Checking the Pulse - Recent legal developments in the Indian healthcare and pharma sector (August - September 2025)

INTRODUCTION

In the past couple of months, the healthcare and pharmaceutical sectors have undergone a series of structural reforms and policy adjustments, highlighting a clear focus on enhancing patient-centricity, standardising quality benchmarks, and streamlining regulatory compliance.

In this regard, a significant development has been the introduction of a new classification framework for mental health establishments by the Central Mental Health Authority, a step intended to bring uniformity and strengthen regulatory oversight. Complementing this focus on healthcare access, the Goods and Services Tax Council announced a significant rationalisation of tax rates for essential medicines and medical devices, aiming to reduce healthcare costs and improve affordability for patients. On the industry front, the Department of Pharmaceuticals has amended the Uniform Code for Pharmaceutical Marketing Practices, 2024, signalling a shift towards a self-regulatory model designed to ease compliance while ensuring ethical marketing.

These developments collectively reflect a strategic push towards building a more robust, transparent, and accessible healthcare ecosystem in India.

In this edition of ‘Checking the Pulse’, we delve into key updates for the months of August 2025 and September 2025.

GOVERNMENT INITIATIVES

Central Mental Health Authority introduces a new classification framework for mental health establishments

On August 12, 2025, the Central Mental Health Authority (“CMHA”) notified the Mental Healthcare (Central Mental Health Authority) Amendment Regulations, 2025 (“Amendment Regulations”), which amended the Mental Healthcare (Central Mental Health Authority) Regulations, 2020 (“Mental Healthcare Regulations”) and introduced a framework for the classification of mental health establishments across India. ₁

In India, the Mental Healthcare Act, 2017 (“MHC Act”) and the Mental Healthcare Regulations serve as the primary legislations for the governance of mental health establishments. Under the MHC Act, the term ‘mental health establishment’ is defined broadly to mean any health facility, wholly or partly for the care of persons with mental illness, including establishments under traditional medicine systems such as Ayurveda, Yoga, Unani, Siddha, and Homoeopathy (“AYUSH”). Pertinently, Section 65(5) of the MHC Act empowers the CMHA to classify these establishments and specify different standards for each category with respect to the scope of services to be provided, the facilities to be maintained, as well as minimum qualifications for appointment of personnel, in these establishments.

In exercise of its powers, the CHMA has notified the Amendment Regulations to introduce the following 5 (five) categories of mental health establishments, with the objective of ensuring greater uniformity and standardisation in their registration and functioning:

1. Standalone Mental Health Establishments (Category A): Standalone and dedicated centres that exclusively provide in-patient mental health services without being part of a general or multi-speciality hospital setup. This includes standalone central or state-run mental hospitals as well as private mental hospitals and psychiatric nursing homes.
2. Psychiatric Department of Medical Colleges (Category B): Psychiatric departments integrated within government or private medical colleges, which provide clinical and academic services.
3. Psychiatric Wards of Multi-Speciality Hospitals (Category C): Psychiatric wards or units that are a part of a general or multi-specialty hospital, including facilities under the district mental health programme.
4. Standalone De-addiction Centres (Category D): Standalone centres specifically designed for in-patient treatment for substance use disorders, including integrated rehabilitation and addiction treatment facilities. Similar to Category A, these centres are not part of any other health or mental health institution.
5. Centres for Psychosocial Rehabilitation (Category E): Establishments providing residential psychosocial rehabilitation and long-term community-based care such as quarter-way homes, halfway homes, and long-stay homes.

The Amendment Regulations prescribe that all healthcare establishments falling under the afore-mentioned categories are required to register with either the CMHA or the relevant state mental health authority under Section 65 of the MHC Act. This mandate ensures that all facilities adhere to the operational standards prescribed for their respective categories, covering aspects like in-patient care, rehabilitation programs, and community support services.

Department of Pharmaceuticals amends the Uniform Code of Pharmaceutical Marketing Practices, 2024 to ease compliance

The Department of Pharmaceuticals (“DoP”), by way of a circular dated September 1, 2025 (“Circular”), has introduced amendments to the Uniform Code for Pharmaceutical Marketing Practices, 2024 (“UCPMP”). ₂

The UCPMP is a framework of ethical guidelines to regulate the marketing practices of pharmaceutical companies in India. Initially introduced in 2015 as a voluntary code aimed at curbing unethical marketing practices, the UCPMP was significantly revised and reissued by the DoP in March 2024. This revision was driven by a growing concern over unethical marketing practices, and sought to enhance transparency in the interactions between pharmaceutical companies and healthcare professionals.

The key amendments to the UCPMP introduced pursuant to the Circular have been discussed below:

1. Clarification on valuation of free samples: Prior to the amendment, there was no clarity on the valuation of free medical samples supplied to healthcare professionals. To address this gap, a clear methodology for valuing free medical samples has now been introduced. For samples manufactured in-house, the value per unit will be the price charged to stockists or immediate customers. For samples that are purchased, the value will be recorded at their purchase price.
2. Complaint reporting mechanism and data retention framework: The Circular requires pharmaceutical industry associations to maintain complaint records on their respective websites. These records must detail the nature of the complaint, the company involved, and the action taken. Further, pharmaceutical associations are mandated to retain such records and establish systems for storing member data for a period of at least 5 (five) years, and make the information accessible to regulators, courts, or committees upon request. The Circular clarifies that only those companies which are affiliated with such associations are required to lodge complaints or make disclosures on these websites, while other companies shall continue submitting disclosures directly on the UCPMP portal.
3. Disclosure of marketing expenditure and self-declaration of compliance: Companies are now required to disclose their marketing expenditure in the form set out in the annexure to the Circular within 2 (two) months of the end of every financial year or upload the same on the website of the pharmaceutical industry association (in case of affiliation). In addition to the disclosure of marketing expenditure, companies are also required to provide an annual self-declaration of their compliance with the UCPMP within 2 (two) months of the end of every financial year.

These amendments signify a move towards a self-regulatory model, placing greater responsibility on pharmaceutical industry associations to ensure transparency and accountability.

Central Drugs Standard Control Organisation simplifies manufacturing approval process for early-stage genetic engineering research

The Central Drugs Standard Control Organisation (“CDSCO”), through a circular dated September 3, 2025, streamlined the regulatory pathway for biopharmaceutical research and development (“R&D”) by simplifying the process for obtaining permission to manufacture test items for early-stage genetic engineering experiments. ₃

The key aspects of this regulatory update are outlined as follows:

1. Sufficiency of approval from Institutional Biosafety Committee for Form CT-10 submission: In accordance with the recommendations made during the 314^th (three hundred and fourteenth) meeting of the Review Committee on Genetic Manipulation (“RCGM”), the circular clarifies that approval from an Institutional Biosafety Committee (“IBSC”) is now sufficient for submitting a Form CT-10 application under the New Drugs and Clinical Trials Rules, 2019. This application is used to seek permission to manufacture products for testing and analysis of recombinant DNA. The relaxation applies to experiments classified under Category I and Category II of the Recombinant DNA Guidelines.

Under the Recombinant DNA Guidelines, experiments are categorised based on risk levels and the extent of regulatory oversight required. Experiments with very low risk fall under Category I, while those with low to moderate risk are classified as Category II.

   b. Elimination of prior RCGM clearance: The erstwhile requirement for applicants to obtain clearance from the RCGM before          submitting a Form CT-10 application to the CDSCO has been removed. Under the Recombinant DNA Guidelines, IBSC                      functions as the first-level review and monitoring body within individual institutions conducting recombinant DNA work. It is        responsible for categorising experiments as Category I or Category II based on risk levels and for ensuring that appropriate          biosafety measures and facilities are in place. The RCGM, established under the Department of Biotechnology, operates at            the national level and provides higher-level oversight, particularly for Category III and Category IV experiments, which                    involve greater biosafety risks.

The revised framework is expected to accelerate innovation in areas such as biopharmaceuticals, recombinant DNA products, and gene therapy research. For manufacturers, particularly early-stage R&D entities and academic-industry collaborations, this regulatory shift offers significant operational advantages by introducing greater flexibility in the initial approval process.

Goods and Services Tax Council reduces applicable tax rates on medicines and medical devices

During the 56^th (fifty-sixth) meeting of the Goods and Services Tax Council held on September 3, 2025, the finance minister announced a significant rationalisation of Goods and Services Tax (“GST”) rates for various medicines and medical devices. ₄  This move is geared towards reducing overall healthcare costs and enhancing the affordability of treatment for patients across India.

The key tax revisions are as follows:

1. Tax exemption for life-saving drugs: GST has been fully exempted on a total of 33 (thirty-three) life-saving drugs, including Asciminib, Mepolizumab, Miglustat, and Alirocumab. Further, 3 (three) life-saving drugs used in the treatment of cancer, rare diseases, and other chronic conditions have also been exempted from taxation.
2. General reduction for other medicines: The GST rate on all other drugs and medicines has been uniformly reduced from 12% (twelve percent) to 5% (five percent).
3. Rate cut for medical devices: In a significant relief for the sector, the GST on medical devices and apparatus has been reduced from 18% (eighteen percent) to 5% (five percent).

The latest round of tax reduction builds on previous efforts to address anomalies in the indirect tax regime and is expected to mitigate long-standing industry concerns regarding inverted duty structures.

Industry stakeholders have welcomed the move, highlighting that it will not only enhance the affordability of healthcare but also strengthen the domestic pharmaceutical and medical device supply chain, supporting India’s position as a global hub for life sciences innovation.

POLICY PROPOSALS

Government Committee begins formulating rules to regulate import of refurbished medical devices

A high-level inter-departmental committee established by the Central Government (“Committee”) has initiated drafting a dedicated regulatory framework for the import of refurbished or second-hand medical devices. ₅  As part of this process, the Committee has opened consultations with the Ministry of Health & Family Welfare, CDSCO, the Directorate General of Health Services, the DoP, and key industry bodies.

Currently, the Medical Devices Rules, 2017 (“MDR”) do not differentiate between new and refurbished devices. While the import of refurbished medical devices is permitted, it is limited to a specific list of high-end, high-value equipment such as MRI equipment, radiotherapy devices, endoscopes, etc., and requires a no-objection certificate from the Ministry of Environment, Forest and Climate Change. ₆

In view of this, the proposed regulatory framework aims to address regulatory gaps, especially on account of the unique safety, quality and lifecycle concerns associated with refurbished equipment. Key areas under consideration include establishing standards for determining the service life of a medical device, defining eligibility criteria for the import of specific categories of expensive and critical care equipment, and implementing stringent quality assurance norms to ensure patient safety.

The development of a dedicated regulatory framework is a significant step towards balancing healthcare affordability with patient safety. For importers and healthcare providers, the proposed rules are expected to bring greater predictability and transparency to the import process. The initiative is expected to improve access to critical medical technologies while ensuring that all medical devices meet stringent quality and safety benchmarks before being approved for use in India.

Parliamentary Standing Committee calls for decentralised healthcare delivery under Ayushman Bharat-PMJAY

The Parliamentary Standing Committee on Finance, in its report dated August 19, 2025 (“Standing Committee Report”), has recommended a series of measures aimed at enhancing the reach and effectiveness of the Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (“AB-PMJAY”). ₇

AB-PMJAY is India’s flagship public health insurance scheme, providing annual health coverage of INR 500,000 (Indian Rupees Five Hundred Thousand) per family for secondary and tertiary care to approximately 550 million (Five Hundred Fifty Million) beneficiaries.

The primary recommendation in the Standing Committee Report is for the Central Government to adopt a decentralised model for healthcare delivery under AB-PMJAY. Specifically, the report suggests use of mobile health units and telemedicine hubs to bridge accessibility gaps, particularly in remote, tribal and hilly regions where physical infrastructure is limited.

To further strengthen the link between health and employment, the standing committee also recommends the universalisation of health education programmes in schools and colleges. This would involve integrating topics such as nutrition, physical fitness, and mental well-being into the academic curriculum through the government’s existing ‘Fit India’ and ‘Eat Right’ initiatives.

These recommendations highlight a strategic focus on leveraging technology to overcome last-mile delivery challenges in public healthcare. If implemented, this approach can significantly improve the accessibility and impact of AB-PMJAY. Furthermore, the emphasis on preventive health education signals a move towards a holistic and proactive public health model in India.

Drugs Consultative Committee proposes Braille labelling on medicine packaging to enhance accessibility

The Drugs Consultative Committee (“DCC”), an advisory body to the CDSCO, has invited stakeholder comments on a proposal to introduce Braille labelling on medicinal packaging. ₈  The notice, dated September 9, 2025, outlines a plan to improve the accessibility of medicines for blind and visually impaired patients, enabling them to identify critical information independently.

The key recommendations outlined in the proposal are as follows:

1. Scope and implementation: The proposal recommends voluntary implementation of Braille labelling on mono-carton packs of medicines. The initiative intends to initially prioritise medicines that are commonly used by visually impaired populations, such as eye drops. Products that are typically administered under the supervision of healthcare professionals, such as injectables and vaccines, are proposed to be exempt from this requirement.
2. Validation and standards: To ensure accuracy and standardisation, the Braille artwork on packaging would be validated by recognised agencies such as the National Institute for the Empowerment of Persons with Disabilities and the Braille Council of India. The proposal also recommends adopting font standards established by the European Commission for Braille on medicinal packaging, ensuring global alignment.
3. Additional accessibility measures: The DCC has endorsed a range of supplementary measures to improve accessibility. These include the use of Braille cards in bulk packs containing more than 10 (ten) units and the integration of quick response (QR) codes on packaging that link to voice-assisted guidance. The proposal also encourages marketing authorisation holders to provide package leaflets in accessible formats upon request and advises retailers to offer verbal guidance to visually impaired customers regarding dosage, medicine name, and expiry details.

This proposal marks a significant step towards creating a more inclusive and patient-centric healthcare ecosystem in India. If implemented, these measures would empower visually impaired individuals to manage their medications more independently, thereby improving patient safety and reducing reliance on caregivers.

MEDICAL DEVICES 

Indian Council of Medical Research and CDSCO release Standard Protocols for evaluation of In-Vitro Diagnostic kits

The CDSCO, in collaboration with the Indian Council of Medical Research, India’s apex body for biomedical research, released a comprehensive Compendium of Standard In-Vitro Diagnostic (“IVD”) Evaluation Protocols (“Protocol”) on September 8, 2025. ₉  Prior to this, India lacked a unified set of national standards for the evaluation of IVD kits. This resulted in a fragmented and inconsistent licensing process, with non-uniform performance claim assessments across different products and applicants. The newly released Protocol aims to address this regulatory gap by establishing a uniform framework for the performance evaluation of IVD kits, thereby streamlining the licensing process into a transparent and standardised pathway.

The key provisions of the Protocol are as follows:

1. Objective and scope: The Protocol establishes a structured framework for evaluating the safety, sensitivity, and overall performance of IVD kits. The primary objective is to ensure that manufacturers’ claims regarding their diagnostic kits are independently validated before a licence is granted under MDR. This formalises inconsistent past practices and enhances patient safety by strengthening confidence in diagnostic results.
2. Technical and quality standards: The Protocol covers evaluation standards for 39 (thirty-nine) categories of IVD kits, including kits for diseases such as dengue, malaria, influenza, and SARS-CoV-2. It prescribes standardised methodologies for common testing platforms like ELISA (Enzyme-linked immunosorbent assay), rapid diagnostic tests, and real-time polymerase chain reaction kits, thereby ensuring comparability of results. A key mandate is the use of irreversibly de-identified archived clinical samples for robust validation.
3. Procedural safeguards: The Protocol introduces several procedural requirements to reinforce quality assurance, including that all the performance evaluations must be conducted in laboratories accredited by the National Accreditation Board for Testing and Calibration Laboratories, to ensure compliance with rigorous quality standards. The framework provides an exemption from obtaining fresh ethical approvals when using anonymised leftover clinical samples. This measure is expected to streamline the evaluation process while maintaining necessary ethical safeguards, thereby facilitating timely and efficient product assessments.

Haryana unveils Draft Policy to attract INR 50 Billion investment in pharmaceuticals and medical devices

The Government of Haryana is set to introduce a new Pharmaceutical and Medical Device Manufacturing Policy (“Draft Policy”) aimed at attracting investments of up to INR 50,000,000,000 (Indian Rupees Fifty Billion) and positioning the state as a leading hub for healthcare manufacturing in India. ₁₀

To achieve these objectives, the Draft Policy proposes a comprehensive mix of fiscal and non-fiscal incentives, including the following:

1. Capital and operational incentives: Eligible manufacturers will receive substantial incentives on capital expenditure, up to a maximum of INR 2,000,000,000 (Indian Rupees Two Billion). Additionally, operational expenditure incentives of up to INR 200,000,000 (Indian Rupees Two Hundred Million) are proposed to support long-term sustainability and cost competitiveness.
2. Support for startups and R&D: To foster innovation, the Draft Policy provides for reimbursement of up to 50% (fifty percent) of the cost incurred by startups in developing a prototype, capped at INR 1,000,000 (Indian Rupees One Million) per year. Further, fiscal incentives are proposed for R&D projects, including the establishment of incubation facilities.
3. Development of industry clusters: The Draft Policy also offers incentives to encourage the development of dedicated pharmaceutical and medical device manufacturing parks and clusters across Haryana, with the aim of building a robust industrial ecosystem.

By focusing on R&D, export promotion, global certifications, and skill development, the Government of Haryana seeks to reduce import dependency and enhance the affordability and availability of medicines and medical devices for its citizens. The proposed incentive structure is designed to foster a business-friendly environment that promotes innovation, attracts large-scale investment, and strengthens linkages to the global life sciences market.

NOTABLE JUDGMENTS 

Hon’ble Supreme Court of India vacates its stay on omission of pre-approval requirements for AYUSH drugs

In a significant development related to the regulation of advertisements for AYUSH drugs, the Hon’ble Supreme Court of India (“SC”), on August 12, 2025, vacated its earlier stay order concerning the omission of Rule 170 of the Drugs Rules, 1945 (“Drugs Rules”). ₁₁  For context, Rule 170 had previously required state licensing authorities to pre-approve any advertisement related to AYUSH drugs.

The matter originated from a notification issued by the Ministry of AYUSH on July 1, 2024, which omitted Rule 170 from the Drugs Rules, thereby removing the pre-approval requirement. ₁₂  In response, the SC had issued a stay on the notification, effectively keeping the pre-approval process in force pending further judicial review.

However, in its recent order, the SC reversed its interim stance and lifted the stay. The bench observed that once a rule has been validly omitted through the legislative process, the judiciary cannot revive a provision that no longer exists in the statute. While the SC acknowledged concerns about potentially misleading or false claims in AYUSH advertisements, it clarified that such grievances must be addressed through appropriate proceedings before the court, rather than by attempting to reinstate an omitted rule.

Hon’ble High Court of Himachal Pradesh upholds conviction for unlicensed stocking of medicines in clinics

The Hon’ble High Court of Himachal Pradesh (“HP High Court”), in its order dated September 2, 2025, held that stocking allopathic medicines for sale in a clinic without a valid drug licence constitutes a violation of the Drugs and Cosmetics Act, 1940 (”D&C Act”). ₁₃  The HP High Court upheld the conviction and sentence of an individual found in possession of such medicines, emphasising the serious risk posed to public health by unregulated distribution of pharmaceuticals.

The case originated from an inspection conducted in 2001 by a drugs inspector, during which the accused was found displaying allopathic medicines for sale on a rack inside his clinic. Upon being asked to produce relevant authorisations, the accused failed to furnish a valid drug licence or any certification of qualification as a registered medical practitioner. Instead, he presented photocopies of ayurvedic certificates. Consequently, the drugs were seized, and a formal complaint was filed under the provisions of the D&C Act.

The Hon’ble Trial Court of Kangra, Dharamshala convicted the accused under Section 27(b)(ii) of the D&C Act, sentencing him to 1 (one) month of imprisonment and imposing a fine of INR 5,000 (Indian Rupees Five Thousand). This conviction was subsequently upheld by the Hon’ble Sessions Court of Kangra, Dharamshala.

The accused then filed a criminal revision petition before the HP High Court, challenging the conviction. The HP High Court dismissed the revision petition and upheld the lower court’s decision.