Data exclusivity refers to a practice whereby, for a fixed period of time, test and other data provided to the drug regulatory authority (“DRA”) of a country (to demonstrate the efficacy and safety of a medicinal product ) in order to obtain an authorization to place the product on the market in that country, are not allowed to be used to register a therapeutically equivalent generic version of that product. Oftentimes, this data arises out of many years of research and clinical trials and is very expensive for the originator of the drug to produce. The framework for pharmaceutical regulation and authorization attempts to protect the investment of companies in their innovations by providing periods of so-called data exclusivity.
In essence, data exclusivity refers to a period during which no third party applicant can rely on data filed by the original applicant for a marketing authorization. Accordingly, during this exclusivity period any subsequent applicant would need to have generated its own data to support the safety and efficacy of the product. It has, therefore, been argued, that data exclusivity is a misleading term; a more appropriate term would be market exclusivity.
The most important international agreement dealing with the use of data submitted for regulatory approval is the World Trade Organization (“WTO”)’s Agreement on TRIPS. Article 39.3 of TRIPS (reproduced below) obliges countries to protect against unfair commercial use of confidential data on new chemical entities submitted by companies to obtain approval for marketing new drugs from a regulatory agency. However, not all WTO member states have enacted data exclusivity laws as described. This is because Article 39.3 allows considerable discretion as to what member states must do. Nowhere does Article 39.3 state that countries should provide exclusive rights to the originator of the data for a given period or a minimum term of protection.
More importantly, it is not clear whether the phrase “unfair commercial use” includes use of the originator’s data by the regulatory agency to assess applications by generic competitors. This has been argued not to amount to “unfair commercial use” so long as the regulatory agency does not disclose the data to the generic competitor. In terms of this interpretation, Article 39.3 does not require data exclusivity.
On the other hand, according to the research-based pharmaceutical industry, the only way to effectively protect test data against unfair commercial use is to provide an exclusivity period for the use of the data.
Both the Office of the United States Trade Representative and the European Union (“EU”) have urged that Article 39.3 of the TRIPS Agreement established an exclusivity obligation. According to the EU, all that is left to member countries is the determination of the duration thereof.
In addition to Article 39.3, there have been other bilateral arrangements and regional free trade agreements signed or under negotiation by the US in the wake of the failure of multilateral negotiations in the WTO, which contain data exclusivity provisions. The most significant of the trade negotiations wrapped up by the USTR is Central American Free Trade Agreement (“CAFTA”).
The Indian Position
In 2003, the Government of India issued a statement that –
“the Government does not have a position on data exclusivity data hk at the moment. But it is clear that we have no obligation under TRIPS (trade- related aspects of intellectual property rights) to have provisions for the same in the country.”
The Government of India was of the opinion that Article 39.3 only requires WTO members to protect the test data against any “unfair commercial use” or “unfair competition”. It neither includes market exclusivity to the innovator nor does it create market protection. The rationale/basis for such a view has originated from the term “unfair competition” as described by the World Intellectual Property Organization (“WIPO”), that “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).”
Since the repression of “unfair competition” does not advocate any kind of exclusive rights nor the word “exclusivity” has been mentioned anywhere in the Article, the demand to give market exclusivity to pharmaceutical companies or the innovator on the basis of Article 39.3 would be unfair.
Also, a Government official reportedly stated that –
“TRIPS only requires us to protect test data against unfair use under Article 39.3, but there is nothing that says that we have to provide marketing exclusivity. Interpretations vary depending on which side you are on. It is only when a case comes up at the Appellate Authority at WTO can there be clarity……Under the existing circumstances, it is highly unlikely that marketing exclusivity would be provided for any period of time. It would be possible only if TRIPS is modified, which one cannot see happening. With new products not coming to the market, new uses are being found for the existing ones. While patents would not cover these, data protection is being seen by American companies as a new form of intellectual property right to effectively extend patent life.”