Unlocking Data Exclusivity Under Article 39.3 of the TRIPS Agreement
The intricate world of intellectual property and global trade has witnessed the emergence of a crucial concept in recent times: Data Exclusivity. Nestled within the framework of the TRIPS Agreement, specifically under Article 39.3, this concept represents a unique layer of protection for valuable undisclosed data, distinct from the well-known realm of patents.
Data Exclusivity represents a transitional form of safeguarding exclusive test data, encompassing publicly undisclosed information. It falls between the protection of data as trade secrets based on equitable and good faith principles and the domain of patent protection, which requires novelty, inventiveness, and industrial applicability. Consequently, while patent laws protect every new invention, the question arises when considering developing countries. In such cases, generic drug manufacturers may develop more affordable drugs by demonstrating bioequivalence to the innovator’s product. This scenario gives rise to a conflict of interest between innovator companies, already protected by patent laws, and public interest.
Understanding Data Exclusivity
Data Exclusivity, often abbreviated as DE, or exclusivity of registration data, defines a limited period during which regulatory authorities prohibit the use of originator’s test data to register generic versions of new chemical entities, pharmaceutical compositions, and agrochemicals. Importantly, it is an independent intellectual property right and should not be confused with other forms of protection, particularly patents.
This test data comprises proprietary information resulting from extensive scientific research and development, demonstrating the efficacy and safety of new chemical entities and formulations. Generating this data is both time-consuming and costly. It plays a crucial role when seeking marketing approval from regulatory agencies.
Data exclusivity bestows the originator with rights to prevent third parties from utilizing their data to gain marketing approval for a specified period, without preventing third parties from generating their own data. Second entrants can seek approval for their products but must gain authorization from the originator’s data and prove bioequivalence according to international standards. Failure to do so grants them an unfair advantage, as they bypass the costly and time-consuming tests required to demonstrate their product’s safety and efficacy.
Therefore, data exclusivity serves two key purposes: a. It grants market exclusivity to the originator for a defined period, enabling them to recover the costs associated with obtaining marketing approval. b. During this specified period, regulatory agencies cannot access the originator’s data without their consent when reviewing applications from second entrants seeking approval for generic versions.
It is noteworthy that UNCTAD holds the same view:1
“authorities are not prevented….from using knowledge of such data for instance, to assess subsequent applications by third parties for the registration of similar products.”
It’s important to note that generic manufacturers can also seek marketing approval, but they must conduct their own tests to prove the efficacy and safety of their products. In the absence of data exclusivity, second registrants could introduce copycat products into the market based solely on bioequivalence tests, thus disadvantaging the originator who invested significantly in their research.
The concept of protecting test data gained international prominence through the Paris Convention and was later reinforced by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Under TRIPS Article 39(3), member states must protect test data against unfair commercial use and disclosure. This obligation mandates a predefined period where second entrants cannot rely on bioequivalence to avoid extensive tests for efficacy and safety. It strikes a balance, enabling the originator to recover their testing expenses while ensuring the availability of safe and effective products in the market.2
A review of national laws in major WTO member states reveals widespread recognition of the role of data exclusivity. Although there is no uniform standard for enacting and implementing data exclusivity laws, the period during which originators can enjoy exclusivity after marketing approval typically ranges from 5 to 10 years.
In 1984, the United States became the first country to enact data exclusivity legislation through the Hatch-Waxman Act. This act provides 5 years of data exclusivity for new drugs and 3 years for new indications of existing drugs. Many developed countries, including those in the EU, Australia, New Zealand, and the Andean Group, implement data protection systems, withholding the results of patented inventions from the public and R&D agencies for up to five years. Some countries even extend patent terms in case of lengthy approval processes. For example, China offers 6 years of data exclusivity, the Philippines 8 years, Brazil 10 years, Korea 8 years, and Taiwan 6 years. Japan’s data exclusivity ranges from 4 to 10 years.
However, some countries, like India, resist the TRIPS mandate.
Patents are granted under the patent legislation of each country. Such legislation is expected, at the minimum, to conform to the provisions of the TRIPS Agreement and India has accordingly amended the Patents Act, 1970 with effect from 1.1.2005.
While India is a signatory to the TRIPS Agreement, it lacks statutory protection for data submitted to regulatory authorities for approval. Indian law does not provide the necessary safeguards for data protection and exclusivity. Existing legal provisions are inadequate, focusing on compensation rather than prevention.
The Official Secrets Act, 1923, primarily addresses the unauthorized disclosure of confidential information by public servants. It is limited in scope and does not comprehensively ensure data protection.
Trade secret protection, a common law remedy, lacks regulatory application in India and doesn’t prevent authorities from using such data for granting approvals to second registrants.
The Insecticides Act, 1968, is relevant in the context of crop-protection chemicals, but it doesn’t offer sufficient protection against unfair commercial use of proprietary data.
The Indian Patents Act, 1970, while important, only covers patentable inventions and doesn’t protect data generated by the originator.
In summary, India lacks a specific law for the protection of undisclosed information, necessitating additional protection mechanisms beyond patents and confidentiality.
India’s Stand On Data Exclusivity
India has faced pressure from the United States and the European Union to incorporate data exclusivity into its domestic legislation after the expiry of the first transition period in 2005. While originators advocate for data exclusivity, the domestic sector holds mixed views, ranging from support for MNC positions to opposition to granting data exclusivity, fearing it could lead to patent evergreening.
The Indian government argues that TRIPS Article 39(3)3 doesn’t require member states to enact data exclusivity legislation. TRIPS emphasizes data protection against unfair commercial use and disclosure rather than exclusive rights for data originators.
To address these complexities, the Department of Chemicals and Petrochemicals in India constituted an Inter-ministerial Committee to evaluate the steps necessary for implementing Article 39.3 of TRIPS. The Satwant Reddy Committee presented its report in 2007, which clarified that TRIPS does not mandate data exclusivity. It recommended data protection periods for agrochemicals, traditional medicines, and pharmaceuticals, emphasizing a balanced approach to data protection.
The report is currently under examination by Indian authorities, and the formal adoption of its recommendations remains uncertain. The Indian pharmaceutical industry has generally lobbied against data exclusivity.
In conclusion, the concept of data exclusivity is a complex issue, particularly in the context of developing countries like India, where it raises questions about innovation, public health, and global trade. The path forward will likely involve a delicate balance between the interests of innovator companies and public health concerns.
- UNCTAD, The TRIPS Agreement and developing countries, UNCTAD/ITE/1, New York and Geneva, 1996, p48, quoted in Correa ↩︎
- European Union, Questions on TRIPs and data exclusivity, An EU contribution, Brussels, 2001, p 19, http://trade.ec.europa.eu/doclib/docs/2006/may/tradoc_122031.pdf ↩︎
- Article 39.3 of the TRIPS Agreement: Its Genesis and the Present Context, Biswajit Dhar ↩︎