The draft Drugs, Medical Devices and Cosmetics Bill, 2026, proposes easing criminal prosecution for minor drug quality and regulatory lapses by allowing offences to be compounded through fines, encouraging industry confidence and investment.
Under the proposed law, an authorised officer can allow an eligible offence to be resolved by paying a prescribed amount instead of going through prolonged criminal proceedings.
A new drugs law could give drug and medical device companies a wider route to settle certain offences without facing criminal prosecution. The draft Drugs, Medical Devices and Cosmetics Bill, 2026, proposes allowing certain categories of offences to be compounded, including specified violations involving not-of-standard-quality or misbranded drugs and certain regulatory breaches relating to clinical trials and medical devices.
The draft Bill has expanded the “compounding route” to reduce concerns among companies, including foreign drugmakers, about facing criminal prosecution for routine compliance failures.
According to the draft Bill, six types of offences to be compounded, including certain offences involving not-of-standard-quality or misbranded drugs; failure to provide medical treatment or compensation to clinical trial participants; specified violations involving adulterated medical devices or devices manufactured, sold or distributed without the required licence or permission; wilfully obstructing a medical devices inspector; and failure to provide medical treatment or compensation during medical devices investigations.
Under the proposed law, an authorised officer can allow an eligible offence to be resolved by paying a prescribed amount instead of going through prolonged criminal proceedings. The amount cannot exceed the maximum fine prescribed for that offence. If a case is already before a court, the court would be informed and proceedings against the accused for that offence would end.
Experts said the proposed shift towards a more “practical” enforcement regime could reduce the fear of among pharma companies and attract investments in the sector. “The most common response to regulatory lapses under the existing law has been criminal prosecution against senior management, which has created a sense of fear in the industry.
The proposed law seeks to remove that fear and give entrepreneurs and senior management greater confidence to enter the sector,” said Anay Shukla, founding partner at Arogya Legal.
“The Bill envisages a well-balanced compounding regime by distinguishing between serious public-health violations and regulatory non-compliance. In implementing a well balanced compounding mechanism, there is some discretion given to the relevant officers. I believe this should be accompanied by regulations governing the penalties to ensure there’s uniformity in execution,” said Pranay Chitale, partner at Chamber One.
The compounding provision, however, would not cover the more serious violations under the Bill. The draft retains stringent criminal punishment for offences involving adulterated or spurious drugs, particularly where such products are likely to cause death or grievous hurt.
For instance, where an adulterated or spurious drug is likely to cause death or grievous hurt, the draft proposes imprisonment of at least 10 years which may extend to life imprisonment, along with a fine of at least Rs 10 lakh or three times the value of the drugs confiscated (whichever is higher).
Other offences involving spurious drugs could attract imprisonment of at least seven years, extendable to life, along with a fine of minimum Rs 5 lakh or three times the value of the confiscated drugs (whichever is higher). The draft also provides for higher punishment for repeat offences.
For serious offences, the Bill talks about dedicated “special courts” with the central or state governments empowered to designate one or more “courts of session” for such cases in consultation with the concerned High Court. It also allows these courts to try other offences connected with the main case.
The draft Bill seeks to replace the Drugs and Cosmetics Act, 1940, and provide a unified legal framework governing drugs, medical devices and cosmetics. It is yet to be introduced in the parliament.
Source: Financialexpress
