data privacy protection bill India

We are moving towards a data centric world, and “data is the new oil”[1]. And few would disagree that a key debate today in finance is ‘trust and privacy vs. using data for business growth’. As modern day businesses look to adapt themselves to generate revenue from customer related data, regulators across the world are grappling with the formulation of effective laws to regulate the data-driven economy. Given the relative novelty of the concept, regulators are reflecting on fundamental questions such as the right to privacy, property rights over data and the right to use the collected data.

In India, the Reserve Bank of India (“RBI”) has been fairly forward looking, by passing various regulations and constituting a host of committees to address issues ranging from cyber security to customers data protection norms.[2] In almost all its regulations, RBI has adopted a data privacy framework similar to the one advocated by the Justice BN Srikrishna Committee in its Personal Data Protection Bill, 2018 (“DP Bill”) – an amalgamated framework consisting of consent-and-notice and the vesting of certain rights with the originators of such information.[3] Undoubtedly, the DP Bill will have an impact on the manner in which data is collected, processed and shared by the financial industry. With this as the background, the authors seek to analyse the impact of the DP Bill on businesses engaged in the financial sector. Continue Reading In the throes of Data Protection (and the associated woes) lies the business of trust

Drug and Medicine Promotion and Marketing Laws in India

Unethical marketing practices have for long been a bone of contention for the Government as well as patient right groups. Time and again, the pharmaceutical industry has been accused of adopting questionable practices in relation to the marketing of their products. The main focus of attention in this respect has been suspect interactions between pharmaceutical companies and healthcare practitioners/ providers (“HCPs”). So much so that the Draft Pharmaceutical Policy,2017[1] also notes that unethical practices deployed by pharma companies is an area of concern.

It notes that “Doctors are lured to recommend a particular brand through all expenses paid trips often disguised and called ‘educational conventions’ and such other incentives. While The Drugs & Magic Act prohibits any advertisement of a drug, such ‘educational’ conferences are used to circumvent and play the trick. These add to the overhead cost of the drugs. It is assuming menacing proportions and needs to be addressed through the new pharmaceutical policy.”

The gun is pointed at the industry and the Government is taking steps to ensure proper regulation and management of import, manufacture, distribution and advertising of drugs in India. There is no law at present that regulates the promotion and marketing of drugs (including medical devices) by companies in front of HCPs. Interactions between pharma companies and HCPs are at best limited under restrictions cast on HCPs under the Medical Council of India (“MCI”) regulations. The Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 regulates what pharmaceutical companies can and cannot print on their product labels, but the legislation falls short in terms of actual regulation of interactions with HCPs – what companies can and cannot say, or give, to HCPs. On the other hand, Direct to Consumer advertising is controlled under the Drugs and Magic Remedies (Objectionable Advertisement) Act of 1954.

Faced with increasing complaints on improper marketing practices employed by pharma companies and lobbying by patient advocacy groups, the Government introduced the Uniform Code of Pharmaceutical Marketing Practices (UCPMP) – this was but a guidance document for the industry, voluntary at first and lacking the necessary regulatory teeth to have force of law. That said, the industry has adopted the same and we have seen a lot of advisory going out in this regard.

The UCPMP sets out a level of regulation in that it ensures that:

  • Claims for usefulness, novelty and safety are based on up-to-date scientific data and credible evidence.
  • Comparison of drugs should be fair and free from comparative disparagement.
  • Promotional materials to have minimum prescribed levels of information so as to enable an HCP to exercise his/ her discretion based on the same. Materials to be an honest and accurate representation of the qualities of the drug. Transparency of disclosure to be made in respect of paid journal publications.
  • Control on free samples. Better accountability. Samples are not gifts or freebies.
  • Restriction on quid–pro-quo arrangements. No gifts for personal benefits.
  • No free travel or vacations.
  • No individual monetary grants or funding save and except through modalities laid down by law in a transparent manner. Full disclosure.

The UCPMP is India’s version of the US PhRMA Code and the Physicians Payment of Sunshine Act. Interestingly enough, both these legislations have been enforced by the authorities and have resulted in hundreds of millions of dollars in fines for some pharma companies that were found to be in violation of these regulations. In India, the UCPMP is voluntary. For now.

The UCPMP suffered from a serious lack of the proverbial teeth. To effectuate more rigorous regulatory control over marketing activities of the industry, therefore, the Government has been contemplating introduction of the Draft Essential Commodities (Control of Unethical Practices in Marketing of Drugs) Order, 2017 (CUPMD Order). While it surfaced online sometime earlier this year, surprisingly the same has now been removed from the public domain by the Government. Some online reports indicate that a doctor and health activist filed an application under the Right to Information Act, 2005 (RTI Act), posing queries about the draft order. However, the Government has refused to reply to the queries citing the exception under Section 8 of the RTI Act[2].

The CUPMD Order is proposed to be passed under the auspices of the Essential Commodities Act, 1955 (EC Act) – which was passed to control the production, supply and distribution of, and trade and commerce in, certain commodities. Drugs as defined under the Drugs and Cosmetics Act, 1940 have been included under the purview of the said regulation. The question remains – what happens to drugs that are not considered as Essential Commodities and that are not included in the National List of Essential Medications? The CUPMD Order currently exempts promotion of “Medical Devices” from its purview. However, the Government may consider including these in the final order.

WHY would the Government pass this order under the EC Act? The answer lies in the fact that this legislation is aimed at the general benefit of the public at large and has seldom been interfered with by the courts. A glaring example is the lack of policy level interference by the courts in cases involving Drug Price Control.

Salient Features: The CUPMD Order intends to regulate the following:

a.    Claims made during promotional activities that are:

  • Misleading and give rise to unjustifiable drug use leading to risks.
  • Not capable of substantiation.
  • Not in good taste.
  • Comparative with another drug, without any substantive basis for such comparison.
  • Unqualified in the use of terms such as safe.
  • An improper representation of the true nature of the drug.

b.    Interaction with HCPs: The CUPMD Order intends to regulate      interaction with HCPs dealing with:

  • Free samples of drugs limited to full therapy for three patients.
  • Offering of gifts or monetary benefits to HCPs or family members.
  • Providing travel or lodging facilities to HCPs in relation to attending seminars, continuing medical education (CME) programmes. No vacations.
  • Extension of grants or funds for medical research or clinical trials.

Penalties/Prosecution:

  • An offence pertaining to promotional activities would lead to criminal prosecution. No punishment for supply of gifts/ travel/ hospitality up to INR 1000.
  • An offence pertaining to interaction with HCPs would lead to suspension of marketing activities of the “highest selling” drug of the pharmaceutical company. The period of suspension to be linked to the “monetary consideration” involved in the marketing. Offences will be compoundable.
  • Penalties would be as per provisions of the Drugs and Cosmetics Act and the Drugs and Magic Remedies (Objectionable Advertisements) Act.

Establishment of a New Authority Responsible to Handle Allegations of Violations.

  • Ethics Compliance Officer for inquiring into any allegation made under the CUPMD Order.
  • An opportunity to be provided for hearing before passing any adverse orders.

Food for thought:

  • Objective of the CUPMD Order is not in sync with the EC Act: as the EC Act deals with production, supply and distribution of essential commodities; while the CUPMD Order pertains to the promotion and marketing of drugs. The only commonalty is “Drugs’. It is unclear as to how this will unfold. This might be one of the reasons why the Government withdrew the Order from the public domain.
  • Negligence by marketing professionals: The Order does not deal with negligent actions by marketing professionals.
  • Person responsible: Proposal to hold the Managing Director/ CEO of the company ultimately responsible for any violation would not meet the muster.
  • Tool for competitors: This CUPMD Order may be misused by the competitor to stop marketing activities of a company.
  • Jurisdiction of the Ethics Compliance Officer: It is unclear whether the authority will be established in central/state/district level. Regulation has to be at all levels.
  • Calculation of expenses to HCPs: Whether the threshold will be calculated per year or per quarter – for example, INR 1000 shall be allowed as gifts. No clarity in this regard.
  • Free samples: Doctors need to study the effects of new drug products. A three patient limit would not be enough. There needs to be some introspection on this front. Maybe have more accountability and reporting requirements.
  • Instead of penalties for violating limits prescribed for gifts etc., mandatory reporting requirements of all promotional expenses should be introduced like in the US.
  • Punishment: The Government intention to link marketing, advertising and promotion as penalties is derived from the DC Act and DMROA. The question remains, however, which penalties under which act would apply – there are different penalties for the same offence under both acts, for example, first violation is six months imprisonment under DMROA while first violation invites one year of imprisonment under the EC Act.

The CUPMD Order has not been finalised yet. The Government has not released the version to receive comments from the general public. The CUPMD Order will cull rampant quid-pro-quo arrangements and industry members will have to re-evaluate their sales and marketing strategies. Pharma companies will need to revise their Standard Operating Procedures (“SOPs”) to include recommendations, though the final order is yet to be published. The MCI may take cognizance of the proposed law and amend the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 accordingly.

Key takeaways for the industry would be to understand the implications of this CUPMD Order on a company’s business. When it comes, it will come suddenly so better to be prepared. Take another look at existing SOPs for promotion and marketing activities. Make necessary adjustments now rather than doing it later. Educate sales forces about the proposed legislation. Nudge them into compliance rather than force them when it descends on you as law. Be sure that all claims in promotional materials can be justified and substantiated based on proper data. Consider amending/ reviewing SOPs in relation to interactions with HCPs. Include restrictions on gifts, travel facilities, HCP payments, grants and speaker honorariums.


[1] http://www.indiaenvironmentportal.org.in/files/file/draft%20pharmaceutical%20policy%202017.pdf

[2] “Section 8 – Exemption from disclosure of information

(1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,–

  • information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence;

 

 

 

Indian Industrial Law - Wages

In its judgment dated September 20, 2018, the Supreme Court of India (SC), in the matter of Rajasthan State Road Transport Corporation, Jaipur vs. Shri Phool Chand[1] (Phool Chand) has ruled on a worker’s (workmen as per Industrial Disputes Act, 1947) entitlement to back-wages, if he/she his reinstated.

Under Indian labour and industrial laws, the provisions pertaining to a worker’s entitlement to back-wages is covered under the legal regime of Industrial Disputes Act, 1947 (ID Act).

In this regard, the ID Act stipulates that a worker[2] will be entitled to back-wages during pendency of proceedings. Continue Reading Back Wages Upon Reinstatement: An Entitlement Which Has To Be Determined!!

Sec 377 LGBT Employment in India

The Supreme Court of India has held Section 377 of the Indian Penal Code, 1860 (IPC) to be unconstitutional, in so far as it penalises any consensual sexual relationship between two adults, be it homosexuals, heterosexuals or lesbians (Navtej Singh Johar v. Union of India and Ors. (2018) (Johar Judgment). By way of this landmark judgment, the Supreme Court has overruled its earlier decision in Suresh Kumar Koushal v. Naz Foundation (2013), whereby, the validity of Section 377 of the IPC had been upheld. Continue Reading What Does the Section 377 Judgment Mean for a Modern Day Employer?

Seat Venue Place Order - Supreme Court of India

Last week, the Supreme Court issued its decision in the case of Union of India v. Hardy Exploration and Production (India) Inc[1]. The much-anticipated decision attempts to provide clarity on the venue-seat conundrum in arbitration cases — cases where an arbitration agreement fails to specify the ‘seat’ of an arbitration but does specify a ‘venue’. Continue Reading The Seat–Venue–Place Conundrum: Supreme Court Weighs In

Transfer of Proceedings from Courts to NCLT: The Calcutta High Court’s View

A question that has often come up since the Companies Act, 2013 (the 2013 Act) came into force is how will proceedings ongoing before the High Courts be transferred to the National Companies Law Tribunal (NCLT)? Section 434(1)(c) of the 2013 Act deals with transfer of “all proceedings” under the Companies Act, 1956[1] to the NCLT. For winding up proceedings, this provision states that only such proceedings relating to winding up, which are at a certain stage as prescribed by central Government, are to be transferred to the NCLT. Another part of this provision, meanwhile, deals with cases other than winding up proceedings, which may not be transferred to the NCLT.[2] A reading of all the various provisions leads to the conclusion that not all proceedings under the 1956 Act pending before the District Courts and High Courts are to be transferred to the NCLT. Continue Reading Transfer of Proceedings from Courts to NCLT: The Calcutta High Court’s View

Online Pharmacy Regulations in India

The Indian Pharmaceutical industry is in its prime phase of growth today at 11-12% per year. While exports occupy a huge chunk, the country meets nearly 95% of its own domestic demands through indigenous production and the domestic retail market is growing by leaps and bounds.

Sale of drugs in India is currently governed by the Drugs and Cosmetics Act, 1940 (D&C Act) and the Drugs and Cosmetics Rules, 1945 (D&C Rules). At present, the law permits sale of drugs through brick-and-mortar pharmacies only. The law as it currently stands is somewhat out of tune with the times in that it is still to catch up with the concept of online sales of drugs. Continue Reading Medicines in Your Mail: The India Regulatory Story

Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 are substantive provisions for regulating private placements by Indian companies. These provisions are, of course, in addition to applicable regulations prescribed by the Securities and Exchange Board of India (“SEBI”) for listed companies. Recently, both Section 42 and Rule 14 have undergone amendments by way of the Companies (Amendment) Act, 2017 and the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018, respectively (the “Recent Amendments”). Continue Reading Recent Amendments to the Private Placement Guidelines – Revamp or Cosmetic?

The use of digital technology in the education sector is growing at a remarkable pace in India. With news reports giving Byju’s, a Bengaluru based learning app, a valuation of over USD 2 billion in its latest round of investments, the investors’ interest in the education technology (edtech) sector is on the rise. Continue Reading M&A Trends in the EdTech Sector

Share transfer restrictions come in various shapes and sizes and in so far as they relate to shares of public companies, their validity has been a topic of hot debate. In several cases, Indian courts have considered and opined on the legality of contractual restrictions on the transfer of shares of public companies. The position in this regard now appears to be much clearer than before with changes also being introduced in the Companies Act, 2013 (CA 2013). However, one aspect of this debate that has hitherto gained lesser traction is the ability of a public company to refuse registration of share transfers pursuant to section 58(4) of the CA 2013.

Section 58(2) of CA 2013 states that the securities of any member in a public company are freely transferable, while under section 58(4) of CA 2013, it is open to the public company to refuse registration of the transfer of securities for a ‘sufficient cause’. To that extent, section 58(4) of CA 2013 can be read as a limited restriction on the free transfer permitted under section 58(2) of CA 2013. However, the statute does not provide any guidance on what would constitute ‘sufficient cause’ and leaves it open to the company itself to ascertain the same. Continue Reading Share Transfers: Can the Company Say No?