Jan Vishwas Act 2025: Decriminalisation and penalisation of drug offences through compounding

Around the world, one thing that is prominent in the current functioning of democracies is that if the government system cannot control and regulate professional businesses due to inadequate manpower and insufficient resources available in the judiciary and regulatory system, the regulatory system is either fully or partially privatised. This is the overall policy of governments seen globally and locally too.

The best example of this can be seen from the constant hike in healthcare charges in private hospital services and other medical expenses. Now it has reached the sky and has become unaffordable for the common people. The Clinical Establishments Act was enacted in 2010 to standardise and regulate private healthcare services in India. But because of high pressure from the private hospital lobby, the Government of India has failed to make the Clinical Establishments Act, 2010 mandatory for private hospitals in all states.

Under such a situation, to fill up this gap, the procedure of ‘Accreditation’ is adopted in many developed countries. The Joint Commission is one of the most widely used accreditation organisations. The International Society for Quality in Healthcare (ISQua) is the umbrella organisation responsible for accrediting the Joint Commission accreditation scheme in the US and Accreditation Canada International, as well as accreditation organisations in the UK and Australia. These bodies ensure the quality of health services and issue certification based on international standards which are continuously updated to accommodate needless new technological developments. This results in continuously hiking the charges to the patient by subjecting them to over-drugging and over-diagnosis.

The Government of India too has adopted and established this Accreditation Policy to partially fill up the gap of regulation on private healthcare services and developed a quasi-government organisation called the Quality Council of India (QCI) at the national level. The QCI has designed and transferred this regulatory system to a private external organisation called the National Accreditation Board for Hospitals (NABH). In other words, the government has directly outsourced regulatory and standardisation work to this semi-private organisation. NABH is only empowered to design the quality standards based on the standards prescribed by an international agency named Joint Commission International (JCI).

However, the most interesting part is – this system is voluntary and not mandatory and does not cover important regulatory aspects and completely lacks the strength of government enactments and the judiciary system. Therefore, if any serious lapses are found in hospital standards, the hospital administration gets only a warning and there is no provision for prosecution or punishment. In a way, this has given minimum protection to the patients but maximum to the private hospitals. Moreover, as there is no scope for prosecution, there is no deterrent or regulatory fear of the charges levied. That’s how all doors are kept open only for making maximum profits by putting patients at a heavy financial burden.

Now, going further, one step forward, the government’s policy of helping private pharma businesses is being legalised. This is clear from the recent amendment made by the government in the Food and Drug Administration’s (CDSCO) Drugs and Cosmetics (Compounding of Offences) Rules, 2025, under the Jan Vishwas Act. In this amendment, the punishment that would have been imposed on the drug manufacturer/trader by law has been reduced and converted into a fine.

The government argues that after registering a case against drug companies as per the existing statutes, due to inadequate management in the judiciary, results do not come for years and finally, the accused is not punished suitably. Therefore, this simple ‘’quasi-judicial’’ method is now being established by the government.

Purpose of the amendment – The Central Government has notified the Drugs and Cosmetics (Compounding of Offences) Rules, 2025, with effect from 25th April 2025 by amending the Drugs and Cosmetics Rules, 1945. Under this new enactment, the government aims to reduce prosecution cases and encourage compliance by allowing offenders to pay a ‘’compounded amount’’ for minor violations instead of facing the Court of Law. In this process, the authority has been empowered to adjudicate quasi-judicially by applying to the designated authority, either an administrative officer or a drugs inspector, for minor offenses. Instead of going through the judicial process, the offender will be asked to pay a fine in cash and from now on, after enforcing these rules, a report will be filed in the court for adjudicating only major offenses.

The government claims that this transformation will reduce the number of offences, especially for minor violations like labelling errors, packaging misprints or logistical issues that the government considers minor and not compromising the quality or safety of the product. But for that, regulatory authorities need to first establish transparent guidelines on minor offences and the consequences of repeated violations. Otherwise, there are concerns that the newly revised amalgamation of offences in the Drugs and Cosmetics Act could be misused by the industry, particularly in the following cases:

For example, currently there are:

1. Lack of clear definitions – the revised rules do not clearly define what constitutes a minor offence, leaving room for interpretation and potential exploitation by the industry machinery.
2. Insufficient deterrence – Penalties for minor offences may be too lenient, which may not deter companies from committing repeated violations.
3. Potential for repeat offenders – The rules state that only first-time offenders will be considered for a fine, while repeated offenders may be subject to fines or imprisonment. However, the effectiveness of this provision will depend on the implementation and monitoring by the regulatory authorities.
4. Risk of concealment of material details – If companies provide false evidence or conceal material details during compounding proceedings, the immunity granted may be withdrawn. However, detecting such instances can be challenging.
5. Potential abuse scenarios – Companies may neglect proper record-keeping and rely on the compounding provision to solve problems without adequate results.
6. Repeated violations – Companies may repeatedly commit minor offences and easily escape the law by paying only a fine without making the necessary changes in their practices.

This change has already been implemented for food/food processing, manufacturing, and distribution. So, processed food manufacturers and hoteliers have no reason to panic even if minor laws are violated due to negligence. They are allowed to pay some amount as a fine and go free.

The government under the ‘Jan Vishwas’ Act will certainly succeed in gaining the trust of traders by replacing the strong judicial institution and creating an alternative, simple, but weak quasi-judicial institution. However, in the absence of clear guiding principles regarding effective implementation, transparency and the honesty, integrity and responsibility of the authorised officer, this quasi-judicial parallel system seems to be untrustworthy for the public in the present context. This will be the major challenge faced by the Government during practical implementation of the amendment.