WHO/WIPO/WTO report on Promoting Access to Medical Technologies and Innovation: Article 39.3 and the cost-sharing approach

In the words of secretariats, “The book’s focus is on advancing medical and health technologies (“innovation”) and ensuring they reach the people who need them (“accessibility”). A huge amount of analytical and factual material is available on access to medicines and other medical technologies, and on innovation. Here, it is brought together in one concise volume.”

This piece seeks to highlight the trilateral report’s treatment (pages 63-66, 75) of Article 39.3 of the TRIPS Agreement which is detailed in Chapter II(B)(1). Chapter II is titled “The policy context for action on innovation and access, and section B(1) deals with “intellectual property systems”. In particular, the report emphasizes that data exclusivity is not a requirement of the TRIPS Agreement, and briefly discusses the concept of cost-sharing as an alternative approach to implementing Article 39.3.

Article 39. 3 of the TRIPS Agreement reads as follows:

3. 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.

With respect to the TRIPS Agreement’s obligations on Article 39.3, the report states that the

TRIPS Agreement requires WTO members to prevent the unauthorized disclosure and unfair commercial use of confidential information submitted to a regulatory authority, subject to certain conditions. (Page 64)

On disclosure, the report clarifies that

this is a straightforward obligation not to disclose the data submitted for regulatory approval purposes. Regulatory agencies may, however, disclose the data when this is necessary to protect the public or where steps are taken to ensure that there is no unfair commercial use of the data concerned. (Page 64)

On unfair commercial use, the report notes:

the TRIPS Agreement does not provide a definition of the term “unfair commercial use”, nor does it deal with the way in which such protection may be achieved. Therefore, opinions, as well as national practices, differ on what exactly is required. Some argue that the most effective way of ensuring such protection is to give a reasonable period of data exclusivity to the originator companies. Under a data exclusivity regime, the respective regulatory authorities would be prevented for a certain number of years from relying on the data submitted in the application for the originator product, in order to approve later generic versions of the product, possibly on the basis of bioequivalence data showing that it is similar or essentially similar to the originator product. Others reject the view that TRIPS requires such exclusivity, arguing that other forms of protection against unfair commercial use are permissible. During the Uruguay Round negotiations, the option of making data exclusivity an explicit obligation under the TRIPS Agreement was discussed, but negotiators instead adopted the general wording of the current Article 39.3.[Emphasis added] (Page 64)

The report makes it clear that although making an explicit reference to data exclusivity was mulled in the Uruguay Round negotiations, this position did not receive sufficient support and thus, adopting the more general wording of the current TRIPS Article 39.3 was the only acceptable option for the Uruguay Round negotiators.

The trilateral report notes that the following four qualifying conditions apply to the protection of test data: 1) the data is undisclosed, 2) the submission of test data is required by countries, 3) the products for which marketing approval is
sought use new chemical entities and 4) the generation of the data involves considerable efforts.

The report further states that

There is no WTO jurisprudence or authoritative WTO guidance on either of these issues (although the matter was raised, but not resolved, in consultations between the United States and Argentina under the WTO Dispute Settlement Mechanism; the mutually agreed solution merely noted that the Parties had expressed their points of view and agreed that differences in interpretation are to be solved under the DSU rules (see WTO documents WT/DS171/3 and WT/DS196/4)). Nor had they been resolved in the TRIPS Council in the lead-up to the Doha Ministerial Conference in 2001, although some views on the interpretation of Article 39.3 of the TRIPS Agreement were put forward by members. (Pages 64-65)

The trilateral report does make clear that the flexibilities of the TRIPS Agreement, as re-affirmed in the TRIPS Agreement apply to the Agreement as a whole, and “therefore apply to test data protection under Article 39.3” further emphasizing that “there is no explicit TRIPS requirement to provide data exclusivity, but some form of protection against unfair commercial use is required”.

Perhaps the most interesting part of the report’s treatment of test data protection is in its description of state practice in implementing Article 39.3. The report clarifies that the different philosophies in Article 39.3 interpretation is “reflected in the way in which this obligation has been incorporated into national law.” The trilateral report notes that free trade agreements often influence the approach adopted. In addition, the report provides the examples of China’s and Ukraine’s accession protocols which prescribed “legally binding commitments providing expressly for data exclusivity”. These examples stand in contrast to “India and many other developing countries” which do not provide data exclusivity but do “prohibit their respective regulatory authorities from allowing third parties to access and use information submitted to them, in accordance with laws on confidentiality and unfair competition”. However, these developing countries

do not prohibit regulatory authorities from relying on test data submitted in an application for a previously approved originator product in order to review and approve an application for second and subsequent market entrants. (Page 65)

As an alternative to data exclusivity, the WHO/WIPO/WTO report describes the concept of cost-sharing which would permit the reliance on originator provided that the “generic supplier participates in the costs of generating the data”.

The report states,

The United States, for example, provides both data exclusivity and a mandatory data compensation system of this kind in relation to data submitted in applications for regulatory approval of pesticides (but not pharmaceuticals). The European Free Trade Association (EFTA)–Korea FTA (Article 3, Annex XIII) also admits a compensation scheme as an alternative to data exclusivity. (Page 66)

As this report bears the imprimatur of WHO, WIPO, and WTO, countries currently involved in free-trade and plurilateral trade agreements may want to further examine the cost-sharing approach. More information can be found here: http://keionline.org/testdata.

With respect to limitations and exceptions to data exclusivity, the trilateral report notes,

Exceptions and limitations to data exclusivity are applied in some countries. US law shortens the period to four years where the applicant for a second product certifies that the patent is invalid or that the second product does not infringe the patent (subject to a possible stay during infringement proceedings). Canada does not provide data exclusivity if the originator product is not being marketed in its territory. Nor do Chile or Colombia if the originator product is not marketed in their respective territories within 12 months of the grant of local marketing approval. Chile does not provide data exclusivity if the application for local marketing approval is filed more than 12 months after registration or marketing approval was first granted in a foreign country. Other exceptions may cover the protection of the public interest, such as in situations of health emergencies or for exports under compulsory licence under the Paragraph 6 System…..Chile does not provide data exclusivity if the product is the subject of any kind of compulsory licence. (Page 66)

In a cautionary tale on the imposition of TRIPS-plus norms on an least-developed country during WTO accession, Box 2.11 (page 75) of the trilateral report recounts Cambodia’s acceding to the WTO. The report notes that “Cambodia made a commitment to implement the TRIPS Agreement no later than 1 January 2007”, despite the Doha Declaration’s provision granting LDCs an extension period until 1 January 2016 for “patents and test data protection with respect to pharmaceutical products”.

The report asserts,

Cambodia thus accepted demands from existing members that went beyond the express obligations set out in the TRIPS Agreement. By doing so, Cambodia in its accession agreement appeared to have given away a number of the flexibilities under the Agreement that it would otherwise have benefited from under current transition periods. (Page 75)