Drug License for Hospitals

Drug License Issue -- Where we stand? IMA still confused - TOI 11 Aug 2014

The Exemption rule 123 -- SCHEDULE K [See rule 123]



  Doctor imprisoned for following Drugs Act, 1940   Drug License for Hospitals


There are 33 Items in this Schedule K. (1, 5, 10, 20, 24 & 30 exempted from Chapter IV.)

Class of Drugs (exempted)

Item: 5. Drugs supplied by a registered medical practitioner to his own patient or any drug specified in Schedule C supplied by a registered medical practitioner at the request of another such practitioner if it is specially prepared with reference to the condition and for the use of an individual patient provided the registered medical practitioner is not (a) keeping an open shop or (b) selling across the counter or (c) engaged in the importation, manufacture, distribution or sale of drugs in India to a degree which render him liable to the provisions of Chapter IV of the Act and the rules thereunder.

Extent and Conditions of Exemptions –

All the provisions of Chapter IV of the Act and the Rules made thereunder, subject to the following conditions:

(1)The drugs shall be purchased only from a dealer or a manufacturer licensed under these rules and records of such purchases showing the names and quantities of such drugs together with their batch numbers and the names and addresses of the manufacturers shall be maintained. Such records shall be open to inspection by an Inspector appointed under the Act, who may, if necessary, make enquiries about purchases of the drugs and may also take samples for test.

Class of Drugs –

Item: 5A. Drugs supplied by a hospital or dispensary maintained or supported by Government or local body.

Extent and Conditions of Exemptions –

The provisions of Chapter IV of the Act and the Rules thereunder which require them to be covered by a sale licence, subject to the following conditions :

(1) the dispensing and supply of drugs shall be carried out by or under the supervision of a registered pharmacist;

(2) the premises where drugs are supplied or stocked shall be open to inspection by an Inspector appointed under the Drugs and Cosmetics Act who can, if necessary, take samples for test.


Kindly read Items 5 & 5A together and find out the difference.

Item 5 says that RMPs can supply drugs to his patients, to the patients of his RMP friends, and that he can keep a "closed shop" (the meaning of "open shop" is something different and not defined), can sell by being on the same side with the buyer (there is no phrase "selling across the counter" but there is "selling over the counter" - OTC), and engage in import/manufacture/distribute to "a degree" until it violates provisions of Chapter IV of Drugs Act.

(In law, if one thing not permitted, the opposite is permitted -- On Indian roads we are not permitted to drive on right hand side. ) The phrase "open shop" is well defined, and it is not a shop that is kept open as understood by the intelligent ones in India. "Open shop" is not defined in Rule 2. But there in Rule 2 they have defined "retail sale" & "whole sale". 

 (Kindly note that the usage "a registered medical practitioner" is applicable to all RMPs and not to "one" RMP as found out by the judiciary/bureaucracy. A right enjoyed by a man will not vanish if 2 or more sit together -- S. 144 of CrPC is not incorporated into Drugs Act! Similarly let us hope they will not interpret "a degree" as ONE degree!)No smoking in public and that can be done in private. Speed up to 80 kms is not violation of MVA rules. Above 80 kms is violation and they book us. The D & C Act/Rule does not say anywhere the level/limit/degree to which we can go, to be branded as violators. 

Item 5A says that the Govt. Hospital is exempted only from S. 18 (c) (License provision) and nothing else in Chapter IV. If a Pharmacist is there the Govt. need not take a license. On the other hand an RMP is exempted from all the Sections in Chapter IV.

A drug Inspector is not an authority/official before an RMP. Before us he is a gentleman visiting us to find out whether the drug stores are giving us good medicines. He has no authority to inspect our drug store or dictate terms and condition. In a private hospital, the place of activity of an RMP, the Drug Official can come and ask the purchase bills and if he has any suspicion in the bill, he can ask for samples of the Drug and take it as required after paying the cost. All that an RMP has to be careful is to buy only from dealers having Drug License and see that all bills are preserved and the entries in the product and bill tally. The reason being, that in a private hospital, whoever be the owner, the responsibility of the drug is vested with the RMP. 

On the other hand in a Govt hospital, the RMP has no control over the drugs stored there and so Item 5A in Schedule K, insist that a Pharmacist must be there or a Drug license. The Drug Inspector can inspect the Drug Store & place of dispensing in a Govt hospital and that is not permitted in a private hospital.

Some Drug Officials tell RMPs that they must dispense drugs themselves and the drugs must be in his room. If this official can allow an illiterate assistant for a pharmacist running a drug store, what prevents an RMP from asking his sweeper to dispense the drugs! The Officials are also ignorant of the word "supply" used in Item 5 of Schedule K. To supply something, that to be supplied must be purchased in bulk, depending upon the requirement and capacity of the RMP involved.

Kindly read Items 5 & 5A together in Schedule K of Drugs Act & Rules to know the upper hand an RMP and his hospital is having.

Other relevant sections/rules --

S. 18 (c) says a seller must take a license to sell drug.

Rule 2 - Definitions -- Sub Rules (f) & (g) -- "Retail sale & Wholesale", for the purpose of the Drugs Act, means, a sale to a hospital/RMP for selling again. These two common words are defined here to impress all that a hospital/RMP can buy drugs and their purchase cannot be blocked and they can sell it again.

Rule 51. Duties of Inspectors -- They are authorised to inspect premises licensed for sale. Hospital is not a licensed place for them to roam around.

Ignorance of the intelligent ones in the profession and their smart legal advisors all over India has converted hospitals to the level of Drug stores for the Drug Officials to roam around and dictate terms and conditions to the RMPs!

Rule 65. Condition of Licences & Rule 65 (5) (1) -- The Drugs Controller read only the first sentence in Rule 65 (5) (1) before directing the Drug Stores not to supply drugs to hospitals without license in his Letter No. DL.17323/94/DC dated 17.3.1995. Or may be, he did not read or understand that written in --

Sub-rule (b) of Rule 65 (5) (1) - It says that a license number is not required when the drug is sold to a hospital/RMP, but only their name is enough.

Rule 105 - Packing of Drugs -- Says that pack sizes should be as specified in Schedule P-1. It also says that pack size in the Schedule P-1 shall not apply to - (6) those meant for retail sale to Hospitals/RMPs.

Rule 105A -- Hospital packings of Schedule X drugs shall not be given to RMPsSchedule X drugs are used only in a hospital and so this restriction.

Rule 123 - Deals with Exemption said in Schedule K and there are six items totally exempted from Chapter IV -- They are: Item No. 1, 5, 10, 20, 24 & 30.

That said in Schedule K Item 5 is explained in detail supra.

Vested interest: 1. Many Officials in the Drugs Department do have drug manufacturing units/other arrangements with manufacturers. Marketing drugs is not a simple task and costly. A drug license for a hospital is a blessing for them. Their products can be easily marketed by forcing hospitals to buy them using their authority and distribute it to unsuspecting patients.

2. The Drugs Department is manned by Pharmacists and they have a very powerful association of Pharmacists. By imposing Drug License on hospitals, the hospitals are forced to appoint at least one pharmacist. To run a medium sized hospital the service of at least 4 pharmacists must be there. There is shortage of pharmacists in the country and the directions of the High Court helped Pharmacists to improve their market value. Their salary has more than tripled in the last 2 years. In the normal course a pharmacist is not required for an RMP.

3. Greasing point -- Drug Inspector have power to visit premises with license at any time. By bringing hospitals to that category, with the blessings of the Judiciary, the Drug Inspectors are the ones blessed. All the Drug stores shell out an undeclared monthly salary to keep the Inspectors away -- like the Apple a day keeps the doctor away! If a small drug store pays Rs. 100 every month (or say One Gandhi), that will be Rs. 1,000 (10 G) from a small hospital. The number of Gandhis is directly proportional to the size of hospital. If not paid, the Inspectors will find out ways to close down hospital pharmacies -- Many hospitals in their net are suffering now! 

Dr. K. Kishore Kumar, Secretary QPMPA