Data Exclusivity

An attempt to ‘balance’ the data exclusivity debate


Warning: Long post – you’ve been warned.
Image from here.
The ToI and the Indian Express have recently carried an op-ed, each, on why India should resist the ‘data exclusivity’ demand being thrust upon it through the Indo-E.U. Free Trade Agreement (FTA). Strangely the Op-eds although written by different people, carry the same title – ‘Don’t Swallow this Pill’. The ToI piece was written by Unni Karunakara, International President of the reputed ‘Doctors Without Boundaries’, while the IE piece was written by Priti Radhakrishnan & Tahir Amin of I-MAK, which was one of the key opponents in the recent successful pre-grant opposition against Abbot’s patent application for Kaletra. Both Tahir and Priti were also involved in drafting this very interesting report on Data Exclusivity.

Unlike the vibrant ‘Data exclusivity’ debates at the time of the Satwant Committee Report, the debates this time around in the media are monologues which oppose data exclusivity. There appears to be nobody who cares to support ‘data exclusivity’ and oppose the opposition to this beloved child of Big Pharma. Although I don’t really give a damn about ‘data exclusivity’, I feel compelled to act the ‘Argumentative Indian’ by providing a completely one-sided view in support of ‘data exclusivity’. So in the interests of a balanced debate my fantasy hypothesis would involve arguing that ‘data exclusivity’ can be used as a policy tool to improve the quality of public health by imposing tougher regulatory standards, which is turn is incentivized by a data exclusivity regime.

Before I proceed I would like to clarify that the views in this post are mine and mine alone. These views cannot be attributed to my co-bloggers who very often, rightfully, disagree with me. I also understand that this topic tends to evoke some passionate responses, all of which are welcome except of course when the passion generates more heat than light.

AN ATTEMPT TO DEFEND ‘DATA EXCLUSIVITY’

As you all know pharmaceutical innovation involves two steps: The first step involves intensive laboratory research and the second step involves testing the laboratory results on first animals and then humans. The second step i.e. clinical testing is partly a result of research requirements and partly a requirement of statutory regulatory clearance i.e. the government regulator will not allow sale of the drug unless it has been put through some rather rigorous clinical trials. The history of rigorous clinical trials itself can be traced to the tragic ‘thalidomide tragedy’ in Europe. Under the old order the innovator companies in the U.S. had complete and perpetual control of ‘clinical trial’ data. But then the Hatch-Waxman Act happened. The U.S. Congress wanted to increase competition amongst generic pharmaceuticals. In order to balance the interests of stakeholders, patent terms were increased in the U.S. but innovators were compensated by reducing the right of innovator companies to hold their clinical data confidential to a period of just 5 years i.e. after five years generics could enter the market after carrying out bio-equivalence tests which basically depended on innovator data without replicating costly clinical trials. (A more nuanced version of the actual history is available over here at the CP Tech website) With widespread acceptance of bio-equivalence studies most countries did away with the requirement of replicating clinical trials and instead allowed for approvals only on the basis of bio-equivalence data. Clinical data however continued to be protected through data exclusivity regimes since most companies would have spent significant amounts on conducting trials and they needed an incentive to continue doing so. Before going any further on the ‘Data Exclusivity’ question it is first necessary to discuss in, some detail, the drug regulation scheme under the Indian Drugs and Cosmetics Act, 1940.

I. THE REGULATORY REQUIREMENTS UNDER INDIAN LAW

A. Drugs & Cosmetics Act, 1940: The Drugs & Cosmetics Act, 1940 which is available over here is the primary legislation covering the sphere of drug regulation in India. The primary regulatory requirements, including the clinical trial protocols, are laid down in the Drugs and Cosmetics Rules, 1945, which are drafted by the Central Government under the Drugs and Cosmetics Act, 1940. The main regulatory component is therefore prescribed through delegated legislation which is almost never debated by the Indian Parliament. The level of scrutiny of delegated legislation in India is troubling, especially so when it comes to the pharmaceutical industry because ‘Rules’ do not require a positive vote to get through Parliament. Instead they are merely placed before the House for a period of 30 days and are deemed to have passed within 30 days unless the House objects.

B. Schedule Y to the Drugs & Cosmetics Rules, 1945: This is the schedule which lays down the clinical trials requirements in order to get regulatory approval in India. The present schedule was inserted in the Rule8, at a time when the Indian pharmaceutical industry was growing by leaps and bounds. While the clinical trial requirements themselves seem to be rather rigorous, the provision starts off with providing an exemption from conducting Phase I and Phase II clinical trials in those cases where the drug has already received foreign regulatory approval. In those cases the applicant is required to conduct only Phase III clinical trials on over 100 patients. Stage IV of the clinical trial phase is after the drug has been released into the market and it involves collecting information on any possible adverse reactions. Phase IV regulation in India has been very weak and the Government has finally set up the National Pharmacovigilance Program to collect such information from across the country.

C. Rule 122E – Definition of ‘New Drug’: The definition of a ‘New Drug’ is found in the Rules and not the main Act. Several categories of drugs are classified as ‘New Drugs’ as per these Rules. One of the categories includes new forms or claims of existing drugs, namely ‘indications, dosage, dosage form and route of administration’. These are the two categories of drugs are most likely not patentable under Section 3(d) of the Patents Act subject to the Supreme Court’s interpretation of the provision. However by virtue of their inclusion under the definition of ‘new drug’ the manufacturers of the same will be required to carry out the same clinical trials required of a ‘new chemical entity’.

D. Waiver of ‘local clinical trials’ requirements: As explained earlier, with reference to ‘Schedule Y’, new drugs which have already received regulatory clearance abroad need not carry out either Phase I or Phase II trials. Instead manufacturers or importers are required to carry out only Phase III trials on just 100 Indians. However a proviso in Rule 122 A (Import) or Rule 122B (Manufacture) allows for a waiver of even these minimum requirements. The proviso reads as follows: “Provided that the requirement of submitting the results of local clinical trials may not be necessary if the drug is of such a nature that the Licensing Authority may, in public interest decide to grant such permission on the basis of data available from other countries.” I am presuming that since most drugs already receive prior regulatory approval in the USA and the E.U. the DCGI must be invoking this provision to waive local clinical requirements on a regular basis. I am also guessing that this rule is of a 1945 vintage. Therefore the only compulsory requirements are probably bio-equivalence tests. A brief scan of the Drugs and Cosmetics Rules, 1945 indicates that the very phrase ‘bio-equivalence’ tests finds mention only thrice in entire 617 pages of the Act and Rules. Even those three mentions are only in the Forms appended to the rules and are technically not part of the statutory scheme.

E. Regulation of ‘Fixed-dose-combinations’ (FDC): The Rules categorize FDCs into four categories of which I will describe only two over here. The entire description can be found in ‘Appendix VI’ to the Rules. The first category is where one or more of the ingredients is a ‘new drug’, in which case the FDC is treated just as any other ‘new drug’ within the definition of Rule 122E. The second category is where the drugs have individually received marketing approval but are being combined together for the first time and are expected to demonstrate significant interaction of a pharmacodynamic or pharmacokinetic nature. As per the rules these drugs too will be treated like ‘new drugs’.

II. THE ARGUMENTS IN FAVOUR OF DATA EXCLUSIVITY:

A. Just because a drug is un-patentable does not mean it can skip clinical trials: One of the common arguments bandied about against data exclusivity is that it seeks to ‘evergreen’ patent monopolies and that it seeks to protect drugs that have been deemed un-patentable under the Patents Act, 1970. This is however a fallacious argument because there is absolutely no link between the regulatory regime and the patent regime. Even if a drug is held to be un-patentable under the patent legislation, it may still have some medical utility and in order to establish its efficacy it will still have to undergo clinical trials before it can be sold. For example drugs which are not patentable under Section 3(d) of the Patents Act, such as new formulations or dosage forms, are all classified as ‘new drugs’ under the definition of Rule 122E, as discussed above and will therefore have to be put through the rigorous three-stage clinical trials. The value of such incremental innovation, even if held un-patentable, has been widely established, including in this WIPO Report. Similarly Section 3(e) of the Patents Act bars the patenting of mere admixtures unless the mixture shows a synergistic effect. Most fixed dose combinations (FDC) would be un-patentable as a result of this provision. The value of FDC in providing novel treatment options has been accepted by WHO itself in this lengthy report. As explained above the regulatory regime requires certain categories of FDCs to be validated through expensive clinical trials.

Both these cases, Section 3(e) & Section 3(d), present a classic free-rider problem wherein generic companies can ride on the success of innovator companies after bypassing the clinical trials phase and depending solely on bio-equivalence studies. Obviously the generics will now be able to price its drug at a significantly cheaper price than the innovator who is bearing the cost of the clinical trials. In such a scenario the innovator has little incentive to innovate since these inventions are in any case not patentable. The end loser is of course the patient.

B. Missing information & ‘local clinical trials’: The Satwant Committee Report, which was set up by the Central Government to examine the issue of data exclusivity, gave an enthusiastic go-ahead to a ‘data-exclusivity’ regime for the agro-chemical industry. The reason for this lies in the fact that the agro-chemical industry argued, convincingly, that given India’s unique climate and topography, it would not be advisable to depend on foreign regulatory data and that it would be advisable to conduct fresh trials in India in order to provide better quality of data to the agricultural community in India. The logical corollary to this was a request for data exclusivity as these companies needed an incentive to carry out expensive trials. As discussed earlier on this blog a Parliamentary Standing Committee has accepted a request to put in place a 5 year data exclusivity period for agro-chemicals.

The question in this context is whether human beings are really that different from plants and whether it really makes sense to depend on foreign regulatory data. Humans of different races react differently to the same drug. A few years ago the United States Food and Regulatory Authority (USFDA) released a document titled: ‘Guidance for Industry – Collection of Race & Ethnicity Data in Clinical Trials‘. In this document the USFDA notes that different races react differently to different drugs and thus urges the pharmaceutical industry to collect information for various races. The USFDA classifies the human population into the following races: (i) White (ii) Black (iii) Asian (iv) American-Indian or Alaska Native & (v) Native Hawaiian. A study on the participation of various races in American clinical trials, available over here, concluded that an overwhelming percentage of the volunteers were ‘whites’. Now the question is why does Schedule Y allow for approvals for the Indian market on the basis of the foreign regulatory data which has little value for the Indian population? This article in a journal criticizes the practice of outsourcing clinical trials from Europe and the U.S. to the third-world on these very same grounds, stating that the results of such clinical trials may not be applicable to the populations of the West. Another article in the prestigious New England Journal of Medicine on the globalization of clinical trials warns against this very same practice. Why is it then that the DCGI allows for the reverse to happen?

Apart from the obvious criticism of depending on foreign regulatory data there is also the question of the pathetic requirements of local clinical requirements in India, which according to Schedule Y can be limited to just 100 Indians. Further the Drugs and Cosmetics Act, 1940 provides no guidance on what exactly constitutes ‘Indian’ for the purposes of drug regulation. ‘The Idea of India’ has tormented, anguished and delighted us for the last 64 years and yet the Drugs and Cosmetics Act is blind to the sheer diversity amongst Indians. For example a person from the North-East is genetically much closer to the Mongloid race, while South Indians are of a completely different race. Such ignorance on behalf of the regulatory authorities is baffling in light of the fact that the Indian Government is the only Government in the world which boasts of its very own ‘Anthropological Survey of India’ (ASI). The ASI has conducted several studies which establish the genetic diversity in India.

In such circumstances it is but necessary that the Drugs and Cosmetics Act be amended to require pharmaceutical companies to carry out rigorous Phase III trials on much larger population sub-groups in India. It is stupid to depend on foreign regulatory data. Forget stupid, it may even be dangerous to depend on foreign regulatory data.

This report by the APPG bemoans the lack of adequate clinical information to treat AIDs in Africa precisely because of this very same reason i.e. all clinical trials are designed for western populations. The report states in pertinent part: “As well as missing medicines and diagnostics there is missing data about the suitability of some of the existing medicines for a developing country context. Clinical trials are often designed with a view to registration in the developed world, to capture maximum commercial benefits.” In addition to the APPG, even MSF has complained of how AIDS is a neglected disease in the sense that although a lot of research does happen it happens only in the context of challenges being faced by the West and not the developing countries. For example the AIDs epidemic in the West has stabilized to the extent that it rarely effects children, however the AIDs epidemic in Africa still claims a large number of children as its prime victims.

The only way, in my opinion, to incentivize AND compulsorily mandate, instead of ‘urging’, pharmaceutical companies to carry out such rigorous ‘population relevant trials’ and provide for relevant information, is to provide for a data exclusivity regime. Ideally if the same drug was covered by a patent, a data exclusivity regime would not be necessary, however in the absence of a patent it is but necessary for a data exclusivity regime especially in a country like India which is currently following a relatively high patentability standard.

C. Traditional Medicine: Traditional medicine has faced two major stumbling blocks in the last few years: firstly the lack of intellectual property protection and secondly doubts of safety and efficacy in the main export markets. As per Section 3(p) of the Patents Act, ‘traditional knowledge’ cannot be protected. This provision also complicates the efforts to patent innovations on existing traditional knowledge. As for safety and efficacy issues the chief export market of the U.S.A. has raised concerns of the heavy metal content in some of these medicines along with other doubts on safety and efficacy. As a result of these concerns the Central Government has mandated clinical trials for even Ayurvedic medicines. The ayurvedic drug industry has expressed concerns over such a move. One of the primary points of concern will be the ‘free-rider’ effect whereby one player conducts clinical trials and is granted regulatory approval after which he will have to price his products to compete with those players who have received approval by ‘free-riding’ on the first player’s clinical trials. Obviously the first player will be unable to compete with the free-riders. A short data-exclusivity term of 3-5 years will solve both problems of lack of IPR protection for innovation and a lack of incentive to carry out clinical trials.

D. Fixed-dose-combinations: As already mentioned before there is little IPR protection offered to incentivize the innovation of new FDCs. The other limb of the FDC dilemma is the utter lack of regulation of this sector. Indian companies have been coming out with FDCs of various permutations and combinations, several of them being irrational combinations leading to a temporary ban by the DCGI. The DCGI has been trying to ban these irrational FDCs for the last decade and this article of the Hindu carries a detailed story on the fight against FDCs. The obvious reason for most companies not wanting to conduct expensive clinical trials is the fact that they will not be able to compete with subsequent manufacturers who will be free-riding of the initial regulatory approval. It is however interesting to note that the medical utility of FDCs has been well accepted, even by WHO. The only cost in developing a FDC is usually the cost of clinical trials aimed at getting regulatory clearance. Even when Cipla came out with its revolutionary FDC – Trimune, the only reason it managed to make a profit was because the clinical trials for the drug were subsidized through grants under projects such as the European and Developing Countries Clinical Trials Partnerships (EDCTP). Such subsidies will not be available for all kinds of FDCs and given the lack of patent protection, it makes a lot of sense to create a data exclusivity regime which will not only create a more safe regulatory environment but also spur innovation in the field of FDCs.

Conclusion: That’s all from me. I hope this post provides the readers with the other side of the story but then again ‘hope’ is the things with feathers.

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP).

4 comments.

  1. Avatarskfinston

    Hi Prashant,

    Thanks for this very original and thoughtful foray into the DE debate!

    A few years back, I also wrote in support of DE here: http://www.thehindubusinessline.in/2006/07/18/stories/2006071800221100.htm
    The DE issue has recently also been debated hotly in the United State for biologics, and SpicyIP may be interested in the economic case relating to ROI and DE, from Professor Grabowski’s ongoing Working Paper series (Duke University) as here: econ.duke.edu/Papers/PDF/DataExclusivityWorkingPaper.pdf, and most recently summarized here: http://www.nature.com/nrd/journal/v10/n1/full/nrd3277.html (requires subscription, sadly).

    I really appreciate your taking up the issue, and look forward to more comments and views from Spicy IP contributors.

    Best regards,

    Susan

    Reply
  2. AvatarAnonymous

    Hi Prasant

    Appreciate your thoughts on the present matter, thus showing the other side of the story.
    Though it may not be liked by majority in the Indian Pharma sector including your fellow bloggers and some of your very close generic IP guys…for them the message should be clear and loud…..Please innovate new drugs and then let us see whether they oppose data exclusivity or not??

    Reply
  3. AvatarPrashant Reddy

    Thank you for encouraging comment Susan.

    I’ll definitely have a look at the article and the working paper that you’ve pointed out.

    I guess the Indian debate on DE is still at a nuts and bolts stage. We’re yet to go beyond the rhetoric.

    Cheers,
    Prashant

    Reply

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