The 13th Round: Article 39(3) TRIPS and the struggle over “Unfair Commercial Use”

• DOI: http://doi.org/10.1111/jwip.12093
• Date: 01 July 2018
• Author: Gabriele Spina Alì
• Published date: 01 July 2018

DOI: 10.1111/jwip.12093

ORIGINAL ARTICLE

The 13th Round: Article 39(3) TRIPS and the

struggle over “Unfair Commercial Use”

Gabriele Spina Alì

Centennial Campus, The University of Hong

Kong, Hong Kong, Hong Kong

Correspondence

Gabriele Spina Alì, Centennial Campus, The

University of Hong Kong, 5/F, Cheng Yu

Tung Tower, Pokfulam Road, Hong Kong.

Email: gabriele.spinaali@gmail.com

The Treaty on Trade-Related Aspects of Intellectual

Property Rights (TRIPS) was the first international agree-

ment to provide for some form of protection for regulatory

information submitted by companies in order to obtain

marketing authorization for a pharmaceutical product.

Nevertheless, after more than 20 years from the formation

of the agreement, the ultimate meaning of Article 39(3)

thereof remains contentious among scholars and govern-

ments. In detail, it is still debated whether the provision

mandates for some form of protection against the practice to

authorize generic drugs by relying upon the clinical dossier

submitted by drug developers or if it tackles otherwise

unlawful conducts as data theft and espionage in the

pharmaceutical sector. By reassessing the relevant literature

on the topic, and by combining old and new arguments, the

present paper argues that Article 39(3) does address

regulatory reliance practices. However, it also emphasizes

that the impact of the provision on developing countries

pharmaceutical policies is greatly mitigated by the flexibility

left to WTO members to approve generic drugs by referring

to prior foreign authorizations. Finally, the paper concludes

by reflecting on an issue often overlooked by commentators,

that is, the amount of protection necessary to comply with

Article 39(3).

KEYWORDS

Article 39, data exclusivity, TRIPS, unfair commercial use

© 2018 The Authors. The Journal of World Intellectual Property © 2018 John Wiley & Sons Ltd

J World Intellect Prop. 2018;21:201–242. wileyonlinelibrary.com/journal/jwip

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INSIDE THE RING: THE STRUGGLES OVER ARTICLE 39(3) TRIPS

A new pharmaceutical is authorized into a market only after a drug sponsor has proven its safety and efficacy before a

specialized governmental agency. Evidence of the drug goodness is usually provided through the submission of a

dossier containing the results of clinical testing in human subjects. The development of these trials involves hundreds

to thousands of volunteers, and, allegedly, increases the overall cost of R&D by several hundreds millions of dollars.

However, subsequent applicants wishing to get approval for a generic drug, that is, a pharmaceutical that is bio-

equivalent to an already approved one, do not need to submit to medical agencies a similar set of trials. In most of the

cases, proof of in vivo bio-equivalence demonstrates that the two drugs have the same chemical composition and a

highly similar efficacy and bio-availability (i.e. drug absorption into the systemic circulation and availability at the site

of action). Therefore, generic companies can obtain marketing authorization for their bio-equivalent drugs by simply

relying on the pioneer trials dossier. For some drugs, pharmaceutical regulations even allow generic authorizations

while waiving strict bio-equivalency studies, for example, for drugs characterized by high solubility and permeability,

whose therapeutic equivalence can be demonstrated by in vitro dissolution tests (EMA, 2010; FDA, 2015; Kurdi &

Karam, 2015). On their turn, some developing countries have failed to guarantee strict equivalency between

referenced and generic drugs (Godoy Snodgrass, 2015, pp. 193–195).

Since the beginning, data reliance was ostracized by R&D companies, which still claim that it amounts to an unjust

free-riding on their investment in trials generation. On their side, generic companies emphasize its benefits, that is, to

keep generic medicines affordable by skipping drug testing, and to avoid human and animal sufferance by impeding

duplicative trials on drugs whose characteristics are already known.

In the 80s, the US and the EU struck a compromise between the pleadings of the R&D and generic industry by

setting up data exclusivity systems in their pharmaceutical legislations.

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Data exclusivity refers to a fixed period of

time during which medical agencies are not allowed to utilize the information developed by a pharmaceutical firm to

authorize generics. Even though the US and the EU have insistently demanded data exclusivity periods in bilateral

trade agreements, data exclusivity remains highly disharmonized among WTO members. Not only relatively few

countries have adopted data exclusivity in their IP system, but those also differ on issues as the exclusivity length,

requirements for protection, and exceptions to the rights.

The TRIPS agreement was the first attempt to include in an international treaty an IP standard to protect the

clinical trials generated to obtain marketing authorization for a drug from the unfair exploitation by competitors

(Gorlin, 2000, p. 14; Cameron & Tomlin, 2000).

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Pushed by their pharmaceutical industries, the US, EU, and

Switzerland delegations repeatedly tried to insert a specific data exclusivity period in the corpus of the agreement. To

their disappointment, they found the sturdy opposition of a group of developing countries, led by India, which stood

against data exclusivity on the grounds that it did not constitute IP, that it would harm their generic industries and that

it would hinder the goal of universal distribution of medicines. The result of this unsettled contraposition are reflected

in the wording of Article 39(3), which reads:

“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.”

At first glance, the provision does not spell out nor refuse an express data exclusivity obligation, but it simply

mandates to protect the data against “unfair commercial use.”The vagueness of such expression, “which admits two

opposed and reciprocally destructing interpretations”(Pires De Carvalho, 2008, p. 264), has split WTO countries and

academics into two opposite factions. The first one claims that the provision entitles data developers to limit generic

companies from utilizing their clinical trials for obtaining regulatory approval of their genericdrugs. This might be done

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either by providing an express data exclusivity period, or alternatively by obliging generic companies to share a portion

of the trials cost with the data generator. The second faction sustainsthat the provision does not refer to data reliance,

but to otherwise unlawful conducts as data theft or espionage as background facts for an independent regulatory

application.

By combining known and new arguments, the present article tries to contribute to the voluminous academic

production on Article 39(3) by defending the thesis that the provision does refer to data reliance, even if it does not

mandate necessarily for an exclusivity period. Moreover, it tries to clarify an issue often overlooked by academics: that

is, which minimal length or amount of protection WTO members have to implement to comply with Article 39(3)

obligations.

The remainder of this paper i s organized as follow. Parag raph two gives some insight on preliminary issues

such as the cost of clinical testing, the economic rati onale of data exclusivity and its alleged negative ef fect on

developing countries heal th policies. Paragraph three provide s an overview of the negotiating process of Article3 9

(3). Paragraph four deals with t he central issue of the present paper: the quest for the mean ing of the expression

“protection against unfair co mmercial use.”Paragraph fi ve continues the process of inte rpretation by looking at

the other requirements set i n the provision, including ex pressions as “new chemical en tities”or “considerable

efforts.”Paragraph six an d seven wrap together some of the conclusions reached i n the two previous paragraphs

to elucidate the amount and the me ans of protection necessary to comply with the provis ion. Paragraph eight

contains a brief outline of t he non-disclosure obligation in the provisio n. Finally, paragraph nine recapitulates and

concludes.

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CLINICAL EXPERIMENTATION AND DATA EXCLUSIVITY: AN

OVERVIEW

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Clinical experimentation: Characteristics and costs

Even if some countries may provide some form of direct or indirect public subsidy (Dreifuss et al. 2006, p. 86; Light &

Warburtonc 2011 p. 7),

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private firms are mostly in charge of clinical experimentation, either directly or by hiring a

contract research organization to perform the trials. Clinical testing is a lengthy process taking up to 10 years (Mestre-

Ferrandiz, Sussex & Towse, 2012 p. 71), and which consists of four main phases:

Phase I: It is meant to assess the drug safety, as well as its pharmacodynamics (i.e. its absorption and metabolism)

and pharmacokinetics (its interactions with targeted tissues). It is also meant to determine a preliminary drug's dose

and frequency of administration. It involves a small number of healthy adult volunteers, usually ranging between 20

and 80 subjects, for a duration that usually takes less than 12 months to complete (Day & Ederer, 2004, pp. 12–13;

Ratain & Plunkett, 2003; Goffin, 2009, pp. 2–4).

Phase II: It consists in evaluating the drug safety on the addressees of the therapeutic treatment. It also aims at

determining the final formulation and dosing regimen of the compound, and to detect potential side effects. It is

generally devised as a randomized trial addressing a specific hypothesis by testing the compound in several hundred

subjects (Day & Ederer, 2004, p. 13; Goffin, 2009, pp. 4–5).

Phase III: It consists of randomized, double-blinded control studies directed at verifying defined hypotheses about

the efficacy of the drug. The patients’samples range from several hundred to several thousands of subjects. It is the

most critical stage of pharmaceutical development, with only 25% drugs achieving positive results (Day & Ederer,

2004, pp. 14–16; Goffin, 2009, pp 5–6).

Phase IV: It involves post-authorization tests, in order to keep under surveillance the drug safety, quality,

and efficacy in the long term. It is also helpful in monitoring potential unexpected therapeutic effects that

could bring to new indications in the marketing authorization (Day & Ederer, 2004, pp. 16–17; Goffin,

2009, pp. 6–7).

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