Freebies to doctors: Why pharma marketing rules may finally get legal teeth

The Supreme Court has pushed the Centre towards a stronger legal framework to regulate pharmaceutical companies’ marketing practices, reopening a long-running battle over freebies, inducements and payments linked to doctors’ prescriptions.

The move could finally address a major loophole in India’s pharmaceutical marketing rules: companies can be told what they should not do, but the system has struggled to impose effective penalties when they violate those norms.

In an order last week, the court directed the Union government to constitute an expert committee within two weeks to examine the appropriate regulatory or statutory framework for controlling unethical pharmaceutical marketing.

The committee must consult petitioners, intervenors and other stakeholders and submit its recommendations within two months of its first meeting. The Centre must then consider the recommendations and report back to the court.

The order marks a significant shift in a case that has been pending since 2021. For years, the government maintained that existing laws were sufficient to address unethical marketing. It has now acknowledged that the mechanism governing pharmaceutical companies needs strengthening, even as it maintains that regulation of medical practitioners is adequately covered.

Partha Rakshit, secretary general of the Federation of Medical and Sales Representatives’ Associations of India (FMRAI), which filed the petition, told India Today the government’s position had changed after years of contesting the need for stronger rules.

“Recently, the government for the first time admitted that the current provisions are not strong enough to deter pharma companies from bribing doctors and influencing their choice of medicines prescribed to patients,” he said.

Calling the development a reason for hope, Rakshit argued that the interests of pharmaceutical companies and the government – which collected tax on every such transaction – had helped sustain the existing arrangement.

Dr Abhay Shukla, a doctor-activist and senior member of Jan Swasthya Abhiyan, said inducements had not necessarily disappeared but had become less direct. “I think it’s not direct any more and there are intermediary agencies involved to pay the doctors,” he said.

India Today has reached out to Indian Pharmaceutical Alliance (IPA), the largest network of major Indian drugmakers, and the Organisation of Pharmaceutical Producers of India (OPPI), the group of foreign pharma NMCs operating in the country. This copy will be updated if and when their responses are received.

WHAT THE CODE COVERS

The Uniform Code for Pharmaceutical Marketing Practices (UCPMP) is a set of rules governing how pharmaceutical companies promote medicines and engage with healthcare professionals. Its purpose is to prevent marketing from distorting clinical decisions, encouraging irrational prescriptions or pushing patients towards unnecessarily expensive brands.

The code addresses practices such as gifts and personal benefits to doctors, hospitality, travel, sponsorships, drug samples and promotional materials. It also lays down conditions for companies’ interactions with medical practitioners and restricts inducements intended to influence prescribing decisions.

Before 2024, the code operated on a voluntary basis. Introduced in 2014 and subsequently revised in 2015, it relied heavily on pharmaceutical companies and their industry associations to ensure compliance. Complaints could be taken up through the associations’ ethics mechanisms, but the framework lacked the force of a dedicated statute with clear, legally enforceable penalties against companies.

That was the central problem identified by FMRAI in its 2021 public interest litigation. The association argued that self-regulation could not work effectively when companies had commercial incentives to promote their own products and the industry was expected to police itself.

The code was intended to discourage the practice commonly described as pay for prescription: providing doctors with financial or material benefits, directly or indirectly, to influence which medicines they prescribe. Such arrangements can affect treatment choices, promote irrational drug use and add to patients’ out-of-pocket expenditure.

WHAT CHANGED IN 2024

The revised UCPMP, introduced in March 2024, following recommendations by a panel headed by former Niti Aayog member (health) Dr V K Paul, attempted to strengthen the framework without enacting a separate law.

The government presented the revised code as mandatory, but its legal status has proved more complicated, FMRAI insists.

The 2024 version removed the explicit voluntary character of the earlier code and introduced more structured oversight.

Pharmaceutical companies were required to appoint ethics officers, submit compliance undertakings and disclose marketing expenditure through prescribed mechanisms. Pharmaceutical associations were also expected to establish ethics committees to handle complaints, while the Department of Pharmaceuticals (DoP) acquired a more formal oversight role.

The revised code extended its coverage to medical devices and introduced clearer quantitative limits for certain promotional activities. These include a ceiling of 1,000 for permissible promotional reminders, limits on the quantity of medicine samples distributed to an individual healthcare professional, and a cap linked to domestic sales for the distribution of free samples.

The framework also provided for an appellate mechanism, with the DoP Secretary heading the relevant appellate body, and a process through which penalties could be recommended for violations.

These changes made the code more structured and gave the government a greater role in monitoring compliance. But they did not automatically transform it into a statutory regime. A code issued through administrative directions is not equivalent to a law enacted under a clear legislative framework, with unambiguous powers of investigation, adjudication and punishment.

For this reason, FMRAI described the 2024 revision as “old wine in a new bottle”, arguing that procedural changes cannot substitute for statutory backing and meaningful punitive action.

WHY DEMAND FOR LEGAL BACKING

The government's own position has evolved during the litigation. In its 2022 response, it argued that the existing legal regime was robust enough to address unethical practices by pharmaceutical companies and healthcare professionals.

However, an affidavit submitted in August this year acknowledged that, while the regulation of medical practitioners was considered adequately addressed, the mechanism governing pharmaceutical companies needed strengthening.

The Centre also indicated that earlier attempts to find a legal route had raised difficulties. The Essential Commodities Act, 1955, primarily concerns essential commodities and their supply, distribution and prices, while the Drugs and Cosmetics Act, 1940, principally regulates drugs, including their manufacture, quality and sale.

Neither provides an obvious, comprehensive framework for regulating the full range of commercial interactions between pharmaceutical companies and doctors.

The apex court has now required the government to examine what form a workable statutory or regulatory mechanism should take, with transparency, accountability and enforcement at its core. It has also linked the exercise to the constitutional obligation to protect public health and the larger public interest.

The committee's recommendations will determine whether the next step is a dedicated law, amendments to existing legislation or another enforceable framework. "That's because the SC cannot make the law itself, but we are now looking forward to what the Centre does following the court order," Rakshit said.

- Ends