The requirement to submit a test licence in the drugs and cosmetics rules goes beyond the ambit of the Parent Act, and is a hindrance to R&D for pharma companies, writes Syngene International’s Shreekanth Katti

One of the essential principles of interpretation of statutes is that delegated legislation cannot override the provisions of the enabling act. The enabling act gives the power to the government to make subordinate legislation, and the delegate on whom such power is conferred has to make rules within the limits of the authority vested by the act. The delegate authority cannot override the act, either by exceeding its authority or making provisions inconsistent with the act. A delegated legislation also cannot lay down something that is not capable of being related to any of the purposes mentioned in the act.

The Drugs and Cosmetics Rules, 1945 (D&C Rules), issued under the under the Drugs and Cosmetics Act, 1940 (D&C Act), in rule 89 requires a company proposing to manufacture a drug for examination, test or analysis to obtain a licence in form 29 (test licence). In business parlance, manufacturing the drug for examination, test or analysis is referred to as manufacturing for R&D purposes.

A company has to obtain hundreds of test licences in a year for its R&D activities, and the crucial time spent in obtaining the test licence impacts many business opportunities. The Indian Pharmaceutical Alliance has also raised concern over India’s stringent and excessive requirements for developing products for R&D purposes.

Due to this, pharma companies, contract research organisations, and contract development and manufacturing organisations are facing difficulties with the registration of their product in India, as well as globally. Additionally, the test licence is something not originally conceived by the legislators.

This article discusses why the test licence, as contemplated under the D&C Rules, is not intended to be covered by the D&C Act and is inconsistent with its provisions. It therefore violates the principle of subordinate legislation overriding the provisions of the statute.

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Shreekanth Katti is associate general manager – legal at Syngene International. The views expressed are personal in nature.