TRIPS Flexibilities and National Implementation (2) Protection of Test Data Submitted to Regulatory Authorities


TRIPS Flexibilities and National Implementation

(2) Protection of Test Data Submitted to Regulatory Authorities

ANOTHER EXAMPLE OF TRIPS flexibilities relates to Article 39.3 concerning the protection of undisclosed test data submitted as a condition for obtaining marketing approvals of pharmaceutical or agricultural chemical products. This chapter examines what kind of policy options the ambiguous wording of Article 39.3 offers.


A Wording

The TRIPS Agreement contains certain obligations concerning ‘undisclosed information’ which cover trade secrets (Article 39.2) and test data submitted to regulatory authorities for market authorisation (Article 39.3). Article 39.3 of the TRIPS Agreement reads:

[WTO] 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. (emphasis added)

Normally, test data are submitted to regulatory authorities for proving the safety, efficacy and quality of the chemical products to be marketed. Within this regulatory context, and from the wording of Article 39.3 TRIPS, the reason the data submitted to the regulatory authority must be protected seems to be that the creation of such undisclosed data required ‘considerable efforts’ to demonstrate that the product ‘utilising new chemical entities’ is safe, efficacious and of good quality and therefore they have commercial value. Article 39.3 uses the vague term of requiring Member governments to ‘protect such data against unfair commercial use’.

Article 10 bis of the Paris Convention (1967), as referred to in Article 39.11 of the TRIPS Agreement, provides a context for interpreting the meaning of ‘unfair commercial use’ in Article 39.3. Article 10 bis of the Paris Convention stipulates a broad principle that any act of competition ‘contrary to honest practices’ constitutes an act of ‘unfair competition’.2 It provides that:

(1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition.

(2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.

(3) The following in particular shall be prohibited:

(i) all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor;

(ii) false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor;

(iii) indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.

According to Ladas, the law of unfair competition aims at protecting pecuniary interests and business relationships acquired by ‘lawful efforts, research, labour, investment or by conducting lawful business’. He further explains that the law of unfair competition ‘forms the background and constitutes the general principle of which the laws protecting the various branches of industrial property are only special aspects or particular applications.’3 The law of unfair competition is applied normally by courts involving civil tort principles, but could be enforced under a special unfair competition law, or under a variety of laws, including penal laws.4

Article 39.3, by contrast, clearly requires the government to protect submitted data against unfair commercial use in a regulatory context of authorising marketing pharmaceutical or agricultural chemical products. In concrete terms, it refers to the government’s obligation to prevent leakage of such data from regulatory bodies to competitors, as has been alleged to occur in a number of developing countries.

During the Uruguay Round, the US negotiators seem to have understood that ‘protection against unfair commercial use’ included the regulators not relying (non-reliance) on the originators’ data for examining the second and subsequent applicants for drug approval, for a fixed period of time (ie, market exclusivity- chapter 4). Thus, they agreed to drop the non-reliance language, because they viewed the phrase as no more than ‘belt and suspenders’.5 Contrary to the expectations of the US, however, the wording of Article 39.3 does not imply a ‘non-reliance’ principle of the regulator. Instead, Article 39.3 left many questions unanswered and allowed a wide scope of flexibilities in interpreting and implementing this provision.

Article 39.3 does not oblige Members to observe data exclusivity in the sense accepted by developed countries (ie, data created by the originator for the purpose of receiving marketing approval are to remain exclusive thereafter for a given period of years). However, Members are required to prevent leakage to competitors of data submitted to the regulatory authorities. Article 39.3 does not limit the term of protection, at least not expressly, and therefore, it is possible to interpret from this provision that authorities are required to protect regulatory data for ‘as long as a possibility of unfair commercial use of this data exists’.6

As Taubman points out, the Paris conception of ‘unfair competition’ is more strongly rooted in business ethics and honest practices than the typical IP law aimed at preventing free-riding or unjust enrichment.7

From Article 1.2 of the TRIPS Agreement, ‘undisclosed information’ is part of intellectual property covered under the Agreement, as it says: ‘for the purposes of this Agreement, the term intellectual property refers to all categories of intellectual property that are the subject of Sections 1 through 7 of Part II.’ This comprises Article 39, the single article within Section 7 of the TRIPS Agreement. According to TRIPS Article 2.1, the Agreement incorporates certain parts of ‘intellectual property conventions’, including Article 10 bis of the Paris Convention (1967).8 Under the TRIPS Agreement, therefore, that part of data submitted to regulatory authorities, as a condition of marketing approval of pharmaceutical or agricultural chemical products, is treated as a category of intellectual property, if ‘considerable efforts’ are involved in the creation of data.

B National Practices

As a result of the ‘constructive ambiguities’ achieved over the unbridgeable rift among the Uruguay Round negotiators, however, the general principle of protection underlying Article 39.3, unfortunately, is not readily apparent. Furthermore, national practices diverge radically. In general, developed countries’ medicinal law ensures, for drug approval, the safety and efficacy of the drugs to be marketed, and regulates the entry of copy products, safeguarding at the same time the investment and creativity used for the research of the applicant. These laws delineate conditions approving new drugs which are not limited to new chemical entities, and regulate the entry of competitor products equivalent to originator products whose safety and efficacy (generally called ‘generic medicines’ which is not necessarily a legal concept under medicinal law – see chapter 9) are approved. In these countries, exclusivity of a fixed term is given to originator companies on the basis of public policy grounds, evaluating and balancing the cost of clinical data generation including that of failures, and the social benefit of generic entry. In these countries also, the regulatory authority may rely on the originator’s data for reference, only after the period of exclusivity for the originator product.

In the US, section 5059 of the United States Food, Drug and Cosmetics Act provides protection (market exclusivity) of five years10 to those drugs of which ‘no active ingredient (including any ester or salt of the active ingredient) has been approved in any other application under subsection (b)’, unless an action for patent infringement is commenced during the one-year period beginning four years after the date of the approval.11 Regulatory authorities require first-time applicants to submit a data package to prove the safety, efficacy, and toxicity of medicinal products, for marketing authorisation of pharmaceutical products.

In the EU,12 the current system of data exclusivity (eight years) and market exclusivity (two years) was introduced under Articles 6 and 10 of Directive 2004/27/EC.13 In Japan, the application for marketing approval of competitive products is prohibited for eight years on the grounds that the regulatory authorities should, after marketing the original product, re-examine the efficacy, safety and side-effects of the medicines in question during this period of de facto data exclusivity. After eight years of exclusivity, the authorities can examine the application of competitive products but cannot authorise their entry for another year. In Japan, therefore, the post-marketing surveillance justifies the non-entry of generic medicines, but, theoretically, such surveillance relating to the drug efficacy, safety and side-effects could be achieved with the existence of corresponding generic medicines on the market.

In the EU, data exclusivity for biosimilars14 is identical to small molecule medicines. In Japan, the post-marketing surveillance period for biologics, which is identical to that of small molecule medicines, offers protection of exclusivity for the reference products. For the entry of follow-on biologics (generic versions of biotechnology medicines), the US Biologics Price Competition and Innovation Act of 200915 provides market exclusivity of 12 years. No application for approval of follow-on biologics can be submitted during the four years from the date on which the original biologics were approved by the FDA.