With reports suggesting that the Organization of Pharmaceutical Products in India is pushing for up to 10–12 years of data exclusivity protection in India, the debate over affordable medicines and pharmaceutical innovation is once again gaining momentum. But what would such a regime mean for India’s carefully negotiated patent bargain, generic competition and access to medicines? In Part I of the three-part post, Arnav examines the parallels between patent protection and data exclusivity, and the important questions that the proposed framework raises.
[Part I] The Trial of Data Exclusivity
By Arnav Kaman
The Organization of Pharmaceutical Products in India (OPPI) has reportedly been pushing to introduce a data exclusivity framework for clinical trial data of new drugs. OPPI represents the interests of multinational big pharma innovator companies, and have publicly stated their desire for a regulatory data protection (RDP) framework for years now. In recent reports, it’s been stated that the industry body is seeking a 10-year protection period for New Chemical Entity and 12 years for Biologics beginning from the date the drug receives marketing approval in India. The Indian Government seems to be taking steps towards it behind closed doors, in the name of increasing investment. While the exact proposal is not out, it’s a good time to revisit and contextualise the debate regarding Data Exclusivity for Pharmaceuticals. Part I will analyse the parallels between the Data Exclusivity proposal and the Patent Bargain, Part II will consider the impacts this proposal will have across multiple policy dimensions, and Part III will conclude with providing some alternative treatment.
Some Context and Background:
At the very outset, it is important to clarify some of the terms used in this fight, as they can be used interchangeably but imply vastly different things. When clinical trial data proving the safety and efficacy of a new drug has been generated and submitted, and a subsequent applicant applies for approval, rather than forcing duplicative trials for subsequent applicants, the approving authority relies on the pre-existing data to prove safety and efficacy. Regulatory Data Protection (or RDP) is the umbrella term for various policy measures and frameworks that protect this clinical trial data. Data Exclusivity refers to the framework where the authorities will not allow reliance on the submitted clinical data for approving subsequent applications. Market Exclusivity refers to the restriction imposed against competitors from entering the market with a competitor product for a period of time. Lastly, Data Confidentiality refers to the maintenance of confidentiality of the clinical trial data and preventing unauthorized disclosure.
These distinct terms can be made clearer with an example of the EU Exclusivity framework wherein they implement the “8+2” system [Article 14 (11) of Regulation (EC) No. 726/2004]. Data Exclusivity is granted for eight years after market approval for innovator products, wherein authorities cannot rely on the innovator trial data for approving generic or biosimilar products. Market exclusivity is granted and runs parallel from the date of marketing approval for ten years. Thus, for the last two years, even when data exclusivity runs out, approved generic or biosimilar products cannot enter the market.
India, on the other hand, does not currently provide for a data exclusivity regime. The New Drugs and Clinical Trial Rules, 2019 provide the requirement for new drug approvals and clinical trials. But after a “new drug” is approved with sufficient clinical trial data, for subsequent applicants the NDCTR provides instances wherein a requirement for local clinical trial data is waived off through Rule 80(7) and Rule 101. India does however, maintain confidentiality of the trial to adhere to TRIPS Article 39.3, as our international obligations mandate.
It is in this context that OPPI is asking for the introduction of a 10-year protection period for NCEs and 12 years for Biologics beginning from the date a drug receives Indian regulatory approval. Their proposal has faced push-back from generic companies and reportedly also the Health Ministry, raising concerns about access and delayed generic entry. OPPI has rebutted this, stating that generics should be able to generate their own safety and efficacy dossier. Further, OPPI argues that having strong DE style protection will lead to increased investment in clinical trials in India. Let’s unpack exactly what this proposal entails by first examining its parallels with the patent system and the greater impact it will have in India across different dimensions.
Phase 1: The Patents and Data Exclusivity.
The basic premise for data exclusivity is that undertaking the required costs for new drugs is an extremely high-risk and costly activity, which needs to be sufficiently incentivized by providing exclusive protection. Sound familiar? Yes, because it’s almost the same premise that’s led to the patent system. But if patents already exist in pharma, then why do some believe it is not enough? The answer lies in the clinical trials themselves, which are highly cost-intensive procedures, and since patents do not directly cover the investment in generating the data but only the end product, a patent alone does not sufficiently incentivize the production of such data. Or so they claim. Comparing the data exclusivity proposal with the patent bargain is a useful exercise and reveals many curious gaps and lacunas.
Firstly, as noted by Swaraj and Sabeeh, while no doubt there is a non-trivial amount that goes into conducting clinical trials, there is a staggering lack of transparency as to the actual costs of the drug development process. The transparency question does not end only at costs, but also extends to the data itself. The patent bargain operates without knowing the costs of the R&D, but justifies providing protection due to the trade-off of the knowledge of the innovation being publicly disclosed in exchange. The data in clinical trials however, remains a secret in perpetuity and is not revealed to the subsequent applicants or the public at any point. Without knowing how much investment took place in the first place or how useful the information is, it is difficult to approximate the level of incentive required for innovation. Conversely, given the amount of discussion around how AI may be reducing time and effort in creating new drugs, it may be a prime moment to re-evaluate whether the patent period itself is properly ‘balanced’ or not! Of course, this should be done by making the relevant economic data public, and not by asking pharmaceutical companies whether they need more market power or not.
Secondly, DE has no standard of scrutiny unlike patents. The patentability standards of novelty, inventive step, and industrial applicability exist to ensure only “true” or rather “substantial” “innovation” is granted protection. In pharmaceutical patenting, there are also the additional burdens of Section 3(d) and therapeutic efficacy, which all go a long way to prevent ever-greening of medicines. Data Exclusivity, on the other hand, possesses none of these safeguards and the approval process shares little in common with patenting standards. Further, any incremental innovation, subsequent improvement on any existing drug, could also be granted new data exclusivity periods. In both the US and Europe, incremental innovations have been granted data exclusivity periods, effectively ever-greening certain products. It’s possible that even if a product’s patent term expires, the data exclusivity may not only continue but be extended due to an incremental innovation! Yin, in a study comparing gains/losses from this type of activity with regard to SSRI drugs, found that the consumer surplus losses due to market exclusivity extensions far exceed the consumer surplus benefits from incremental innovation. For the Indian scenario, it’s important that safeguards be put into place for the data exclusivity regime to prevent ever-greening in such instances.
Thirdly, there are ambiguities on what timelines and territorial options to opt for. OPPI is pushing for the period of exclusivity to begin from Indian approval, territorially restricting it, but whose interests does it really serve? Would the additional protection of DE only be granted to trials that took place in India alone or anywhere in the world? If, in fact, DE would be granted for trials done outside India, which would then only require bridging trials for Indian approval, why does it require the additional protection incentive of Data Exclusivity in the first place? One cannot allow for waivers of local clinical trials and Data Exclusivity at the same time. While the patent system grants independent terms from the date of filing in each country, there are incentives to file globally simultaneously. If one delays filing in one country, they lose out on priority or novelty of the innovation and thus instruments such as the PCT supplement the ability to file internationally. In data exclusivity, however, innovators have full confidential control over the data and need not worry about fulfilling any time-bound requirements. An independent data exclusivity term might even incentivise a late entry in Indian markets.
Furthermore, the periods being discussed are unusual! What is the logic of asking for 10 and 12 years for NCE and Biologics? In the US, which has some of the strongest data exclusivity regimes, they only grant 5 years of exclusivity for a New Chemical Entity. And as mentioned earlier, the common practice right now is for CDSCO to waive studies or only require bridging studies. So, what exactly are these terms allegedly needed to incentivise? What exactly are we losing out if these are not granted? Let’s remember what comes out when the masks have slipped in the past, such as when Bayer’s CEO stated that Nexavar (which received a Compulsory license) was not made for Indians, but only for Western patients who can afford it. Big pharma is prone to using its monopolistic powers to price out patients, with a number of practices including additional protections such as data exclusivity. These years will be crucial, as claimed, when it comes to appropriate incentivisation of innovation and generic competition, so they must be well substantiated with evidence.
Lastly, we must not forget medicines are ultimately a public good and require state levers to ensure the balancing of private commercial interest with the needs of the public. In the patent regime, this lever manifests in the form of compulsory licensing under Section 84 and 92 of the Patents Act. However, compulsory licensing only removes the patent barrier of a medical product, and generic manufacturers may still be restricted from launching their alternatives in the market because of the lack of safety and efficacy approval. Data that would be locked behind the barrier of the DE regime. Thus, there is a great need for a state lever in the DE regime to ensure public interests.
The Indian Patent Bargain has been developed and has evolved over years and years of consultation, along with trial and error, and all the hard-won trade-offs should act as lessons for the DE regime when it finally reaches our doors. Yet even if and when these lacunae are addressed, the impacts of any DE regime on this country will have grave consequences across many policy dimensions which will be analysed in part II.