Data Exclusivity Patent

INDIAN GOVERNMENT COMMITTEE SAYS "NO" TO DATA EXCLUSIVITY


After multiple deliberations spanning more than 3 years, a government committee has finally submitted its report on regulatory data protection and Article 39.3 of TRIPS. It finds that Article 39.3 does not require “data exclusivity” and that, at the present moment, it may not be in India’s national interest to grant “data exclusivity” to pharmaceutical drug data. It relies heavily on the Doha Declaration to support this interpretation.

It argues that a “trade secrecy” form of protection is sufficient to comply with Article 39.3 and that India already provides for this (via common law principles). However, it cautiously recommends that since there has been no instance thus far of common law trade secrecy provisions applying to the government, this position be made more explicit in the Drugs and Cosmetics Act.

I had submitted a report to the Committee arguing that the US and EU claim that Article 39.3 requires data exclusivity is a false one and directly at odds with TRIPS negotiating history. However, my reading of Article 39.3 also suggested that a “trade secrecy” form of protection is not sufficient to comply with Article 39.3.

No doubt, this Article is perhaps the most contentious of all TRIPS provisions therefore the most “flexible” one—reflective, perhaps of the fact that pharma companies weren’t as concerned about this Article at the stage of TRIPS negotiation [agro chemicals were pushing harder for this] and there were various disagreements between the US, EU and Japan on this, the three industrial superpowers that dictated the wordings of most of the TRIPS provisions. The compromise position was therefore a very watered down provision, that is now the subject of much interpretation and debate.

The various flexibilities notwithstanding, I argued that Article 39.3 spoke about two distinct standards:
i) Protection against unfair commercial use
ii) Protection against “non disclosure”

Therefore, it is non-sensical and against well known canons of treaty interpretation to argue that the first standard (protection against unfair commercial use) is the same as the second one (non disclosure). And yet, this is exactly what the government report argues —that the term “unfair commercial use” means a trade secrecy form of protection [or a protection against “disclosure”). These are two separate standards, and quite clearly, “unfair commercial use” cannot represent a mere protection against non disclosure.

In sharp contrast with the above recommendation pertaining to pharmaceutical data, the Committee recommends the grant of a 3 year exclusivity term for agro chemicals and a 5 year term for traditional medicines.

I will comment on this in greater detail, once I’ve seen the committee report. In the meantime, I’m banking on the accuracy of Sarah Hiddleston’s report in the Hindu (she’s been doing a great job thus far on various pharma patent issues):

“In an important win for the domestic pharmaceutical industry, a government committee has concluded that there is no need to change the laws that govern drug registration in the country. It has recommended against allowing pharmaceutical companies exclusive rights to clinical trial and other test data they submit when registering a new drug for sale in the country. Instead, it proposed that data be treated as a trade secret under common law. However, it suggested that this might be reviewed after an unspecified period of debate.

The Satwant Reddy Committee, an inter-departmental group, was constituted in February 2004 to review the protection of undisclosed information in the light of intellectual property rights set down by the World Trade Organisation. It submitted its report to the Ministry of Chemicals and Fertilizers on May 31 — the day its chairman, Satwant Reddy, stepped down from office.

It noted that the country was entitled to determine the appropriate method of implementing WTO intellectual property rights recommendations but pointed out that there was a need for transparent legal mechanisms to protect undisclosed test data. As such, it recommended separate provisions for three different sectors. So while it advocated that test data for pharmaceutical drugs be protected as a trade secret under common law, it has recommended giving three years of exclusive rights to test data for companies registering new agro chemicals and five years of exclusive rights to test data for companies registering new traditional medicines. This would effectively give a company that first registers a new product sole access to the market for the duration of the right.

The domestic pharmaceutical industry will avoid the delays, costs, and the ethical black hole of retesting a generic drug. This is because the drugs regulator, which judges how safe and effective a drug is, will continue to be able to refer to the clinical trial data of an original drug to approve generic versions that are chemically the same (bio equivalent).

Multinational pharmaceutical companies, backed by the US and the EU, had lobbied for a five-year data protection term to recoup investments in clinical trials and encourage innovation. They claimed that Indian practice constituted “unfair commercial use” and contravened the internationally agreed guidelines laid down by the World Trade Organisation on intellectual property.

The domestic pharmaceutical industry and public interest groups had opposed this. They argued that it was a means for foreign owned pharma companies to avoid competition and make extra profits on drugs with expiring patents or drugs that were not patented because they lacked innovation. They maintained that WTO intellectual property rights, which award patents for innovation, were being deliberately confused with the separate process of registering drugs.

In committee reasoned, that “there was enough flexibility in the [WTO] TRIPS [trade related aspects of intellectual property rights] Agreement for a country to determine the appropriate means of protecting test data.” It cited paragraph 4 of the Doha declaration, which states that the WTO Agreement should be “interpreted and implemented in a manner supportive of WTO members’ right to protect public health and… promote access to medicines.” It also recommended that in order to ensure confidentiality of data, additions should be made to the Drugs and Cosmetics Act 1940 to specify third party liability for unauthorized use and make data protection enforceable through courts.

However, the committee kept the door open for higher standards of data protection for a pharmaceutical innovator in the future. It suggested a five-year data exclusivity model for discussion with 14 safeguards to prevent excessive monopolies and enable the government to override data protection in the case of a public health emergency.

G.S. Sandhu, Joint Secretary, Department of Chemicals and Fertilizers, which authored the report, said that the future model for pharmaceuticals was not a recommendation but a base from which discussion should begin. He stressed the importance of as wide a debate as possible and said that critical upgrades were necessary in the infrastructure and technical skills of the drug regulator before higher standards of protection could be considered.”

Shamnad Basheer

Shamnad Basheer

Prof (Dr) Shamnad Basheer founded SpicyIP in 2005. He is currently the Honorary Research Chair of IP Law at Nirma University and a visiting professor of law at the National Law School (NLS), Bangalore. He is also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof Amartya Sen. Professional History: After graduating from the NLS, Bangalore Professor Basheer joinedAnand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Prof Basheer has published widely and his articles have won awards, including those instituted by ATRIP and the Stanford Technology Law Review. He is consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also serves on several government committees.

6 comments.

  1. AvatarSusan

    Shamnad,

    Thanks for posting your comments and the report itself, which I read as more nuanced and slightly more positive than you do. It seems to me that the report captures the zeitgeist of the times, ie that there is a growing awareness of the need to promote innovation, and that after a transitional period it may be in India’s own interests to provide a full five year period of exclusivity, which is already going to be available for Ayurvedic and other traditional medicines. It is harder for me to understand, on a theoretical basis, why this is being allowed in full now only for Indian companies in the area of traditional medicines, and I am going to write about that on the IPI PolicyBytes blog in the next day or so. Travel safely, Susan

    Reply
  2. AvatarShamnad Basheer

    Dear Susan,

    Thanks for your comments. Like I said in the post, my note wasn’t an evaluation of the report–which I hadn’t seen at the time that I first posted–rather, I was relying on secondary information from the Hindu.

    I’m not sure that providing data exclusivity down the road (and an intention to this effect expressed at this stage) is necessarily a “positive” step. I’m still studying how data exclusivity works in the US and EU–and from what I gather, in most cases (almost 97% of the time), patent term exceeds the term of data exclusivity. Given this scenario, the question we need to ask is: why do we need both “exclusivity” and patents in the context of pharmaceutical innovations?

    Just adding a layer of monopoly (without investigating as to what it really incentivises, to what extent does it so incentivise, and whether we really need the drugs so incentivised) may not necessarily be “positive”.

    I don’t buy the oft repeated argument that patents and data exclusivity are to be kept separate and protected independently. Given that they both pertain to pharmaceutical innovation, a sensible government policy has to measure their combined impact. In any case, given the loose wording of Article 39.3, one could well provide for a very low level of protection (only NCE’s and protection only for one year), if one finds that “data exclusivity” really doesn’t do much for pharmaceutical innovation in India.

    I’m still evaluating the data from the US/EU on the combined impact of data exclusivity/patents–and am reluctant to express any of views on this until I’ve studied this further.

    There appears to be no such study of existing data exclusivity systems by the Committee–and they should perhaps do this, before they begin to pontificate that “data exclusivity” may be a good thing in future. And as you rightly mention, what’s the basis for this separate treatment of traditional medicines. Do we need incentives to get more medicines here–and more importantly, is “data exclusivity” the best incentive that we can aim for? I couldn’t find much in the Committee Report to help me out here.

    Much as I would love to share your view that this is a “nuanced” report, what I am left with is a feeling that this is nothing more than a “stalling” exercise–much like the Mashelkar Committee referral. Something to keep everyone happy. Generics are happy–since there is no exclusivity at this stage. And multinationals are happy, since there is an expression of “interest” to have exclusivity at some stage. But perhaps, in a post Mashelkar Committee Controversy climate, this is the “politically” smart thing to do—-sit on the fence!!! Bodes very well for the future of IP policy in this country.

    Reply
  3. AvatarSusan

    Shamnad, I agree that the impact of the two policies together needs to be measured – – you know I am a big fan of data-driven policy development. However, I do not share the view that data exclusivity is just a duplication of patent protection. The two things do serve somewhat different purposes, particularly for a pharmaceutical or agro-chem product where the patent is not actually on a product, just an (early-stage) invention of some relevance to the ultimate product, and a great deal more time and effort goes into generation of the data than that of filing the patent application itself. The fact that the data is commercially valuable and only disclosed to regulators in the public interest and as a condition of gaining marketing approval is part of the reason for its protection in nearly all major markets. India remains an outlier in this respect. I will try to address this general issue at greater length at a later time.

    take care,

    Susan

    Reply
  4. AvatarShamnad Basheer

    You’re right Susan,

    They serve different purposes. I guess the questions I would ask are:

    1. if most of the basic molecule discovery comes out of publicly funded research, then we really don’t need a patent incentive here?
    2. if we need to incentivise pharma companies to take these molecules to the market, then we need a sensible data exclusivity regime. But, if the above drug discovery scenario (from publicly funded research) holds good, we could do with a little less patent protection? So although both serve different purposes, a combined study of both to understand innovation incentives in their entirely would help us structure our policy better.
    3. Lastly and most importantly, how do the above issues play out in an Indian context. For most of the affluent diseases, India can continue to free ride –since India granting or not granting any IP would not seriously affect Pfizer’s incentives to do R&D –since their main markets are the US/EU/Japan. And given that most nations went through development phases by appropriating others’ IP, “free riding” is not such a bad thing. So perhaps we’re not really that worried about this lack of incentive in India? But what about Indian companies that do R&D, one wonders? Well, most generics still cater to the Western market–and so long as they can claim their protection there, how does it matter what the Indian regime looks like. Of course, if they moved part of their revenues to R&D neglected, we might have to do some serious thinking about incentives. But there’s not much of this happening now–and without a drastic change in government policy in this regard, I don’t see many of them diverting their resources towards this noble endeavour.

    I guess I’m still searching for answers to all of this–and am hesitant to arrive at conclusions prior to seeing some data on the innovation process globally, the funding for such innovation and how this plays out in a country like India.

    Reply
  5. AvatarSusan

    Shamnad, I have posted more extensively on this topic at http://www.policybytes.org, not directly addressing the above points but providing more general background on data exclusivity and how Indian biotechs would benefit from this independent form of protection. take care, Susan

    Reply

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