A new framework for assessing clinical data transparency initiatives.

AuthorLietzan, Erika
PositionIntroduction through II. Placing Disclosure Within The Legal Landscape A. Classification as Trade Secret B. Analytical Problems with Trade Secret Classification 1. Trade Secret Law is Not Directly on Point, p. 33-57

Introduction I. Background II. Placing Disclosure Within The Legal Landscape A. Classification as Trade Secret B. Analytical Problems with Trade Secret Classification 1. Trade Secret Law is Not Directly on Point 2. The Doctrinal Debate Collapses C. The Property Question 1. Defining the Content as Property 2. A Closer Look at the Right to Exclude D. Implications 1. Application of Takings Principles 2. Public Policy Should Shape the Taking and Ancillary Legal Reform 3. Just Compensation Follows 4. The International Dimension CONCLUSION INTRODUCTION

Biopharmaceutical companies submit vast amounts of clinical data and analysis to support approval of their medicines, expecting the information to be kept confidential, as has been the practice of regulators around the world for decades. Over the last ten years, however, pressure has been mounting for regulators or industry to release this data. Indeed, European authorities are moving swiftly now towards full release over industry objections and despite several lawsuits. Industry generally argues that the material is intellectual property--specifically trade secret or confidential commercial information and that its release will help a company's competitors, devaluing the property and reducing incentives for medical innovation. To the limited extent that they have addressed the issue, however, legal scholars have generally taken the view that no relevant doctrines or bodies of law preclude the release of this material and that public policy considerations compel its release. And the tide is turning, with incremental changes in the law in the United States, coercive pressure from medical journals to release data as a condition of publication, European regulators pressing forward, and industry volunteerism to stave off the most aggressive forced disclosure proposals.

This Article provides a new framework for assessing disclosure of the contents of drug applications, by filling several major gaps in the legal scholarship. The key gaps are as follows. First, scholars in the intellectual property field devote very little attention to this sort of information good--both the actual content and the context in which it is generated and used. Application of the trade secret label, in particular, has not been subjected to close scrutiny. Second, very few have explored the special issues presented by operation in an environment where data and analyses are generated and submitted to government in order to gain market access--i.e., where the content has both an informational value and a regulatory value. Third, very few have explored the implications of operation in a multi-national environment where the decision of one regulatory authority to release the material could have profound implications on legal outcomes in other jurisdictions.

My primary thesis is that this content should be understood as property rather than trade secret and that the right to exclude includes severable sub strands. The right to prevent disclosure can be severed from the right to prevent use, including use by regulators to assist one's competitors. This approach blunts the impact in the United States of potential disclosure by European authorities. Although this Article focuses on information submitted by biopharmaceutical companies for approval to market their medicines, my analysis has broader implications. Participants in many other industry sectors submit testing analyses to regulatory authorities around the world to satisfy a barrier to entry and with an expectation of confidentiality.

Section I of this Article explains the relevant features of the safety and effectiveness information in drug applications. Specifically, this content includes raw data (including manipulated and synthesized data) and strategic and interpretive writing. Scholars have not fully identified the potential regulatory uses of the former if released, nor have they fully appreciated the policy implications of releasing the latter. Section I also explains the salient features of the barrier to market entry, including the difference in scope, cost, and risk between innovative applications and follow-on (generic or biosimilar) applications, and the fact that essentially the same content is submitted to regulators around the world.

Section II provides a framework for assessing government disclosure of the content. It argues, first, that labeling this content as trade secret is analytically problematic. Both historically and doctrinally trade secret law is private law--mostly about actions taken in connection with relationships between private parties, not a person and the government. Moreover, the enduring debate in trade secret law, whether this law's origins lie in principles of property or principles of unfair competition, arguably collapses in the regulatory context. It makes no sense to consider whether the doctrine is property-based or liability-based, because the government may in fact "take and pay" with respect to property. All roads lead to the property question. For both reasons, I propose that we ignore the trade secret label when considering the disclosure issue. I consider instead whether the contents of marketing applications are property. This Section of the Article works primarily from Lockean principles, but considers also utilitarian norms.

After concluding that the contents are property, I turn to characterizing the sticks in the bundle of rights. This is where a deeper understanding of the content and its context are most relevant. This content has both informational uses and regulatory uses, to its owner and to potential third parties. These qualitatively different uses for the content lead to a broader right to exclude than scholars and courts have previously asserted, including severable rights to prevent disclosure and to prevent use. Thus, disclosure need not deprive the owner of the right to disallow direct use--including, for instance, reliance on a company's information by regulators for the benefit of the company's competitors. This conclusion represents a significant departure from conventional wisdom about trade secrets (that disclosure eviscerates the property right) and helps to demonstrate why the trade secret label is wrong. A robust reading of the right to exclude, combined with an understanding of the full regulatory context, also helps to explain why this content should not be viewed as a true public good. Among other things, released clinical modules might be excludable, insofar as a regulator can decline (or be forbidden) to use them in support of third party products.

Understanding this content as property leads to the conclusion that in the United States, takings law applies. The leading case with respect to data submitted for regulatory purposes, Ruckelshaus v. Monsanto, suggests that disclosure is a taking, but it suffers from a serious analytical flaw; Justice Blackmun commented that disclosure of the data eviscerated the property interest. (1) The balance of the Court's property takings jurisprudence would lead to a similar conclusion, although Kaiser Aetna and Mahon remain the most compelling precedents, particularly because disclosure to the public at large would eliminate the information owner's ability to profit from the fruits of its labor. (2) But, because the right to exclude can be understood more broadly than Justice Blackmun asserted, disclosure should not be understood to have eviscerated all property right in the material. This could have profound implications in the United States, where, for instance, an argument has been made that biologic applications filed prior to the enactment of the new biosimilars law contain property that cannot be used over the owner's objection to support biosimilars. The framework presented in this Article should lead to the conclusion that disclosure of the content by European authorities has no bearing on that use-related takings claim.

I also argue in Section II that public policy considerations should shape the taking and ancillary legal reforms. The most compelling argument for...

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