TRIPS Article 39.3 Does not require Data Exclusivity Provisions: A critical issue for access to medicines and Incentives to encourage medicines for paediatric use: Why Data Exclusivity should not be used
EGA Position
 

A) TRIPS Article 39.3 Does not require Data Exclusivity Provisions: A critical
issue for access to medicines



1. Summary



Article 39.3 obliges WTO Member States to protect clinical data made for
registration purposes against acts of unfair competition. Certain
pharmaceutical companies are now claiming that Article 39.3 requires the
introduction of data exclusivity provisions as operated in the EU or USA.



However, exclusivity and protection from acts of unfair competition are not
the same and should not be confused.



Data exclusivity prevents the regulatory authority from making reference to the
original clinical data for a set period, during which no authorisation of
generic medicines may take place. Data exclusivity, therefore, provides a form
of market exclusivity. However, what Article 39.3 requires is a form of data
protection so as to prevent unfair commercial use of the data by third parties.
The intention of the Article 39.3 is not to create a form of market protection.



The reason that certain companies are seeking an interpretation of Article 39.3
as meaning data exclusivity is to gain market protection for pharmaceutical
products that are not covered by product patents. Such an interpretation would
of course create a major barrier to access to medicines in many countries.
Moreover, since Article 39 has no time limitation, the effect of such an
interpretation would be to provide an unlimited market protection against
generic applications for an un-patented product. This is clearly not the
intention of TRIPS.



The interpretation that Article 39.3 requires data exclusivity is clearly beyond
the agreed terms of TRIPS. It also undermines the basic objective of the
Agreement as outlined in Article 7, i.e. to seek the enforcement of intellectual
property in a manner conducive to social and economic welfare, and to a balance
of rights and obligations.



In addition, arguments have been made that data exclusivity laws preventing the
exclusivity periods from extending beyond the period of a patent (as are
operated in 3 EU Member States) are incompatible with TRIPS. However, since
Article 39.3 does not relate to data exclusivity, there is in effect no impact
of TRIPS on such laws. This is important for several Accession countries, which
are seeking to introduce such linkage laws upon accession to the EU.



2. The Purpose of TRIPS Article 39.3 - preventing unfair competition



Article 39.3 cannot be viewed in isolation from the whole of TRIPS Article 39
which is devoted to effective protection against unfair competition as provided
in Article 10bis of the Paris Convention.



In order to understand the nature of TRIPS Article 39.3, the difference between
the repression of unfair competition and other forms of intellectual property
protection should be understood. This difference is made clear by WIPO when it
states:



Industrial property deals principally with the protection of inventions, marks
(trademarks and service marks) and industrial designs, and the repression of
unfair competition. The three subjects first mentioned have certain features in
common inasmuch as protection is granted for inventions, marks and industrial
designs in the form of exclusive rights of exploitation. The repression of
unfair competition is not concerned with exclusive rights, but is directed
against acts of competition contrary to honest practices in industrial or
commercial matters, for example, in relation to undisclosed information (trade
secrets).



A clear definition of unfair competition, and the examples of unfair competition,
is provided by WIPO.

The repression of unfair competition is directed against acts or practices, in
the course of trade or business, that are contrary to honest practices,
including, in particular:



Acts which may cause confusion with the products or services, or the industrial
or commercial activities, of an enterprise;



False allegations which may discredit the products or services, or the
industrial or commercial activities, of an enterprise;



Indications or allegations which may mislead the public, in particular as to the
manufacturing process of a product or as to the quality, quantity or other
characteristics of products or services;



Acts in respect of unlawful acquisition, disclosure or use of trade secrets;



Acts causing a dilution or other damage to the distinctive power of another's
mark or taking undue advantage of the goodwill or reputation of another's
enterprise.



3. Article 39.3 - confidentiality of data in relation to generic applications



Clearly, no parts of Article 39, including Article 39.3, create a property in
information nor create exclusive rights of any kind, as is the case with EU
and US data exclusivity laws. What Article 39.3 requires is that the data
submitted is either protected against disclosure or protected against unfair
commercial use.



The last paragraph of Article 39.3 is quite clear: 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.



Consequently, Article 39.3 cannot prevent a regulatory authority from using/relying
on the data of a registered product in order to assess and register other
similar products - so long as this information is not disclosed to the third
party e.g. a generic manufacturer.



The difference between data exclusivity and data protection can in fact be
seen in the regulatory practices of the EU. The EU operates 6 or 10-year data
exclusivity periods during which the regulatory authority may not rely on the
originator's data. However, after expiry of this period, during which no generic
applications are assessed, commercially sensitive data still remains undisclosed
to third parities.



The differences are also well argued by the Hungarian Patent Office. Mihály
Ficsor, Head of Legal and International Department states that:

It has to be taken into account that the whole Article [Article39] is devoted
to effective protection against unfair competition as provided in Article 10bis
of the Paris Convention. Therefore Article 39.3 of the TRIPS Agreement cannot be
interpreted in such a way as to mean that Members are required to establish a
special legal regime for the protection of undisclosed tests or other data
submitted for the regulatory approval of pharmaceutical products. This is
clearly only an option open to Members. Nevertheless, Members are no less free
to choose other means of ensuring that such data be protected against unfair
commercial use. Those means may include the application of general rules against
unfair competition, in particular those protecting trade secrets (undisclosed
information). This interpretation is further justified by the reference Article
39.1 of the TRIPS Agreement makes to Article 10bis of the Paris Convention.
Hungary has opted for a solution of this kind by relying on Article 4 of the
Hungarian Competition Act (ACT NO LVII of 1996 on the Prohibition of Unfair
Market Practices and the Restriction of Competition). The provisions the Article
comply, in full, with all the requirements following from Article 39 of the
TRIPS Agreement.



The point is also stressed by Professor Carlos Correa of the University of
Buenos Aires, who has assisted the WHO in the area of health perspectives on
TRIPS Agreement. Professor Correa wrote in 1999:

The protection conferred to data submitted for the marketing approval of the
product (in accordance with Article 39.3) of the TRIPS Agreement has been
another problematic issue in some countries. The Agreement does not oblige to
recognize any kind of exclusivity on data submitted for approval, since the
protection should be granted under the discipline of unfair competition. Once
data on a new drug have been submitted, their use by a national health authority
to study and approve a subsequent application on the basis of similarity, does
not entail a violation of the confidentiality obligation under the Agreement.



Moreover, it must be stressed that clinical information which is often claimed
to be protected under both art. 39.3 and data exclusivity does not in fact meet
the basic conditions indicated in Article 39. It is important to note that
Article 39.2 sets the conditions/criteria to qualify/define certain information
as undisclosed information. Point (a) clearly states that confidential
information is secret in the sense that it is not ... generally known or
readily accessible to persons. However, the information and data about the
pharmaceutical and therapeutic property of certain pharmaceutical products are
widely published; thus they represent part of public knowledge. Therefore, it
cannot be claimed that when a generic producer shows that their product is
bioequivalent to the originator, he has used undisclosed information. To the
contrary, generic producers only use the generally known information and do not
use the protected information of the originator.



4. Previous statements by the European Commission and holders of
pharmaceutical patents show that Article 39.3 is not Data Exclusivity.



It is important to note that documentation from the Transatlantic Business
Dialogue held in Berlin at the end of 1999 also shows that Article 39.3 does not
mean data exclusivity.



The European Commission position paper on Intellectual Property under the
heading Data Protection (note not Data Exclusivity) states that:

The TRIPS Agreement requires countries to protect such data against unfair
commercial use (emphasis added).



Significantly during these discussions the European and US originator
pharmaceutical industry are cited as calling for:

a common position between the EU and the USA that

TRIPS Article 39.3. means non-reliance by governments on the originator's data
for a fixed time i.e. 10 years.



Similarly, The international Federation of Pharmaceutical Manufacturers
Associations (IFPMA) in its own paper Industry Objectives for the WTO
Millennium Round of October 1999 states that

Should the TRIPS agreement be discussed in this Round, the industry would
propose that the text be clarified and strengthened in several ways:

A Ten Year Right of Data Exclusivity should be instituted for the propriety and
costly business information, such as the data files compiled by the
pharmaceutical companies for application for drug regulatory approval.



In other words, the EU and US originator industry itself recognizes that Article
39.3 does not at present provide for data exclusivity and are asking for TRIPS
to be changed. The European Commission indicated during the TABD that it
supports the overall recommendation of the originator industry to enhance the
protection of undisclosed test and other data and indicated that it was prepared
to raise this issue in the future Millennium Round, i.e. that it would
constitute part of new negotiations under TRIPS.



5. EU Accession and Data Exclusivity



Countries seeking EU accession will of course be required to introduce data
exclusivity through the adoption of Council Directive 65/65/EEC as amended by
Directive 87/21/EEC.



However, as is well known, there is no harmonised data protection period and
Member States operate one of three periods:

10 year data exclusivity period

6 year data exclusivity period

6 year data exclusivity which does not extend beyond patent protection



It should be stressed that EU data exclusivity only covers the first
authorization of a medicinal product and cannot be given for additional
indications, strengths or dosages.

These provisions only need to be effective as from date of accession of a new
Member.



6. Linking Data Exclusivity to Patent Life is compatible with TRIPS since
Article 39.3 is not Data Exclusivity



Finally, arguments have also been raised that linking data exclusivity to patent
life - as is provided for under EU law - is in breach of TRIPS since they are
two separate rights and one right should not be used to limit another. However,
linking data exclusivity to patents is possible under TRIPS because, as this
paper has demonstrated, data exclusivity itself is not provided for in TRIPS.
Moreover, the linkage does not limit the rights of the patent but only the
length of the data exclusivity period. Consequently, the three EU countries,
which operate the linkage (i.e. Greece, Portugal and Spain), and the Accession
countries in Europe, which have indicated their intention to have this link upon
EU accession, are completely in line with their TRIPS obligations.



7. Conclusion



It is clear that TRIPS Article 39.3 does not require the implementation of EU/US
type data exclusivity provisions for pharmaceutical products. The purposes of
seeking to interpret Article 39.3 as meaning data exclusivity - as opposed to
meaning protecting data against unfair competition - is an attempt to extend
exclusive marketing rights to pharmaceutical products which are not in fact
covered by product patents in TRIPS. The proposed interpretation is therefore
beyond the agreed terms of TRIPS and would, if applied in many countries, have a
major negative impact on access to health and the development of local generic
pharmaceutical companies. In addition Article 39.3, because it does not relate
to data exclusivity, does not impact on existing EU law, which allows EU Member
States to prevent data exclusivity from going beyond the patent period.





B) Incentives to encourage medicines for paediatric use: Why Data Exclusivity
should not be used



1. Summary



The EGA welcomes the resolution on paediatric medicinal products by the Council
of Health Ministers of 14 December 2000.



Incentives to foster research and clinical trials for medicines and indications
for children should be of financial or regulatory nature. However, the EGA is
concerned that data exclusivity provisions might also be proposed as a measure
to encourage paediatric medicines. The draft memorandum on paediatric drugs by
the French EU Presidency mentioned incentives including an extension of the
period of protection for medicinal products as well as commercial exclusivity
for the first form that was the subject of clinical trials or for the first
paediatric formulation. The document further stated that these are to be seen
in parallel to a recent legislation introduced in the USA.



Whilst incentives based on financial aid for development, exemption fees for
registration and fiscal measures to encourage paediatric trials should be
welcomed, policies that provide further market protection for pharmaceuticals
must be carefully assessed.



It is important that establishing efficacy and safety of specific drugs for
children is encouraged. However, the EU already provides adequate periods of
protection during which paediatric indications can be developed by the
originator company compared to the US and at costs much lower than the USA.
Granting of additional market protection for pharmaceutical products, in
exchange for investing in paediatric trials, must be very carefully constructed
so as to avoid unnecessary trials on children or the encouragement of anti-competitive
practices in the pharmaceutical sector.



The US's experience of granting an additional 6 months market exclusivity for
paediatric indications appears to have encouraged the development of medicines
for paediatric use. However, for this model to work in the EU and to ensure
better application of medicines for children, the following three conditions
should be met at the minimum:



1. The USA system of market protection for pharmaceuticals must be adopted in
its entirety. This would require that, in exchange for granting an
additional 6-month data exclusivity period for paediatric indications, present
levels of market protection for pharmaceuticals in the EU would have to be
brought in line with the USA's more competitive and less protective practices
for pharmaceuticals.

2. Adding indications for paediatric use must not create any additional
barriers for the registration of pharmaceuticals through the EU's Mutual
Recognition Procedure, particularly for affordable generic medicines.



Clear and stringent criteria must be met before data exclusivity for
paediatric indications are granted. Such criteria would include:
demonstrating that such trials are necessary, that the medicines can and will be
used for paediatric use, that clinical trials were not sponsored by public funds
or charities, that the trials were successful and that the trials took place
soon after the first authorisation of the product.



2. Bringing the EU in line with US legislation regarding Data/Market
Exclusivity



The proposal to introduce increased data exclusivity similar to the USA 6-month
extension period could provide incentives for paediatric use if the current EU
data exclusivity and market protection provisions were similar to those in the
USA.



However, in the EU both data exclusivity and patent protection are already much
stronger than in the USA.

(a) Data Exclusivity Provisions. Whilst the EU operates a 10 or 6 year
data exclusivity provision during which an application of a generic medicines
may not be filed, the USA operates a more competitive system consisting of the
following mechanisms:



5-year data exclusivity period is granted to the NCE

3 years data exclusivity period for any new indications

6-month data exclusivity period for paediatric indications



(b) Patent Extensions. Under EU law, Supplementary Protection
Certificates (SPC) provide a 5-year patent extension providing up to 15 years of
market protection whilst in the in the US the 5 year patent extension gives up
to only 14 years of market protection.



More importantly under the USA's Waxman Hatch Act (Patent Term Extension Act) an
explicit right was given to allow generic development work to take place during
the patent period. No such provision was granted by the SPC Regulation.



Therefore, EU law already provides extended periods of protection during which
paediatric indications could have been developed by the originator company. It
is therefore ethically questionable of whether companies should now undertake
clinical trials on children in exchange for extra market protection over and
above for what is already provided.



It should also be noted the conduct of clinical trials in the US is estimated to
be three times more expensive than in Europe. This raises the question of why
paediatric trials have not been undertaken by originator companies in the
European Union before now.



Moreover, for the incentives proposed by the draft memorandum to actually work,
the US model should be adopted in its entirety, otherwise it would simply act as
an added period of market protection for originator products.



3. Giving Additional Data / Market Exclusivity for Paediatric Trials would
further complicate the EU Registration System



As it is well known, the EU's Mutual Recognition Procedure for the registration
of medicines is already considerably problematic, particularly for the
registration of generic medicines. Arguments for the introduction of market
exclusivity extensions for paediatric trials are likely to further complicate
the fact that any extensions of the existing provisions would make the EU's
Mutual Recognition Procedure (MRP).



The lack of harmonisation of SmPC's (Summary of Product Characteristics) of
originator products throughout the EU is the key problem for the Mutual
Recognition Procedure. If extra exclusivity is now applied to anything other
than the first authorisation, each change of indication to the originator will
give a different SmPC and each SmPC a different data exclusivity period. This
will prevent the registration, especially via MRP, of generic products, as they
cannot ever be approved with the same current SmPC as an originator. The Mutual
Recognition Procedure will be unworkable for the same generic product across the
EU, and there would be no way to obtain a marketing authorisation in more than
one Member State.



If the EU wishes to offer an incentive of additional data protection for
paediatric indications it will have to require that paediatric medicines be
market under a totally separate marketing authorisation, even if the product is
identical to the adult version.



In this way,

(i) The physician can be sure that the product has been investigated and is
suitable for use in children rather than having to read the SmPC in detail;

(ii) The innovator companies would not be able to misuse this additional data
protection intended to protect children for significant commercial gain, by
blocking the entry of generics into the market;

(iii) A phased introduction of the paediatric indication could not be used to
create further SmPC disharmony in products approved nationally and hence block
generic products being approved via Mutual Recognition (marketing the paediatric
indication, as a separate product to benefit from the data exclusivity would
prevent this);

(iv) The product information could be written specifically for parents; and

(v) In countries where substitution exists, a generic version of the adult
product could be introduced with an identical SmPC whilst awaiting the
paediatric product's data exclusivity to expire.



4. Clear criteria have to be set for granting extended protection and
Commercial Exclusivity as a reward for Paediatric Trials



If the EU wishes to offer an incentive of additional data protection for
paediatric indications it must take an approach in which exclusivity operates as
a true incentive for manufacturers to invest in clinical studies, without it
being used to block post-patent competition.



Consequently, extension of market exclusivity as a reward for paediatric trials
should only be granted if the following conditions are met:

(i) All decisions on paediatric trials should be based on a clearly identified
and articulated need for additional clinical research, which will lead to
results and a significant health benefit. Moreover, consideration has to be
given to whether a medicinal product for which approval for paediatric trials
will be given is actually used for the treatment of children. This broad
standard might result in the listing of medicinal products for paediatric trials
for which there is no clear need for additional information.



Generally, it should be made clear that no paediatric trials are undertaken
unless it is clearly demonstrated that:

Information currently available is inadequate to ensure its safe and effective
use in children,

There is a significant potential that the approved drug is being or will be used
in the paediatric population and

A determination is made that additional infomation will provide a meaningful
benefit to paediatric patients;



(ii) Information should be additional i.e. derived from new studies, improving
the existing knowledge concerning paediatric indications. Exclusivity should not
be granted to existing data (e.g. clinical trials performed before legislation
came into force). This also implies that additional exclusivity should only be
granted prospectively (not retroactively);



(iii) Minimum requirement for granting exclusivity should be a successful study
(i.e. showing positive results in indications for children), not a study
undertaken in itself. An extension of marketing exclusivity should not be
granted if the results of the paediatric trials are unusable or if the results
show no benefit for children. This must be required in order to prevent the
conduct of unnecessary and unethical studies on children;



(iv) All paediatric age groups (i.e. from newborns through to young adolescents)
should be included in the research in order to qualify for additional
exclusivity. Studies should encompass all appropriate paediatric sub-groups for
a given indication and result in one, and not several, exclusivity period for
that indication;

(v) Paediatric trials sponsored by public or charitable funding should not
benefit from a new extension period. As a rule, studies conducted or sponsored
by someone other than the submitter, should not form the basis of exclusivity;



(vi) The originator should be required to develop additional labelling to
support the use of medicinal products in children before so as to avoid off-label
use of medicinal products;



(vii) An extended marketing exclusivity should only be granted for a specific
dosage form if a study has been done for this dosage form alone i.e. an
extension cannot be granted for all dosage forms when only one study has been
undertaken; and



(viii) Additional market exclusivity should only be granted if carried out
within a specified time soon after the first authorisation of the product.
Additional market exclusivity may encourage originator companies to wait with
the submission of paediatric indications until the last possible moment e.g.
expiration of the patent/SPC or the original market exclusivity. Encouraging
delayed paediatric research would encourage anti-competitive activities, which
is not to the benefit of public health.



5. Conclusions



The request to provide special indications in medicinal products for children is
desirable. However, incentives such as the extension of market protection as
suggested in the draft memorandum of the French EU Presidency must be reviewed
taking into account existing incentives for the pharmaceutical industry in the
EU.



Firstly, if the USA model is to be adopted it should be done so in its entirety,
for example by reducing market protection provisions as they currently are in
the EU before adding new incentives for paediatric indications. Secondly, the
practical application of paediatric indications and their effect upon the Mutual
Recognition System of generic medicines must be carefully considered. Mechanisms
must be put in place to prevent introducing future barriers into the Mutual
Recognition System. Failure to do this will increase the problem of generic
registrations, which is not in the interest of public health. Finally,
extensions should be granted after meeting a series of strict criteria so as not
to open the system or the industry to claims that clinical trials have been made
on children for purely commercial reasons.