Home > Archives (2006 on) > 2007 > September 15, 2007 > Data Exclusivity : Access to Medicine in Danger

Mainstream, Vol XLV, No 39

Data Exclusivity : Access to Medicine in Danger

Tuesday 18 September 2007, by Deepu M

Pharmaceuticals and agrochemicals are two key sectors having direct implication to the everyday life of the people. Hence, it is important to regulate the safety, efficacy and quality of pharmaceutical products and agrochemical products. Most countries in the world have their own regulations for the marketing of these products. While patents are meant to reward innovations by giving the inventor a monopoly right for a fixed term, the regulatory approval system seeks to ensure that only medicines having safety, efficacy and quality enter into the market. Often, the national regulatory authorities would ask the manufacturer itself to provide relevant information to assess the quality and efficacy of medicines and pesticides.

There are several tests that should be conducted to generate the data for proving safety and efficacy of a medicine or an agrochemical product. These tests can be broadly divided into two phases, pre-clinical and clinical. The pre-clinical phase may include in vitro studies, for instance, to find the biochemical characteristics on pharmaceutical properties, and toxicity, animal studies including the use of animal models, to test the potential therapeutic and toxic effects. The clinical phase involving human beings will only take place when tests in animals have been successfully concluded. Clinical trials are an essential part of medical research with a view to develop new treatments or new diagnostic methods which are normally divided into four phases: phase I: performed with health volunteers to test the pharmacology and toxicity of the new product; phase II: performed with a limited number of patients to test the potential effects of drug on the disease and to determine the common short-term side effects and risks; phase III: expanded controlled and uncontrolled trials after preliminary evidence suggesting effectiveness of the drug has been obtained and are intended to gather additional information to evaluate the overall benefit-risk relationship of the drug and provide adequate basis for physician labelling; phase IV: performed after the product has been commercialised in order to identify potential rare adverse effects.

Apart from patent protection, pharmaceutical and agrochemical companies are seeking protection of test data which consist relevant information related to test conducted by the manufacturer to prove the safety, efficacy and quality of the product. This new monopoly is known as data exclusivity. Monopoly right in the form of data exclusivity prevents the generic companies to introduce their product during the data exclusivity period. As a result, generic medicines cannot be introduced in the market even in the absence of patent monopoly. Often multinational companies cite Article 39.3 of the TRIPS Agreement to demand data exclusivity in developing countries.


THE United States introduced a proposal for the regulation of test data during the Uruguay Round negotiations in the form of data exclusivity. Developing countries, including India, objected to the inclusion of data exclusivity in the TRIPS negotiations. They argued that data exclusivity does not fall under intellectual property rights but it is protected according to civil law, contract law and other statutory regimes. They cited that data exclusivity could not be regarded as a form of intellectual property, since the requirement of disclosure, which was an essential part of all forms of intellectual property, could not be enforced in this case. Finally, as a compromise, the provision related to the protection of test data was included under undisclosed information in Article 39.3 of TRIPS Agreement in a diluted form than argued by the United States. Currently, according to Article 39.1 of the TRIPS Agreement, the protection of submitted test data is based upon Article 10 bis of the Paris Convention (1967), which does not require the statutory protection for a fixed period of time. Thus the obligation of the member countries is to protect test data submitted to the government agencies in the course of ensuring effective protection against unfair competition which is synonymous with the term protection against unfair commercial use included in Article 39.3. The protection is against unfair commercial use of the test data submitted by pharmaceutical and agrochemical products of the originators, which utilise new chemical entities and origination involves considerable efforts. Article 39.3 states:

Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products, which utilise 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.

There is an argument that Article 39.3 mandates data exclusivity. However, a careful examination of the provision according to standard interpretative tools does not warrant such conclusion. Article 39.3 requires countries to protect undisclosed registration data about new chemical entities against disclosure and unfair commercial use. This prevents the regulatory authorities from publishing it or passing it to third parties. But it does not prevent the regulatory authorities from using the data for statutory purpose like ‘New Drug Approval’. The US and EU argue that the reliance of originators data by the regulatory authority comes under unfair commercial use. The regulatory authority is a government organisation, which is not a profit- making body, but a body established to monitor the regulatory approval of agrochemicals and pharmaceutical products for the welfare of the people. So, how does the use of data by these regulatory authorities become unfair commercial use? The concept of data exclusivity was discussed and rejected during the negotiation phase itself. The US and EU are trying to impose the once rejected concept of data exclusivity through the backdoor by way of Free Trade Agreement (FTA), Regional Trade Agreement (RTA) and bilateral trade retaliation like Special 301 provision of Omnibus Trade and Competitiveness Act, 1988.

Indian Scenario

THERE is intense pressure from the developed countries like the United States and European Union, in the form of trade retaliation, over India on the issue of data exclusivity. Their argument is that after the expiry of the first transition period in 2000, India has the obligation to include data exclusivity in the domestic legislation. Reacting to this pressure, in February 2004, the Government of India constituted a 15-member high-level committee with the mandate to find out whether protection is needed, if at all, and how it would be enacted and enforced. Schedule Y of the Drugs and Cosmetics Act 1940 deals with the clinical trials and regulatory approval of drugs in India. The existing practice is: if a drug is approved or marketed in other countries, only data regarding confirmatory trials or bioequivalency trials are required. Majority of the applicants are in this category. Only in rare cases new chemical molecules are invented in India for which clinical trials are required.

Like the Drugs and Cosmetics Act, the Insecticides Act 1968 deals with the marketing approval of agrochemical products in India. Section 9 of the Insecticide Act mandates any person desiring to import or manufacture any insecticide is to obtain certificate from the registration committee constituted under the Act. In practice only the originator should submit data proving the efficacy and its safety to human beings and animals. After satisfying the efficacy and safety test the insecticide committee will issue registration certificate. The subsequent applicant for registration of the same insecticide need not give data proving the efficacy and safety of the insecticide. He has to submit only the composition and labels and leaflets, which were approved of originators.

This existing practice gives generic pharmaceu-tical companies and domestic agrochemical companies opportunity to get marketing approval by proving bio-equivalency to the original product. This situation creates competition and price reductions in the market. The MNC companies which are using various tools for ever greening of patents use data exclusivity as a potent weapon to achieve their target.

The committee appointed by the Government of India is examining all aspects related to the implementation of Article 39.3 in India. It almost decided to recommend to the government to amend the Insecticide Act for providing data exclusivity for three years. In the case of pharmaceuticals, the Ministry of Health is objecting the idea vehemently. After the conclusion of the US-India Joint Statement for the development of a vibrant intellectual property regime, the Prime Minister’s Office is under intense pressure from the USA and MNC companies. Recently they called a series of meetings to sort out the issue. The inclusion of India in the priority watch list of the 2006 report under the US Trade and Omnibus Act makes the issue more complicated. There are also moves to trade off this issue for getting concessions in trade in services and the agriculture agreement. There is no obligation on the part of India to provide data exclusivity, which is clearly the TRIPS-plus agenda.

Expert Opinion

ACCORDING to Sisule. F. Musungu, the WTO members have considerable discretion to define ‘unfair commercial use’ in the context of national laws. So the use of originators data by drug regulatory authorities to assess the efficacy and toxicity of pharmaceutical and agrochemical product is not a commercial use. In this context countries need not protect test data through the grant of exclusive rights.

Carlos Correa also supports granting of marketing approval to a second entrant based on the second products similar to a previously approved first product, which is not a prohibited use under Article 39.3. Countries can meet their obligation to protect ‘unfair commercial use’ under Article 39.3 by barring dishonest uses of test data. So countries are not obligated under Article 39.3 to confer exclusive rights on the originator of marketing approval data.

Renowned Intellectual Property Law expert Prof N.S. Gopalakrishnan says the reliance by the authorities on data granted by the originator for giving an approval to a generic product is not unfair commercial use but only acts in relation to the performance of statutory function. The negotiating history also reveals that the concept of data exclusivity has been rejected during the negotiations. Hence data exclusivity will be a TRIPS-plus approach not bound by member countries.


THE availability of generic medicines played a vital role in keeping the cost of health care low. But if data exclusivity is accepted after the product patent it would create new barriers to generic companies. The absence of competition will help them to control the market. The increase in the price will affect the ordinary people by making it unaffordable for them to buy essential medicines.

The pharmaceutical MNCs’ demand for data exclusivity is clearly a TRIPS-plus demand and against the objects and principles of the TRIPS Agreement. It violates the flexibilities inherent in the TRIPS Agreement and also against the Paragraph IV of Doha Declaration on Public Health, which clearly says the TRIPS Agreement can and should be interpreted and implemented in a manner supportive of the WTO members, right to protect public health and, in particular, to promote access to medicines for all.

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