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‘Data Protection’: Needs A Clear Direction…But Is It An IPR Issue?

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The terminologies ‘Data Exclusivity’ and ‘Data Protection’ are quite often used interchangeably by many, creating a great deal of confusion on the subject. However, in a true sense these are quite different issues having critical impact on public health interest of a nation.

In several media reports as well, one can notice the interchangeable use of these two terms. It is especially happening when the reports are speculating whether or not the Government of India is considering putting in place ‘Data Exclusivity’/ ‘Data Protection’ along with ‘Patent Linkage’ through administrative measures, without making any amendments in the Patents Act 2005 of the country.

Tracking this development, the last week, I wrote about ‘Patent Linkage’. In this article, I shall dwell on the same area, but from ‘Data Exclusivity’/ ‘Data Protection’ perspective.

A brief overview:

Close to a decade ago, Government of India constituted ‘Satwant Reddy Committee’ to recommend a direction that India should follow on ‘Data Protection’ in the country involving pharmaceutical and agricultural products.

In 2007 the Committee submitted its report recommending ‘Data Protection’ in the country to be introduced for pharma products in a calibrated manner. However, the report did not specify a timeline for its implementation.

Interestingly, even this committee did not differentiate between the terminologies ‘Data Protection’ and ‘Data Exclusivity, as we now see in the first draft of the ‘National IPR Policy.’

According to available reports, after due deliberation, the erstwhile Government decided not to take any action on the committee’s recommendations for ‘Data Protection’ in India.

Difference between ‘Data Protection’ and ‘Data Exclusivity’:

In an article published in ipHandbook, titled “Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals”, the author Charles Clift with a great deal of experience in the U.K. Department of International Development (DFID) and a former Secretary, Commission on Intellectual Property Rights, Innovation and Public Health, World Health Organization; differentiated these two terminologies as follows:

Data Protection (DP): Protection of commercially valuable data held by the drug regulator against disclosure and unfair commercial use.

Data Exclusivity (DE): A time bound form of Intellectual Property (IP) protection that seeks to allow companies recouping the cost of investment in producing data required by the regulatory authority.

Arguments in favor of ‘Data Exclusivity’:

International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), Geneva, in its website argues in favor of ‘Data Exclusivity’ as follows:

- Health authorities require, as part of a submission for a marketing authorization, that proprietary information be disclosed in order to ensure public health and patient safety.

- The innovator assumes the entire risk for the generation of the data, what requires expensive and lengthy clinical trials.

- ‘Data Exclusivity’ is necessary to provide a measure of certainty to the innovator that they will be provided with a period of protection for their efforts of testing a drug.

- Patents and ‘Data Exclusivity’ are different concepts, protect different subject matter, arise from different efforts, and have different legal effects over different time periods

Arguments suspecting the intent of ‘Data Exclusivity’:

The above paper of Charles Clift highlights the following on DE:

- The effect of DE is to prevent entry of generic competitors, independent of the patent status of the product in question.

- DE law, wherever applicable, prevents generic manufacturers from using innovators’ test data, though it would allow the drug regulator to analyze this data prior to market approval.

- Even if the patent period has expired or there is no patent on a product, DE will act independently to delay the generic entry until the period of DE is over.

- In that way DE compensates innovators for delayed market entry and concomitant loss of potential profits.

- DE is a much stronger right than a patent, mainly because, unlike patent law, there is no exceptions or flexibilities that allow the governments to provide the equivalent of Compulsory License (CL).

- DE acts as a barrier to CL of a patent on the same product by preventing marketing approval for a CL.

TRIPS Agreement talks about DP, but not DE:

Article 39 of TRIPS Agreement on “Protection of Undisclosed Information” contains a general clause on the obligations of the members of the WTO, where Article 39.3 specifies three obligations for its member countries as follows:

- To protect data on New Chemical Entities (NCE), the collection of which involves considerable effort, against unfair commercial use.

- To protect these data against disclosure, except where necessary to protect the public

- To protect such data against disclosure, unless steps are taken to ensure that the data are protected against unfair commercial use

According to Charles Clift, Article 39.3 only articulates widely accepted trade secret and unfair competition law, and is not an invitation to create new IP rights per se for test data. Nor does it prevent outside parties from relying on the test data submitted by an originator, except in case of unfair commercial practices.

Some developed countries, such as the United States and the European Union have argued that Article 39.3 of TRIPS requires countries to create a regime of DE, which is a new form of time-limited IP protection. However, it is worth noting that in both these countries DE regime was adopted prior to TRIPS Agreement. Hence, many experts construe such approaches and pressure, thus created for DE, as ‘TRIPS Plus’.

What is ‘TRIPS Plus’?

The ‘TRIPS-Plus’ concept would usually encompass all those activities, which are aimed at increasing the level of IP protection for the right holders, much beyond what is required for conformance of TRIPS Agreement by the World Trade Organization (WTO).

Some section of the civil society nurtures a view that ‘TRIPS Plus’ provisions could significantly jeopardize the ability, especially, of developing countries to protect the public health interest adequately.

Some common examples of ‘TRIPS Plus’ provisions:

Common examples of ‘TRIPS Plus’ provisions could include:

- Extension of the patent term beyond usual twenty-year period

- Introduction of provisions, which could restrict the use of CL

- Delaying the entry of generics

Is ‘Data Protection’ an IPR issue?

In my view, the issue of ‘Data Protection’ is more a drug regulatory than an IPR related subject and should be treated as such. This is because ‘Data Protection’ is more related to the ‘Drugs and Cosmetics Act’ of India rather than the ‘Patents Act 2005′.

Thus, it is quite intriguing to make out why ‘Data Protection’, which will be governed by ‘Drugs and Cosmetics Act’, is featuring in the IPR Policy of the country.

I wrote on the draft National IPR Policy in my blog post of January 19, 2015, titled “New “National IPR Policy” of India – A Pharma Perspective”.

Conclusion:

After jettisoning the ‘Satwant Committee Report’ on ‘Data Protection’, the Government was in no mood, until recently, to discuss anything about DP and DE, despite intense pressure from the pharma MNC lobby in India. However, the issue first resurfaced during EU-FTA negotiation, when India rejected these provisions outright and unambiguously.

However, the ghost started haunting India, yet again, when the US Government started flexing its muscle on this issue, at the behest of the American pharma companies.

Although DP is a drug regulatory issue, curiously, it features in the draft National IPR Policy. Even there, the subject has taken an interesting turn, when in the first draft of ‘National IPR Policy’ of India, the six-member ‘Think Tank’ chaired by Justice (Retd.) Prabha Sridevan clearly recommended “Protection of undisclosed information not extending to data exclusivity.”

In my opinion this is indeed a very pragmatic recommendation. It deserves support from all concerned so that the profound intent continues to feature in the final IPR Policy of India, to protect public health interest of the nation.

Just like ‘Patent Linkage’, as I discussed in my last week’s article, finding a middle ground to put ‘Data Protection’ in place through administrative measures, without making any amendments either in the Drugs & Cosmetics Act or in the Patents Act of the country, seems to be desirable and very much possible, as well.

However, the very thought of considering ‘Data Exclusivity’ in India, in my view, should prompt a clear ‘No…No’ response from the present Government of India.

This is mainly because, besides all other reasons as mentioned above, even if the patent period for a molecule has expired or there is no patent on a product, DE will act independently to delay the generic entry until the period of ‘Data Exclusivity’ gets over.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

The Game Changer: Effective transition from ‘blockbuster’ to an integrated ‘niche buster’ plus ‘generic drugs’ business model

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Since quite some time global pharmaceutical majors have been operating within the confines of high risk – high reward R&D based business model with blockbuster drugs (annual sales of over US$ 1 billion).

Blockbuster brands, mostly in the chronic-care segments have been driving the business growth, since long, of the global R&D based pharmaceutical companies. Many such blockbuster drugs are now at the end of their patent life like, Lipitor (Atorvastatin) of Pfizer.

Patent expiry of such drugs, especially in the environment of patent cliff, could make a severe adverse impact on the revenue and profit stream of many companies, leading to drastic cost cut including retrenchment of a large number of employees.

In addition ballooning costs of R&D failure coupled with the decisions of the governments all across the world, including the US , EU and even in Asia, to contain the healthcare cost – the recent examples being Germany, Spain, Korea and China, have become the major cause of concern with the business model of blockbuster drugs.

Availability of low cost and high quality generics coupled with increasing consumerism, growing relevance of outcome-based pricing model are making the global pharmaceutical business models more and more complex.

The need to realign with the new climate:

Accenture in its report titled, “The Era of Outcomes – Emerging Pharmaceutical Business Models for High Performance” had commented, “Unless pharmaceutical companies act now to adjust to the new climate, they will be pressured to sell their proprietary drugs at low profits because the market will no longer bear the premium price”.

‘Blockbuster drugs’ business model is under stress:

Over a period of so many years, the small-molecule blockbuster drugs business model made the global pharmaceutical industry a high-margin/high growth industry. However, it now appears that the low hanging fruits to make blockbuster drugs, with reasonable investments on R&D, have mostly been plucked.

These low hanging fruits mostly involved therapy areas like, anti-ulcerants, anti-lipids, anti-diabetics, cardiovascular, anti-psychotic etc. and their many variants, which were relatively easy R&D targets to manage chronic ailments. Hereafter, the chances of successfully developing drugs for ‘cure’ of these chronic ailments, with value addition, would indeed be a very tough call and enormously expensive.

Thus the blockbuster model of growth engine of the innovator companies effectively relying on a limited number of ‘winning horses’ to achieve their business goal and meeting the Wall Street expectations is becoming more and more challenging. It is well known that such business model will require a rich and vibrant R&D pipeline, always.

The changing scenario with depleting R&D pipeline:

The situation has started changing since quite some time from now. In 2007, depleting pipeline of the blockbuster drugs hit a new low. It is estimated that around U.S. $ 140 billion of annual turnover from blockbuster drugs will get almost shaved off due to patent expiry by the year 2016.

IMS reports that in 2010 revenue of more than U.S. $ 27 billion was adversely impacted due to patent expiry. Another set of blockbuster drugs with similar value turnover will go off patent by the end of 2011.

According to IBIS World, the following large brands will go off patent in 2011 and 2012:

Patent Expiry in 2011

Condition

Company

 2010 US Sales $ billion
Lipitor cholesterol Pfizer

5.3
Zyprexa antipsychotic Eli Lily

2.5
Levaquin antibiotics Johnson & Johnson

1.3
Patent Expiry in 2012

Condition

Company

 2010 US Sales $ billion
Plavix anti-platelet Bristol-Myers Squibb / Sanofi-Aventis

6.2
Seroquel antipsychotic AstraZeneca

3.7
Singulair asthma Merck

3.2
Actos type 2 diabetes Takeda

3.4
Enbrel arthritis Amgen

3.3

Proactive shift is required from ‘Blockbuster’ to Niche buster’ model:

Companies with blockbuster-drug business model without adequate molecules in the research pipeline may need to readjust their strategy even if they want to pursue similar R&D focused business model effectively.

Brand proliferation, though innovative, within similar class of molecules competing in the same therapy area, is making the concerned markets highly fragmented with no clear brand domination. In a situation like this, outcome based pricing and competitive pressure will no longer help attracting premium price for such brands anymore.

Being confronted with this kind of situation, many companies are now shifting their R&D initiatives from larger therapy areas with blockbuster focus like, cardiovascular, diabetes, hypertension and more common types of cancer to high value and technologically more complex niche busters in smaller therapy areas like, Alzheimer, Multiple Sclerosis, Parkinsonism, rare types of cancer, urinary incontinence, schizophrenia, specialty vaccines etc.

This trend is expected to continue for quite some time from now.

Generics to continue to drive the growth in the emerging markets:

It is expected that the global pharmaceutical market will record a turnover of US $1.1 trillion by 2014 with the growth predominantly driven by the emerging markets like, Brazil, Russia, India, China, Mexico, Turkey and Korea growing at 14% – 17%, while the developed markets are expected to grow just around 3-6% during that period.

The United States of America will continue to remain the largest pharmaceutical market of the world, with around 3-6% growth.

IMS predicts that over the next five years the industry will have the peak period of patent expiry amounting to sales of more than US$ 142 billion, further intensifying the generic competition.

The experts believe that the growth in the emerging markets will continue to come primarily from the generic drugs.

Integrated combo-business model with ‘niche busters’ and generic drugs:

Some large companies have already started imbibing an integrated combo-business model of innovative niche busters and generic medicines, focusing more on high growth emerging pharmaceutical markets.

The global generic drug market was worth US $107.8 billion USD in 2009 and is estimated to be of US$ 129.3 billion by 2014 with a CAGR of around 10%. However, there are some companies, who are still ‘sticking to knitting’ with the traditional R&D ‘blockbuster drugs’ based business models.

The process of innovative and generic drugs ‘combo-business model’ was initiated way back in 1996, when Novartis AG was formed with the merger of Ciba-Geigy and Sandoz. At that time the later became the global generic pharmaceutical business arm of Novartis AG, which continued to project itself as a research-based global pharmaceutical company. With this strategy Novartis paved the way for other innovator companies to follow this uncharted frontier, as a global ‘combo-business strategy’. In 2009 Sandoz was reported to have achieved 19% of the overall net sales of Novartis, with a turnover of US$ 7.2 billion growing at 20%.

Other recent example of such consolidation process in the emerging markets happened on June 10, 2010, when GlaxoSmithKline (GSK) announced that it has acquired ‘Phoenix’, a leading Argentine pharmaceutical company focused on the development, manufacturing, marketing and sale of branded generic products, for a cash consideration of around US $ 253 million. With this acquisition, GSK gained full ownership of ‘Phoenix’ to accelerate its business growth in Argentina and the Latin American region.

Similarly another global pharma major Sanofi is now seriously trying to position itself as a major player in the generics business, as well, with the acquisition of Zentiva, an important player in the European generics market. Zentiva, is a leading generic player in the markets like, Czechoslovakia, Turkey, Romania, Poland  and Russia, besides the Central and Eastern European region. In addition to Zentiva, in the same year 2009, Sanofi also acquired other two important generic players, Medley in Brazil and Kendrick in Mexico.

With this Sanofi announced, “Building a larger business in generic medicines is an important part of our growth strategy. Focusing on the needs of patients, Sanofi has conducted a regional approach in order to enlarge its business volumes and market share, offering more affordable high-quality products to more patients”.

Keeping a close vigil on these developments, even Pfizer, the largest pharmaceutical player of the world, has started curving out a niche for itself in the global market of fast growing generics, following the footsteps of other large global players like, Novartis, GlaxoSmithKline, Sanofi, Daiichi Sankyo and Abbott.

Yet another strategy – splitting the company for greater focus on both generic and innovative pharmaceuticals:

In the midst of the above trend, on October 19, 2011 Chicago based Abbott announced with a ‘Press Release’ its plan to separate into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals. The announcement said, the diversified medical products company will consist of Abbott’s existing diversified medical products portfolio, including its branded generic pharmaceutical, devices, diagnostic and nutritional businesses, and will retain the Abbott name. The research-based pharmaceutical company will include Abbott’s current portfolio of proprietary pharmaceuticals and biologics and will be named later. Both companies will be global leaders in their respective industries, the Press Release said.

Such splits are based on the belief of many that in the pharmaceutical business two entirely different business models of new drug discovery and generics will need different kind of business focus, which may not complement each other for the long term growth of the overall business.

OTC Switch of prescription drugs will continue:Prescription to ‘Over the Counter (OTC)’ switch of pharmaceutical products is another business strategy that many innovator companies have started imbibing from quite some time, though at a much larger scale now.This strategy is helping many global pharmaceutical companies, especially in the Europe and the US to expand the indication of the drugs and thereby widening the patients’ base.Recent prescription to OTC switches will include products like, Losec (AstraZeneca), Xenical (Roche), Zocor (Merck), etc. Perhaps Lipitor (Pfizer) will join this bandwagon soon.
Conclusion:

PwC in its publication titled “Pharma 2020: The Vision” articulated:

“The current pharmaceutical industry business model is both economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets. In order to make the most of these future growth opportunities, the industry must fundamentally change the way it operates.”

Quite in tandem a gradually emerging new ‘pharmaceutical sales and marketing model’ has started emphasizing the need for innovative collaboration and partnership within the global pharmaceutical industry by bundling medicines with patient oriented services. In this model, besides marketing just the medicines, as we see today, the expertise of a company to effectively deliver some key services like, patient monitoring and disease management could well be the cutting edge for business excellence. In this evolving scenario, those companies, which will be able to offer better value with an integrated mix of medicines with services, are expected to be on the winning streak.

Be that as it may, effective transition from ‘blockbuster’ to an integrated ‘niche buster’ plus ‘generic drugs’ business model, is expected to be “The Game Changer’ in the new ball game of the global pharmaceutical industry in the years ahead.

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

EU-FTA, TRIPS-Plus provisions, Data Exclusivity, Public Interest and India

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Business Standard in its January 27, 2011 edition reported, “Data Exclusivity still key hurdle to India-EU FTA”
Before deliberating on this important issue of “Free Trade Agreement (FTA)”, let me touch upon very briefly, for the benefit of all concerned, the pros and cons of the FTAs.
Free Trade Agreements (FTAs):
Free Trade Agreements (FTAs), as we know, are treaties signed between the governments of two or more countries, where the countries agree to partially or completely lift the import tariffs, taxes, quotas, special fees, other trade barriers and regulatory issues to allow increased business, benefitting each country.
The Pros and Cons:
Consumers of each country are the key beneficiaries of FTAs with increased supply of various products of wider choices at lesser prices with consequent increase in market competition and market penetration.
The cons of the FTAs are apprehensions that arising out of fierce competition and increasing supply of imported products at lesser prices, the demand for domestic goods decline, leaving an adverse impact on the domestic business performance with consequent job losses, especially, in the manufacturing sector. In addition, because of lower import tariff, revenue collection of the government may also get adversely affected.
The scenario is no different for the pharmaceutical sector of the country.
A recent example:
The most recent example is the FTA between India and Japan. This will include both trade and investments, increasing the bilateral trade and commerce between the two countries to around US$ 11 billion. With this Agreement, Indian pharmaceutical products will be able to get access to the highly regulated and the second largest pharmaceutical market of the world.
The key issues with EU FTA:
1. It wants to include IPR issues like Regulatory Data Protection (RDP) or Data Exclusivity (DE) 2. RDP is a TRIPS-plus provision and its inclusion will delay the launch of generics 3. Delayed launch of generics would adversely impact the ‘public interest’.
A paradigm shift has taken place in India:
As we know, January 1, 1995 ushered in a new era, when the agreement of the World Trade Organization (WTO) on Trade-Related Aspects of Intellectual Property Rights (TRIPS), became effective for its member countries. This Agreement significantly changed the international Intellectual Property (IP) regime with the introduction of the principle of minimum intellectual property standards.
This would, therefore, mean that any IP related agreement that will be negotiated subsequent to TRIPS between WTO members can only create higher than the specified minimum standards.
What is ‘TRIPS Plus’?
The ‘TRIPS-plus’ concept usually would encompass all those activities, which are aimed at increasing the level of IP protection for the right holders beyond what is stipulated in the TRIPS Agreement.
Some section of the civil society nurtures a view that ‘TRIPS Plus’ provisions could significantly jeopardize the ability, especially, of developing countries to protect the ‘public interest’.
Some common examples of ‘TRIPS Plus’ provisions:
Common examples of ‘TRIPS plus’ provisions could include:
- Extension of the patent term beyond usual twenty-year period – Introduction of provisions, which could restrict the use of Compulsory    Licenses (CL) – Delaying the entry of generics
Is section 39.3 an example of ‘TRIPS Plus’ provision?
The raging debate around Regulatory Data Protection (Data Exclusivity) as indicated under Article 39.3 of TRIPS is perhaps unique in terms of apprehension of the generic pharmaceutical industry on its possible adverse impact on their business and very recently of the Government of India because of the share of voice of the pressure groups following the EU-FTA.
Be that as it may, the moot question is, even if these provisions are ‘TRIPS Plus’, are these good for India?

Key arguments in favor of RDP in India:
1. It will not extend Patent life and promote evergreening:
However, there is hardly any evidence that RDP does not get over well before the patent expires. Thus RDP does extend the patent life of a product and hence is not ‘Evergreening’.
2. It will not delay the launch of generics because of safeguards provided in the Indian Patent Act, just like in the USA:
A robust ‘Data Exclusivity (DE)’ regime is effective in the USA since over decades. Despite DE, the world witnesses quickest launch of generic products in that country without any delay whatsoever. This has been possible in the USA, because of existence of the‘Bolar Provision’, which allows the generic players to prepare themselves and comply with all regulatory requirements, using the innovators data wherever required and keep the generic product ready for launch immediately after the patent of the innovator product expires in the country.
I reckon similar ‘Bolar like provision‘ exists in the section 107A of the Indian Patent Act. This particular section allows, in a similar way that generic entry is not delayed in India after patent expiry of the respective innovator products.
Though the generic players of India, by and large, are up in arms against RDP (protection against disclosure and unfair commercial use of the test data) in India, highest number of ANDAs are being filed by the Indian companies, just next to the USA, despite a stringent DE provisions being in force there.
Moreover, inspite of very stringent IPR regulations, Generic prescriptions are quite popular in the USA. Around 62% of the total prescriptions in that country are for generic pharmaceuticals.
Thus the key apprehension that the RDP provision in the EU-FTA will delay the launch of generic  pharmaceutical products in India and will go against ‘Public Interest’ seems to be unfounded to me.
Government report indicates RDP is good for India:
The Government of India appointed ‘Satwant Reddy Committee’ report (2007) also categorically recommended that RDP is good for the country and should be introduced in a calibrated way.The committee examined two industries:
- Pharmaceuticals – Agrochemicals
Meanwhile, a 3 year RDP for Agrochemicals has been accepted by the Government of India, vindicating the fact that even if section 39.3 is considered as ‘TRIPS Plus’, RDP, as such, is good for the country.
Thus the question whether Section 39.3 is ‘TRIPS Plus’ or not, does not appear to be relevant while discussing EU-FTA, after following the above sequence of events in India.
Conclusion:
The issue of RDP appears to me more a regulatory than an IPR related subject in EU-FTA negotiation process and should be treated as such. It means RDP is more related to the ‘Drugs and Cosmetics Act’ of India rather than the ‘Patent Act 2005′. The media hype that an IPR issue in the form of RDP is being taken up in the EU-FTA negotiation also seems to be misplaced.
Let me hasten to add that I do not hold any brief directly or indirectly for or against the EU-FTA. Neither do I wish to make any general comment on the EU-FTA as such, because the agreement will deal with various other important issues of our nation’s interest involving intensive negotiations between the sovereign countries, at the government level.
However, even without going into the merits or demerits of the EU-FTA, it appears to me that the arguments put forth by a group of people against RDP related to the EU-FTA are indeed not robust enough and possibly have been prompted more by the vested interest groups rather than the ‘Public Interest’.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.