Data exclusivity in India: a new tool for innovators?

India is one of the world’s largest suppliers of generic drugs, with its plants estimated to manufacture 40% of all generic medicines in the US and 90% of the world’s generic HIV/AIDS medicines. But its approach to intellectual property has sometimes riled innovator companies—and in recent years, businesses including Gilead and Novartis been refused Indian patents for products that are IP-protected in other countries.

Meanwhile, Bayer has been engaged in a long battle to revoke a compulsory licence that lets Indian generic drug makers make and sell the patent-protected cancer drug Nexavar (sorafenib).

Now, big pharma companies are looking for alternative ways to protect their products in the subcontinent—through data exclusivity.

Relationships between India and the US are deepening. In January US President Barack Obama made his second state visit to India since Prime Minister Narendra Modi’s appointment in May 2014. The visit sparked speculation in India’s pharmaceutical industry that there could be changes to the IP regime that favour drug makers from the US.

In India, the bar for new inventions, or new chemical entities, is higher than in other jurisdictions. Many drugs have been refused patents because of section 3(d) of the country’s patent law, which states that an invention that is a new form of a known substance but does not result in increased efficacy of the substance is not patentable.

Most recently, Gilead’s application to patent hepatitis C drug Sovaldi, a drug that some have claimed has a 90% cure rate, was rejected by the Indian Patent Office, which found that some of the patent’s claims were not allowed under section 3(d).

With such a high bar to clear to secure certain patent protection, data exclusivity could be an option. Data exclusivity grants pharmacompanies exclusive rights to their clinical data and stops regulators from approving generic drugs that have made use of the data.

In the US, pharma companies enjoy five years of data exclusivity for new molecules, while the EU’s standard is eight years.

Data protection exists to protect such data from unfair commercial use, and is another form of protection for innovator companies, which bear the risk and expense of developing new drugs. However, it throws up walls for generic companies, like those in India, which supply millions of people in developing nations with affordable drugs.

Adverse effects

At the moment, there is no statutory protection for data exclusivity in India.

Vikrant Rana, managing partner at law firm SS Rana in New Delhi, says that the introduction of data exclusivity for pharmaceuticals would delay the entry of generic drugs to the Indian market.

“The generic pharma industry in India is of the view that inclusion of data exclusivity shall introduce an adverse pricing of drugs,” he adds.

So far, such a change to India’s IP regime has not been confirmed, and the first draft of India’s National IP Rights Policy, published in December, identified the protection of “undisclosed information not extending to data exclusivity” as an important area of research of “future policy development”, implying  data exclusivity provisions are not being considered.

“When Ambassador Froman makes a statement to the Senate committee under oath, the Indian government needs to clarify what these commitments are.”

However, details emerging from trade meetings between the countries suggest that change may be on the cards.

Interpreting article 39.3

In its draft Special 301 submission to the US Trade Representative, published in February, the Pharmaceutical Research and Manufacturers of America (PhRMA) flagged up India’s “lack of regulatory data protection”.

PhRMA said that the Indian regulatory authority’s reliance on innovators’ test data when approving generic drugs results in “unfair commercial use” and therefore violates the World Trade Organization’s (WTO) TRIPS Agreement.

Whether India is required by law to change its IP policy to recognise data exclusivity depends on its interpretation of article 39.3 of the TRIPS Agreement.

Article 39.3 states that WTO members should protect test data against unfair commercial use and disclosure, although the provision leaves ample room for interpretation. Indeed, the TRIPS Agreement allows countries a degree of flexibility in interpreting the provisions, depending on the country’s developmental and IP needs.

“Countries have a certain amount of freedom in modifying their regulations and, various options exist for them in formulating their national legislation to ensure a proper balance between the goal of providing incentives for future inventions of new drugs and the goal of affordable access to existing medicines,” the WTO says.

WTO member states must also consider the Doha Declaration, which states that the TRIPS Agreement should not prevent members from taking measures to protect public health.

In India, the issue of how to deal with article 39.3 has come to the table before. In 2004 a government committee was established with the goal of deciding how to make article 39.3 work in the country’s IP regime.

The committee presented its opinion in 2007 but since then, says Ashwin Julka, managing partner of law firm Remfry & Sagar in New Delhi, there doesn’t seem to have been any official discussion of the article.

Even the draft national IP rights policy, while identifying data exclusivity, does not address the issue, he adds.

Unrest

Last November India’s Minister of Commerce and Industry Nirmala Sitharaman met US Trade Representative (USTR) Michael Froman in New Delhi for a meeting on the India-US Trade Policy Forum.

Sitharaman and Froman expressed the desire to “enhance bilateral trade” to promote economic growth in India and the US, discussing a range of subjects including agriculture, manufacturing, and IP.

In their joint statement, they said that “India and the US recognise the importance of trade secrets protection for attracting investment” and “agree to exchange information on best legal practices in this area”.

While there was no direct mention of data exclusivity, some jurisdictions have introduced trade secrets as a form of protection to comply with article 39.3.

Although few details emerged from the meeting about IP, Froman was reported in The Hindu Business Line as saying to Congress that discussions between Obama and Modi had helped “secure commitments from India in the 2014 Trade Policy Forum on a broad range of IP issues of concern to the US and its stakeholders”.

This worried DG Shah, secretary general of the Indian Pharmaceutical Alliance, who said in the same report: “We are at a loss to understand, and are unaware about, what has been committed.

“When Ambassador Froman makes a statement to the Senate committee under oath, the Indian government needs to clarify what these commitments are.”

A coup for Indian innovators?

Julka says that while data exclusivity would have a negative impact on India’s largely “generic-centric” pharma industry, Indian innovator drug companies might benefit, as they’ll have another line of defence for their original research molecules.

“Data exclusivity in India may contribute to the growth of an innovator company irrespective of whether the company is home-grown or a multinational,” Julka says.

He adds, however, that a very small percentage of drug companies in India are engaged in research and development (R&D), and so the overall effect of data exclusivity is not “very encouraging for the Indian pharma industry”.

Julka continues: “In the long term, the implementation of article 39.3 may encourage the smaller players in the pharma industry to invest in R&D, but the downside of this will be seen as an increase in the prices of medicine.”

Although relations between India and the US are strengthening under Modi’s leadership, with no mention on the Trade Policy Forum about possible changes to data exclusivity, perhaps India’s generic drug makers can sit tight for now.

Julka continues: “The Commerce and Industry Minister under Prime Minister Modi’s leadership has not given any such indication regarding data exclusivity becoming a statutory requirement.”

Publication of the USTR’s Special 301 Report later this year might provide a clearer picture of what is to come.

For the time being however, it appears Modi is in a difficult position—he wants to develop his country’s economy by enhancing relationships with trade partners, without dismantling a system that manufactures and distributes generic drugs to those in need.