No clarity on whether Electronic nicotine delivery systems are to be treated as ‘drugs’

Published: September 12, 2019 2:11:15 AM

Electronic nicotine delivery systems (ENDS) are stuck in a regulatory mire, with no clarity on whether they are to be treated as “drugs”.

The legal question involves various multi-layered issues ranging from the exact nature of ENDS to limitations to freedom of commerceThe legal question involves various multi-layered issues ranging from the exact nature of ENDS to limitations to freedom of commerce

By Ankur Khandelwal & Vatsal Joshi

While the sale of Electronic Nicotine Delivery System (ENDS)—e-cigarettes, vapes, etc—continues to be on the rise, the debate with respect to its regulatory framework remains inconclusive. At the core of the debate is the question whether ENDS falls within the definition of ‘drug’ under the Drugs and Cosmetics Act, 1940 (the Drugs Act).

The Delhi High Court, by an order of a single judge passed on March 18, 2019 (Delhi Stay Order), after considering provisions of the Drugs Act observed, prima facie, that ENDS is not a drug under the Drugs Act as it is not sold as a therapeutic device, or as having any medicinal usage for internal or external use of human beings or animals, intended to be used for in the diagnosis or treatment of any disease. The Delhi Stay Order also stayed the effect and operation of the Circular dated November 27, 2018 (“Circular”) issued by the Central Board of Indirect Taxes and Customs (Anti-Smuggling Unit) and of the Advisory dated February 22, 2019, (Advisory) issued by the Union government. The appeal against the Delhi Stay Order was not entertained by the division bench of the Delhi High Court.

The Circular and the Advisory were issued to all custom authorities and state governments,, to ensure that ENDS is not sold (including online sale), manufactured, traded, imported and advertised in their jurisdiction except for the purpose and in the manner and to the extent as approved under the Drugs Act. The Circular and the Advisory were issued on the premise that ENDS is a drug under the Drugs Act.

The Drugs Consultative Committee, a statutory body established under the Drugs Act, in its meeting on June 1, 2019 also concluded that ENDS falls under the definition of “drug” under the Drugs Act. The committee, during its discussion, referred to the fact that nicotine gums (and lozenges) that are used for smoking cessation, are also covered under the Drugs Act and therefore, ENDS should not be treated differently.

Interestingly, this conclusion of the committee is diametrically opposite to its earlier observation in its 48th Meeting, held on July 24, 2015, when it observed that e-cigarettes are not covered under the definition of the term ‘drug’, and, therefore, the Committee concluded that ENDS cannot be regulated under the provisions of the Drugs Act.

Given the lack of clarity over the regulatory regime governing ENDS, the Delhi High Court, in another pending petition, directed the Union government to file an affidavit, listing the measures that would be brought into effect for regulation of ENDS.

More recently, the Bombay High Court, by an interim order, stayed any further investigation/action by Food and Drugs Administration, Mumbai, in the context of ENDS, in a petition filed by Godfrey Philips India. The Bombay High Court placed reliance on the Delhi Stay Order. The Mumbai petition, like the Delhi one, is pending final adjudication.

The lack of clarity on whether ENDS is a drug or not also leads to the debate whether the Union government can regulate ENDS or it will remain the exclusive domain of the state government(s). This stems from the fact that though public health falls in the State List, drugs and poisons fall under the Concurrent List.

Therefore, if ENDS falls within the definition of drug under the Drugs Act, the Centre also will have the constitutional mandate to regulate it.

However, an interpretation to the contrary will vest the jurisdiction exclusively with state government to pass regulations with respect to ENDS. The Delhi High Court, noting this, recorded in the Delhi Stay Order, “If the product in question is not a drug, respondent no.1 would not have the jurisdiction to issue the impugned circular. In this view, the impugned communication and the impugned circular are stayed, till the next date of hearing.”

Amidst the legal debate on the exact nature of ENDS and its regulation, the ministry of electronics and information technology (MEITY) issued the Draft Information Technology (Intermediary Guidelines) Rules, 2018 (‘Draft ITIG Rules, 2018’). Rule 3(2)(j) of the Draft ITIG Rules, 2018, prohibit the users from displaying, uploading, publishing, transmitting, updating or sharing any information that threatens public health or safety; promotion of cigarettes or any other tobacco products or consumption of intoxicant including alcohol and ENDS. Pertinently, the Draft ITIG Rules, 2018 are yet to be notified.

Further, as of now, 13 states, including Punjab, (vide circular dated October 3, 2018), Maharashtra (vide circular dated March 16, 2019), Karnataka (vide circular dated June 15, 2016), Kerala (vide circular dated August 1, 2016), Bihar (vide circular dated November 28, 2017), Uttar Pradesh (vide circular dated November 14, 2017), Jammu & Kashmir (vide circular dated July 24, 2017), Himachal Pradesh, Tamil Nadu (vide circular dated September 3, 2018), Puducherry, Jharkhand and Mizoram (vide circular dated June 8, 2016), have imposed a ban on the sale (including online sale), manufacturing, trading, importing and advertising of ENDS.

Pertinently, Haryana has also notified ‘Nicotine in its pure chemical form’ as ‘poison’, vide notification No. S.O.152/C.A.12/1919/S.2 and 8/2015 dated October 15, 2015 under the Poisons Act, 1919.

Interestingly, most of the state ban circulars, do not prohibit the use of ENDS by an individual and only prohibit the sale (including online sale), manufacturing, trading, importing and advertising. Therefore, it remains unclear whether ENDS, bought in a state where it is not prohibited, can be used in a state that prohibits it. Some of these state bans have been challenged before the respective High Courts.

The legal question involves various multi-layered issues ranging from exact nature of ENDS, extent of right of choice of the consumer to limitations to freedom of trade and commerce, amongst others, and it remains to be seen how the courts deal with them.

(Khandelwal is Partner & Joshi is associate, Kochhar & Co.)

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