[Ip-health] Market exclusivity beyond patents for drugs?

[Benjamin Krohmal]

http://economictimes.indiatimes.com/News/News_By_Industry/
Healthcare__Biotech/Pharmaceuticals/
Market_exclusivity_beyond_patents_for_drugs/articleshow/2078395.cms

The Economic Times
Market exclusivity beyond patents for drugs?
by KG NARENDRANATH

TIMES NEWS NETWORK[ MONDAY, MAY 28, 2007 03:37:31 AM]
Three governments from the emerging world namely Thailand, Brazil and
Malaysia have, although in varying degrees, shown aggression in
recent months in the seizure of pharmaceutical patents, causing their
supporters in the world to expect a cascade of governments to follow
suit, and considerable anxiety among the enthusiasts of intellectual
property rights (IPRs).

That contrary to what some quarters expected the World Health
Organisation=92s annual assembly last week did not formally endorse
Thailand=92s action came as big relief to the world=92s biggest drug
companies=97Big Pharma=97which apprehend if such actions go scot-free and
the trend is buttressed, then, to their detriment, violation of
multilaterally-ratified IPR laws would eventually become a global
norm. Already, the Big Pharma is slightly week on their knees, having
been deprived of the consistent and easy support they used to get
from the US government, which is seen to be embracing the politically
popular policy of lending a big hand to the generics industry.

This week, the Indian government is likely to take a call on a
related issue=97=93data protection=94, an obligation on governments under
an allegedly ambiguous provision of the Trade-Related Intellectual
property Rights (TRIPS) agreement.

A committee at the senior bureaucrats=92 level has been sitting on the
vexing issue since February 2004, only to realise that it can hardly
reach a consensus. Fresh efforts are now being made for a patch-up as
the official at the chair=97Satwant Reddy, secretary, department of
chemicals=97is keen to get the work done, before she demits office on
Thursday.

What does data protection (also referred to as data exclusivity)
stand for? Article 39.3 of the WTO=92s TRIPS agreement requires the
member countries of the world body to ensure that =93undisclosed test
or other data=94 concerning products using new chemical entities
(NCEs), which the pioneer applicant has to submit to the regulator
for marketing approval, is not subjected to unfair commercial use by
a third party.

The provision itself is rather vaguely expressed, giving its
potential beneficiaries and those who oppose it room to variously
interpret it. It may be right to say that what the data protection
provision seeks to achieve is avoid frustration of an otherwise
deserving IPR through leakage and resultant unfair use of the
relevant data by a third party. In that sense, it will at the best
facilitate or even reinforce a good patent but won=92t extend its
tenure. And nobody quiet opposes such a legal instrument to ensure
deserving patents.

The problem, however, is that almost all developed countries and even
China and Korea went beyond what the TRIPS agreement mandated, to
give a =93period of data protection=94 (which is nothing but market
exclusivity) to the pioneer applicant, which, considering the way
patent systems work, would sometimes lead to extension of patent
tenure beyond the stipulated 20 years. For instance, the US gives
five-year data protection, the EU 10 years, Canada eight years and
China six years. So, a precedent has been created.

For the last few years, New Delhi has been under intense pressure by
Big Pharma and their political patrons in the West to provide for in
its laws something similar. Generally speaking, the Indian drug
industry, including most of the big companies, whose present
capability lies in the development and manufacture of cheaper
generics than core innovation, has been strongly countering this
pressure.

So, what is important is what the government thinks. The 15-member
committee headed by Ms Reddy was itself the result of seemingly
irresolvable inter-ministerial differences. The PMO was behind its
formation. Once it was clear it=92s split down the middle, a group of
three secretaries=97scientific and industrial research department
secretary RA Mashelkar, commerce secretary GK Pillai and Ms Reddy=97
went into a huddle in November 2006. This group, according to
sources, concluded that India could, toeing the line of the West,
give the pioneer applicant in pharmaceutical and agrochemical sectors
not only protection of data from unfair commercial use but also a
period of protection, which according to some analysts, mean =93not
only protection of data but also protection from competition=94. This
three-member group has, however, not been able to take others in the
panel on board so far and hence the deadlock.

The panel, which has had extensive consultations with all
stakeholders, has almost agreed on giving five-years=92 =93market
exclusivity=94 for NCE products in the agrochemical sector and also for
new products in the herbal segment. However, most members of the
committee, including the representatives from the health and industry
departments and independent experts, are strongly opposed to giving
such market exclusivity in pharmaceuticals which is a =93sensitive
sector=94.

What is so harmful about the period of protection or market
exclusivity? Usually, after a patent is granted for an NCE, it takes
eight-nine years on an average for various developmental studies,
including testing the substance in animals, and another three years
or so for trying it in humans. Even if the drug hits the US, the EU
or Canadian market in the 11th or 12th year of the grant of patent,
its introduction in Indian or Malaysian or Chinese market could well
take another five-six years.

This is because the test and other data will have to be submitted to
the regulators in these countries who will independently take a call
on them, according to their rules, even as they largely rely on
approval of the primary data by the regulators in the West. The
Indian regulator would ask for a repeat of some of the tests,
including last phase of trials in humans.

So, in practice, even if the inventor has got the patents
simultaneously in the US and in India, the drug would normally hit
the US market in the 11th year after patent grant while it could
reach Indian market only in the 17th year. A five-year market
exclusivity since such market launch=97which means that the information
on the product would not be available to a generic drug-maker for
even researching on it during the period=97effectively leads to an
extension of the patent to the 22nd year, if not beyond that.

Can India deny such market exclusivity? It can if it has the
political will. =93Mentioning a period of protection is not TRIPS-
mandated. If we allow that for even agrochemicals, that could move us
to a slippery slope,=94 says an independent expert in the Reddy
committee. Although most countries in the West have allowed market
exclusivity, New Delhi won=92t be without company if denies it. Brazil
and South Africa have not conceded any period of protection. Says an
industry official: =93India could consider protection coterminous with
the expiry of patent or first disclosure of data in any WTO member
country.=94

The independent expert says remedy against leakage of the data
without any reference to period of protection would do. For this, the
Drugs & Cosmetic Rules could be amended, because the Right to
Information Act could supersede the Official Secrets Act, which would
have otherwise been enough. The industry official emphasised that as
TRIPS requires giving data protection to only NCE products, the
Indian law should clearly restrict it to such products. He has a
point given the drying down of the global NCE pipeline, the fortunes
of the global pharma industry seems to be predominantly generics-
driven, at least in the medium term, and Indian industry has a clear
advantage in capturing more of this rapidly growing market.

The industry should not be incapacitated by the urge to play to the
galleries, when there isn=92t actually a multilateral obligation to
give market exclusivity of the sort given by the countries in West.A
government official familiar with the committee=92s current thinking
said: =93Pharmaceuticals could be given differential treatment as the
sector is sensitive due to public health issues involved.=94 But would
it be defensible to give five-years=92 data protection for
agrochemicals and at the same time deny that to pharmaceuticals?