Drug License – Eligibility, Requirements, Process to Obtain

The need of medical industry in India has increased manifolds since the spread of the pandemic Covid-19. Apart from that, the increasing population and the associated size of people in need of medical attention is also huge. This has created a wide scope for new players in the medical and pharma industry.

In India the pharmacy and medical sector are highly regularised and governed by various laws that are enacted to keep a check on the sellers of medicines and medical equipment for the safeguard of people against use of adulterated, low quality and dangerous medicines.

Legal Framework

The business of medicine (including Narcotic Drugs such as Cannabidiol/CBD) or medical equipment are governed by the below statues: 1.    Narcotic Drugs and Psychotropic Substances Act 1985 2.    Drug and Cosmetic Act 1940 3.    Drug Price Control Order,2013 4.    Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954

The regulatory framework in India concerning CBD comes under Narcotic Drugs and Psychotropic Substances Act 1985 (NDPS Act) and the Drug and Cosmetic Act 1940 (Drug & Cosmetic Act). The key provisions are as follows: -

1.    As per Section 3(b) of the Drug and Cosmetic Act 1940, “Drug” includes –

(i)    All medicines that are used for external use or internal use of humans or animals and all substances intended to be used in the treatment or diagnosis, or prevention of any disease in humans or animals, including creams or lotions applied on the humans to repel mosquitoes.     
(ii)    All substances that are used for components of a drug even including empty gelatin capsules.
(iii)    Substances (other than food) that affect the structure or any function of the human body or used for the destruction of insects or vermin which cause disease in human beings or animals, as may be specified by the Central Government time to time by notification in the Official Gazette.
(iv)    Such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board.

2.    As per Section 3(aaa) of the Drug and Cosmetic Act 1940, “Cosmetic” refers to “any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic”.

3.    As per Section 3(f) of the Drug and Cosmetic Act 1940, “Manufacture” of a cosmetic or a drug refers to “a process or part of a process for making, altering, ornamenting, finishing, packing, labelling, breaking up or otherwise treating or adopting any drug or cosmetic with a view to its 8 [sale or distribution] but does not include the compounding or dispensing of any drug, or the packing of any drug or cosmetic, in the ordinary course of retail business and “to manufacture” shall be construed accordingly”.

4.    As per Section 18 of the Drug and Cosmetic Act 1940, no person shall himself or by any other person on his behalf —

(i)    manufacture for sale or distribution, stock, sell, or exhibit or distribute-

• any drug that is not pertaining to the set standards, or is adulterated, misbranded or spurious.
• any cosmetic which is below the set standard or is spurious or misbranded.
• any patent or proprietary medicine, unless it is presented in a prescribed manner on the container or label.

(ii)    Sell, or distribute any drug or offer for sale any cosmetic which has been manufactured or imported in contravention of provisions of under this Act.

(iii)    Manufacture for sale or sell, distribution or offer for sale or distribute or exhibit any drug or cosmetic, except under, and by the conditions of, a license issued for such purpose under this Drug and Cosmetic Act.

5.    Under the NDPS Act 1985 and Schedule-1 of the Narcotic Drugs Substances and Psychotropic Rules, 1985 defines Narcotic Drugs means Coca Leaf, Cannabis (Hemp), Acetorphine, Diacetylmorphine (Heroin), Dihydrodesoxymorphine (Desmorphine), Etorphine and ketobemidone and their salts, preparations, admixtures, extracts, and other substances containing any of these drugs.

6.    Section 8(c) of the NDPS Act 1985 prohibits any person from producing, manufacturing, possessing, selling, purchasing, transporting, warehousing, using, consuming, importing inter-state, exporting inter-state, importing into India, exporting from India or tranship any narcotic drug or psychotropic substance,  except for scientific or medical purposes and to the extent provided by the provisions of this or orders made thereunder and in a case where any such provision, imposes any requirement by wav of license, permit or authorization also in accordance with the terms and conditions of such license, permit or authorization.

7.    The NDPS Act empowers both the State as well as the Central governments to frame rules and authorize drug-related activities for “medical and scientific purposes”.

Licensing Requirements

As per Section 18 of the Drug and Cosmetic Act 1940 and Section 8(c) of the NDPS Act 1985, as mentioned above, a license is required to deal in medicines/drugs. Following are the broad type of licenses required:

1.    Manufacturing License – License issued for the purpose of manufacturing of drugs.

2.    Sale License – License that is issued for the sale of drugs: -

A.    Wholesale Drug License
B.    Retail Drug License

License Under the Drug & Cosmetic Act

1.    Drugs and Cosmetic licenses are required to manufacture and sale medicines under the Drug and Cosmetic Act 1940 [However, if the medicine comprises of any narcotic drug, the licensing requirement is governed by NDPS Act, 1985]:


2.    Process
A.    The applicant is required to make the application in the following categories:


B.    The applicant is required to submit the following documents:


C.    The applicant must apply separate applications for each type of prescribed license via the different forms mentioned above. The Drug Inspector visits the premises and verifies the application. After satisfactory verification, the Drug Controller Department issues the License in the name of the applicant.

D.    Apart from the above requirements, there may be specific state-wise requirements for Wholesale license and retail drug license depending on the respective SDSCO.

License Under the NDPS Act, 1985

1.    Manufacture or sale of any narcotic Drug is governed by NDPS Act 195

[Note: Under the NDPS Act 1985 and Schedule-1 of the Narcotic Drugs Substances and Psychotropic Rules, 1985 defines Narcotic Drugs means Coca Leaf, Cannabis (Hemp), Acetorphine, Diacetylmorphine (Heroin), Dihydrodesoxymorphine (Desmorphine), Etorphine and ketobemidone and their salts, preparations, admixtures, extracts, and other substances containing any of these drugs]

The State Government provides the license for manufacturing of the products from the CBD Extracts for medical and scientific purposes. The State of Uttarakhand became the first Indian state to allow commercial cannabis cultivation in 2018 and has allowed the cultivation of ‘industrial CBD subject to THC is less than 0.3% (zero-point three per cent).  The other states such as Uttar Pradesh, Himachal Pradesh and Madhya Pradesh are in the process of providing permission to commercial cannabis cultivation.

The first and foremost condition to be considered is that the product should not contain any more than 0.3% THC.

    
2.    Process:
A.    The company desirous to manufacture any narcotic drugs (including CBD Extracts) shall apply to the Narcotics Commissioner in a prescribed manner and submit the following documents:


B.    The approval of the manufacturing of Narcotic drugs is provided on an estimated basis. The company is required to ensure that total production during any year does not exceed the estimated requirements of India. The company is required to apply for the renewal of the license at least 30 days prior to the expiry of his license to the Narcotics Commissioner along with the following documents:

Foreign Companies

1.    Import of any Drugs or medicines or medical devices in India is governed by the Drugs and Cosmetics Act and the NDPS Act.

2.    The Central Drugs Standards Control Organization (CDSCO) is authorised regulatory to approve applications to grant permission to import medical devices in India. To import notified medical devices, an import license

3.    An authorized Indian agent should also be appointed for it. This agent should hold a license to manufacture or a license to wholesale (sale or distribution) as per the rules. The agent will make an application for the grant of the import license by applying through the Sugam online portal.

4.    Steps for a foreign company to apply for License to export medicines in India:


The applicant must also have a premises suitable for storage and distribution of the imported drugs and must comply with all the requirements under the Drugs and Cosmetics Rules, 1945 and the Drugs and Cosmetics Act, 1940.