Data Exclusivity: Implications For Public Health

IN recent months there has been substantive lobbying by a section of the pharmaceutical industry in India – led by the multinational sector – and pressures from the US to provide for what is known as “Data Exclusivity”. Responding to such lobbying and pressures the government had set up an inter-ministerial group involving the ministries of Chemicals, Health and Commerce. It is understood that the group, unable to reach a consensus has now referred it to the PMO.
Whatever the current status of deliberations on this issue might be, what is clear is that there has been little public debate on the issue. That is unfortunate given that the resolution of the issue can have major consequences regarding access to new medicines that may be vital for public health.


Data exclusivity refers to a practice whereby, for a fixed period of time (usually 5 years), drug regulatory authorities do not allow the data that the originator company files to get marketing approval, to be used to register a generic version of the same medicine. It means that if an MNC gets marketing approval for a drug based on data of clinical trials, the same data cannot be used to register a drug by an Indian company. The latter, in spite of the fact that it is wishing to register the same drug, will be forced to conduct fresh clinical trials before its version of the drug can be registered.

Since the debate on Data Exclusivity has been linked with a discussion on Patents, many assume that if national laws allow for Patent protection they also need to allow for Data Exclusivity. This is entirely incorrect on several grounds.

First, Patents and Data Exclusivity are two entirely different concepts. In fact the enforcement of Data Exclusivity can have the biggest impact in situations when Patents cannot or are not being enforced. Second the TRIPS Agreement, which lays down conditions for Patent protection does not talk about Data Exclusivity. What the TRIPS Agreement talks about is “Data Protection”, which is very different from Data Exclusivity. But the whole issue of Data Protection has been hijacked by developed countries led by the US and EU and by Pharmaceutical MNCs in such a manner, that it is being posed that Data Protection is the same as Data Exclusivity.

To understand the issues at stake it is necessary to understand how the marketing of medicines is regulated. Medicines, the world over, are subject to two sets of rules: Intellectual Property Rights (IPRs – which include Patent protection) and registration of drugs before marketing approval. The former is regulated by a country’s Patent laws while the latter is regulated by the drug regulation authorities – in India the Drug Controller General of India (DGCI).

In the case of Patents it is a private right, that it is a right that the Patentee enjoys and the onus is on the Patentee to ensure that it is not infringed, i.e. someone else does not make the patented substance during the patent period. If such an infringement is alleged, the Patentee has to approach the relevant authorities to take action against the infringer. On the other hand a drug regulatory authority is a body set up as a public authority. Its function is to ensure, in public interest, that drugs that are provided with marketing approval meet the criteria of safety, efficacy and good quality.


Under the guise of Data Exclusivity, what is really being sought is that drug regulatory authorities should act on behalf of pharmaceutical companies to safeguard their monopoly right. They are being asked to reject the application for marketing of a drug by a local company if it doesn’t submit fresh data from its own clinical trials. This is clearly a practice that cannot be within the domain of regulatory agencies. If the same agency has approved a drug based on clinical data provided by one company, there is no logical reason why the same drug should be refused marketing approval if another company produces it. For the issues of safety and efficacy have already been taken care of when the originator company’s drug was given approval.

Here it must be understood that drug regulatory agencies can and do insist that the second company provide data on bio-equivalence – i.e. show that the drug achieves the same concentration in the human body as for the originator company’s drug. Or else regulatory agencies make sure that the second company follows manufacturing practices that ensure a certain quality so that its drug is similar in properties to the original drug.


Let us now turn to the argument that is being used to make a case for providing Data Exclusivity. The TRIPS agreement mentions the need to provide for what it calls “Data Protection” under Article 39(3) of the agreement where it says: “ Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products that utilise 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”.

It may be noted that TRIPS does not mention “data exclusivity” but “data protection”. There is a clear distinction that must be made between the two – in the former case it’s a concept involving monopoly right for a period over test data whereas in the latter case no such monopoly right is involved. Experts have argued that if regulatory agencies do not share the data with other companies or make it public, the requirements under TRIPS are met. Carlos Correa, noted Patents expert has argued this point thus: “The protection conferred to data submitted for the marketing approval of the product (in accordance with Article 39.3) of the TRIPS Agreement has been another problematic issue in some countries. The Agreement does not oblige to recognize any kind of exclusivity on data submitted for approval, since the protection should be granted under the discipline of “unfair competition”…. Once data on a new drug have been submitted, their use by a national health authority to study and approve a subsequent application on the basis of similarity, does not entail a violation of the confidentiality obligation under the Agreement”.

But as the IPR debate has taught us so well logic and legal considerations are often not the only considerations when pharmaceutical MNCs, backed by the US and the EU, wish to push through changes in law that affect sovereign nations. They are attempting today to push through laws similar to those in existence in the US and the EU – allowing for Data Exclusivity for periods up to five years. The urgency with which the US, especially, is pursuing this can be gauged from the fact that every Bilateral or Regional Free Trade Agreement that the US is signing today has a clause that provides for Data Exclusivity. Data Exclusivity has thus become the prominent “TRIPS Plus” (i.e. measures that go beyond the TRIPS Agreement) measure that the US is pressing for.


There are various dimensions in the interest that pharmaceutical companies have in pressing for data exclusivity. First, it allows them monopoly power even in situations where a country is not required to provide patent protection. This is true for all Least Developing Countries (LDCs) who do not need to allow Patents in medicines till 2016. In their case, Data Exclusivity allows companies to have a “patent like” monopoly for a certain period – usually at least 5 years. While 5 years may seem a small period compared to the patent period of 20 years mandated by TRIPS, it must be understood that data exclusivity comes after marketing approval, i.e. usually after 5-7 years of the filing of a patent. So it really covers up to half or more of a patent period, and importantly, it covers the period when the benefits of monopoly protections are maximum. Further, the US is also pressing for Data Exclusivity for the new use of an existing drug, which can push the monopoly enjoyed by the originator company beyond the 20 year patent period if the new use is “discovered” just when a patent is about to expire.

For countries like India where Patents on medicines are now allowed the effect can be of a different kind. The instrument available in India to curb the monopoly of MNCs is the use of a compulsory license. It is a license that the government can issue after 3 years of patent grant, if it is found that the Patented drug is not available, or it is too expensive, or the development of domestic industry or an expert market is hampered. Such a license would allow domestic companies to manufacture the Patented drug in the country, after paying a small royalty to the originator company. But if India allows for Data Exclusivity, such a license would be useful as the DGCI would then insist that Indian companies conduct fresh clinical trials before getting marketing approval. Such trials are expensive and would add to the cost of the drug, and would be time consuming and delay the introduction of the drug. Most importantly such trials would be unethical. If we know that a drug is useful and it is safe, to conduct the trials again on human beings is not ethical.


There are, thus, clear reasons why India need not allow for Data Exclusivity – it is neither a requirement under TRIPS, nor is it something that serves national interest. It is unfortunate that the government should seriously consider amending domestic laws under pressure from the US and MNCs in the pharmaceutical sector. To allow for Data Exclusivity the government will have to amend the Drugs and Cosmetics Act. Such an amendment needs to be approved by Parliament and it is hoped that Parliament shall reject such an amendment.