Checking the pulse - Recent legal developments in the Indian healthcare and pharma sector April - May 2025
INTRODUCTION
In the past couple of months, the healthcare and pharmaceutical sector has witnessed a wave of regulatory and policy shifts, reflecting a clear push towards strengthening oversight, enhancing drug safety and streamlining compliance norms. In this regard, the roll out of the long-awaited Drugs and Cosmetics (Compounding of Offences) Rules, 2025 serves as a major development intended to provide procedural clarity on the compounding of minor drug-related violations without engaging in protracted processes. Other key developments include the streamlining of the procedure for the grant of no-objection certificates for exporting new drugs under the New Drugs and Clinical Trials Rules, 2019 and the updating of the risk-based classification of cardiovascular and neurological medical devices in line with the Medical Devices Rules, 2017.
These changes underscore a sector in rapid transition, moving decisively towards stronger safeguards, comprehensive regulation, and global competitiveness. In this edition of ‘Checking the Pulse’, we delve into such key updates pertaining to the months of April 2025 and May 2025.
A. GOVERNMENT INITIATIVES
1. Ministry of Health and Family Welfare notifies the Drugs and Cosmetics (Compounding of Offences) Rules, 2025
On April 24, 2025, the Ministry of Health and Family Welfare (“MoH&FW”) notified the Drugs and Cosmetics (Compounding of Offences) Rules, 2025 (“Compounding Rules”). The Compounding Rules provide a comprehensive framework for the settlement of certain minor offences under the Drugs and Cosmetics Act, 1940 (“D&C Act”) with the aim of reducing the burden on the judicial system.[1]
The Compounding Rules have been formulated to provide a procedural framework to supplement the substantive provision regarding compounding contained in Section 32B of the D&C Act.
As per Section 32B of the D&C Act, the following offences can be compounded, provided they are punishable only with a fine and not with imprisonment or with imprisonment along with a fine:
- import, manufacture, distribution, sale, stock etc. of drugs or cosmetics in contravention with the D&C Act, if the contravention occurs due to: (i) import of the concerned drugs/ cosmetics without adhering to the conditions prescribed in the import license; (ii) misbranding; (ii) the drugs/ cosmetics not being of standard quality; (iii) import or sale of any patented or proprietary medicine without complying with labelling requirements, including failure to display the true formula or list of active ingredients that constitute the medicine; (iv) the cosmetic containing any ingredient which renders it unsafe or harmful for use; and (v) any claims made regarding the ability of the drug in preventing, curing or mitigating a particular disease or ailment.
- failure on the part of persons in charge of any premises where drugs or cosmetics are being manufactured or kept for sale or distribution to disclose the details of such premises, upon being required to do so by the inspector appointed under the D&C Act.
- failure on the part of persons in possession of any drugs or cosmetics to disclose details of the manufacturer (name, address, etc.) from whom the drugs or cosmetics have been acquired, upon being required to do so by the inspector appointed under the D&C Act.
- failure on the part of a licensed manufacturer in maintaining records and registers as required under the D&C Act or in furnishing such documents upon request by authorities designated under the D&C Act.
While the provision was included in the D&C Act in 2008, the implementation of the Compounding Rules serves as the first concrete attempt by the Central Government to provide procedural clarity regarding the settlement of the outlined offences.
The key features of the Compounding Rules are as follows:
Appointment of Compounding Authorities: The Central Government and each State Government has been accorded the authority to appoint officers as compounding authorities responsible for the administration of the Compounding Rules.
Application for Compounding: Any company or person which/ who has committed any offence compoundable under the D&C Act may apply to the compounding authority in the form prescribed under the Compounding Rules, along with relevant information and documents.
Procedure for Compounding: Upon receipt of the application from the applicant, the compounding authority shall call for a report from the reporting authority, under whose jurisdiction the offence has been committed, for examination of the application. Such report shall be furnished by the reporting authority within a period of 30 (thirty) days or within such extended period as may be allowed by the compounding authority.
Upon examination of the application, the compounding authority shall, by order, either: (i) allow the application indicating the amount to be paid for compounding the offence and grant the applicant immunity from prosecution; or (ii) reject the application after giving the applicant an opportunity of being heard and set out grounds for rejection of the application.
The Compounding Rules clarify that compounding cannot be claimed as a matter of right by the applicant.
Payment of Compounding Amount: If the compounding authority allows the application, the applicant is required to pay the compounding amount as determined by the compounding authority within a period of 30 (thirty) days from the date of receipt of the order from the compounding authority. The compounding fee cannot exceed the maximum amount of fine prescribed for the concerned offence under the D&C Act.
Grant and Withdrawal of Immunity from Prosecution: The compounding authority, upon satisfaction that the applicant has cooperated in the compounding proceedings and has made full and true disclosure of facts relating to the proceedings, grant to the applicant immunity from prosecution for the offence in relation to which the application for compounding had been made.
The immunity so granted may be withdrawn in the event: (i) the applicant fails to pay the compounding amount within 30 (thirty) days from the date of receipt of the order from the compounding authority; or (ii) if the compounding authority is satisfied that the applicant concealed facts or tendered false evidence during the compounding proceedings. In case the immunity is withdrawn, the subject matter of the compounding application will be subject to adjudication as per the provisions of the D&C Act.
The implementation of the Compounding Rules has been long-awaited and marks a significant step in the Central Government’s efforts to decriminalize minor offences and promote trust-based governance under the D&C Act.
2. The Central Drug Standard Control Organisation streamlines the procedure for drug transfer from special economic zones into domestic tariff areas
With the intent of preventing the sale and distribution of illegal and unapproved drugs and formulations in India, the Central Drug Standard Control Organisation (“CDSCO”), through a circular dated April 8, 2025, issued new rules to streamline the transfer of drugs manufactured in special economic zones (“SEZ”) to domestic tariff areas (“DTA”) for sale and distribution.[2]
Prior to this circular, units located in SEZs were exempt from mandatory import registrations required for importing a drug into India, provided that such drugs were used solely for export purposes and not diverted for sale within India.
The CDSCO has now allowed the transfer of drugs from SEZs to DTAs for sale and distribution, subject to compliance with the following guidelines:
- Drugs that are banned for sale or distribution in India but are manufactured in SEZs for export cannot be transferred to DTAs for any purpose.
- For transfer of: (i) Approved New Drugs[3]; and (ii) Unapproved New Drugs[4] manufactured in SEZs, the requirements specified under the New Drugs and Clinical Trials Rules, 2019 (“NDCT Rules”) and D&C Act, including procurement of manufacture and import permissions, must be complied with.
- For drugs manufactured in SEZs that do not fall under categories (a) and (b) above, compliance with the requirements specified under the Drugs and Cosmetics Rules, 1945 (“D&C Rules”) is mandatory.
- In case an Active Pharmaceutical Ingredient (“API”) is imported in the SEZ for manufacturing a drug, and such formulation is proposed to be diverted to the DTA for sale and distribution, procurement of a registration certificate and an import license is mandatory.
- APIs/ semi-finished/ finished dosage forms in bulk packs imported without a registration certificate and an import license shall not be permitted for sale and distribution in the DTA.
These guidelines have been adopted with the aim of ensuring that the drugs meet quality, safety and efficiency requirements specified in the D&C Act and relevant rules formulated thereunder.
3. CDSCO issues directions on the manufacturing and marketing of unapproved fixed-dose combinations
Amid rising concerns about the manufacturing and marketing of unapproved fixed-dose combinations (“FDCs”), the CDSCO directed drug controllers across all States and Union Territories to put an immediate halt on the manufacturing, sale, and distribution of 35 (thirty five) FDCs.
In the directive issued on April 11, 2025, the CDSCO stated that these formulations, ranging from antidiabetics, antihypertensives, and antibiotics to pain relievers, have been licensed for marketing despite not having undergone safety and efficacy evaluations, as required under the NDCT Rules.[5] The directive highlighted that the licensing of FDCs in the absence of scientific validation compromises patient safety, and may lead to adverse drug reactions, drug interactions and other health hazards.
To tackle this issue, the CDSCO further directed drug controllers to ensure that the approval process adopted by them for unapproved FDCs complies with the requirements prescribed under the NDCT Rules. These include ensuring that these formulations obtain clearance from CLA. The move is part of a broader regulatory effort aimed at enhancing the scientific validity of approved drugs and aligning domestic standards with global practices.
4. CDSCO revises guidelines for grant of no-objection certificates for export of unapproved and approved new drugs
On May 7, 2025, the CDSCO released a guidance document (“Guidance Document”) to revamp the procedure for the grant of no-objection certificates for the manufacture of: (a) Approved New Drugs; and (b) Unapproved New Drugs, intended for export purposes (“Export NOC”).[6]
As per the Guidance Document, manufacturers holding a valid license in: (a) Form 25 (license to manufacture for sale or for distribution of drugs other than those specified in Schedule C, C(1) and X); (b) Form 28 (license to manufacture for sale or for distribution of drugs specified in Schedules C and C(1) excluding those specified in Schedule X); and (c) Form 28-D (licence to manufacture for sale or for distribution of large volume parenterals/ sera and vaccine/ recombinant DNA (r-DNA) derived drugs specified in Schedules C and C(1) excluding those specified in Schedule X) can now apply online for procuring the Export NOC by submitting the one-time Integrated Registration Form through the SUGAM portal.
Along with the form, the applicant is required to submit additional supporting documents, such as a legal undertaking in the manner prescribed under the Guidance Document, a copy of the valid manufacturing license, and documentary proof that the drugs intended to be exported are permitted in the importing country.
Subject to the verification of the application by the zonal office of the CDSCO, the Export NOC shall be granted to the manufacturer within 7 (seven) working days from the date of application. The Export NOC shall be granted in the following manner: (a) in the case of first application, the Export NOC shall be granted for a period of 1 (one) year from the date of grant; and (b) in the case of any subsequent applications after the first one, a quantity-specific Export NOC shall be granted on a case-to-case basis.
The new framework has only been formulated for manufacturers of Approved New Drugs and Unapproved New Drugs in India, and thus, manufacturers of drugs falling under the ambit of the Narcotic Drugs and Psychotropic Substances Act, 1985 (“NDPS Act”) shall still be required to obtain case-specific NOCs in line with the erstwhile framework.
5. CDSCO issues guidance document to regulate the safe disposal of expired and unused drugs
On May 27, 2025, the CDSCO issued a guidance document to provide comprehensive instructions for the safe disposal of expired and unused drugs, with the aim of reducing the detrimental impact caused to public health and environment due to improper disposal of these drugs.[7]
The terms ‘expired drugs’ and ‘unused drugs’ have been defined in the guidance document in the following manner: (a) ‘expired drugs’ refer to drugs which have crossed the expiry date mentioned on the label; and (b) ‘unused drugs’ refer to medications which have not been used by the individual for whom they were prescribed or purchased, on account of being unsealed, not of standard quality, damaged, etc.
The guidance document lays down appropriate disposal methods based on the physical characteristics of these drugs (i.e., solids, semi-solids, liquids, etc.). These disposal methods include landfill, encapsulation and inertization through waste immobilization, burning, and chemical decomposition, among others.
The primary responsibility to dispose of expired and unused drugs has been placed on: (a) manufacturers, for the drugs returned to them by the retailers and wholesalers on account of being expired or unused; and (b) private and government hospitals/ government agencies. They are required to adhere to the requirements specified under the Bio-Medical (Management and Handling) Rules, 2016, in carrying out the disposal activity. Separately, for the disposal of samples drawn for testing and analysis, the Drug Inspector appointed under the D&C Act has been made responsible.
These stakeholders are further required to maintain records concerning the disposal of expired/ unused drugs, in the format prescribed in the guidance document.
B. POLICY PROPOSALS
1. The Drugs Technical Advisory Board recommends classification of antibiotics as “new drugs” under the NDCT Rules
In its 92nd (ninety-second) meeting held on April 24, 2025, the Drugs Technical Advisory Board (“DTAB”) recommended the CDSCO to consider the proposal for inclusion of all antibiotics within the fold of the definition of ‘new drugs’ under the NDCT Rules and make suitable amendments in the NDCT Rules to enhance regulatory oversight over antibiotics.[8]
DTAB had earlier requested the Drugs Consultative Committee to probe into the matter and provide their observations, with the aim of curbing the growing antimicrobial resistance through regulatory oversight. The issue has gained significance recently, on account of antimicrobial resistance being increasingly recognised as a public threat worldwide.
Presently, generic version of antibiotics requires the approval of state licensing authorities (“SLAs”) constituted by each State Government in accordance with the D&C Act. The recommendation by the DTAB intends to centralize the process by transferring this authority from the SLAs to the CLA.
In case the CDSCO considers the recommendation, pharmaceutical companies seeking approval for antibiotic formulations would be mandatorily required to comply with all regulations applicable to ‘new drugs’ as prescribed under the NDCT Rules. These requirements include: (a) obtaining permission for conducting clinical trials and bioequivalence studies; (b) obtaining fresh manufacturing and import permissions; and (c) labelling and packaging compliances, among others. Furthermore, patients would be required to adduce prescriptions for the purchase of antibiotics, which would in turn necessitate documentation of the manufacturing, marketing and sale of these drugs by pharmaceutical companies.
2. CDSCO publishes draft guidelines to regulate biosimilars with enhanced focus on advanced analytical evaluations
In view of advancements in scientific technology, the CDSCO published the draft of the revised guidelines on biosimilars on May 6, 2025 (“Draft Guidelines”), for public consultation.[9] Once finalized, the Draft Guidelines will replace the Guidelines on Similar Biologics: Regulatory Requirements for Marketing Authorization in India, which had come into effect in 2016.
The Draft Guidelines propose changes in the marketing authorisation requirements for biosimilars and have been devised to harmonize domestic regulatory requirements with global standards. In this regard, a stronger emphasis has been placed on analytical characterization and in vitro studies for testing biosimilars, instead of adopting extensive and time-consuming animal testing. This approach aligns with global regulatory trends, particularly the standards established by the World Health Organization in TRS 1043: Guidelines for Evaluation of Biosimilars. The Draft Guidelines propose the introduction of novel analytical methodologies for establishing similarities between biosimilars and reference biological products (“RBP”). In addition, the guidelines also address statistical considerations more comprehensively, providing clarity on establishing similarity ranges and calculating appropriate sample sizes for clinical studies. This move is aimed at ensuring that bio-similarity assessments are scientifically sound and reproducible.
Pertinently, the Draft Guidelines set out a revised pathway for biosimilar approval through comprehensive compatibility exercises intended to ascertain if the proposed biosimilar actually demonstrates structural, functional and clinical similarity with the RBP.
To this effect, a distinction has been made between the afore-stated compatibility exercise and the licensing process generally followed for generic drugs, where structural similarity and bioequivalence of the generic drug with its reference product are considered sufficient to infer therapeutic equivalence. As per the Draft Guidelines, this distinction has been made as biological products are typically large and complex proteins that are difficult to characterize and manufacture in comparison to small molecules, and thereby, need to be subjected to more comprehensive compatibility exercises for approval purposes.
3. MoH&FW issues draft Drugs (Second Amendment) Rules, 2025 to amend D&C Rules for public consultation
On May 28, 2025, the MoH&FW issued the draft Drugs (Second Amendment) Rules, 2025 (“Draft Amendment Rules”) to amend the erstwhile D&C Rules.[10] The notable amendments proposed by the Draft Amendment Rules are as follows:
- Mandatory Bacterial Endotoxin Testing for All Substances Intended for Parenteral Administration: The existing Rule 121A is proposed to be substituted with a new rule that mandates that all solutions intended for parenteral administration (injectables), as well as any accompanying aqueous solvents, must comply with a test for bacterial endotoxins. The testing procedure will be as per the current edition of the Indian Pharmacopeia. The option to use a pyrogens test will only be allowed if justified and authorized. This is a major shift from the present framework, wherein pyrogen testing is mandated only for solutions of large volumes (i.e., 10 (ten) ml or more).
- Supervision of Drug Sales by Competent Person: The Draft Amendment Rules propose amendments to: (i) Form 20-B (license to sell, stock or exhibit or offer for sale, or distribute by wholesale, drugs other than those specified in Schedule C, C(1) and X); (ii) Form 20-G (license to sell, stock or exhibit or offer for sale, or distribute by wholesale drugs specified in Schedule X); and (iii) Form 21-B (license to sell, stock or exhibit or offer for sale, or distribute by wholesale drugs specified in Schedule C and C(1), excluding those specified in Schedule X), requiring the applicant/ licensee to designate a competent person to oversee and supervise drug sales, and mention their details in the application. Further, the licensee would be required to intimate the licensing authority regarding any change in the competent person so designated within 1 (one) month of such change.
- Exemption from Restrictions for Non-Medicinal Manufacturers: The Draft Amendment Rules seek to remove restrictions on the sale of drugs to manufacturers of non-pharmaceutical products such as beverages, confectionery, biscuits, etc. To this effect, the restrictive conditions present in licenses granted under: (i) Form 20-B (license to sell, stock or exhibit or offer for sale, or distribute by wholesale drugs other than those specified in Schedule C, C(1) and X); (ii) Form 20-BB (license to sell, stock or exhibit or offer for sale by wholesale, or distribute drugs other than those specified in Schedule C and C(1), from a motor vehicle); (iii) Form 21-B (license to sell, stock or exhibit or offer for sale, or distribute by wholesale drugs specified in Schedule C and C(1) excluding those specified in Schedule X); and (iv) Form 21-BB (license to sell by wholesale or to distribute drugs specified in Schedule C and C(1), from a motor vehicle) are proposed to be removed. The Draft Amendment Rules clarify, however, that antimicrobials will remain subject to the erstwhile restrictions and cannot be sold to these manufacturers.
These proposed amendments indicate a focus on enhancing the quality control of parenteral drugs, ensuring responsible dispensing through competent personnel, and refining the conditions under which certain industries can procure drugs, with a particular emphasis on stricter control over antimicrobial drugs.
C. Medical devices
1. CDSCO issues revised risk-based classification list of cardiovascular and neurological medical devices
The CDSCO issued a notice dated April 1, 2025, whereby it released the revised draft of the risk-based classifications for medical devices falling in the cardiovascular and neurological categories.[11]
The draft list includes a total of 553 (five hundred and fifty three) devices, out of which 351 (three hundred and fifty one) devices are cardiovascular devices, while 202 (two hundred and two) devices are neurological devices. The devices have been further classified based on their potential risks to the intended user. As per this classification, 372 (three hundred and seventy two) devices (such as aortic annuloplasty rings, biological heart valve implants) have been classified under high-risk classes (i.e., Class C and Class D), and 181 (one hundred and eighty one) devices (such as cardiac mapping system reference patches) have been kept as low-risk (i.e., Class A and Class B).
Pertinently, this distinction based on perceived risk levels has been created in line with the Medical Devices Rules, 2017 (“MD Rules”), which prescribes for the classification of medical devices based on the risk posed to the intended user, into the following categories: (a) Class A (low risk devices such as absorbent cotton wools); (b) Class B (low moderate risk devices such as thermometer); (c) Class C (moderate high risk devices such as implants); and (d) Class D (high risk devices such as heart valve).
2. CDSCO streamlines the application process for procurement of market standing certificate and non-conviction certificate for licensed medical devices
On April 9, 2025, the CDSCO issued a notice to introduce an auto-generated certification process for obtaining Market Standard Certificate (“MSC”) and Non-Conviction Certificate (“NCC”) in relation to licensed medical devices.[12]
An MSC serves the purpose of establishing that an entity possesses a valid manufacturing license under the MD Rules and that the medical device manufacturer has been actively manufacturing and selling its manufactured products in the domestic market. This certificate, once granted, is an indicator of the creditworthiness and reputation of the entity in India. Similarly, an NCC serves as proof of regulatory compliance, as it certifies that the medical device manufacturer or importer has not been convicted of any offences related to the safety and/ or quality of medical devices.
As per the notice, the erstwhile online application workflow for grant of these certificates is being upgraded with a new workflow for auto-generated certification. On account of this change, the CDSCO has clarified that all applications for procurement of MSC and NCC that were made under the previous regime will stand automatically rejected and has mandated all applicants to file fresh applications in this regard.
D. NOTABLE JUDGMENTS
1. The Supreme Court of India urges the formulation of a statutory mandate for medical professionals to only prescribe generic drugs
The Supreme Court of India has called for the formulation of a nationwide statutory mandate for doctors to prescribe only generic drugs and not drugs of a particular brand. This observation came in response to a public interest litigation (“PIL”) filed against the widespread practice followed by pharmaceutical companies of bribing doctors to prescribe branded, high-cost and excessive drugs to patients.[13]
Under the PIL, the petitioners sought the Supreme Court to lay down binding guidelines to control and regulate the unethical marketing practices of pharmaceutical companies. It is in response to these submissions that the Supreme Court observed that a statutory mandate directing doctors to prescribe generic drugs only and not drugs of a particular brand should resolve the issue. It highlighted the recent decision of the State of Rajasthan to make it mandatory for all medical practitioners operating in the State to only prescribe generic drugs as an example of how the statutory mandate can be made effective across India.
The Supreme Court shall deliberate on the matter further at its next hearing, which is set to take place on July 24, 2025.
2. Supreme Court clarifies on applicability of NDPS Act on psychotropic substances not listed in Schedule I of the Narcotic Drugs and Psychotropic Substances Rules, 1985
The Supreme Court has decisively settled the long-standing legal conundrum concerning the applicability of the NDPS Act to psychotropic substances that appear in the Schedule to the NDPS Act but not Schedule I of the Narcotic Drugs and Psychotropic Substances Rules, 1985 (“NDPS Rules”).[14]
In an appeal against the decision of the High Court of Delhi (“Delhi HC”), the Supreme Court observed that the term ‘psychotropic substance’ under Section 8 of the NDPS Act must be read with Section 2(xxiii) to include all substances listed in the Schedule to the NDPS Act and not just those listed in Schedule I of the NDPS Rules.[15]
The matter had originally stemmed from the respondent-accused being found in possession of Buprenorphine Hydrochloride without possessing the requisite license. While the said psychotropic substance is listed in the Schedule to the NDPS Act, it is not covered under Schedule I of the NDPS Rules. The Delhi HC had earlier opted for a narrow interpretation of the NDPS Act, holding that the legislation does not apply to psychotropic substances which are not listed in Schedule I of the NDPS Rules.
In its decision, the Supreme Court reaffirmed that the NDPS Act is a special legislation with overriding effect and thus cannot be diluted by rules framed under its fold, unless explicitly stated otherwise.
Accordingly, the Supreme Court allowed the appeal, holding that Buprenorphine Hydrochloride, being a psychotropic substance listed in the Schedule to the NDPS Act, falls within the purview of the legislation, and accordingly, activities involving the substance without proper authorization would constitute an offence under the NDPS Act, even if the substance is not listed in Schedule I of the NDPS Rules.
[1] The notification can be accessed here:
[2] The circular can be accessed here:
https://www.cdsco.gov.in/opencms/export/sites/CDSCO_WEB/Pdf-documents/IMP141.pdf
[3] IndusLaw Note: Under the NDCT Rules, approved new drugs refer to a drug that has been granted permission for manufacture for sale or distribution by the central licensing authority (“CLA”) designated under the NDCT Rules (“Approved New Drugs”).
[4] IndusLaw Note: Under the NDCT Rules, unapproved new drugs refer to drugs which have not been granted permission for manufacture or import by the CLA, however, are critical for treatment of life threatening diseases, diseases causing physical disability, etc (“Unapproved New Drugs”). Permission to manufacture or import Unapproved New Drugs can be only be obtained by government hospitals and government medical institutions.
[5] The directive can be accessed here:
[6] The Guidance Document can be accessed here:
[7] The guidance document can be accessed here:
[8] The minutes of the 92nd meeting of DTAB can be accessed here:
[9] The Draft Guidelines can be accessed here:
[10] The Draft Amendment Rules can be accessed here:
[11] The notice can be accessed here:
[12] The notice can be accessed here:
[13] https://pharma.economictimes.indiatimes.com/news/policy-and-regulations/sc-backs-direction-to-prescribe-only-generics-suggests-countrywide-adoption/120832412
[14] The copy of the judgment can be accessed here: https://www.livelaw.in/pdf_upload/1271420122025-04-17-596235.pdf
[15] The copy of the judgment can be accessed here: https://www.livelaw.in/pdf_upload/1271420122025-04-17-596235.pdf
