Exclusive: AAP govt procured drugs from 2 blacklisted pharma firms with many failed quality tests

The supply of allegedly substandard medicines has triggered another tussle between the Centre and Delhi. But who’s responsible?

WrittenBy:Shivnarayan Rajpurohit
Pictures of Delhi LG Vinai Kumar Saxena and Delhi CM Arvind Kejriwal.

Six drugs from six pharma firms have fuelled a tussle between the Centre and the Delhi government, with both sides trying to blame each other for substandard medicines making their way to the capital’s government hospitals. 

But at least two of those drugs, sourced by the Delhi government’s central procurement agency, were procured in an alleged violation of norms as their manufacturers had been blacklisted after their other medicines failed lab tests in several states, Newslaundry has found. 

This came before these two pharma firms were counted among the six manufacturers whose drugs were declared as not standard quality, or NSQ, by Delhi’s drugs control department in September last year. A subsequent report by vigilance officials triggered a war of words between the elected government of Delhi and Lieutenant Governor  Vinai Kumar Saxena in December. And a CBI probe was recently launched. 

The six NSQ drugs include cephalexin 500 mg by Jackson Laboratories Pvt Ltd, sodium valproate 200 mg by Zee Laboratories Ltd, amlodipine 5mg by Adroit Pharmaceuticals Ltd, levetiracetam 500 mg by Regent Ajanta Biotech, and dexamethasone 4 mg by Medicamen Organics Pvt Ltd. Some of these drugs were used to treat inflammation, some for seizures, and some to control blood pressure.

However, of the six firms behind these drugs, as many as 61 drug samples of Zee Laboratories Ltd and 45 of Jackson Laboratories had failed the lab test in various states since 2011, according to data maintained by Maharashtra, Gujarat and Jharkhand governments. Separately, the Central Drugs Standard Control Organisation, the central regulator for drugs, had also declared 54 drug samples of Jackson and 27 of Zee as NSQ over the last five years.

In addition, Zee and Jackson have been blacklisted by medical procurement bodies of state governments in Tamil Nadu, Odisha, Karnataka, Assam, Chhattisgarh and Punjab between 2018 and 2023. In December 2022, Nepal also debarred Zee from accessing its market for non-compliance with World Health Organisation’s manufacturing standards.   

Testing and procurement

In the most recent case, samples for testing were taken from three Delhi government-run hospitals – Lok Nayak Jai Prakash Narayan (LNJP) hospital, Deen Dayal Upadhyay (DDU) hospital and Institute of Human Behaviour and Allied Sciences – in July-August last year. Six drugs from six manufacturers failed the test.

According to a report by the Lieutenant Governor-controlled Directorate of Vigilance dated December 5, 2023 on the sub-standard samples, five of these drugs were sourced by the central procurement agency – which works under the Delhi government’s directorate general of health services – while levetiracetam was procured through a “local distributor”. The tenders for the six drugs were issued in 2020 and 2021, claimed DGHS sources and a director of one of the six firms.  

Meanwhile, in the latest showdown with the Arvind Kejriwal government, Delhi L-G Saxena had last month recommended a CBI probe into the supply of “substandard drugs to the Delhi hospitals as the investigation therein involves multi inter-state stakeholders including CPA, GNCTD, suppliers/dealers, manufacturers in other states and other agencies”. He also suggested that the central agency may check if these “substandard” drugs were supplied to Mohalla Clinics, the flagship health programme of the Aam Aadmi Party-led Delhi government.

The central government swiftly recommended a CBI inquiry.

The sample collection exercise at the three Delhi hospitals was allegedly led by the directorate of vigilance while the drug inspectors which operate under the Delhi government remained mute spectators, an official privy to the sampling claimed. “Everything was done by the L-G office; drug inspectors who are authorised to collect samples were mute spectators,” he claimed.

However, special secretary (vigilance) YVVJ Rajasekhar and the L-G are yet to respond to such allegations from the Delhi government, which is under fire over the issue.

Delhi health minister Saurabh Bharadwaj had earlier “welcomed” the CBI probe, saying that only five drugs were found NSQ. (The sixth test result came later). He also targeted Delhi health secretary SB Deepak Kumar for allegedly not paying heed to his direction of auditing medicines. Kumar, however, called Bharadwaj’s claim “half truths” and “baseless”.  

Failing quality tests in several states

A drug can be defined NSQ if it fails to pass the quality test and does not comply with the Indian Pharmacopoeia (IP) standards. The reason for failed tests vary: dissolution, salt content, particulate matter, bacterial endotoxins, faulty description, sterility, etc.

The other medicines of these two firms – Zee Laboratories Ltd and Jackson Laboratories – that were declared NSQ were used to cure inflammation, clotting, seizures, gastro ailments, blood pressure, malaria, bacterial infection, decongestion etc.

With an annual turnover of Rs 100 crore, Jackson Laboratories’ drug samples failed lab tests 57 times since 2018, according to the monthly drug alert bulletin issued by the national regulator, the Central Drugs Standard Control Organisation, on medicines which “are not of standard quality/spurious/adulterated/misbranded”. Majority of them failed the test for dissolution which refers to time taken by a drug to get dissolved in the bloodstream. At least 13 of them were found to be adulterated with particulate matter. A few were contaminated with bacterial endotoxins. 

Adulterated or endotoxin contaminated drugs can harm or even lead to death of patients. 

Dinesh Thakur, a public health activist and co-author of The Truth Pill-The Myth of Drug Regulation in India, said bacterial endotoxins are “the worst form of contaminants”.

That’s not all. 

According to data from Jharkhand, Maharashtra and Gujarat, Jackson – established in 1980 with two manufacturing units in Punjab and Himachal Pradesh – has failed NSQ tests 45 times since 2011.

The track record of Zee Laboratories is equally unenviable. Its drugs have failed lab tests 27 times since 2018, as per CDSCO data. The key reasons were non-compliance with IP parameters on dissolution and salt content. Some were found contaminated with particulate matter and bacteria.

In July last year, Zee’s sodium valproate tablets failed the test for non-compliance with salt content, according to CDSCO. The same tablets were found NSQ in the Delhi drug test too.

The data from Jharkhand, Maharashtra and Gujarat shows that Zee had 61 cases of NSQ since 2011.

Of the six firms in the CBI’s line of fire, drugs from Zee, Gentech, Regent Ajanta and Jackson failed the dissolution test while Adroit’s sample was declared NSQ for related substance and Medicamen for assay (salt content).


According to two government sources and an industry insider, the tenders for drug supply to government hospitals were granted by the Delhi government’s medicine procurement arm, or the central procurement agency, in 2020 and 2021.

Almost all CPA tenders specify that companies that are blacklisted and whose drugs are NSQ are not allowed to participate in the bidding process. But before 2020 and 2021, Jackson and Zee were blacklisted by at least four states and the implementing agency of the central government’s Jan Aushadhi programme.

Jackson was blacklisted by Bureau of Pharma PSUs of India (BPPI), which implements the central government’s flagship Jan Aushadi programme, for two years beginning January 2019. Its vitamin C tablets failed the assay test, which refers to the salt content.

Odisha had debarred the firm in 2017 for a period of three years for supplying sub-standard pantoprazole tablets.

In Jammu and Kashmir, Jackson’s product B complex tablets were debarred by the Medical Supplies Corporation Ltd, a government undertaking, for two years beginning February 2021.

The firm was also blacklisted for two years up to December 2022 by the Tamil Nadu Medical Service Corporation (TNMSC) in December 2020.

Jackson was blacklisted last year by Karnataka for five years starting with 2023. The order was issued by Karnataka State Medical Supplies Corporation Ltd after Jackson’s two injection samples were found NSQ.

Similarly, Zee Laboratories was also debarred for two years up to December 2022 by the Tamil Nadu Medical Service Corporation in December 2020. This was revealed during technical bidding for drugs supply in Punjab in November the same year.

Before this, Assam’s National Health Mission office debarred Zee from participating in any bid for five years starting from the year 2018. Zee’s Amoxicillin oral suspension, an antibiotic, failed the drug test.

In an order by Odisha State Medical Corporation Ltd in October 2018, Zee was debarred for three years for supplying sub-standard paracetamol for children.

Chhattisgarh Medical Services Corporation Ltd blacklisted Zee’s lithium carbonate tablets for five years beginning from July 2023.

In 2022, Zee was among 16 pharma companies that were blacklisted by Nepal.

Lack of due diligence by Delhi govt?

Between 2020 and 2021 when the tenders for drug supply were issued, Jackson was blacklisted by at least two states and the Jan Aushadhi agency, and Zee by three states. The CPA tenders specifically debar blacklisted firms from participating.

When asked how these two firms could bid for tenders whey they were blacklisted, Dr Arvind Mohan, head of the central procurement agency, refused to comment, saying it had been just one week since he joined the office. 

“When a firm applies for tender, it has to share details if it is blacklisted or facing prosecution,” said a source at the Delhi government’s directorate general of health services, under which CPA works. The source was tight-lipped when asked if CPA checked the track record of Zee and Jackson.

Prashant Reddy T, a public health activist and co-author of The Truth Pill, a book on drug regulation in India, asked if the Delhi government had carried out due diligence.

“Blacklisted companies are typically not allowed to participate in the public procurement process. The fact that these companies managed to sell their drugs to the Delhi government despite being allegedly blacklisted by other companies raises questions about whether Delhi has conducted sufficient ‘due diligence’,” said Reddy.

But how did these firms escape CPA’s scrutiny? 

One tender for supply of drugs throws some light on this. Zee and Jackson participated in a drug supply tender issued by the Punjab Health Systems Corporation in November 2022. While evaluating technical bids by the two firms, PHSC asked them why they participated when they stood blacklisted by a Tamil Nadu undertaking up to December 2022. 

To this, Zee and Jackson gave identical replies, saying their subsidiaries were debarred and in this tender, other firms of their group were the participants. PHSC allowed Zee to bid but refused similar leeway to Jackson.


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‘Diluted’ law and low rate of prosecution

In a national drug survey (2014-16) by the central government, drugs procured through government supply are three times more likely to fail the quality test than those in retail outlets. But laws to act against violators have weakened over the years.

Section 17 of the Drugs and Cosmetics Act describes three types of violations in the form of ‘misbranded drugs’ (17A), ‘adulterated drugs’ (17B) and ‘spurious drugs’ (counterfeit) (17C). If a drug leads to grievous hurt or death due to adulterated or spurious drugs, the manufacturer could face up to a minimum of 10 years in jail, under section 27(A) of the Act. In other cases wherein harm to people is not established and the drug flouts the Act, the offence invokes a minimum of one year of jail extending up to two years with a fine not less than Rs 20,000.

However, the Act, in the words of Reddy, was “diluted” by the 2008 guidelines of the Drug Consultative Committee (DCC), a statutory body of the central government comprising members of all the state drug controllers and CDSCO officials.

The 2008 guidelines list three categories: spurious and adulterated drugs, grossly substandard drugs and drugs with minor defects. In the first category, the guidelines mandate prosecution. In the second category, they provide for “judicious” use of prosecution. In the third category, it mandates the authorities to take administrative measures, including penalties, instead of prosecution.

However, the data on the drugs control department of Delhi shows a low rate of prosecution of violators. 

Between 2012 and 2018, 130 drugs failed the drug test but prosecution was ordered only in 29 cases, according to the book The Truth Pill. And the department has stopped publishing such reports on its website since 2018.

“I think the low rate of prosecution is a conscious decision to not enforce quality standards rigorously. This is evident from the manner in which prosecution guidelines have been drafted by the Drugs Consultative Committee – these guidelines effectively dilute the law by requiring drug inspectors to prosecute only a small percentage of cases where drugs fail quality testing,” said Reddy. 

The Jan Vishwas Bill passed last year further seeks to weaken punishment, according to this Newslaundry article by Thakur. Four categories (adulterated, spurious, misbranded and NSQ) in the Drugs and Cosmetics Act have been made compoundable, meaning only penalty and no imprisonment. Rules are yet to be formulated under this Act.

According to officials in the Delhi health department, the CBI investigation into NSQ drugs is unprecedented given the low rate of prosecution even in lower courts.

A questionnaire was sent to Zee and Jackson. No reply had been received at the time of publishing this report. 

Delhi health minister Saurabh Bhardwaj was also asked about the CPA’s alleged lack of due diligence. This report will be updated if a response is received.

With inputs from Pratyush Deep.

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