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Striking a fine balance between innovation and social policy

Striking a fine balance between innovation and social policy
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First Published: Mon, Jul 30 2007. 12 11 AM IST
Updated: Mon, Jul 30 2007. 12 11 AM IST
Patient versus patent. It’s a debate that arouses strong reactions from activists, the media and the public on one side and the powerful pharmaceutical industry on the other.
In much of the developed world, comprehensive patent law regimes exist to protect the profits of pharmaceutical companies from medicines and drugs produced by them for a period of 20 years from the date of patenting.
This protection is further extended through rules relating to data exclusivity, that is, protection for the data from research and clinical trials submitted by a pharmaceutical company to any regulatory authority, for instance to the patents office to back up its patent application. While all this protection encourages research in the medical field and the finding of new cures and medicines, it also keeps the price of such medicines very high.
The balancing factor for the public in the developed world is the wide coverage by medical insurance schemes, which have not yet become a part of the average citizen’s life in the developing world.
In many developing countries, however, the policy has been more focused on the needs of the average citizen than the industry.
The case of India has been one of the most interesting. At independence, India had inherited the British regime through the Indian Patents and Designs Act, 1911. The prices of medicines in India, newly independent and grappling with poverty, were among the highest in the world.
The Patents Act, 1970, changed all that by introducing a system that recognized medicines as a special need for society and deliberately diluting the protection for pharmaceuticals.
This allowed the growth of a flourishing generics industry and the prices of medicines fell sharply to become more affordable for millions across India. Thus, generic manufacturers saved significant expenditure by relying on the clinical trial data of the originator as they could avoid conducting of clinical trials and conducting bio-equivalence studies for their drugs.
International pharmaceutical companies argue that the provision of data exclusivity would foster research in India. However, it would undoubtedly impact the price of drugs.
In a developing country like India with millions living in poverty, it is imperative that a balance is struck between fostering innovation and social policy.
While the Patents Act, 1970, has already been amended in 2005 to provide a stronger patent regime on the lines of the developed world, this balance may yet be struck with data exclusivity laws. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) recognizes this, providing members of the World Trade Organization (WTO) with the flexibility of adapting the provisions of TRIPS to the public interest.
Article 39.3 of TRIPS, inter alia, mandates that in the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention, 1967, under which WTO members must protect undisclosed information.
When data of an undisclosed test which involves considerable effort is submitted to any governmental authority in order to obtain regulatory approvals for marketing of pharmaceutical/agricultural chemical products which utilize new chemical entities, WTO members have an obligation to protect such data against unfair commercial use or disclosure except (i) where necessary to protect public interest; or (ii) if steps are taken to ensure that the data are protected against unfair commercial use.
Data protection is available for both patented and non-patented products.
In India, the Satwant Reddy Committee has presented a report on the steps that should be taken by the regulatory bodies of the Indian government for provision of data protection.
The committee considered (i) trade secret, i.e., an implied form of protection which is perennial and the regulatory body cannot disclose this information to a third party—however, information could be used by the regulator while granting marketing approvals to other drugs; and (ii) data exclusivity, i.e., where the regulatory body cannot rely on the data submitted by the originator for subsequent approvals of the product. The Satwant Reddy Committee has made a distinction between pharmaceuticals and traditional medicines.
The committee has recommended that data protection should be provided for a period of five years for traditional medicines (for example, ayurvedic, siddha or unani drugs). However, they have not provided data protection for classical medicines where the panel maintains that trade secret protection is a sufficient means of protection.
The trade secret protection proposed, however, is more stringent than currently available under the Drugs and Cosmetics Act, 1940, and the committee has, inter alia, recommended that (i) the government would have an obligation to take adequate steps to prevent theft of the confidential information of the applicant; (ii) the Drug Controller General of India (DCGI) should not accept data fraudulently obtained by the applicant; (iii) employees of the DCGI should be barred from obtaining commercial advantage of the data which they were privy to while employed with the DCGI; and (iv) liability of third parties in case of use without consent of the originator of the trade secret information to be enforced through the courts should be clearly spelt out.
The committee has, however, carved out an exception where the government should have the power to disclose the trade secret information in exceptional circumstances in public interest.
In the long term, it is likely that the introduction of stringent data exclusivity laws at the opportune moment would give an impetus to R&D in the pharmaceutical sector in India. However, given that the healthcare sector in India is not fully developed and the lack of medical insurance for average citizens, the impact of introducing data exclusivity laws, primarily in relation to life-saving medication, in the immediate future raises some apprehension. The people and policy makers of India must also consider whether the inevitably high prices of all new medicines on the market is worth the prospect of growth in such R&D.
This column is contributed by AZB & Partners, Advocates & Solicitors.
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First Published: Mon, Jul 30 2007. 12 11 AM IST