Home > Topics > The IP Toolbox > Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals > Editor's Summary, Implications and Best Practices

Regulatory data are the data that the researcher or manufacturer of a product must provide to the appropriate regulatory agency in order to prove that the product is safe and efficacious. Regulatory data are protected from disclosure or acquisition for a certain period of time, usually 5-10 years from the date of the product’s first authorization to market; during this time, no other applicants are allowed to use the data to obtain marketing authorization for the same product. Regulatory data protections are substantively different from other sorts of intellectual protection, including confidential information protection and patents. The obligations in Article 39.3 of TRIPS concerning the protection of regulatory data are broad and subject to interpretation. Both the U.S. and the E.U. have interpreted and implemented the obligations in different ways: for example, the U.S., but not the E.U., has established a linkage between the patent and regulatory systems, as explained in Chapter 4.10. It is important for those who make use of regulatory data to understand the differences between these two systems and the consequences of those differences.

These chapters explain the meaning of the terms “data protection” and “data exclusivity,” as they relate to pharmaceuticals and agrochemicals. Intellectual property protection is evolving in direct response to advances in science and technology. The most valuable IP asset is data. Data must be carefully guarded against potential misappropriation and therefore falls within the purview of trade secret law (which is a form of intellectual property). Originator companies try to protect their new drug test data from potential competitors. In the pharmaceutical, vaccine, agrochemical, and agricultural biotechnological industries, the same regulatory hurdles that are designed to protect public safety and health also create delays in commercialization. These delays reduce innovators’ market advantage and overall profits, since they reduce the already limited period of time that innovators enjoy market exclusivity.

Data exclusivity laws compensate innovators for delayed market entry (and the concomitant loss of potential profits) caused by regulatory hurdles. These laws provide additional market protection independent of patent protection. These laws prevent outside parties from using innovators’ test data (though they do allow the regulatory authority to analyze this data prior to market approval).

The pharmaceutical and agrochemical industries have often successfully argued that if regulators allow an equivalent product (a “generic”) to go to market on the strength of the test data provided by the originator company, there would be no incentive for anyone to produce the test data necessary to obtain market approval. A rule that prevents an outside party from using an originator company’s data (or that prevents a regulator from relying on that data to approve an outside party’s generic product) effectively provides temporary market exclusivity to the originator’s product. The cost of reproducing sufficient data to satisfy regulatory requirements is usually prohibitive.

These chapters also examine the specific language in the TRIPS agreement that addresses data exclusivity and compare this language with the laws of several countries that deal with data exclusivity. Article 39 of TRIPS, entitled “Protection of Undisclosed Information,” contains a general clause about WTO members’ obligations in dealing with trade secrets. Article 39.3 imposes three obligations on WTO members’ governments:

• First, to protect data on new chemical entities, the collection of which involved considerable effort, against unfair commercial use.
• Secondly, to protect such data against disclosure, except where necessary to protect the public.
• Thirdly, to protect such data against disclosure, unless steps are taken to ensure that the data are protected against unfair commercial use.

Article 39.3 does not protect IP rights (other than trade secrets), nor a does it prevent outside parties from relying on the test data submitted by an originator (except in the case of unfair commercial practices). Article 39.3 only articulates widely accepted trade secret and unfair competition law, and is not an invitation to create new IP rights per se for test data.

Some developed countries (the U.S. and the E.U.) have argued that Article 39.3 requires countries to create a regime of “data exclusivity”: in other words, a new form of time-limited IP protections. In these countries, data exclusivity regimes for both medicines and agrochemicals were adopted prior to the TRIPS agreement. A data exclusivity IP rights regime specifies that for a term of five or more years (the exact term depends on the jurisdiction) from the date of the marketing approval of an originator product, no other company may seek regulatory approval for an equivalent product based on data submitted by the originator company, except by the latter’s approval. To put it another way, regulators cannot rely on the originator’s data to approve an equivalent generic product during the period of exclusivity. In some jurisdictions, data exclusivity may also be granted for a new application of an existing drug. Therefore, a data exclusivity IP rights regime establishes how long a regulatory agency may be prevented from relying on originator’s data to approve the products of potential generic competitors. However, this is not the question of disclosure to third parties and trade secrets articulated in TRIPS Article 39.3 (and 39.2), where no time limits are specified; as the chapter points out, this is the distinction between TRIPS and the national exclusivity regimes.

A new drug may be simultaneously protected by both a patent and a data exclusivity rights regime. Even if a drug patent has expired, a data exclusivity regime can delay the entry of generic companies into the market (so long as the data exclusivity period extends beyond the patent’s expiry date). The irony is that this rarely happens in developed countries. Far more useful than data exclusivity rights is the right granted in the U.S. and E.U. for the innovator to extend the patent term in order to compensate for delays in regulatory approval. Additionally, the data exclusivity right may be more impervious than a patent because, unlike patent law, there are no exceptions. For example, governments cannot order the equivalent of a compulsory license. Data exclusivity may also act as a barrier to compulsory patent licensing on the same product by preventing marketing authorization for a compulsory licensee. In conclusion, the relationship between patent law and data exclusivity law is complex.

Some argue that data exclusivity offers benefits to domestic innovators in developing countries: it provides incentives for such innovators to identify new uses for existing, unpatented products and for originator companies to introduce products into developing countries without the threat of competition from generics. However, the costs and benefits of data exclusivity depend on a country’s economic circumstances. In developing countries with little innovative capacity, the benefits of data exclusivity may be less obvious than the costs in terms of reduced competition in the market for medicines or agrochemicals. When making bilateral trade agreements with undeveloped countries, the pharmaceutical industry in developed countries may make demands for data exclusivity that are not in the best interests of those developing countries.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• If a country is a member of WTO, it must pass legislation that is in accordance with the framework for data protection outlined in the TRIPS agreement.
• TRIPS-compliant legislation need not include provisions for time-bound data exclusivity regimes for new drugs. However, it should prevent the unfair use of data by other parties.
• When designing a data exclusivity regime, carefully consider the possible costs and benefits of such a regime for producers/manufacturers (for example, both generic and research-based pharmaceutical companies) as well as consumers (for example, patients).

For Senior Management (university president, R&D manager, etc)

• It is important to understand data exclusivity laws. Such laws protect valuable data and R&D efforts.
• It is important to support the efforts of your institution’s technology transfer office to manage and protect data. Data can only be produced with substantial investments of time, money, and talent.

For Scientists

• If your research involves product development and/or clinical trials, be aware that you need to keep your data confidential. Data is a valuable form of intellectual property, and it should be protected from undue disclosure.
• Contact your technology transfer office for information and guidance if you have questions about data and confidentiality.

For Technology Transfer Officers

• If your institution’s scientists are conducting research involving product development and/or clinical trial work, it is critical that their data be protected from disclosure.
• Provide your scientific and administrative staff with information on how they can protect data confidentiality.