India: Data Exclusivity - Its Interpretation and India

Last Updated: 7 January 2005
Article by Rahul Goel

The Intellectual Property Regime in India is in the final stages of ensuring compliance with the standards agreed in the World Trade Organization’s Agreement on the Trade Related Aspects of Intellectual Property Rights (‘TRIPS’). Much highlighted is the imminent amendment proposed to the Indian Patents laws. However, India’s TRIPs obligations are not only limited to ensuring its Patent Laws to conform with the TRIPs standards but also to provide adequate protection to that class of Intellectual property Rights (‘IPRs’) enumerated in Article 39 of TRIPs Agreement. This TRIPs provision owes its origin to Article 10bis of Paris Convention1, which provides for ensuring effective protection against unfair competition by protection of undisclosed information.

Companies involved in research and development (R&D) spend a considerable amount of time and money on innovation of new products. The protection available under Intellectual Property laws requires them to disclose the information publicly and later grants them exclusivity for a very limited period of time. The pharmaceutical companies research and generate pre-clinical and clinical trial data, which is imperative for endorsement of a pharmaceutical or medicinal product. The costs involved in generation of such test results are extremely high and form the basis of development and production of any new pharmaceutical drug. As per estimates, the time involved in getting approval after the grant of the patent, from the relevant drug controlling authorities and before the drug is finally introduced into the market, is around 12-13 years and average costs involved are USD 500 million2. In developing countries, it takes another 2-33 years before the drug is introduced. Thus, giving a drug or pharmaceutical manufacturer only 7-8 years (or may be even less than that) of effective Intellectual Property protection.

The R&D oriented pharmaceutical companies, for the purpose of regaining their investment, require protection for a particular period, during which competitors are not permitted to use research data submitted by a patentee or a manufacturer of new drugs. The innovator has proprietary rights over the clinical test data and other research data.4 Research data that is confidential and proprietary knowledge of the inventor/innovator or his licensee, is protected under Article 39.35 of the TRIPs Agreement.

Undisclosed information is recognized as a form of intellectual property in Article 39 of the TRIPS agreement. Article 39.3 of the TRIPS, requires WTO Member States to protect clinical test data submitted for the marketing approval or for registration purposes. The test data has to be protected against any "unfair commercial use". The term ‘unfair commercial use’ has not been defined anywhere in the text of the TRIPs Agreement, but an inference can be drawn from the negotiating history of Article 39.3 that testifies the contest between new drugs manufacturers and the generic drugs manufacturer. During the negotiation stages, it was strongly contended that a generic competitor should not benefit from relying on the research data of the innovator, made public during the process of securing patent registration and drugs approval, at least for a specific period of time.

Some countries provide for sui generis form of protection, whereby giving temporary right to use such data to the first applicant6. This curtails the practice of other manufacturers of similar products, on relying on test data of the first applicant. In other countries, authorities, at times, rely on the data submitted by the first applicant to approve the ensuing applications for similar products. For the purpose, it is to be proved that the physico-chemical components are similar to the product of the first applicant. This practice is more common while granting approval for generic pharmaceutical drugs. Data exclusivity in general prevents the Drug Controller from utilizing the original or innovator’s clinical trial data for a specific period. During this period no generic drugs would be approved based on the original test data. This kind of market protection may restrict the access to pharmaceutical drugs, mainly in developing and least developed countries. Since Article 39 has no time limit, it may lead to unlimited protection against generic application of un-patented drugs and chemical products.

The data protection, as also advocated by India, is different from patenting and both are distinct forms of protection. Protection of one right is independent of the other. The clinical test data, which forms a critical part in research and development of a pharmaceutical drug, is not protected by the way of patent. The protection of test data is provided under Article 39.3. It is also argued that the existing Official Secrets Act, is sufficient enough to provide protection to Undisclosed Information, as Drug Controller works within the ambit of the said act and there has not been any instance where the drug controller has misused his authority and power. It is further argued that neither the regulatory authorities nor the competitor uses the pre-clinical trial data or clinical trial data as generated by the first applicant.7

India, under the rapidly changing international trade scenario and immense lobbying of pharmaceutical companies, has been forced to assess its stand on Article 39.3. Unlike US and European Union, India’s stand and interpretation of Article 39.3 does not include market exclusivity to the innovator and does not create market protection. India is of the view that the said article only talks about the protection of test data against unfair use and nothing about data exclusivity, which is further interpreted to be same as market exclusivity. It is viewed that Data Protection is very different from data exclusivity. EU and US are of the opinion that article 39.3 also covers data exclusivity. Wherein they have adopted similar legislation to provide data exclusivity to innovator, the duration of which may exceed up to ten years in EU and five years in US. Since the main objective of Article 39.3 is to restrict and stop ‘unfair commercial use’ or unfair competition, it is vital to analyse ‘unfair competition’ as described by WIPO:

"The repression of unfair competition is not concerned with exclusive rights, but is directed against acts of competition contrary to honest practices in industrial or commercial matters, for example, in relation to undisclosed information (trade secrets)."8

The debate on Article 39.3 revolves around whether to include or to leave data exclusivity from the interpretation of the said article. On the analysis of the text of WIPO as mentioned above, it can be agued that repression of unfair competition does not advocate any kind of exclusive rights. Thus, the demand to give market exclusivity to pharmaceutical companies or the innovator on the basis of Article 39.3 would be very unfair. Moreover, the word ‘exclusivity’ is not mentioned anywhere in the Article. This Article also discusses protection of data against unfair commercial use. It is contended that the pressure from the multinational companies primarily based in EU and US, is against the spirit of Doha Declaration, where it was stated that, the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. It was further stated that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.9 This declaration among others has more importance for developing and least developed countries, where generic drugs, compulsory licensing and parallel imports play a vital role as needed to enhance access and implement public heath policies.

On the other hand, the only concern as shown by the groups opposing, EU and US stand is, the extension of protection period beyond current 20 years protection period as granted under Patents Act or leading it to ‘ever-greening of patents’. The above-mentioned argument can be countered, taking in to account Poland’s legislative framework on data exclusivity. Poland though, providing for data exclusivity, calculates the period of protection from the first date of global registration of the patent. Thus restricting the period of protection in Poland. A similar kind of an approach, if adopted, can counter the fear of ever-greening of patents and can also resolve the debate related to data protection and data exclusivity. The exclusivity which otherwise would also be available on the grant of patent, would continue under data exclusivity. This would ensure that the time period of data exclusivity or protection not going beyond patent protection period. Alternatively, a ceiling can be set whereby it can be set that the time period of data exclusivity shall not be granted beyond patent protection. This is more closely related to the system as adopted by some of the EU members like Germany and Portugal.10

Article 39.3 advocates protection only for ‘new chemical entities’. ‘New chemical entities’ are not defined anywhere in the Article. It is left on the Member States to examine and define, what new chemical entities would be? Any alteration or rectification or modification in the current legislation would also involve changes within the scope of functioning of the Drug Controller.

Data Exclusivity (Article 39.3), in more concrete form, only seeks protection of the interests of the innovator and originator, against any unfair commercial use and provides a healthy platform to encourage investments and innovation for social benefit.

Footnotes

1 http://www.wipo.int/clea/docs/en/wo/wo020en.htm#P211_35197 viewed on November 10, 2004.

2 Data Exclusivity – A TRIPS Dictated Supra-IP Protection Tool by A.D.Damodaran at http://www.patentmatics.com/pub2004/pub4g.htm viewed on November 04, 2004

3 "…a patented drug is introduced in the 17th year of the 20-year patent life…", Pharma Cos In Grip Of Feverish Debate On Data Exclusivity at http://www.financialexpress.com/fe_full_story.php?content_id=35135 viewed on November 04, 2004

4 TRIPS Article 39.3 (Protection of Undisclosed Data) A critical issue for the continued development of of safe and innovative medicines for patents) at http://www.efpia.org/4_pos/legal/trips-39-3.pdf viewed on November 22, 2004

5 Article 39.3 of TRIPS: "Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products that utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use." www.wto.org. Viewed on June 05, 2004.

6 http://www.southcentre.org/publications/protection/protection-03.htm viewed on November 22, 2004

7 Data protection not synonymous with granting EMRs, Govt tells drug cos, Harish Damodaran in Business Line at http://www.blonnet.com/2004/03/29/stories/2004032901660300.htm viewed on November 22, 2004

8 Pg 4 at http://www.egagenerics.com/doc/ega_trips39.3_2000.pdf, viewed in Jun’04.

9 World Trade Organisation, http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm, viewed in Jun’04.

10 Pg 7 at http://www.egagenerics.com/doc/ega_trips39.3_2000.pdf, viewed in Jun 04

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