[Answered] Critically analyze the recent CDSCO guidelines on the compounding of drug-related offences. Evaluate the challenges in balancing ‘ease of doing business’ with public safety, and suggest institutional measures to prevent the regulatory framework from regressing into a ‘pay and pass’ scheme.

Introduction

India’s pharmaceutical sector supplies nearly 20% of global generics (WHO), making regulatory credibility critical; the CDSCO’s 2025 compounding guidelines under the Jan Vishwas Act seek efficiency, yet raise safety concerns.

Context and Rationale of the CDSCO Compounding Guidelines

1. Legal and Policy Background: The Drugs and Cosmetics (Compounding of Offences) Rules, 2025 operationalise amendments introduced through the Jan Vishwas (Amendment of Provisions) Act, expanding Section 32B of the Drugs and Cosmetics Act, 1940. The objective is to decriminalise minor, technical violations and reduce judicial backlog, aligning with the government’s broader “ease of doing business” agenda.
2. Regulatory Logic: Historically, minor record-keeping lapses or procedural errors triggered criminal prosecution, diverting regulatory capacity from serious offences such as spurious, adulterated or misbranded drugs. Compounding allows CDSCO to adopt risk-based regulation, focusing enforcement on high-harm violations.

Decriminalisation versus Deterrence: The Core Trade-off

1. Efficiency and Regulatory Focus (Merits): Compounding filters out “procedural noise”, reduces compliance costs for firms, and enables faster resolution. Comparable regimes exist in mature regulators like the US FDA, where warning letters precede criminal action, reflecting proportionality.
2. The ‘Pay and Pass’ Risk (Concerns): The broad drafting of compoundable offences—such as manufacturing drugs in breach of the Act but outside Section 27(a–c)—risks allowing substantive quality failures to be treated as technical lapses. If monetary penalties are low or inconsistently applied, fines may become a cost of doing business, eroding deterrence.

Institutional Vulnerabilities and Public Safety Risks

1. Excessive Administrative Discretion: The Compounding Authority (Additional Director General of Health Services) enjoys wide discretion without a publicly notified offence-penalty matrix. This creates scope for regulatory capture, where influential firms may secure leniency.
2. Transparency Deficit: The absence of mandatory publication of compounding orders, case details or firm histories undermines public trust. In contrast, global best practices emphasise disclosure as a regulatory tool.
3. Lessons from Past Incidents: Tragedies such as the Gambia and Uzbekistan cough syrup deaths (2022–23) and domestic quality failures demonstrate that “minor” lapses often signal deeper systemic weaknesses. Compounding such issues without scrutiny risks reputational damage to India’s status as the “Pharmacy of the World”.
4. Weak Corrective Linkages: The guidelines do not sufficiently mandate Corrective and Preventive Actions (CAPA), follow-up inspections or recalls, limiting long-term risk reduction.

Balancing Ease of Doing Business with Public Safety: Way Forward

1. Codified Offence Matrix: Introduce a transparent, graded classification of offences—procedural, substantive, and critical—with clearly differentiated penalties to ensure proportionality and consistency.
2. Mandatory Public Disclosure: All compounding orders, including violations and penalties, should be published (with redactions if necessary) on the SUGAM portal, enabling social audits and parliamentary oversight.
3. Conditional Compounding: Settlement should be contingent upon verified CAPA compliance and successful follow-up, risk-based inspections, ensuring compounding is corrective, not merely transactional.
4. Exclusion of Repeat Offenders: Strictly bar habitual violators from compounding for a defined period (e.g., five years), reinforcing deterrence.
5. Stakeholder Participation: Allow representations from consumer groups, whistle-blowers or pharmacovigilance bodies before granting immunity, strengthening participatory regulation.

Conclusion

As Justice J.S. Verma cautioned, regulatory discretion needs sunlight. CDSCO reforms must ensure efficiency without moral hazard, for public health, as WHO notes, is “trust institutionalised through accountability.”