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Insights into Editorial: The expanding universe of IP



Insights into Editorial: The expanding universe of IP





Data exclusivity has become a topic of intense discussions led by large drug companies which are strongly advocating that each member country of WTO should introduce a provision for keeping the data, submitted by them to the market approval authorities, confidential for a fixed period of time. The common argument being forwarded by them is that TRIPS has stipulated a provision for data protection or data exclusivity in respect of drugs and agrochemicals.


What is data exclusivity?

Data Exclusivity refers to a practice whereby, for a fixed period of time, drug regulatory authorities do not allow the test data of the innovator company to be used to register a equivalent generic version of that medicine.


International Law on Data Exclusivity:

The Pharmaceutical companies are demanding data exclusivity law by resorting to Article 39(3) of TRIPS. Article 39(3) of the TRIPS states that that “Members when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or 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 data are protected against unfair commercial use”.

But, it should be remembered that Article 39(3) does not talk about “Data Exclusivity” but only about “unfair commercial use” and it is this phrase that is interpreted by Multi-national companies as containing “Data Exclusivity” provision and thus demanding data exclusivity law.


Case for Data Exclusivity:

  • The proponent for data exclusivity put forward the argument that test data, which are submitted to the drug regulatory authorities to assess the quality, efficacy and safety of the drug, are the result of huge and risky investment made by the innovator companies. They argue, it takes around 8-10 years of intensive clinical research and trials and investment between $800 million to $1.2 billion to bring a new drug to the market and if such data are made available to the generic companies, it means that huge investment in Research and Development (R & D) made by the innovator companies to launch new drugs are unprotected.
  • Proponents say if data is protected, it would encourage pharmaceutical giants to make massive investment in R & D which is complex, time consuming and most importantly very expensive. Such huge investment in R & D is beyond the scope of the domestic manufacturers and even outside the financial limit of the third world countries. Thus, data exclusivity will act as an incentive for such companies to make more risky and huge investment in drugs and medicines.
  • It is also said that data exclusivity law will encourage and boost Foreign Direct Investment (FDI) in the country by Multi-national pharmaceutical giants and it would be good for India’s economic development. Concerned over absence of data exclusivity law in the country, multinational pharmaceutical companies are of the view that India could lose out on foreign investment in the pharma sector as protection of test data was the key to company decision on location of clinical trials. India’s technological and research and development will expand with resultant economic benefits if the data exclusivity law is implemented in the country.
  • The proponents also argue that enactment of data exclusivity will encourage brain- gain as Indian scientists will return home to pursue innovation in their own country and will gain increased access to clinical trials in the country and hence Indian scientists will acquire global competitiveness and world class expertise in clinical trials in their own country.


Case against Data Exclusivity Law:

  • Many generic drug manufacturers and public interest groups are against such data exclusivity law. Their main contention is that if such data exclusivity law is introduced in India, the Drug Controller of India (DCI), which is regulatory authority, will be barred from relying on test data, submitted by pharmaceutical giants, in granting marketing approval to generic medicines. Instead, it will ask the generic drug manufacturer to undertake its own clinical trials and submit test data to controller of drugs to assess the quality, efficacy and safety of the generic version of the drugs which takes time and is costly.
  • The long gestation period undertaken by generic companies in conducting clinical trials will delay the process of arrival of life saving drugs at affordable price in the market by a number of years and would amount to monopolization of the pharmaceutical giants. It is also said that since Indian drug companies export significant amount of life saving drugs to other developing and least developed countries, any significant rise in the pricing of such drugs or delay in the introduction of generic version of such drugs in the market would significantly affect the population in and out of the country.
  • It is argued that clinical trial process involves ethical questions, as the proposed drugs have to be tested on animals and then on the human beings, usually on volunteer patients, in order to determine its efficacy, quality and safety. If data exclusivity law is enacted, then generic drugs manufacturers have to undertake clinical trials for getting the marketing approval of the generic version of the same medicine and it will led to duplicative test5ing and it would also amount to unnecessary and possible human injury associated with clinical trial process. It is unethical to conduct clinical trials on the drugs, which have already proven effective. And it is also important to obviate social and economic costs of repetitive animal and human testing. Hence, data exclusivity law can be challenged on moral and ethical grounds also.
  • It is also argued that data exclusivity law would led to ever greening of patent. The innovator companies will make minor modification of their drugs and will get it protected under data exclusivity law. Data exclusivity will encourage investment in modifying existing drugs rather than inventing new one. While patent would not cover data protection due to ever greening concept, data exclusivity is seen as new form of intellectual property right to effectively extend patent life.
  • Another disadvantage of implementing data exclusivity law is that it can defeat the provision of Compulsory Licensing. The Indian Patent Act under Section 84 contains law on Compulsory Licensing which can be enforced under certain conditions such as when patented drug is available in insufficient quantity or when the price is out of the reach of common people or in order to remedy anti-competition practice and in circumstance of extreme urgency or emergency. But if data exclusivity law protects such data, then the grant of Compulsory Licensing will be of no use to generic companies, as data exclusivity law will act as a barrier to marketing approval of generic version of patented drugs thus defeating the whole philosophy behind Compulsory Licensing.


What can be done?

Since the matter is very controversial and each side has their own valid points, it must be remembered that the issue relates to the accessibility and affordability of the life saving drugs to millions of people in third world countries and any rigid or adamant attitude from any side will adversely affect all especially the common people. Each side should try to find a middle-path formula so that interest of all can be reconciled with the larger interest of the common people in developing and third world nations.

The best possible solution to the matter in hand is that the Compensatory Liability Model (CLM) should be adopted. Generic manufacturers must compensate the originator of data for the use of the data. After all such test data are products of long and intensive research, which involves considerable amount of expenditure, and commercial exploitation of such data without the consent of innovator companies is nothing less than “unfair commercial use” under Article 39.3 of TRIPS Agreement. The compensatory model seems to be appropriate in the circumstances, as this would make generic companies share the fair cost of bringing a new drug in the market and the innovator company will be able to earn a fair return on its investment. But amount of compensation must be reasonable and must be well within the financial limits of generics manufacturers.



Data exclusivity has become the next big tool for pharmaceutical industry to indirectly seek market exclusivity. Increasing the period of data exclusivity is the absolute best and indirect way of delaying generic competition. It is time for the Indian government to evaluate where it stands on making drugs affordable for its ever growing population and bring in policy in relation to that. India has a desire to grow its pharmaceutical sector. It certainly has the capabilities. However, to reach the next level, and to create the new medicines that will treat the needs of people right here in India, the country needs to create the right environment to stimulate research.