Drugs and Cosmetics Act 1940 — Key Rules Every Pharmacy Owner Must Know
The Drugs and Cosmetics Act, 1940 is the primary legislation governing the manufacture, sale, distribution, and storage of drugs and cosmetics in India. For a pharmacy owner, this Act is the legal foundation of everything you do — from which medicines you can stock to how you store them, what records you keep, and who can work in your pharmacy. Not knowing it is not a defence.
What Does the Drugs and Cosmetics Act Cover?
The Act covers four main areas relevant to retail pharmacy:
- Drug licensing: Who can sell medicines, what qualifications are required, what facilities are needed
- Drug standards: Quality standards for medicines sold in India (purity, potency, labelling)
- Scheduled drugs: Which drugs require prescriptions, special registers, or additional licences
- Penalties: What happens when any of the above rules are violated
The Act is supplemented by the Drugs and Cosmetics Rules, 1945, which contain the detailed operational requirements — this is where you'll find the specific rules for Schedule H, H1, X records, pharmacist requirements, and storage standards.
Key Schedules Under the Act — What They Mean for Your Pharmacy
| Schedule | What It Covers | Your Obligation |
|---|---|---|
| Schedule H | Prescription-only medicines (antibiotics, antihypertensives, antidiabetics, etc.) | Sell only on prescription; retain prescriptions 2 years |
| Schedule H1 | High-risk antibiotics and controlled medicines | Prescription + separate H1 register |
| Schedule X | Narcotic and psychotropic medicines | Special licence endorsement + Schedule X register + locked storage |
| Schedule C | Biological and special medicines (vaccines, blood products, sera) | Stricter labelling and storage requirements |
| Schedule C1 | Life-saving drug preparations | Stricter standards; very limited retail dispensing |
| Schedule G | Medicines requiring medical supervision (hormones, etc.) | Label must state "Caution: It is dangerous to take this preparation except under medical supervision" |
| Schedule J | List of diseases/conditions that no drug may claim to cure (cancer, AIDS, etc.) | Do not stock medicines with labels claiming to cure Schedule J conditions |
| Schedule P | Minimum shelf life for drugs at import/manufacture | Don't accept goods near-expiry from suppliers |
Drug Licence — What the Act Requires
Under Section 18 of the Drugs and Cosmetics Act, it is illegal to:
- Sell or stock any drug without a valid licence
- Stock or sell any misbranded, adulterated, or spurious drug
- Sell a Schedule H, H1, or X medicine without a prescription
Your licence is granted by the State Drug Control Authority (under the State Drugs Controller) and is valid for 5 years. To hold the licence, your pharmacy must continuously meet these requirements:
- A registered pharmacist (B.Pharm or D.Pharm, registered with State Pharmacy Council) must be present during all working hours
- The pharmacy premises must be at least 10 square metres
- The premises must be clean, well-lit, and adequately ventilated
- Refrigeration must be available for medicines requiring it
- Separate locked storage must be maintained for Schedule X medicines
Record-Keeping Requirements
The Drugs and Cosmetics Rules specify exactly what records pharmacies must maintain:
- Purchase records: Every purchase invoice must be retained for 2 years — these show batch numbers, expiry dates, and quantities received from each supplier
- Schedule H prescriptions: All prescriptions for Schedule H medicines must be retained for 2 years and produced on demand by a Drug Inspector
- Schedule H1 register: A separate bound book recording every sale of Schedule H1 medicine — must be maintained and preserved for 2 years
- Schedule X register (purchase & sale): Separate registers for purchase and sale of every Schedule X medicine — must be maintained and preserved for 2 years
Digital records: CDSCO and most state drug control authorities now accept digitally maintained records, provided they can be produced promptly during inspection and are backed up. However, many Drug Inspectors still prefer physical bound registers for Schedule H1 and X — check your state's practice.
Drug Inspector Powers Under the Act
Section 21 of the Act gives Drug Inspectors (DIs) broad powers to:
- Enter and inspect any pharmacy at any reasonable time without prior notice
- Inspect all records, registers, prescriptions, and invoices
- Take samples of any medicine for testing at the Central Drugs Testing Laboratory
- Seize any medicine that appears to be misbranded, adulterated, or in violation of the Act
- Suspend or cancel the drug licence if violations are found
Penalties for Pharmacy Owners
| Violation | Penalty Under D&C Act |
|---|---|
| Operating without a drug licence | Imprisonment up to 3 years and/or fine (first offence); up to 5 years for repeat |
| Selling Schedule H/H1 medicine without prescription | Imprisonment up to 3 years and/or fine |
| Selling Schedule X medicine without prescription or licence | Imprisonment up to 10 years + fine; NDPS Act also applies |
| Selling misbranded or adulterated medicine | Imprisonment 1–3 years + fine for first offence; up to 5 years for repeat |
| Selling spurious drug | Minimum 10 years imprisonment, may extend to life imprisonment if death results |
| Not maintaining records | Licence suspension/cancellation; fine |
| Expired medicine on dispensing shelf | Warning, fine, or licence suspension depending on severity |
Spurious drugs are treated as a criminal matter. If you are found to be knowingly stocking or selling medicines that are fake, adulterated, or substandard — even if supplied to you by a distributor — you can face criminal prosecution. Always buy from licensed distributors, retain invoices, and verify batch numbers when CDSCO issues recall alerts.
Recent Amendments Relevant to Pharmacies
- 2013 — Schedule H1 Amendment: Added a new category of high-risk antibiotics and anti-infectives requiring stricter controls and a separate register
- 2015 — e-Pharmacy Regulations draft: Early framework for online pharmacy regulation; finalised e-pharmacy rules were still evolving as of 2026
- 2020 — Consolidated Drugs Import Rules amendment: Strengthened requirements around import documentation
- Ongoing — Central Drugs Standard Control Organisation (CDSCO) Recalls: CDSCO regularly issues drug quality alerts; pharmacies are expected to check these and quarantine affected batches
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