Pharma freebies to doctors: SC reserves order as Centre moves to set up 3-member panel on statutory framework to curb unethical practices

New Delhi: The Supreme Court has reserved its order on pleas seeking a framework to regulate unethical marketing practices by pharmaceutical companies, after noting the Central Government's submission that it is setting up a panel to examine the issue.

On Tuesday, the Centre told the Supreme Court bench comprising Justices Vikram Nath and Sandeep Mehta that a three-member panel is being set up to suggest a statutory framework for ensuring that pharmaceutical companies do not indulge in unethical practices to lure doctors. PTI has reported that the government sought two months' time during which the committee would submit its report that will be placed before the court for approval.

The pleas filed by Federation of Medical and Sales Representatives Association of India and others sought direction that till an effective law was enacted, the top court may lay down the guidelines to control and regulate unethical marketing practices by pharmaceutical companies.

Centre Agrees on Need for Strengthened Mechanism: 

The Centre agreed on the need to strengthen the mechanism to ensure that pharmaceutical companies do not indulge in any unethical practices.

"...there is a need of strengthening mechanism to ensure that pharmaceutical companies do not indulge in any unethical practices... We will be taking a holistic approach on the issue. There are several factors involved in it. Big pharma companies are normally not involved in these practices but smaller ones do and it is mostly a local issue. There is a need to strengthen the mechanism so that pharma companies do not indulge in unethical practices," Solicitor General Tushar Mehta stated.

He said until the report is received and a decision is taken based on it, the Uniform Code for Pharmaceutical Marketing Practices, 2024 will govern the field.

Earlier, the Apex Court had questioned whether the UCPMP 2024 had sufficient enforcement mechanisms. It had also asked whether the Union Government was willing to give statutory backing to the Code, after noting that the absence of government control could make it almost voluntary.

Back then, while hearing the case, the Supreme Court had also pointed out how there was no statutory remedy for consumers and patients against unethical pharmaceutical marketing practices. The Court had questioned how an ordinary consumer could use the Drugs and Cosmetics Act it is the drug inspectors who initiate the prosecutions under the Act.

Also Read: SC Questions Effectiveness of UCPMP, Seeks Govt Clarification on Pharma Freebies

What Centre said in its Affidavit? 

Live Law has reported that during the hearing on Tuesday, SG Mehta referred to an affidavit filed by the Centre dated 17 August, 2026 and submitted that detailed deliberations had taken place between the Department of Pharmaceuticals, Department of Health and Family Welfare and the Department of Legal Affairs.

He said that the government had examined two aspects to ensure that medical practitioners do not indulge in unethical practices and pharma companies do not engage in unethical practices to lure medical practitioners. Regarding the first aspect, Mehta submitted that the existing statutory and regulatory framework already provides for disciplinary action against registered medical practitioners for professional misconduct.

The government in its affidavit said so far as the medical practitioners are concerned, under the existing statutory and regulatory framework, original disciplinary jurisdiction in matters of professional misconduct of registered medical practitioners lies with the concerned State Medical Council (SMC).

"This position is recognised under Section 30 of the National Medical Commission Act, 2019, which provides the appellate framework in respect of disciplinary action taken by an SMC," it said, adding that a registered medical practitioner aggrieved by an order of the SMC may prefer an appeal to the Ethics and Medical Registration Board (EMRB) in accordance with Section 30 of the NMC Act and the applicable regulatory provisions.

It said that, for determining professional conduct and misconduct, the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (IMC Regulations), which presently remains the applicable ethical framework, are followed, and it prescribes a code of conduct for healthcare professionals in their relationship with the pharmaceutical and allied health sector industry.

"The IMC Regulations prohibit medical practitioners from abetting or committing such acts which are unethical in nature. It prohibits receipt and acceptance of gifts, travel facilities, hospitality and cash or monetary grants by medical practitioners from pharmaceutical and allied health sector companies," the affidavit said, adds PTI

It added that the IMC regulations specifically provide for penalties which include censure, removal from the Indian Medical Register or the State Medical Register of a medical practitioner for a period of three months, six months, one year or more than one year depending on the value of cash, gift, travel or hospitality received in contravention of Section 6.8 of the said regulation.

Addressing the second aspect regarding pharmaceutical companies, Mehta submitted before the Apex Court that after detailed discussions, the Government had decided setting up a three-member panel for examining whether there was a requirement for a statutory framework and if so, what it should contain.

"The committee will be constituted in a day or two if not done by now as it is the top most priority of the government. We will be apprising the court, there will be no lethargy," he told the bench on the query of the court whether the panel has been constituted.

Federation Questions Delay in the Process: 

Senior advocate Sanjay Parikh, appearing for the Federation, submitted that there was nothing new in the matter and what the government has done is copy-pasted the earlier guidelines and changed the headline.

Questioning the delay in the process, Parikh pointed out that in its earlier affidavit, filed in September 2022, the Union Government had stated that a high-level committee, under the chairmanship of a Member, Health, NITI Aayog had been constituted for examining the need for a legally enforceable mechanism to regulate pharmaceutical marketing practices.

Parikh said that the said committee had been given 90 days for submitting its recommendations. He also referred to the affidavit, which stated that making the UCPMO statutory was a policy decision and legislative act requiring extensive consultation between ministries and government departments and an overall consensus. Previously, the Government had also mentioned that it had invited bids in October 2021 for a study on pharmaceutical marketing practices in India in comparison to the best practices across the globe. However, the study could not be finalised due to issues concerning the scheme guidelines and high financial bids.

He added that despite the earlier exercise, nearly four years had passed and now the Government was proposing setting up another three-member panel. He claimed that the UCPMP 2014 and the present code were practically the same except the changes in the headings and corrections to some sentences.

Highlighting the difference in the treatment of doctors who receive freebies and pharmaceutical companies that offer them, Parikh submitted that the existing regime penalised the doctors who accepted the gifts, travel facilities, hospitality or other benefits. However, it does not impose any corresponding statutory penalty on the pharma company that gives the inducement. He further submitted that this gap in the law allowed pharma companies to offer benefits to doctors for influencing prescriptions.

He argued that there were two possible solutions- either the government bringing a statutory framework, or the Court issuing guidelines for filling up the gap until the legislation is enacted. He stated that he had already submitted suggestions to the Solicitor General on what such a statutory framework should contain, he sought urgent directions from the Court for the pharma companies and the medical practitioners against indulging in the unethical practices.

Advocate Shreya Meni also stressed for the need for an effective regulatory mechanism and supported the concerns highlighted by the petitioners regarding the present framework. She submitted that during the process of framing the proposed regulatory mechanism, the concerns and submissions by the stakeholders should be considered.

She referred to Rule 65(11A) of the Drugs and Cosmetics Rules and submitted that there was an inconsistency in the Pradhan Mantri Bhartiya Janaushadhi Pariyojana. While she welcomed the government proposal for a statutory framework, she sought an opportunity for stakeholders to participate in the meetings and deliberations by the proposed committee.

Taking note of the submissions, Justice Nath said that the committee would give an opportunity to the stakeholders for placing their concerns before it.

Meanwhile, Advocate Kaleeswaram Raj referred to the Supreme Court's 2022 judgment in Apex Laboratories Pvt. Ltd. v. Deputy Commissioner of Income Tax. In this ruling, the Supreme Court had held that medical practitioners had a quasi-fiduciary relationship with their patients and benefits offered by pharma companies could influence the prescriptions by the doctors.

In that ruling, the Apex Court had referred to the instances where pharma companies offered freebies to the doctors in the forms of gold coins, electronic goods, and funding for international trips or medical conferences. Referring to this judgment, Raj submitted that the Court had described the resulting practice as a "publicly injurious cycle".

He also referred to the observations made by the Parliamentary Standing Committee on Health and Family Welfare regarding generic medicines. He submitted that there was a requirement for some mechanism in the interregnum while the government was making considerations for bringing statutory regulation, as the current UCPMP was voluntary.

Further referring to the Apex Laboratories judgment, Parikh submitted that the Court had held that prohibition against doctors accepting gifts and freebies also implied a prohibition against the giver of those benefits.

Referring to this, he urged the Court to pass appropriate directions so that the process of framing a statutory mechanism would proceed and would not get delayed any further.

Senior advocate Kapil Sibal, appearing for some parties, submitted that the petitioner can give their suggestions to the committee, so that action can be taken on their grievances. 

The bench said it would pass orders which would strengthen the hands of the committee. Reserving its order, the Court posted other matters related to generic medicines on September 22.

Background: Long-Standing Concerns Over Enforcement