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Paper Details Paper Code: RP-CLA-V2-03 Category: Research Paper Date of Submission for First Review: March 28, 2022 Date of Acceptance: July 6, 2022 Citation: Anuja Elizabeth Jacob, “Data Exclusivity and TRIPS”, 2, AIJACLA, 42, 42-51 (2022)

Author Details: Anuja Elizabeth Jacob, Legal Counsellor, Al Jabal Consultancy W.L.L., Bahrain

Abstract Apart from the legal rights of Intellectual property over a medicine, there exist drug regulatory systems to ensure that the medicines sold in the market are safe and effective. The safety and efficacy of a drug can be either proved through full-fledged clinical trials or by showing that the drug is chemically and biologically equivalent to an existing previously registered drug. Thus, in reality, the originator companies goes through a tedious task of clinical trials, whereas the generic companies easily surpasses the need of clinical trials, by submitting bioequivalence tests. The demand for data exclusivity begins with that, which would grant the originator company an exclusivity to utilise the data for certain duration of time, preventing others reliance on it. The Article 39.3 of the TRIPS is one of the confusingly interpreted provision relating to data exclusivity and the insight into the origin of the concept of data exclusivity, the changes that occurred during the round of negotiations and the drafts are required to ascertain the actual intention of the Article. The conditions mentioned in the Article and the obligations casted on it also required to be analysed carefully to understand how each country, especially a developing nation can make use of the flexibilities imbibed in it. Keywords: Data exclusivity; Trade Secrets; Data Protection; Article 39.3 TRIPS; Round of negotiations

INTRODUCTION & MEANING OF DATA EXCLUSIVITY The registration or test data effectively demonstrating a drug product’s safety, quality, and efficiency as well as pointing out the drug product’s physical and chemical characteristics are required to be submitted by the pharmaceutical companies before the drug regulatory authorities, as a pre-condition for allowing the sales and marketing of the product.[1] This being referred to as test data, can be in the form of reports of pharmacological and toxicological profile of drug, report of clinical trials conducted, usage and indications etc.[2] When generic drug manufacturers seek for approval and claim bioequivalence[3], or when they state that their product has a molecular structure to that of the originator's product, without actually conducting their own studies, they are in fact referring to the originator’s submitted and published data. The concept of Data exclusivity in IPR is to ensure that the data submitted by originator is protected and to hinder such referrers for a given number of years.[4] Data exclusivity is thus the protection afforded to the clinical test data that is submitted before a regulatory agency proving safety, efficacy and quality of a new drug, and at the same time, prevents the generic drug manufacturers from banking on this submitted data in their own applications. Data exclusivity is a safeguard mechanism for pharmaceutical companies[5] and even applies to products which are new in the market and are not the subject of an application for patent protection. The countries that has the data exclusivity clause is granting protection that ranges from five years (in USA), up to 10 years (amongst European Union members).

HISTORY The rule earlier was to disclose the results of the test so as to inform the public of the safety and efficiency of approved medicines without regarding the private interests of the originator. The idea of protecting those data against government’s unauthorized use in favour of competitors of the manufacturers of new products was presented for the first time in US, in the field of agro-chemical products in 1972, in Insecticide Act. Later, in health field, it was introduced into Food and Drugs Act in 1984. Even then emphasis was given on foods rather than medicines, because it was believed that foods posed a greater public health problem than adulterated drugs. The negotiations on IP that took place during the Uruguay Round of multilateral trade negotiations (1987) of GATT are when suggestions for the inclusion of rules relating to test data aroused. The US was the first GATT Contracting party to suggest the need of making multilateral rules on test data, during the first round of discussions. The suggestion was inspired by the opinion of US Supreme Court in Ruckelshaus v. Monsanto[6], wherein Monsanto challenged the constitutionality of a new section added to FIFRA (The Federal Insecticide, Fungicide, and Rodenticide Act) which permitted Environmental Protection Agency under some limited circumstances, to disclose or to rely on the pioneer product’s data to obtain approval of a product manufactured by a competitor. Monsanto contended that the provision amounted to a taking of property without just compensation in addition to violating the due process of law. The court accepted the argument that the provision gave Monsanto’s competitor’s a free ride at Monsanto’s expense. There was no justification for disclosure of confidential data, and no argument of public policy, outweighs the private interest in keeping the data away from competitor’s eyes. Since 1987, the EU member states granted exclusivity for the data that is filed to obtain marketing sanction for drugs. The Swiss plan was quite thorough, encompassing both trade secrets and test data. Canada and Austria also had proposals on the protection of the trade secrets, without making reference to test data. The difference between the protection of data as data exclusivity and trade secrets is that the exclusivity protection necessarily means an exclusive use for a certain period of time which would act as an IP protection. Whereas, when under trade secrets it is a mere exception to the trade secret right i.e., whenever the data is used by another in unfair commercial manner then the same can be challenged rather than protecting it for a period. This protection is being widely recognised as data protection measure. Thus the EC demanded for an exclusivity provision whereas the US and Swiss required a data protection measure. In the Geneva round of negotiations (1989), the EC draft proposal required that the test data should depend on certain requisites or formal conditions, in addition to their undisclosed nature. The conditions were that the data should be submitted as a requirement for attaining approval for marketing, which means that voluntary submissions would not trigger protection; and that there requires involvement of a considerable effort, the measure of which would ascertain the length of protection period. The EC proposal would grant protection against ‘unfair exploitation by competitors’ and also used the term ‘undisclosed information’. The EC proposal was followed by a US proposal which prohibited two types of use: ‘use of trade secrets for the commercial or competitive benefit of the government’ and ‘use of trade secrets for the commercial or competitive benefit by any other person other than the right holder’. The US also identified the conditions of test data protection as exceptions to legitimate use with right holder’s consent, on payment or in the event of providing a substantial term of exclusivity to the originator.[7] The second round of negotiations also saw the countries holding onto their respective demands. The Anell draft formulated (July 1990) contained the proposals of data exclusivity and protection as trade secret tabled by the Members as well as the views expressed were compiled by the chair under two different set of provisions identified by letters Aa and Ab in Article 3.[8] ‘3Aa’ envisaged a single TRIPS agreement while ‘3Ab’ did not want the exceptions of the protection of trade secrets as a category of IP. The core provision of 3Aa corresponded essentially to EC position, whereas 3Ab reflected the views of US. 3Aa used the ambiguous expression ‘unfair exploitation’ but gained clarity as to the listing of a few elements necessary to establish the term of protection. The expression ‘unfair exploitation’ was ambiguous but clarity was maintained by listing a few elements necessary to establish the term of protection. The proposal enunciated a test of proportionality which would not safeguard the test data under a predetermined and fixed term reflecting the technical and economic value of the data. 3Ab1 reflected the views of US and Switzerland and was better drafted to the extent it identified the scope of data protection as in the protection would be conferred against the use of the data for the competitive benefit of right holders’ competitors. But it lost clarity as regards to the extension and nature of the exclusivity, by not providing for any elements for assessing the reasonableness of the exclusivity period. Whereas in the Brussels draft (December 1990), from the chair’s compilation of proposals[9] to the Brussels, many of the differences of view between those fundamentally opposed approaches were sorted out. In clear contradiction to the final version of Article 39[10], the Brussels Draft bought forth a suggestion to formulate a definite term of exclusivity, provided it is not under 5 years.[11] The Dunkel draft(December 1991) diminished the objective of safeguarding the data and constricted it to products that utilize New Chemical Entity as well as scratched the reference to exclusivity. In summary, there was nothing in the clause that implied the parties’ duty to adopt protection of exclusivity, which had been urged from the start of the discussions. This omission of reference to data exclusivity after it was included in the previous drafts serves as a proof to the point that the objective of the parties was to disregard the exclusivity protection as a minimum obligation against unfair commercial use.[12] The Dunkel Draft was eventually adopted as Article 39.3 of the TRIPS Agreement in 1996, with trivial amends.

Summary of Negotiating History Of Trips As the TRIPS negotiation history demonstrates, at least two proposals expressly demanding data exclusivity were made and eliminated before to the final document, indicating a clear aim by the negotiators not to mandate an interpretation of data exclusivity.[13] Also throughout the negotiations, a number of developing countries maintained their position that they did not consider trade secrets to be a part of IP. As a consequence the developing countries did not have a significant role in the final formulation of the protection of test data. It was essentially formulated by the major trading partners and if today it contains a certain ambiguity that gives rise to a number of flexibilities that is the result of the negotiating position of the EC.[14]

TRIPS PROVISION “Undisclosed information” mentioned in Article 39 of the TRIPS comprises any secret information which is of commercial significance, including • Technical know-hows, namely designs, procedures, formulas and other technological knowledge that are a derivative of knowledge and intellectual skill; • Data of commercial value, namely marketing strategies, clients’ lists and other related materials that deliver an advantage over competitors; • Test and other data submitted for the approval of pharmaceutical and chemical products for agriculture. TRIPS is the first international convention explicitly imposing responsibilities on undisclosed information and test data. The extract of Article 39(3) is as follows: “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 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.

Scope Article 39.3 is restricted to undisclosed information that are necessitated by an authority as a stipulation for attaining authorization of the marketing of pharmaceutical or agricultural chemical products "that use new chemical entities," and the data should have been derived through "considerable effort." In other words, the following are the conditions that the Article stipulates: a) The test data is submitted in order to achieve the approval of marketing pharmaceuticals and agrochemicals; b) The information pertaining to the drug is not available in the public domain; c) The data should be in relation to a drug that uses “new chemical entity”; and d) The formulation of the data should have involved a “considerable effort”. [15]

Flexibilities The article 39.3 of the TRIPS is the mostly debated as it has the ability to be read as an exclusivity provision and also as a data protection measure. This ability is what is seen as the flexibility by the member countries. Most of the developing countries interpret the provision as a mere data protection measure whereas most of the developed country read it as a data exclusivity protection. The protection mentioned in Article 39.3 is called as ‘data exclusivity’ in the U. S. whereas it is termed as ‘data protection’ or as ‘regulatory data protection’ in the European Union. There are still un-reconciled views as to whether the TRIPS provision can be read as data protection or exclusivity. According to one point of view, Article 39(3) do not assign new property rights or a preventive right against a third party from banking on test results supplied by an originator for marketing clearance of an analogous product, unless unfair commercial activities are involved. Whereas industry groups and some developed countries argue that as the generic producers are restricted from utilising the data, it is data exclusivity.[16] It is necessary to read into the flexibilities in the provision in order to see the legislative intent behind the provision. The flexibilities can be read both in the conditions set out in the provision and in the obligations spelt out.

Conditions: The four conditions under Article 39.3 are: a) Data requirement for marketing approval: The first and foremost contingent condition in Article 39.3 is the requirement to provide for data in order to attain approval of marketing. In the event of such requirement being absent, for instance, if approval is on the basis of existence of a prior registration elsewhere, this Article will not be applicable. It also means that the obligation to protect arises only when the regulatory authorities of member countries require submission of test data for market approval of new drug molecule or New Chemical Entity. Data submitted voluntarily or in excess by the innovator does not fall under Article 39.3. b) Undisclosed data: The relevant information must be ‘undisclosed’, to acquire protection. The information which is in public domain does not fall under this provision. While a substantial part of the information on tests relating to safety and efficacy of approved drugs becomes publicly available because information is published in scientific journals, or made public by the health authority. c) New chemical entities: The relevant data must relate to a “new chemical entity”. The Agreement does not define ‘new’ and hence, the members may apply a concept similar to the one applied under patent law, or consider that a chemical entity is “new” if there were no prior application for approval of the same drug.[17]

Article 39.3 would not apply to new applications of known goods, nor to dosage forms, combinations, new means of administration, crystalline forms, isomers, and so on of existing pharmaceuticals, because there would be no unique chemical entity involved. d) Considerable effort investment: The final stipulation is the involvement of “a considerable effort”[18]. There is no definition or standard to determine the type of effort[19] as well as its magnitude and to that extent, a middle ground or a reasonable standard would be to consider that the “effort” to be substantial in both economic and technical and scientific terms.

1.1. Obligations: The obligation of security to be provided as per Article 39.3 is twofold: 1) Against “unfair commercial use” and 2) Against disclosure of the protected information. WTO members have wide discretion in defining 'unfair commercial usage’ and according to one point of view[20], exclusive use is mandatory in some industrialized nations, where national authorities are not authorized to place reliance on data acquired during the exclusivity period to evaluate later applications for the registration of identical goods. [21] In the context of a developing country, flexibility can be read in if the law forbids the misappropriation of data, thereby concurring with the obligation to protect test data. Furthermore, a third party should be barred from utilizing the outcomes of another company's test for marketing approval, if it was acquired through deceptive commercial practises. However, under that clause, a government entity will not be barred from using data supplied by one firm to evaluate tenders from others pertaining to generic items. This allows the early entrance of generic competition which on the other hand would also surge the affordability of medicines at the lowest possible rate.[22] The second obligation relates to the assurance of the protection against disclosure of the confidential data by government authorities, which is subject to the two exceptions in Article 39.3: a) when disclosure is necessary to protect the public; and b) when steps are taken to ensure that the data will not be used in a commercially unfair manner. Accordingly, disclosure may be permitted, for instance, to allow a compulsory licensee to obtain a marketing approval, particularly when the licensee aim is to remedy anti-competitive practices or to satisfy public health needs.[23] Implications ● The generic producers producing generic drugs have to produce bioequivalence tests and bioavailability tests and also will have to conduct clinical trials, thereby increasing production costs, leading to substantial increase in generic drug prices. ● The provision applies to even non-patented or patent expired drugs and that acts as an additional level of protection for the initiator companies. ● The provision would also render it impossible to practise Compulsory Licensing for drug production in the event of urgency of public health, as opposed to the concept of patents.

DEVELOPING COUNTRY The Para 4 of the Doha Declaration provides that the Agreement be “interpreted and implemented in a manner supportive of WTO members right to protect public health and, in particular to promote access to medicines for all”. Therefore, it is evident that the TRIPS do not necessitate data exclusivity, whereas the responsibility is instead to render protection against unfair commercial use. Following the text of this Para, developing countries ought to allow drug regulatory authorities the right to approve equivalent generics that would act as substitutes, by placing reliance on the originator data that was submitted to obtain approval. They are to enact data protection laws that are compatible with public health aims that would allow generic rivals to enter the market easily. During the bilateral FTA with EU, India was immensely pressurised to include data exclusivity. However, India fortunately did not fall for that pressure and to that extent, India has very well used the TRIPS flexibility in this subject matter. For instance, if in case, the provisions relating to data exclusivity were added to the Indian drugs and cosmetic act, this would have prevented the India’s drug regulatory agency from referring to the registration data that are filed by the originator companies to attain approval for generic forms. [24] But when it comes to bilateral, multilateral or even pluri-lateral agreements between the countries or organisations, there are situations where in this flexibility of reading Article 39.3 as data protection gets eroded away. For example, in the license agreement entered into by the Indian generic companies with the Gilead Sciences for the manufacturing and sale of medicines for Hep C treatment, stipulates for a 5-year period of data exclusivity.[25]

CONCLUSION TRIPS Agreement entered into effect in the year 1995 and decades later, we still witness a remarkable lack of harmonisation in many provisions between the WTO members, particularly the one relating to the protection of test data. The actual understanding of Data exclusivity is very essential when it is considered as a factor which can pose as an obstacle to the effective and necessary use of compulsory licensing. It can delay the entry of a generic product until the exclusivity period is expired or until a new test data is compiled. On weighing the interests, it can be understood that the public interest in restricting the wide usage of data protection serves as a means to promote competition and to ensure that the data protection would not in any way become a mean to hinder the availability and accessibility of affordable generic medicines which play an important role in public health. Therefore, developing country members should be aware of the contemporary regional and bilateral developments that have the ability to constrain the existing flexibilities of TRIPS.

[1] World Health Organization,Intellectual property protection: impact on public health’ (2010) 19(3) WHO Drug Information <> accessed 20 May 2022 [2] Manthan D. Janodia, Ajay Chauhan, Shuaib M Hakak, D. Shreedhar, V S Ligade and N Udupa, ‘Data Exclusivity provisions in India: Impact on Public health’ (2008) 13 JIPR <> accessed 24 February 2022 [3] The pharmaceutical equivalence and similarity in bio availabilities (rate and extent of availability) after administration in the same molar dose [4] Manisha Singh, ‘India: Data Exclusivity – TRIPS Compliant or TRIPS Plus?’ (Mondaq, 05 September 2006) <> accessed 25 January 2022 [5] Supra n.1 [6] [1986] 467 U.S. 986 (DC) [7]Draft Agreement on the Trade-Related Aspects of Intellectual Property Rights, art 33: ‘Contracting parties which require that trade secrets be submitted to carry out governmental functions, shall not use the trade secrets for the commercial or competitive benefit of the government or of any person other than the right-holder except with the right holder’s consent, on payment of the reasonable value of the use, or if a reasonable period of exclusive use is given to the right-holder. [8] ‘3. Government Use: 3Aa PARTIES, when requiring the publication or submission of undisclosed information consisting of test [or other] data, the origination of which involves a considerable effort, shall protect such data against unfair exploitation by competitors. The protection shall last for a reasonable time commensurate with the efforts involved in the origination of the data, the nature of the data, and the expenditure involved in their preparation, and shall take account of the availability of other forms of protection. 3Ab PARTIES which require that trade secrets be submitted to carry out governmental functions, shall not use the trade secrets for the commercial or competitive benefit of the government or of any person other than the right holder except with the right holder’s consent, on payment of the reasonable value of the use, or if a reasonable period of exclusive use is given to the right holder.’ [9] ‘4A PARTIES, when requiring, as a condition of approving the marketing of new pharmaceutical products or of a new agricultural chemical product, the submission of undisclosed test or other data, the originator of which involves a considerable effort, shall [protect such data against unfair commercial use. Unless the person submitting the information agrees, the data may not be relied upon for the approval of competing products for a reasonable time, generally no less than five years, commensurate with the efforts involved in the origination of the data, their nature, and the expenditure involved in their preparation. In addition, PARTIES shall] protect such data against disclosure, except where necessary to protect the public.’ [10] In the final text, the originators are not granted any exclusive property rights. [11] Nuno Pires de Carvalho, The TRIPS regime of Antitrust and Undisclosed Information (Wolters Kluwers Law and Business Publications 2008) [12] Owais H. Shaikh, Access to Medicine Versus Test Data Exclusivity: Safeguarding Flexibilities Under International Law (Springer 2016) [13] Swaraj Paul Barooah, ‘Data exclusivity back on the table for India’ (Spicyip, 27 March 2015) <> accessed 02 February 2022 [14] Nuno Pires de Carvalho, The TRIPS Regime of Patent Rights (Kluwer Law International 2010) [15] Cambridge University, Resource Book on TRIPS and development (Cambridge University Press, 2005) [16] Supra n.1 [17] T. Cook, Special Report: The protection of regulatory data in the pharmaceutical and other sectors (Sweet & Maxwell 2000) [18] Like inventive step or novelty. [19] Effort can be technical or even economic in that sense [20] The Communication from the EU and its Member States, The relationship between the provisions of the TRIPS Agreement and access to medicines (IP/C/W/280, 2001) [21] The rationale for this stance is that equity dictates that data, that the costs the originator spends for development be protected. Disclosure of it, to be used in another application unfairly devalues the data's compiler's efforts and gives a financial advantage to later marketing approval applicants, allowing them to escape from creation of data and its associated cost. [22] Carlos Correa, ‘Protection of Data Submitted for the Registration of Pharmaceuticals. Implementing the Standards of the TRIPS Agreement’ (2002) The South Centre <> accessed 27/02/2022 [23]Supra n.15 [24] Gargi Chakrabarti, Need of Data exclusivity: Impact on access to medicines (2014) 19 JIPR <> accessed 25/02/2022 [25] The agreement was entered into between Gilead Sciences Ltd., and Indian Companies on September 15, 2014 so as to facilitate access to compounds to treat patients with Hepatitis C Virus (HCV) in underprivileged countries.

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