Data Exclusivity

Data Exclusivity Debate: Whither Context?


In this wired world of ours, they say that content is king. After reading Prashant’s impressively articulated post on data exclusivity, I’m inclined to supplement this with : “context is also king”. And unless content situates itself within context, it risks a painful dethroning.
For context is one thing that he missed in an otherwise persuasive post: the “context” of the current EU-India FTA negotiations, where it is abundantly clear that the clarion call for data exclusivity comes from European companies with little or no interest in promoting indigenous Indian innovation.

Prashant bemoans the fact that we had witnessed more “balanced” debates during the time of the Satwant Committee report. Unless age is getting the better of me and taking its toll on the grey cells meant to retain information, I didn’t see much of a debate during the Satwant Reddy time…at least not any debates worth mentioning….. and certainly no debates that are anywhere near close to the level of sophistication that Prashant himself has offered in his thought provoking post.

What I recall are widely rehashed arguments from both camps (innovators and generics) that had already been done to death several times in several earlier contexts. In fact, the Satwant Reddy report itself contains many of these truisms that are waiting to be busted with simple empirical data. But I will come back to this badly researched and drafted report in a later post.

For the moment, let me focus on the key thesis of my post, namely that of “context”. Where is the demand for data exclusivity coming from at this stage? Are any of the Indian companies advocating for this?

Certainly not! This is a European demand….made for and in the interests of European companies. However, much to their credit, the EU has not faked any false interest in the future of Indian companies this time and tantalized us with the magical notion that a simple flick of a legal pen would convert Indian companies to innovation powerhouses! On the contrary, they appear to implicitly acknowledge that the future of innovation would continue to vest with European companies… and are seeking India’s active co-operation to help them retain their supremacy in this regard. Needless to mention, they are also aware of the fact that once we help them, the benefits would automatically flow to US, Japan and all other WTO members including the troubled Arab states…for this is what the TRIPS concept of “most favoured nation” is all about and we have to mandatorily grant data exclusivity to all countries. Its a win win game for all…..but what about India? Does it also win?

Woeful Drug Regulatory Oversight:

Prashant’s post helps us address this to some extent. He triggers the discussion by rightly pointing to the pathetic state of drug regulation in India….and helps focus our attention on one of the most under debated areas in Indian public health. I had lamented this lack of attention to regulatory oversight in an earlier post.

Our Drugs and Cosmetics Act (DCA) mandates that any drug that has already been approved by a foreign regulator can be introduced in the Indian market, only after “bridging trials” have confirmed that the drug is likely to work reasonably well (in terms of efficacy and lack of toxicity) in India too. And that there is nothing special in the Indian constitution that would warrant the opposite conclusion.

Such bridging trials can be derogated from only under exceptional circumstances, where there are good reasons to suggest that even in the absence of such trial data, the drug is safe and effective for Indians.

(For those not in the know, bridging trials are trials that are done on around 100 volunteers or so to demonstrate that there are no special reasons to suspect that a drug already approved abroad wouldn’t work well in an Indian body ……these trials are not as intensive as regular clinical trials and can at best, be seen as an abridged version of phase III of clinical trials.)

Most industry insiders that I have spoken with confirm what Prashant rues about and admits that there is considerable regulatory laxity and abysmal compliance of norms by both generics and foreign multinationals….with many of them effectively circumventing the bridging trial requirements. However, it takes two hands to clap and one cannot blame the companies by themselves. Our drug regulator does not offer much in terms of guidance on this count….it does not stipulate detailed norms pertaining to the kinds of patient populations to be recruited for such trials, the types of protocols to be followed etc. In effect, a sub-optimal regulatory radar encourages pharmaceutical companies to avoid meaningful trials and effectively compromises our state of public health.

So our first priority really ought to be towards restructuring the regulatory framework and making it more credible. And not worrying about data exclusivity incentives!

From Rhetoric to Empirical Data:

Assuming we do formulate and enforce regulatory norms in a meaningful manner (including by devising trial protocols that represent Indian diversity of all kinds, including race, ethnicity, age, gender and even socio-economic status), what costs are we really speaking about? Unless we know this, there is no point discussing incentives and assuming that a western style data exclusivity model is the right answer.

A rough estimate suggested by an industry insider is that, given the prevalence of low cost and effective CRO’s in India, meaningful bridging trials are likely to cost anywhere between 50,000 to 2 crores. Assuming this to be true, how much of an incentive do firms really need to conduct such trials in India. A 6 month exclusivty? One year? Or can we dispense with legal protection altogether and simply ask firms to rely on lead times i.e. the time difference between their approval (after bridging trials) and those of their competitors (who have to merely demonstrate “bio-equivalence” and are saved the effort of generating any data whatsoever). Assuming the costs of data generation are not that significant, would pharma firms worry about free riders, even in the absence of any protection or market advantage?

And if some form of legal incentive is necessary, does an exclusivity regime necessarily constitute the best option? What about a compensatory liability (or compulsory licensing) model, where there is no exclusivity, but the originator company has the right to be compensated by any follow on market entrant. In other words, assuming the originator spends 2 crores to generate bridging trial data, that cost is to be shared by all generic companies that wish to enter the market. This is a model that I am personally fond of and had advocated in an earlier paper.

These are empirical questions that need to be investigated and answered prior to jumping to the conclusion that western style data exclusivity is the best panacea to our problems. Indeed, our empirical investigations ought to begin with an examination of those cases where the drugs had been approved in India, but only after some “real” regulatory compliance costs had been incurred.

Regulatory “Costs” and “Context”:

All of this however leaves us with a more pertinent question that lies at the heart of the debate, provided we are sensitive to “context”: what about the costs of data generation in the US and EU? Should India pay for this? For the Indian approval does rely (indirectly) on this data as well. And if Di Masi et al’s estimates are to believed, this process of data generation through a full fledged clinical trial process in the US accounts for the most significant portion of an intensively expensive innovation pipeline.

More specifically, the Di Masi study claims that of the total 802 US million that is slated to be the average cost associated with drug discovery and development, the costs associated with only the “clinical” trial phase amounts to US$ 467 million.

Had it not been for this foreign approval, the Indian regulator would surely have insisted on full fledged clinical trials in India. And although the regulator may not be privy to the data itself, the very fact that a regulator such as the US FDA has approved the drug is good enough for regulatory “reliance” in India.

Should India pay for this cost of data generation in the West? And if we continued to free ride on these costs (in much the same way that most other developed countries did in the pre-TRIPS era), would we be sounding the death knell of these fine engines of innovation that we now call Big Pharma? I doubt it.

Our national interest will likely dictate that we need to only pay for the cost of additional data generation for India (i.e. the bridging trials). I say “might”, since we are yet to undertake any empirical studies to determine whether the costs of data generation are significant enough to warrant legal protection against free riders. And it is “national” interest that ought to guide us here…..and not some abstract and a-contextual “balancing” concern.

So, is the EU demand for data exclusivity really a nuanced one and does it take account of Indian national interest as articulated above? Even if I were to fall several notches short of the man on the clapham omnibus (someone that whimsical common law judges crowned with the epithet of “reasonable” many decades ago), I’d say no. The EU simply wants that their cost of data generation in the EU or US be compensated for by market exclusivities in India. I’m also guessing that their companies are not overly concerned with improving drug regulatory norms in India through this FTA: for that would only increase their costs of compliance in a country that is anyway seen as ripping them off.

Given this contextual background, I’d argue that it is a national priority for all of us to stand together in opposing this demand for data exclusivity as articulated by the EU. However, we need to initiate the process of closely examining our own regulatory structures and ramping up our norms. And we can then begin discussing incentive structures within that specific context.

Tentative Suggestion:

In order to ward off the EU clarion call at this moment (I understand that the EU is keen to have the FTA signed within the next couple of months), my recommendation to the Indian government would be to inform the EU that India is keen on making the following changes to its legal/regulatory regime:

1. Ramping up its regulatory norms and insisting on adequate bridging trials in India prior to the approval of drugs that have already been approved in foreign countries.

2. Assuming that the costs of such bridging trials are significant, India will take steps towards granting some legal protection against free riders. However, such costs would only be protected through a “compensatory” mechanism and not through “data exclusivity”. The recoverable costs will only include the specific “bridging trial” costs incurred in India, and not any cost incurred for the purpose of procuring approval from the EU or any other country abroad.

3. In order to be entitled to compensation from follow on market entrants, firms have to reveal their detailed (and audited) costs to the drug regulator or other government agency. Data generated through bridging trials would be mandatorily published and accessible by any member of the public.

My bet is that once this proposal comes on the table, the clamour for data exclusivity, as articulated in the FTA context, is likely to die a natural death. I’m no gifted octagonal seer…… but to the extent that this debate is “contextualised”, and one sees the EU demand as one triggered by the desire to have India compensate a foreign regulatory cost, any proposal to strengthen regulatory compliance in India and compensate only to the extent of this cost, will likely dampen the fires that are stoking the current data exclusivity embers……

And once we have this EU pressure off our backs, we can begin to seriously think through our regulatory framework and the kind of incentives that will help procure the desired compliance levels, whilst at the same time, yielding drugs that are largely affordable to the vast majority of Indian consumers.

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.

12 comments.

  1. AvatarAnonymous

    Excellent proposal. On the one hand, there is an arguable case for recognizing that clinical trial data is a intellectual property on its own, separate from patent rights, and providing some sort of protection. On the other hand, providing market exclusivity on the basis of data which has no significance to the Indian population seems perverse. There is a need for a via media, and your proposal for a compensatory mechanism, rather than exclusivity, seems just that.

    Reply
  2. Avatarskfinston

    Dear Shamnad,

    We could go back and forth on this for days, so I will just make a few key points here:

    First, I think that the arguments you make are important because they are in the back of the mind for many, even if they don’t want to say out loud that yes, there is considerable effort, and high costs for clinical research, but no, India does not want to play a meaningful role in supporting this global R&D effort, even for drugs and diseases of great importance to public health.

    At bottom, however, this argument presents a classic slippery slope.

    When does it become an immoral position for India to be a scofflaw when it comes to providing exclusivity periods for commercially valuable, proprietary regulatory dossiers?

    Taking this to the farthest extreme, you could use this same argument on theft of real property, saying that robbery is ok, so long as there is little likelihood of getting caught.

    Second, and significantly, India now benefits from an increasing amount of CRAMS, Preclinical and Phase II, III, and IV clinical research trials and has a great deal at stake now to support the global pharmaceutical research enterprise.

    So even if your first point did not strike me as at least amoral, if not immoral, doesn’t that change the context that you are citing as key to decision making?

    Third, historically there were some very courageous Indian companies that did support at least a five year period of full data protection. These include Nicholas Piramal Labs, Biocon, and others.

    It was a hard position to take when the entire India pharma establishment was lined up against data protection!

    So it is an overstatement, at the very least, to say that this is only an MNC demand.

    Fourth, if India wants to support truly novel bio-pharma research, Data Protection is key for many smaller biotechs that lack the firepower of MNCs to file patents in so many important markets.

    When the MOH acts as gate-keeper via data protection, small biotechs with only one or two products can be assured of a fair period for ROI prior to facing competition in the market.

    (Amrita Therapeutics Ltd. falls squarely into this category, and is very much an Indian firm, organized in the State of Gujarat.)

    I am sure that you have thought of these points already, and look forward to your thoughts!

    Best regards,

    Susan

    Reply
  3. AvatarAnonymous

    Shamnad,

    Many thanks for looking at this topic (which I know- is close to your heart and mind 😉 } in a completely objective setting.

    Coming to the debate.. I want to know how many of the readers (NOT you) have actually read the current draft version of the FTA’s IP chapter. Its now available on some sites like KEI etc.

    So… while I may have a biased perspective, lets also see what the EU is actually demanding today (which you already given an indication).

    GenericIPGuy

    Reply
  4. AvatarShamnad Basheer

    Thanks Anon, Susan and Sandeep:

    @Susan: good points, as always. let me respond to them in turn.

    1. You call the Indian position of active free riding as “immoral” and amounting to “theft”:

    Well Susan, what can I say, apart from referring you to a classic by Doron Ben Atar who carefully captures the state sponsored piracy committed by the US in the 18th century…a very deliberate policy of plundering Europe’s IP. And within europe itself, switzerland held out for long and refused to grant pharma patents, but preferred to imbibe (or in your language “steal”) technology from the germans. Japan also followed the same strategy. India does the same (within existing TRIPS constraints)…and merits moral censuring for an “immoral” act?

    if you’re interested, see atar’s book summary at this link here: http://www.theglobalist.com/StoryId.aspx?StoryId=4222

    2. You’re right that piramal supports data exclusivity. but piramal has always aligned itself with big pharma and OPPI owing to its contracts with them…and now its key formulation business has been taken over as well by abbott. so i wouldn’t really count on piramal as reflecting the indian posn on this count.

    3. Fortunately, in order to judge whether indian companies are ready for data exclusivity, we have a fairly simple test. since most such companies operate in teh US and EU, lets look at how many new drugs they’ve developed for those markets and attempted to gain patents and data exclusivities for those drugs. If they’re unable to exploit a market that provides all these exclusivities, surely, we’re fooling ourselves in thinking that they would suddenly begin doing so in India…at least in numbers significant enough when compared with big pharma….and i assume that just as with patents, we’d have the vast majority of exclusivities handed out to foreign firms. so who exactly are we benefiting by having such a regime?

    4. We must examine really how much money it takes to make a drug in the US and EU (and subtract away all NIH funds etc) and how long it takes to recover these sums from the US and EU markets. Unfortunately, this highly secretive industry does not believe in sharing figures. But once these are out, I’m sure that even other developed countries would reconsider the exorbitant levels of exclusivity that they dole out and consequent windfalls that they engender…

    Reply
  5. Avatarskfinston

    Dear Shamnad,

    Please help me to understand your first argument – which I admit has me so stymied, logically, that I am having difficulty moving to your second point.

    First, my post raised the question of WHETHER India’s free-riding is a slippery slope issue, and runs the risk of becoming an immoral policy.

    Here is what I wrote:

    “When does it become an immoral position for India to be a scofflaw when it comes to providing exclusivity periods for commercially valuable, proprietary regulatory dossiers?”

    So I did not actually call India’s policy immoral, or amounting to theft, just to be clear.

    Instead I was raising the question, which still hope you will answer.

    So to restate the question(s) here, more directly:

    Is there any risk of a slippery slope in this policy?

    Does it risk at some point becoming an immoral policy?

    Second, going back to logic, if it does raise the risks of a moral slippery slope, then what is the point of citing past state practice, however widespread, or even current legal authority?

    Many countries, for example, in the 18th, 19th and even early 20th century had some form of legal slavery, and even now in the 21st century the international sex trade is a pernicious form of involuntary servitude. Until the mid-20th century, a number of U.S. states had “Jim Crow” laws that made discrimination legal based on race, sex, religion or country of origin. Even today many countries legally discriminate against women and certain religious groups. I suspect we agree that all of this well-documented past and current state practice does not address the question of the moral quality of the policy!

    So the question remains:

    Does Free-Riding on commercially valuable, proprietary clinical data for the clear commercial gain of third parties present any kind of moral slippery slope?

    Is there a point at which it becomes immoral and theft from the innovator in your mind, or is it just always ok, just so long as it comes at the cost to the foreign innovator and to the benefit of Indian companies?

    Help me to understand why I should care that there is wide-spread and well-documented evidence of past state practice, if I also believe that that practice is hard to defend on a moral basis.

    How is that different from just saying that “two wrongs make a right?”

    I am sure that that is not what you mean, and that I am missing out on something here.

    Then we can move on to the rest of the argument!

    Best,

    Susan

    Reply
  6. AvatarShamnad Basheer

    Dear Susan:

    It fascinates me that IP is now put on the same plane as international sex trade and slavery.

    More importantly, for the purpose of our discussion, it strikes me as rather odd that you’re asking me to respond to an argument on morality when you haven’t even spelt out as to why exactly technological imitation by India would be immoral. Or would be slanting towards immorality on your alleged slippery slope. Because big pharma says it is so?

    I’m sure you’ll appreciate that a number of good scholars and human rights activists worked hard to theorise abolitionism (both slavery and sex trade) and place it on sound philosophical and jurisprudential tenets…based interalia on the right to equality and dignity.

    Do we have similar arguments on why IP should be protected on a “moral” basis. For unless there is such moral basis, how can there be any immorality, whether slippery slope or otherwise?

    Correct me if I’m wrong, but it seems to me that you have automatically assumed that there is a moral basis to IP, without really bothering to explain as to how you arrived at this proposition, which seems jurisprudentially and philosophically flawed to me. Not least because I really haven’t found any credible arguments on this count. And IP appears to be no more than an economic tool to regulate governance of non rival and excludable knowledge goods…and countries ought to be free to devise appropriate policies based on their respective national interest…period…

    But perhaps we can get to an informed discussion on that count, after you’ve taken a shot at educating me on the moral basis for intellectual property. Thanks.

    Reply
  7. AvatarAnonymous

    Does the fact the Europe provides 10 years of data protection while the US provides only 5 make the US somewhat immoral? Are Canada (8), China (6), and Russia (6) somewhere in-between? What about Japan? It only re-examines after 6 years for safety issues. But does not really call it data protection. Wouldn’t it be nice to design a moral spectrum in which we can fit countries based on the length of data protection they offer, and, to boot, patent the pigeonholing process as a business method?

    Sex-trade and slavery have been equated with data protection. Why go that far, is Europe on a slippery slope because it doest not grant patents on business methods? Would it be alright for countries where abortion is illegal to call immoral those where it not, and, vice versa?

    Sorry, too much rhetoric. The fact is, context plays a huge role in understanding law, anywhere. While there is a legitimate argument to be made on providing data protection, the context cannot be ignored. I think that is what Shamnad has highlighted.

    Reply
  8. Avatarskfinston

    I tried to provide the most extreme example possible to point to the lack of logic in judging morality of a policy by evidence of state practice – sorry but there was no other intended connection between the two. That would be ludicrous, I agree.

    However, it is clear to me now that Shamnad rejects the entire notion that morality has a role to play in developing IP policy, and it should be seen only as an economic tool, full stop.

    Is this correct?

    That is a much better answer than State practice!

    We can disagree, strongly, but it is a clear and direct answer.

    And you could say that this conclusiong is also rooted in philosophy, i.e., utilitarianism.

    Also, there is a philosophical underpinning relating to IP and morality that we can enjoy discussing at a later time. (Interestingly, some forms of copyright are even called “moral rights.”)

    A topic for another day!

    Best,

    Susan

    Reply
  9. AvatarShamnad Basheer

    Great that you’ve alluded to moral rights under copyright regimes Susan,

    For it is perhaps be the only aspect of current IP doctrine that many agree to possess some legitimate semblance of a moral underpinning. On this count, it may interest you to note that Europe provides moderate to strong protection (the french protect it stronger than most other europeans). Contrast this with the US which provides such “moral” protection to a very limited extent (via an enactment called VARA).

    Quite surprisingly, India appears to provide for extremely strong protection on this count….and has even gone to the extent of conferring rights on the author to prevent the destruction of the work (Amarnath seghgal case). So, on this one legitimate “moral” count re: IP, India appears to be doing quite well…..

    but anyway, I digress and we ought not to conflate issues. we’re discussing data exclusivity here….allegedly one species of “intellectual” property. I’d be very curious to see how one might build a moral argument here.

    For this kind of protection, covering as it does mere “investment”, does not even have anything “intellectual” to begin with, much less “moral”.

    Reply
  10. AvatarAnonymous

    Shamnad, I would equate morality with fairness here. Is it fair or unfair to deny someone who has spent considerable resources in bringing a drug to the market some sort of protection to the underlying data? In this case by not allowing the regulator for a certain period to approve a third party product, which relies on the original data for approval? The simple answer, I would think, is that it would be unfair. What is unfair is immoral if done deliberately. Now, these matters – like life in general – are never simple. The temporal context matters and it, unfortunately, complicates matters a lot. Right now, the discussion in India has unfortunately taken an all or nothing approach. That’s where I believe your idea provides a way forward. It needs to be further debated. Alternatively, we can try to apply game theory!

    Reply

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