India Notifies New Compounding Rules for Minor Drug Offences | April 2025

Description

On April 24, 2025, the Ministry of Health and Family Welfare introduced the Drugs and Cosmetics (Compounding of Offences) Rules, 2025, to simplify the resolution process for minor violations under the Drugs and Cosmetics Act of 1940. These rules, effective from April 25, 2025, permit offenders to resolve certain infractions by paying a monetary penalty rather than undergoing extended legal proceedings.

Overview Of Compounding System

The updated rules are intended to facilitate quicker resolution of less serious breaches related to the manufacture, import, sale, and distribution of drugs. Applicable to both pharmaceutical companies and individuals, the framework aims to reduce legal congestion while promoting regulatory compliance within the industry.

Authority To Compound Offences

Under the new guidelines, the Central Government will appoint a senior-level official no lower than a Licensing Authority as the competent authority to oversee compounding cases. In parallel, State Governments will designate suitable officers below the Licensing Authority rank to act in a similar role at the state level.

Compounding Application Procedure

Applications for compounding may be filed either before or after prosecution begins. Applicants must provide details such as their identity, the nature of the product involved, and a description of the offence. This simplified mechanism supports faster case closure and reduces administrative burden.

Steps After Application Submission

Once an application is received, the designated compounding authority can seek a report from the relevant enforcement agency, which is required to respond within a month. If the application is approved, the authority may grant immunity from prosecution, provided that the applicant pays the prescribed penalty within 30 days.

Terms And Conditions For Immunity

The decision to grant immunity lies at the discretion of the compounding authority. Immunity will not be extended in cases where the applicant provides false or misleading information or fails to make timely payment. This clause ensures that the process remains transparent and accountable.

Implications For Pharma Industry

As India’s pharmaceutical sector heads toward a projected $100 billion valuation by 2025, the move is expected to ease compliance while upholding safety and quality standards. By reducing criminal liability for minor infractions, the new rules support a more conducive business environment for drug manufacturers and distributors.

In Line With Jan Vishwas Act, 2023

These rules are in alignment with the Jan Vishwas Act, 2023, which seeks to decriminalise certain economic offences by converting criminal penalties into civil fines. The broader objective is to foster trust in regulatory processes and promote ease of doing business across key sectors.

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