are also restrictions on the medication that may be prescribed via a teleconsultation – with lists such as List O, List A, List B, Prohibited List, etc. The guidelines also permit both parties to verify each other's identity and credentials before a tele-consult. The guidelines also set out the parameters of professional misconduct vis-à-vis teleconsultations.
To address privacy concerns, the guidelines stipulate that in the event of a privacy breach, if there is evidence to show that the same was a product of technological or third-party breaches, then the practitioner may not be held liable, provided due care was exercised while engaging such third parties. Furthermore, the guidelines instruct technology platforms to exercise due care while listing practitioners on their portals, with grievance redressal mechanisms. The Indian Medical Council reserves the right to blacklist any platforms that violate the guidelines.
This brings particular clarity and comfort for healthcare professionals who hitherto would carry a concern of mis-diagnosis or liability for conducting an examination or consultation over telecommunication platforms.
Doorstep Delivery of Drugs
The online sale of medicines remains a grey area under Indian law. The law is geared towards the sale of medicines through brick and mortar pharmacies and requires that that all drugs be sold under a license and by a registered pharmacist to the patient who holds a valid prescription (except in the case of over the counter drugs). This makes doorstep delivery of drugs via an online platform difficult. Several companies have attempted to work around these requirements by operating as an intermediary between already licensed pharmacies and patients, rather than storing inventory. While we have not seen legal developments in this area, the government recently permitted the supply of drugs to the doorstep of consumers in public interest, due to the COVID-19 pandemic. In the event of a doorstep delivery, certain conditions such as holding a valid prescription, geographic constraints, and maintenance of records would need to be complied with. While not directly addressed to e-pharmacies, we believe this change bodes well for such companies.
New Drugs and Clinical Trials Rules 2019
Although the New Drugs and Clinical Trials Rules 2019 (NCDT Rules) were notified in 2019 under the aegis of Drugs and Cosmetics Act 1940 and came into effect on 19 March 2019 – their effect has continued to be felt during the Covid-19 pandemic particularly in light of trials required for vaccines. They apply to all new drugs, bioequivalence studies, ethics committee and investigational drugs applicable for human use, and clinical trials in India. The most significant changes brought in by the NDCT Rules are as follows:
- Under Rule 6 of Chapter III of the Rules, an Ethics Committee is required to be set up by anyone who intends to conduct a clinical trial or bioavailability study or bioequivalence study, and the same needs to be registered under Rule 8 of the Act.
- Under Rule 23, if a drug is discovered or developed in India, and is proposed to be manufactured and marketed in India, then the application for permission to conduct clinical trials should be disposed of within 30 working days of receipt of such application by the Central Licensing Authority. However, if no communication is received within the said 30 days, the application would have been deemed to be approved.
- Under Rule 80 of Chapter X of the Rules, a local clinical trial requirement may be waived for the manufacturing of a new drug if it is approved and marketed in any of the countries specified by the Central Licensing Authority.
Legal Recognition to Marketers
Along with the changes to the medical device regime, the Ministry of Health and Family Welfare also introduced significant amendments that would impact pharmaceutical companies that manufacture their drugs via contract manufacturing – a widespread practice in the industry that has come under some scrutiny. The Drugs and Cosmetics (Amendment) Rules 2020, now grants legal recognition to drug distributors / marketers who prefer the asset-light model are willing to distribute drugs manufactured by another manufacturer and want to affix their name on the label of the drug with a view for its sale and distribution.
From 1 March 2021 marketers and manufacturers would need to enter into a written agreement (as opposed to conducting the business solely through POs etc.). They would also be responsible for quality of that drug as well as other regulatory compliances along with the manufacturer under the Drugs and Cosmetics Act, 1940.
Product Linked Incentive Scheme
The Indian pharmaceutical sector remains heavily reliant on imports to meet its active pharmaceutical ingredient (API) requirements. In the aftermath of the pandemic, companies experienced severe disturbance to their supply-chain due outbreak and the consequent lockdown. In a push to improve self-reliance, the Department of Pharmaceuticals notified two Product Linked Incentive Schemes (PLI Schemes) for the promotion of domestic manufacturing of critical Key Starting Materials, Drug Intermediaries, and APIs in India (Bulk Drugs Scheme), on 21 July 2020. The same guidelines were revised on 29 October 2020, incorporating suggestions from the pharmaceutical industry to encourage maximum participation.
Valid from the financial year 2019-20, the Bulk Drugs Scheme provides financial incentives for the sale of forty-one products identified in the scheme with the intent to incentivise domestic manufacturing and attract investments in the pharmaceutical sector. There are parallel efforts to provide bulk drug and medical device parks. Of note is the fact that the PLI Schemes only apply to greenfield projects, defined as new facilities or new plants in existing production facilities.
Revised OSP Guidelines
While digital health was trending prior to 2020, the pandemic has definitely accelerated its adoption and proliferation. The government has pushed initiatives such as the National Digital Health Blueprint and the National Digital Health Mission. We may also see new Data Privacy Bill, 2019 which would bring Indian data protection laws in like with Europe's GDPR. In what would be a relief to digital health companies, the Other Service Providers Guidelines were recently amended. Per the old guidelines tele-medicine providers were required to register themselves with the government. In addition, the language on who would be a service provider was incredibly broad. New amendments have done away with this requirement.
The legality of telemedicine, the inclusion of product liability and the recognition granted to drug manufacturers are welcome changes. With the medical device industry set to grow exponentially, more clarity on the law surrounding medical devices is needed urgently, the delays due to COVID-19 notwithstanding.
* Sameer Sah (Partner) and Maitreya Subramaniam (Associate), are part of the Corporate / Commercial Practice of Khaitan & Co, and they also have a special focus towards Lifesciences, Medical Devices, and Healthcare sector. The views of the author(s) in this article are personal and do not constitute legal / professional advice of Khaitan & Co. For any further queries or follow up please contact us at email@example.com.
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