Contract manufacturing of Drugs and Cosmetics Increased liability for marketers from 2021
Background
The amendments dated 11 February 2020 to the Medical Devices Rules, 2017 and the Drugs and Cosmetics Rules, 1945 (Rules) broaden the scope of medical devices that fall within the purview of the Indian regulatory framework. On the same day, the Government released another notification amending the Rules with an aim to tighten the regulations in relation to marketing of drugs and medical devices (Amendment).
Amendment
The Amendment introduced the concept of a ‘marketer’ and the compliances associated with being classified as one.
Marketer: For any person to be classified as a marketer, the following elements are required to be fulfilled:
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adoption of drugs manufactured by another manufacturer; |
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adoption of such drugs in the capacity of an agent or any other capacity; |
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adoption is under an agreement for marketing the drug; and |
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the name of the marketer is affixed to the label of the drug with a view to sell and distribute. |
The Amendment specifically states that no marketer will be permitted to adopt drugs manufactured by another manufacturer for marketing such drug by affixing its name in the label with a view to sell and distribute, unless it enters into a marketing agreement with the manufacturer of such drug.
Responsibility of a marketer: A marketer will, in addition to the actual manufacturer, be responsible for the quality of the drug as well as other regulatory compliances, currently assumed solely by the manufacturer under the Drugs and Cosmetics Act, 1940 and the Rules (collectively DCA).
Labelling requirements for marketers: The Amendment prescribes that the name and address of the marketer is required to appear on the label of the innermost container of the drug as well as every other covering in which the container is packed. However, in case a drug is contained in an ampoule or a similar small container, only the name of the marketer will suffice.
Effective Date: The Amendment will be effective 1 March 2021.
Implications
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In 2018, an investigation by the Drugs Controller General of India revealed that many big pharmaceutical companies engage in the practice of procuring drugs manufactured by smaller contract manufacturers to ensure that they are not held liable for the quality of the drugs under the DCA (as the responsibility with respect to the quality assurance lies with the manufacturer under the DCA). This Amendment will have a substantial impact on the pharmaceutical companies engaging in such contract manufacturing activities, who will need to consider the compliance requirements and implement them sooner rather than later. |
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The Amendment will result in increased quality of drugs, as it will help curb the rampant practice of marketing of unapproved or sub-standard or spurious drugs. |
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As marketers will necessarily be required to enter into marketing agreements, their current contract manufacturing arrangements will need to be reviewed to ensure that they have trappings of a marketing agreement. On the other hand, any person that does not want to be classified as a marketer will also need to review its current contract manufacturing arrangements to prevent itself from inadvertently being classified as one. |
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Typically, under contract manufacturing agreements, indemnity from the manufacturer is limited to manufacturing defects and claims arising in relation thereto. These indemnity protections may need to be re-negotiated to provide marketers back-to-back indemnity in relation to compliance with the requirements under the DCA. |
Conclusion
The prolonged timeline allows persons procuring drugs through contract manufacturing arrangements to assess implications of being classified as a ‘marketer’ and review their agreements accordingly.
- Sanchit Agarwal (Principal Associate) and Tanmaya Negi (Associate)
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