The pharmaceutical industry across the globe and even more so in the developing countries has been consistently under attack for its perceived insensitivity to the needs of the sick and the poor even when its contribution to improvements in health of large populations in all parts of the world is widely acknowledged. The problems facing this industry have been well articulated by several experts as well as by all stakeholders including Governmental and private agencies, the medical profession, the industry and the patients. Approaches to possible solutions have been however, diverse and often times contradictory, with little meeting ground, let alone consensus. From the Indian perspective, the problems which beg for early solutions are all connected with finalisation of several pending issues of a statutory nature calling for intervention of the Government. At the broadest level affecting all aspects of the industry's activities is the Draft National Pharmaceutical Policy 2006 which is meant to be the roadmap for the industry to grow to global dimensions and competitiveness and at the same time meet its obligations to the Society which it is meant to serve by providing drugs at as affordable a cost as possible. The other two issues which directly affect R&D, particularly in the Post 2005 (product patent) era, are related to issues on patentability criteria (Art. 27 of TRIPS) and the rationale or otherwise of providing data exclusivity to innovator companies which submit proprietary data to regulatory agencies for drug approvals.
This paper will address issues connected with the dilemma the Government faces with respect to bring in appropriate legislations for data exclusivity to the innovator company which first submits pre-clinical and clinical data for regulatory clearances to the Drug Controller General of India.
What are the points of contention?
The research-based companies, which are largely responsible for the discovery and development of new products at very high cost argue that any proprietary data submitted by them on any drug or similar product (eg agrochemicals) should be protected from use for approvals of their generic versions by the regulatory agencies. This means that either the applicants for approval of their generic products should generate fresh data or get an authorisation from the original applicants to use their data. The innovating companies feel that any unauthorized use of data generated with heavy financial and intellectual inputs by the regulatory agencies to approve generic products would constitute an unfair commercial advantage to the generic producers.
The generic companies as well as many healthcare policy groups aver that generation of fresh pre-clinical and clinical data to get approvals for generic products would be repetitive, involve avoidable high costs of generic drug development and cause considerably delay in making the generic substitutes available, accessible and affordable to the patients. This view is particularly relevant to developing countries with scarce resources to handle healthcare costs of their population.
Is there a way to balance these views?
Both these diverse views are valid and represent the reality of the prevailing scenario. It is essential to find a solution which will be acceptable to advocates of both views within the ambit of not only the established international agreements to which 148 countries are signatories, but also will take into account the public health concerns of the less privileged populations of the world. The final solution to this problem should be legally viable under TRIPS, since India has so far not violated any of her obligations under this Multinational Agreement.
TRIPS and data exclusivity
The relevant Article in TRIPS (39.3) mentions data protection with no mention of exclusivity. The US, Japan and most countries of Western Europe consider the two equivalent, an interpretation which has been challenged by many developing countries. Article 39.3 says "researchers who require as a condition for approving the marketing of pharmaceuticals or agricultural chemicals 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". It is obvious that this statement contains many ambiguous terms such as 'new chemical entities', 'unfair commercial use', 'considerable effort' etc which are amenable to differing interpretations by the member countries. And that indeed has been one of the reasons why members have widely diverse provisions for data exclusivity in their national legislations. Thus the provision made by the member countries vary a great deal with regard to the number of years of protection (5 to 15). Most countries of North South and Central America, Asia/Pacific Rim including China, Western and Eastern Europe and Egypt, Jordan, South Africa and Saudi Arabia in the African and Middle East have provisions for data exclusivity on pharmaceuticals in their national legislations. Apart from India the countries which have no such provisions as of now include Argentina, Cuba, Guatemala, Paraguay, Uruguay, Kenya, Morocco, Nigeria, Indonesia, Malaysia, and Phillipines.
Data exclusivity & patent rights
There is no explicit or implicit relationship between these two protection systems. Provision for data exclusivity would apply equally to products other than drugs such as agrochemicals as well to those which are under patent protection or have either no patents or the patents have already expired. In fact if any new data on a known product is generated for submission to the Regulatory Agency, that data would also be protected even in the absence of a patent. Therefore, the suggestion that the period of data exclusivity should be limited to the patent validity period is not tenable. Data exclusivity should therefore be a separate legislation within the overall meaning of Article 39.3 of TRIPS. India can adopt like most other countries a five-year period.
What then is the solution?
It is only fair that the costs and efforts deployed for the generation of valuable and sophisticated data required for product approvals are recouped by the generators of proprietary data. At the same time the public should not be denied access to the cheaper generic products in the shortest possible time frame. To achieve these twin objectives, an equitable formula is for the generic companies to pay for the data based on which the regulatory agency will approve their generic versions. There are several models available to ensure an equitable compensation structure. Direct sharing of the expenses incurred on the generation of the data is impractical since India is only one of the many countries where regulatory submissions are made and apportioning costs would be a complex and cumbersome exercise. The royalty model is based on volume sales and hence would be an appropriate model and the royalty payment will be restricted to the data exclusivity period (say five years from the date of commercialization) and the volume of sales, like in the case of compulsory licenses. Alternatively the Drug Regulatory Agency could charge a 'User Fees" much like the charges levied by US FDA for services rendered. The User Fees could be levied by the regulatory authority which will reimburse the original data supplier the funds thus collected. The Drug Control Administration could also levy a charge for processing the data for use for drug approvals. In case of disputes, the Government could be the Arbitrator with the proviso that the launch of the generic product will not be delayed as a consequence of the disputes or litigation. Of course the freedom to commercialise the product would still be dependent on other legislations, for example the patent law in force in this country.
Conclusion
Such a legislation will satisfy the requirements of all stakeholders, the data generators, the generic companies who will create competition in the market place and thus will ensure that patients have access to cheaper drugs and ultimately the patients who will be the real beneficiaries. Overall a win-win for all the parties.
(The author is a senior research scientist and industry observer)