This article originally appeared in online edition of The Financial Express (August 23, 2006). The author is a legal expert with Centad.
The demand of MNCs, big India pharma companies and agro-chemical majors for exclusive rights over clinical and field trial data has come into sharp focus due to its far-reaching impact on drug prices and public health as also in the agriculture sector. What are the facts of the case?
It is well known that before a drug/agrochemical enters a market it must undergo a series of trials, which cost both time and money. The test data is then submitted to regulatory agencies for marketing approvals. The current practice in India has been to grant marketing approval to similar (following the principle of establishing bioequivalence) drugs and agrochemicals on the basis of existing test data submitted by originator firms.
The practice has been a win-win strategy for generic producers and for consumers as well. If the government caves into aggressive lobbying by the big boys of pharma/agrochemicals then all this may undergo a change for worse.
Why?
Essentially, the trials are prohibitively expensive and time consuming and constitute high barriers to entry offsetting the cost and time advantage to generic drugs and agrochemicals.
The outcome of grant of data exclusivity is quite similar to that of patents and, in a sense, data exclusivity is patenting by other means in the absence of patent protection. .
It is important to understand the rationale of the demands for data exclusivity. The Indian Patents Act (IPA) generally does not grant patents to incremental modification of known substances.
However, most big pharma/agro chemical players, both Indian and foreign, resort to this practice in order to differentiate their product and retain their market share. Given the fact that this practice is disallowed to an extent in the IPA, data exclusivity offers the second best option to continued monopoly rights over the drug/agrochemical.
This leaves the generic companies and consumers who stand to benefit from increased competition driving down prices high and dry under what is a thinly veiled attempt to retain patenting by other means. Effectively, the consequence is that even when the patent does not exist, a generic version of the drug/agro chemical cannot be introduced in the market.
Interestingly, earlier the demand for data exclusivity was projected as an international legal obligation under Article 39.3 of the TRIPS Agreement, which prescribes members to protect the data submitted for marketing approval from unfair commercial use.
However, the negotiating history of Article 39.3 and legal interpretation of Article 39.3 does not support that demand. Under the TRIPS Agreement, India has the legal right to define the term “unfair commercial use” to permit the current practice of regulatory authority to rely on the originator data for the subsequent marketing approval.
Further, the objective of reliance on originator data has been to ensure safety and efficacy of a drug and, therefore, does not constitute commercial use. Hence, the only obligation under Article 39.3 is to protect the test data from unfair commercial use, which means the data submitted to the regulatory authority should not be disclosed to the third parties for unfair commercial use.
Two independent international panels of experts, viz., Commission on Intellectual Property Rights and Commission on Intellectual property, Innovation and Public Health shared the same view and explicitly advised developing countries against the adoption of data exclusivity. Once this tactic failed, the pharmaceutical and agrochemical companies argue that data exclusivity is essential for a host of reasons, including growing R&D expenditure, stimulation for discovery by small companies and longer duration of drug development.
It is easy to see that these protections are precisely the objective of patents and there is no justification of having additional protection. The cost of incremental modification cannot be equated with invention of new chemical entities and, therefore, should not be accorded with excusive rights. Till date, the demanders of data exclusivity have not provided any convincing empirical evidence to justify their claim on any of the above grounds.
It is believed that the government is actively considering data exclusivity to agrochemicals. However, for pharma companies, a version of ‘pay and use' is being contemplated. Under this model, generic companies would be permitted to rely on the test data for marketing approval against a payment of royalty. This is disingenuous, especially since big pharmaceutical companies would stand to benefit even without the need of introducing their product in the competitive Indian market by simply registering the product. Needless, the price advantage of generic products would not exist under this approach, with all the attendant disadvantages to both producers and consumers.
Clearly, for the government, the peoples' health and farmers' welfare should come before profit. |
