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Data Exclusivity: An Indian Perspective

Aug 19, 2006
Praveen Dalal

The aim of this article is to analyse the applicability of "data exclusivity" provisions in India. The same assumes significance since India has to clear its position on one side or the other

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The grant or refusal of data exclusivity protection has to be considered keeping in mind the nation's interest and provisions of Doha Declaration and TRIPS Agreement, more particularly Article 39.3 of the TRIPS Agreement.

Introduction

Data exclusivity refers to a practice whereby, for a fixed period of time, drug regulatory authorities do not allow the registration files of an originator to be used to register a therapeutically equivalent generic version of that medicine. Data exclusivity is completely separate from patents.
In fact, the strongest impact may be felt in a country where there is no patent for a medicine - if data exclusivity is granted this will provide a monopoly for a set period.[1] Data exclusivity is one of the most controversial issues in the current discussion on pharmaceutical intellectual property policy-making globally. It is aimed at protecting and safeguarding pharmaceutical registration files, i.e. the data submitted by pharmaceutical companies to drug regulatory authorities (DRA) for the purpose of obtaining marketing approval for new drugs.
The underlying logic of data exclusivity suggests that it is an expression of trade-secrets, and that as such, data exclusivity should be independent of patents. Compared with patents, the market power of data exclusivity is, in theory, less restrictive, mainly because it does not legally prevent other companies from generating their own registration data. However, in practice, the vast financial resources and extended time required for gathering and generating pharmaceutical registration data for a new drug create a market barrier that is too high for generic-based companies.
The data included in the registration file of a pharmaceutical product is disclosed to the health regulatory authorities. Without this data a drug cannot be approved for market use. This in turn means that the term unfair commercial use is linked to the responsibility of the Government for protecting this data.[2] In what form such data has to be protected by the Government is a different issue. It may be protected in the form of administrative guidelines or it may be protected in the form of a separate law. The larger question that remains to be answered is whether India is at all required to protect the same in the form of a "statute"? This question directly relates to the Public International Law obligations of India as India is a signatory to the TRIPS Agreement. India is not required to provide any protection beyond the scope of TRIPS Agreement and any demand over and above that will be TRIPS plus option and not a TRIPS related obligation.

II. The relevant provisions

Article 39.1 of TRIPS establishes that in order to prevent unfair competition, as defined in Article 10bis of the Paris Convention, members shall protect undisclosed information and data submitted to governments and governmental agencies. Pursuant to Article 39.2, WTO members shall allow natural or legal persons to prevent information lawfully within their control from being disclosed, obtained, or used, without their consent, in a manner contrary to honest commercial practices. In order to be protected, undisclosed information must fulfil three criteria:

(1) it must be secret in the sense that it is not generally known or accessible to persons who normally deal with this kind of information (Art. 39.2a);
(2) it must have commercial value because it is secret (Art. 39.2b);
(3) reasonable steps were taken by the owner of that information to keep it secret (Art. 39.2c).[3]

As to pharmaceutical registration files, Article 39.3 states that "Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which 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".

The rationale is that where substantial cost has been incurred by the researcher, it would be unjust to deprive him of the legitimate and reasonable profits by allowing the other persons adopt its unfair commercial use. Developed countries pushed very hard during the TRIPS negotiations to have data exclusivity included in the TRIPS Agreement as a new kind of IPR. They succeeded in part, as test data are mentioned in Section 7 of the TRIPS Agreement, but not entirely, as TRIPS does not talk about "exclusivity" as such.

III. Protection dilemma

The conferment of data exclusivity has serious implications for domestic enterprises engaged in the fields of pharmaceutical and agro-chemical products. If data exclusivity is approved domestic enterprises would be prevented from taking marketing approvals on the basis of the data submitted by the first enterprise who had generated the data and submitted the same for taking marketing approval.

The World Health Organisation has recommended that developing countries must keep the systems of Intellectual Property Rights and drug regulation separate and reject efforts to make connections between the two. Recently, International Aid Agency Medecins Sans Frontieres (MSF) - Doctors Without Borders - said in its letter to the Prime Minister of India that the Drugs and Cosmetics Act was a legislation related to health and improving access to drugs.

An amendment to implement an intellectual property agreement in the Drugs and Cosmetics Act can have a serious impact on the approval and availability of generic versions of essential drugs. If the Indian Government starts providing exclusive rights over test data, this will delay generic competition from Indian pharmaceutical companies even in cases where the medicines are not patent protected.[4]

Opponents of data exclusivity provisions argue that the TRIPS provisions speak only about the protection of test data against unfair use and nothing on data exclusivity. It is also pointed out that data exclusivity might restrict access to drugs, especially generics, which helps keep down prices. Other arguments focus on unwarranted extension of patent rights and obstacles to compulsory licensing, which helps poor countries to avert emergencies.[5] In order to delay competition from generic manufacturers, multinational companies have been pushing hard to obtain exclusive rights over their test data. The biggest

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