India Proposal for Immediate Suspension of Manufacturing Licence for NSQ Drugs Raises Industry Concerns

The Government of India has issued a draft notification, G.S.R. 956(E), proposing a significant amendment to Rule 85 of the Drugs and Cosmetics Rules, 1945 relating to Suspension and cancellation of licences.

Under the proposed amendment, where a Government Analyst reports a drug as “Not of Standard Quality” (NSQ) with respect to critical quality attributes such as Assay, Dissolution, Related Substances, Impurities, or Sterility, the licensing authority would be empowered to immediately suspend the manufacturing licence for that product.

The proposed provision states that the suspension would remain in force until the manufacturer completes a Root Cause Analysis (RCA) and implements satisfactory Corrective and Preventive Actions (CAPA) to the satisfaction of the licensing authority.

Stakeholders have been invited to submit objections and suggestions within 30 days of publication of the draft notification, following which the proposal may be finalized.

Regulatory Intent

Recent years have witnessed increased regulatory focus on medicine quality, including instances where substandard or contaminated products have resulted in significant public health concerns. Against this backdrop, regulators seek mechanisms that enable swift intervention when serious quality defects are identified.

However, while the regulatory intent is understandable, the proposal has generated considerable debate within the pharmaceutical industry regarding its legal, scientific, and practical implications.

The Principal Concern: Action on the Basis of a Single Government Analyst Report

The primary concern relates to proposal for immediate suspension of manufacturing license based solely on a Government Analyst’s report, before the statutory process under the Drugs and Cosmetics Act is fully exhausted.

Section 25 of the Drugs and Cosmetics Act provides a structured mechanism whereby:

• The Government Analyst’s report is communicated to the manufacturer.
• The manufacturer is given an opportunity to respond to the adverse findings.
• Additional evidence or explanations may be submitted.
• In disputed cases, the sample may be referred to the Central Drugs Laboratory (CDL), whose report is treated as conclusive evidence.

Industry stakeholders therefore argue that immediate suspension of a manufacturing licence solely on the basis of an initial analyst report effectively bypass an important statutory safeguard built into the legislation.

Scientific and Practical Considerations

Industry stakeholders also highlight several scientific considerations that could affect a market sample result

1. Possibility of Analytical or Sampling Error

Any single analytical result can potentially be affected by sampling, handling, transportation, storage, or laboratory / analytical error factors.

2. Post-Distribution Storage Conditions

A medicine collected from the marketplace or a hospital may have been exposed to storage conditions outside the manufacturer’s control. Temperature excursions, humidity exposure, or improper handling may affect certain quality attributes, particularly closer to the end of the product’s shelf life.

3. Shelf-Life Considerations

In some cases, testing may occur several days/ weeks after sample collection. By the time the analysis is complete and the manufacturer is notified, the batch may be close to expiry or may already have expired. Suspension of a manufacturing licence under such circumstances may be disproportionate without a broader investigation.

4. A Batch Failure Does Not Necessarily Implicate All Batches

Perhaps the most fundamental concern is that a quality issue identified in one batch does not automatically establish that all batches manufactured under the licence are similarly affected.

Even where a genuine quality defect exists, regulators and manufacturers would typically seek to determine:

• Whether the issue is batch-specific or systemic.
• Whether other distributed batches are also impacted.
• Are other batches in the inventory / work-in-progress impacted
• Whether targeted market actions on specific impacted batches are sufficient to mitigate patient risk.

Question of Regulatory Proportionality

Where concerns arise from a specific batch or batches, a more proportionate response will be to:

• Stop further distribution of the affected batch (es).
• Initiate a recall where warranted.
• Conduct an expedited investigation.
• Require enhanced testing and risk assessments.
• Escalate to licence suspension where evidence demonstrates a broader systemic failure.

Comparison with International Practice

In most mature, highly regulated markets, the discovery of a potentially defective market sample does not automatically result in immediate suspension of a manufacturing authorisation.

Typically, regulators first:

• Notify the manufacturer.
• Seek an investigation and response.
• Assess the extent and root cause of the issue.
• Conduct inspections where necessary.
• Escalate enforcement actions where evidence demonstrates significant or recurring GMP or product-quality failures.

A Balanced Way Forward

The pharmaceutical industry broadly supports strong regulatory oversight and decisive action against genuinely substandard medicines. Protecting patient safety must remain the foremost consideration.

At the same time, the draft notification raises important questions regarding procedural fairness, scientific evaluation, and proportionality of enforcement actions.

A framework that enables immediate containment of potentially affected batches, while allowing completion of the statutory investigation and adjudication process will be a more balanced approach.

• G.S.R. 956(E), Gazette Notification (Draft) on Suspension of Manufacturing License on NSQ Drugs (October 2026)