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Data Exclusivity

January 21, 2023 | Expert Insights

India has learnt to live with the 1995 Trade Related Intellectual Property Rights (TRIPs) Agreement cobbled together by WTO after much acrimony. As one of the founding members, India had no choice but to submit to the pressures of the western world to respect IPRs in the pharmaceutical field.

Since the mid-1970s, Indian drug companies have been successfully able to reverse engineering and develop their processes for drug production at a fraction of the cost compared to the more developed countries. However, when TRIPs was enacted in 1995, it altered the dynamics of the international IP laws as TRIPs with the backing of WTO had more teeth.

Background

TRIP was intended to impose international rules governing patents, especially in the pharma industry, to safeguard health globally. Member countries were allowed a period of time to enact a suitable legal framework nationally to protect patents for a minimum period of 20 years, provision of product patents and the protection to test data of the pharm industry.

As part of the 1995 protocol, India was allowed an extended period to evolve a patent regime that met TRIP specifications. This was achieved in 2005 with the passing of the Indian Patents Amendment Act of 2005, under whose aegis the Indian pharmaceutical industry prospered.

The developed economies were the driving force behind TRIP, but they were not fully satisfied with the provisions agreed upon in 1995. They had demanded a higher degree of protection for their IPRs attained at great cost. As an alternative to TRIPs and WTO, these countries have been increasingly favouring Free Trade Agreements (FTAs) where all interested parties agree to a higher level of IP protection. However, developing economies like India would risk being excluded from any such FTAs.

Now the developed countries are pushing TRIPs Plus, which has 'Data Exclusivity' at its core. This entails protecting the clinical test data that pharma research labs submit to their regulatory agencies that prove its safety, quality and efficacy. Generic drug manufacturers like India can no longer use this data while applying for drug licenses.

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Analysis

The right to health requires access to affordable medicines and vaccines. High out-of-pocket health expenditure (OOPHE), especially in the low- and middle-income countries (LMICs), mars this access. Medicines can account for up to 67 per cent of all public and private expenditures in LMICs, putting an additional burden on the people. The promotion of generic medicines is a strategy employed by developing nations for access to affordable medicines that are usually 20-90 per cent cheaper than their patented counterparts.

TRIPS-Plus seeks to elevate the protection granted to IPR and hugely favours the developed nations. Data exclusivity is a TRIPS-Plus measure that fuels the originator drug company versus generic company debate. Originator drug companies invest significantly in research and development and later in clinical trials. The clinical trial data is essential for regulatory approval. The generic pharma companies only prove the bioequivalence of their drug, thereby bypassing the need for clinical trials. Hence, the originator companies have been pushing for data exclusivity to restrict the access of the generic manufacturers to the originator's data for market authorization post-regulatory approval. It implies a delay in releasing generic drugs in the market until the data exclusivity period ends.

Data Exclusivity hinges on the interpretation of Article 39.3 of TRIPS presents complexities in its interpretation. "Protection of undisclosed information" under section 7 forms the basis of pushing for data exclusivity by developed nations housing the originator firms. However, section 7, despite vouching for the protection of undisclosed information, does not explicitly state or mention "exclusivity". Therefore, interpretation, especially of Article 39.3 of TRIPS, becomes crucial.

Research studies on data exclusivity indicate a rise in generic medicine prices. Various studies have used econometric models to determine the impact of data exclusivity on generic drug prices in developing nations. A study on enforcing data exclusivity under the US-Thailand Free Trade Agreement estimated the loss to the Thai domestic pharma industry at USD 3.3 million. In Malaysia, enforcement of TRIPS-Plus measures due to the Trans-Pacific Partnership Agreement was found detrimental to the domestic pharma industry. Another recent study used trade data from the UN Comtrade database and established that the countries imposing data exclusivity face a rapid increase in drug import costs. Enforcement of data exclusivity through FTAs can potentially increase generic drug prices.

India has also rightfully earned the moniker- pharma capital of the world due to a vibrant generic pharma ecosystem. India's involvement in Free Trade Agreement with nations harbouring originator drug companies, like the USA may bolster a push toward data exclusivity. TRIPs

India has a strong history of fighting for "access to knowledge". For instance, section 84 (1) of the Indian Patent Act 1970 introduces compulsory licensing to facilitate access to patented drug technology to increase access to affordable medicines. Courts have also been instrumental in ensuring the affordability of drugs. The landmark Bayer versus Natco case of 2014 is a classic for public welfare, where the Court ruled in favour of Natco Pharma. Data exclusivity may restrict access to affordable medicines by stymying the operations of generic pharma, making it unappealing.

Assessment

  • Undeniably, India's flourishing pharma industry is threatened by the TRIPs Plus regime as it will restrict the operations of Indian drug manufactures producing generic medicines at very competitive prices. Importing high technology will also become costly, thus impacting India's international competitiveness in the international pharma market.
  • Quantifying the impact of the data exclusivity provisions on India becomes pertinent. India has a high OOPHE of approximately 48% (according to 2018-19 data). Patented drug prices are unaffordable for many. As the adage goes- health is wealth. Similarly, for India, the health of its citizens ensured by access to affordable medicines is the key to wealth, i.e., economic development.