E-DRUG: TACD on Pharmaceutical Registration Data Exclusivity
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[copied from IP-Health with thanks; WB]
Draft, comments are welcome:
Jamie Love <love@cptech.org>
TACD on Pharmaceutical Registration Data Exclusivity
version 1.0
1. Background
There is controversy over the period of data exclusivity as it
relates to the pharmaceutical regulatory process. The issue
concerns the status of various tests and medical research that
are submitted in order to gain marketing approval for
pharmaceutical drugs.
In the absence of data exclusivity, generic drugs or drugs
produced under a compulsory license can be introduced into the
market on the basis of simple bioequivalence tests, without
having to replicate time consuming and expensive clinical trials
that are used to establish the efficacy and safety of the
products.
In the United States, for the first five years, only the "owner"
of data is permitted to rely upon the evidence of safety and
efficacy used for marketing approval of a product. In the EU,
the period of data exclusivity is 10 years for EU registrations,
or 6 to 10 years for national registrations. Outside the US and
EU there are a wide range of approaches to this issue, including
many countries where there are no rules regarding data
exclusivity.
The US provisions on data exclusivity are part of a broader
compromise on issues relating to the introduction of generic
drugs, early working of patents and patent extensions for
pharmaceuticals. In the EU, the 10 year period of EU
registrations was initially designed to compensate for a lack of
pharmaceutical patent protection in Spain and Portugal, as the EU
permits parallel imports of pharmacueticals within the EU. This
situation has been changed with the adoption of the WTO/TRIPS
agreement, which requires patent protection for pharmaceutical
drugs.
2. The economic rationale for data exclusivity
The putative rationale for periods of data exclusivity is to
provide an economic incentive for research. However, governments
have other economic incentives for investments in research. If a
company is responsible for an invention, it will receive a
patent, giving the firm exclusive rights for 20 years or more.
Firms may also receive exclusive marketing rights under the US or
EU orphan drug laws. In the US the orphan drug act provides
seven years of marketing exclusivity. The EU orphan drug
legislation will provide for 10 years of marketing exclusivity.
Thus, in cases where the firm has an invention or when the
product is for a relatively small number of patients, the EU and
the US already provide for substantial periods of marketing
exclusivity. Thus, the primary importance of the data
exclusivity provisions in US and EU law are to provide marketing
exclusivity in cases where the firm is not the inventor and the
market is large.
The data exclusivity provisions are part of a growing class of
sui generis forms of protection that are designed to protect
investment, rather than innovation. Because data exclusivity
isn't a reward for invention (which is already rewarded by
patents) but rather a protection of investment, there should be
greater transparency of the basis for the protection and a
reasonable relationship between the investment and the
protection.
3. The Taxol/Paclitaxel case
Critics of the current system say US and EU provisions on data
exclusivity are excessive. One example is the case of Taxol, the
Bristol-Myers Squibb (BMS) version of Paclitaxel, a drug used to
treat breast, ovarian and lung cancer, Kaposi sarcoma and other
illnesses.
Paclitaxel was discovered and initially developed by the US NIH.
Government scientists began a program to screen 35,000 plant
species for anticancer activity in 1958. By 1963, extracts of
the Pacific Yew tree were examined, and found to have
antileukemic and antitumor activity. In 1971, paclitaxel was
identified as an active ingredient, and became the subject of
further NIH funded research. In 1983, the US government began a
series of human use clinical trials using paclitaxel. By 1988
the US government documented paclitaxel's antitumor activity for
ovarian cancer. The government subsequently sponsored clinical
trials for many types of cancer. By 1990 Paclitaxel had entered
Phase III clinical trials for ovarian cancer, the last stage
before FDA approval.
It was not until 1991 that the US government signed a contract
with BMS. The contract gave the company the worldwide exclusive
rights to use US government sponsored research data in regulatory
proceedings. In 1992 BMS asked for and received US FDA marketing
approval for Taxol.
BMS's contribution to the development of Taxol was minor. The
company's only role in the initial development period was to
assume responsibility for the production of the drug, and this
obligation began less than two years before FDA approval.
BMS used the government's own contractor to manufacture
Paclitaxel. BMS did not sponsor any of the clinical trials used
for Taxol approval.
BMS paid no royalties for obtaining the exclusive rights to
Taxol. Despite signing a reasonable pricing clause with the NIH,
BMS announced a wholesale price that was about 20 times its costs
of bulk production. Taxol was an immediate commercial success.
In the several years that Taxol has been on the market, it has
generated billions of dollars for BMS, including about $1.5
billion last year alone. Taxol is currently being use for the
treatment of ovarian, breast and non-small cell lung cancer, and
Kaposi Sarcoma.
There was no patent for the discovery of Paclitaxel itself or its
antitumor activity against cancer. But the health registration
data exclusivity provisions in US and EU law created a barrier to
entry. Generic companies could not introduce products that
relied upon the NIH sponsored clinical trials, and had to create
their own clinical trials.
There were also other barriers to entry. BMS used the US orphan
drug act to prevent US generic firms from obtaining FDA approval
for Kaposi Sarcoma. BMS also obtained the rights to NIH patents
on certain methods of administering paclitaxel (doses), which it
has used as the basis for expensive patent litigation against
would be entrants. BMS also purchased a Dutch firm that had
conducted its own EU Paclitaxel trials, and engaged in other
efforts to discourage entry.
In 1997, BMS lobbied the US Congress to extend the US period of
data exclusivity from 5 to 10 years. To gain support for the
proposal, BMS offered to pay a 3 percent royalty to NIH, and
promised to reinvest another 3 percent of its revenues in
research. Critics of the proposal said the longer period of data
exclusivity would harm consumers, who were already paying high
prices for a drug that was initially developed by the government.
The legislative proposals failed, but BMS was able to block US
introduction of a generic product for 30 months, by claiming the
generic product would infringe upon patents covering the methods
of administering Paclitaxel.
4. The Consequences of the Taxol monopoly.
In the 1997 US debate over Taxol, economist Richard P. Rozek
estimated that a two year delay in the introduction of generic
versions of Paclitaxel would cost US consumers $1.27 billion.
(Costs to the U.S. Health Care System of Extending Marketing
Exclusivity for Taxol, N.E.R.A., Washington, DC, March 1997). As
noted, BMS charges about 20 times its costs of bulk production
for Taxol. The product is so expensive that its use is
restricted under formularies in the US and in Europe. In the UK
access to Taxol is a subject of controversy and national debate.
5. WTO rules regarding protection of undisclosed information.
BMS has asked the US government to object to generic Paclitaxel
registrations in several countries, including the Netherlands,
the EU, Australia, South Africa, Argentina, New Zealand and
Turkey. These objections are typically framed in terms of
WTO/TRIPS provisions regarding undisclosed information.
Article 39.3 of the TRIPS says that governments,
when requiring, as a condition of approving the
marketing of pharmaceutical or of agricultural chemical
products 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.
The IFPMA, PhRMA and other large pharmaceutical companies are
asking that this provision be interpreted to require 10 years of
data exclusivity. In some cases, the US government has sought
data exclusivity periods internationally that are longer than the
5 years that are required by US law.
Article 39.3 asks that "undisclosed test or other data" that
involves "considerable effort" be protected from unfair
commercial use, but it doesn't say how this should be done.
The US government has an aggressive interpretation of Article
39.3, arguing in several countries that it requires every country
to protect the data disclosed by any government. Moreover, the
US has argued it even violates the TRIPS for countries to rely
upon US FDA actions as evidence of safety and efficacy. The text
of Article 39.3 appears to be narrower, and this will likely be
addressed by the WTO later.
It is the view of TACD that the Article 39.3 of the TRIPS should
not be interpreted to require unreasonable barriers to the
introduction of generic drugs. Since research that is inventive
is already rewarded by patent, and products with small markets
are protected by orphan drug marketing exclusivity, the important
cases are those where the products have large markets and for
which the company was not the inventor. In many cases, these are
products, like Taxol, that have benefited by government funded
research.
If the purpose of the TRIPS is to protect "considerable effort,"
the amount of protection should be reasonably related to the
costs of the data collection.
Governments should avoid the abuses of the Taxol case, where
there was no relationship between the period of data exclusivity,
the company's investment in the development of the drug, and the
profitability of the Taxol monopoly.
Article 39.3 protections should be based upon financial
disclosures. Moreover, a system of cost sharing or compulsory
licensing of the data rights should be included to protect the
public from excessive exclusivity provisions, to avoid situations
such as the Taxol case.
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Appendix A
WTO/TRIPS Provisions
SECTION 7: PROTECTION OF UNDISCLOSED INFORMATION
Article 39
1. In the course of ensuring effective protection against
unfair competition as provided in Article 10bis of the Paris
Convention (1967), Members shall protect undisclosed information
in accordance with paragraph 2 and data submitted to governments
or governmental agencies in accordance with paragraph 3.
2. Natural and legal persons shall have the possibility of
preventing information lawfully within their control from being
disclosed to, acquired by, or used by others without their
consent in a manner contrary to honest commercial practices (See
footnote 10) so long as such information:
(a) is secret in the sense that it is not, as a body or in
the precise configuration and assembly of its components,
generally known among or readily accessible to persons within the
circles that normally deal with the kind of information in
question;
(b) has commercial value because it is secret; and
(c) has been subject to reasonable steps under the
circumstances, by the person lawfully in control of the
information, to keep it secret.
3. Members, when requiring, as a condition of approving the
marketing of pharmaceutical or of agricultural chemical products
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. 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.
Footnote: 10 For the purpose of this provision, "a manner
contrary to honest commercial practices" shall mean at least
practices such as breach of contract, breach of confidence and
inducement to breach, and includes the acquisition of undisclosed
information by third parties who knew, or were grossly negligent
in failing to know, that such practices were involved in the
acquisition.
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Appendix B
1999 Berlin Communique, TABD
http://www.tabd.org/recomb/berlincomm.html\]
PHARMACEUTICALS: Data Exclusivity
The pharmaceutical industry supports a harmonised EU-US
approach on data exclusivity to ensure access to
medicines and stimulate innovation, but recognises that
views within the industry vary.
The generic sector supports a harmonised US and EU
approach for the protection of safety and efficacy
data. It recommends a period of up to five years for
new chemical entities only. The generic sector is also
concerned that the introduction of data exclusivity
laws in countries joining the EU will have negative
effects on the local industries in those countries and
therefore calls for transitional provisions in this
area.
The innovative sector is united in supporting a
harmonised US and EU 10-year period of data exclusivity
for NCE's as well as for additional safety and efficacy
data, as this would bring economics and patient benefit
by stimulating the further and efficient development of
medicines. It is also crucial to ensure that countries
seeking to join the EU as new members equalise data
exclusivity for pharmaceutical products that were
marketed before the change in their laws.
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Appendix C
TABD Mid Year Report
May 10, 1999
Washington, D.C.
Technical Annex
http://www.tabd.org/about/MYMTechnicalAnnex.html
PHARMACEUTICALS: Data Exclusivity
Recommendation:
The U.S. and the EU currently provide different periods of
protection for the safety and efficacy data that companies
generate at great expense to support the approval of new products
by regulatory authorities. Within the EU, the protected period
varies with 10 years provided for products approved under the
centralized EU procedure and 6 of 10 years for all other
products. In the U.S., the protection afforded varies with 5
years granted for new chemical entities and 3 years for new
indications. Countries seeking to join the EU as new members, in
addition to providing strong patent protection, should offer data
exclusivity for new products as well as for products that were on
the market at the time of accession.
Industry?s 1998 recommendations were to seek a harmonized
protection period within the EU and to harmonize the U.S. and EU
periods of data protection (exclusivity) to ten years. Moreover,
countries seeking to join the EU should equalize data protection
for pharmaceutical products that were marketed before the change
in their laws.
Action Taken and State of Play:
At the 1998 TABD Conference, both U.S. and EU authorities
recognized the concern over lack of transatlantic harmonization
with respect to the period of data protection. The Commission has
also recognized the need to provide data protection for
pharmaceutical products, and has expressed sympathy for a full
and complete harmonization up to a 10-year period within the EU.
However, neither side has taken any affirmative action in this
regard.
Outlook/New Issues:
It appears unlikely that U.S. legislation will be introduced in
the near future. There will be an opportunity to propose
organization through legislation within the EU in the year 2000.
As an independent intellectual property right (separate from
other protections such as patents) industry is concerned that any
new Member States in the CEE accession fully implement EU law
regarding this right as part of their obligation to adhere to
Community law. Because the Member States differ in the periods of
data exclusivity they offer harmonization of ten years? should be
accomplished prior to accession of new Member States.
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Appendix D
21 U.S.C. Sec. 355(c)(3)(D)(ii)
(ii) If an application submitted under subsection (b) of
this section for a drug, no active ingredient (including any
ester or salt of the active ingredient) of which has been
approved in any other application under subsection (b) of this
section, is approved after September 24, 1984, no application
which refers to the drug for which the subsection (b) application
was submitted and for which the investigations described in
clause (A) of subsection (b)(1) of this section and relied upon
by the applicant for approval of the application were not
conducted by or for the applicant and for which the applicant has
not obtained a right of reference or use from the person by or
for whom the investigations were conducted may be submitted under
subsection (b) of this section before the expiration of five
years from the date of the approval of the application under
subsection (b) of this section, except that such an application
may be submitted under subsection (b) of this section after the
expiration of four years from the date of the approval of the
subsection (b) application if it contains a certification of
patent invalidity or noninfringement described in clause (iv) of
subsection (b)(2)(A) of this section. The approval of such an
application shall be made effective in accordance with this
paragraph except that, if an action for patent infringement is
commenced during the one-year period beginning forty-eight months
after the date of the approval of the subsection (b) application,
the thirty-month period referred to in subparagraph (C) shall be
extended by such amount of time (if any) which is required for
seven and one-half years to have elapsed from the date of
approval of the subsection (b) application.
<----------------------------------------------------------->
Attachment E
Excerpt from
MSF, Health Action International,
Consumer Project on Technology
An open letter to the WTO Member States
November 8, 1999
http://www.msf.org/advocacy/accessmed/wto/reports/1999/letter/
5) Avoid restrictive and anti-competitive interpretations of
country obligations under Article 39 of the TRIPS, concerning
health registration data.
Article 39 of the TRIPS is a little debated and little understood
provision that requires WTO members to protect health
registration data from disclosure or unfair commercial use. Some
have argued that if a country requires the use of scientific data
to register a pharmaceutical product for sale, the TRIPS requires
countries to provide some level of exclusivity for that data,
including restrictions on the ability to rely upon the data to
register a competing product. In bilateral trade actions, the US
government has argued that countries are obligated by the TRIPS
to prevent generic drug companies from even relying upon
published scientific papers or foreign government regulatory
approvals, without permission from the "owners" of the data that
the papers or approvals were based upon.
In the absence of data exclusivity, generic drugs or drugs
produced under a compulsory license can be introduced into the
market on the basis of simple bioequivalence tests, without
having to replicate time consuming and expensive clinical trials
that are used to establish the efficacy and safety of the
products. But if countries are required by the WTO to adopt
excessive protection for data exclusivity, there will be problems
with providing marketing authorization for generic products and
drugs produced under a compulsory license using existing
registration data.
At present, several countries, including the US and the members
of the EU, provide several years of data exclusivity, for
purposes of regulatory approval of pharmaceuticals. There are
proposals from public health groups to replace current US and EU
rules on data exclusivity with new rules that curb abuses such as
the Taxol (Paclitaxel) case III . Some proposals would include
requirements that companies make public disclosures of the actual
costs of clinical trials and other data they seek to protect from
"unfair commercial use," and that protections be reasonably
related to the actual investment costs.
The actual impact of Article 39 on competition and access to
drugs is quite unclear, because the language in the Article is
not precise regarding country obligations. The WTO
interpretations of country obligations will be critical.
There is a need to examine the empirical evidence and economic
analysis used to support various national policies regarding
exclusive rights to health registration data, as well as the
historical justification given for such policies. The WHO should
provide the WTO with a report on the least trade restrictive
policies with regard to protection of such data, and accept
public comment on anti-competitive aspects of current national
regimes, including the 10 year period used in the European Union,
that was initially introduced to compensate for the lack of
patent protection in Spain and Portugal. By providing the WTO
with a communication on the need to avoid excessive and
anti-competitive levels of data exclusivity, countries can help
set a pro-public health agenda on this issue.
James Love, Consumer Project on Technology
P.O. Box 19367 | http://www.cptech.org
Washington, DC 20036 | love@cptech.org
Voice 202/387-8030 | Fax 202/234-5176