Data Exclusivity Debate Resurfaces Amidst US-FTA Talks, Evidence Still Missing
Md Sabeeh Ahmad
(Long post ahead!)
A Central Drugs Standard Control Organization (CDSCO) notice has triggered fresh discussions on a data exclusivity regime for pharmaceutical products in India. The notice dated October 8 invites comments ‘to ensure a level playing field in new drug approval’. The notice reasons that applicants obtaining approval of a new drug for the first time in the country based on clinical trial and test data do it at a higher regulatory compliance cost compared to subsequent applicants who obtain approval based on bioequivalence studies. The notice has been met with significant resistance from civil society bodies who are concerned that this may lead to extended monopolies and delay in access to affordable medicines. India has, in the recent past, rejected demands of having a data exclusivity regime, especially in its FTA negotiations, notably with the UK and the EFTA. However, the same may not be the way forward. As India inches close to a trade agreement with the US, with a formal agreement expected as soon as March, 2026, a data exclusivity regime seems very much on the table. The reason I say this is the US’s requirement of enacting TRIPS+ provisions by their trading partners in their domestic law, a practice they have successfully negotiated for 2 decades now.
In any case, for the CDSCO and relevant authorities mulling over the same, I have news – it’s not so simple!
What is Data Exclusivity and why is it not a great idea?
Data exclusivity provides a period of protection for new pharmaceutical products (originator drug), effectively blocking use of the clinical data (submitted by an originator to drug regulatory authorities) by generic manufacturers who seek to produce a therapeutically equivalent version of the drug. The primary rationale behind data exclusivity being – recouping the ‘high-cost’ involved in clinical trials and generating the data. The protection of this data can be found in Article 39.3 of the TRIPS agreement although with ambiguous interpretations, which has ensured successful resistance by global south countries including India, until now. The Satwant Reddy Committee of 2007, for example, had concluded that ‘data exclusivity’ (for pharmaceuticals) is not mandated under TRIPS and the obligation under TRIPS would not preclude regulatory authorities to rely on data for approval products by subsequent applicants.
Justification for a data exclusivity regime fails on several grounds currently. First, it is no secret that very little is known about the costs of drug development, including often cited high costs of clinical trials by pharmaceutical companies. The lack of transparency in the actual costs does not help their case, especially given the major role that public funding plays towards drug development. If data exclusivity is to be considered, it must be preceded by solid evidence backed rationale, including mandatory disclosures of what the actual clinical trial and test data generation costs are for originator drugs. In any case, as Prof. Srividhya Ragavan notes, the existence of patent period is sufficient profit protection for the investments made by pharmaceutical companies, who more often than not, have recouped well beyond their investments.
Secondly, AI has made its way into drug development, most prominently evidenced by AlphaFold, a Google Deepmind AI system whose creators won the 2024 Nobel Prize in Chemistry. AI plays a key role in all stages of drug development (a fact that many, if not most, big pharma companies proudly tout on their respective websites, for eg. AstraZeneca, Novartis, Sanofi, Merck amongst others) but importantly contributes in ‘accelerating timelines, lowering costs, and increasing success rates.’ From a clinical trial perspective, AI has made the process efficient by assisting in optimising the study design, determining optimal sample size, identifying suitable patient population, amongst others. A step ahead and AI still plays a significant role in analysing the clinical trial data assessing efficacy and suggesting modifications, leading to efficient clinical trials and contributing to reducing development costs. India has not had a drug exclusivity regime till now. Now that the technology to quicken timelines and lower costs is here – now is when we start considering it? With changing times like these, pharmaceutical incentives like exclusivities including data exclusivity need a rethink, and extended periods of protection make less sense with these technological advances.
Some Empirical Evidence
One of the first studies on the adverse impact of a data exclusivity regime goes back to 2003 in the Australia – US FTA. Analysing five blockbuster drugs, the study (authored by Dr Buddhima Lokuge, Dr Thomas Alured Faunce and Richard Denniss) had concluded additional public expenditures of USD 1.12 billion for these drugs alone between 2006 and 2009. Additionally, the study noted an average delay of 24 months for the introduction of generic medicines. Similarly, another study (authored by Juan Pichihua Serna) in 2006 attempted to predict the impact of data exclusivity on the Peruvian market consequent to the US – Peru FTA. The study noted an increase of 9.6% in the price of medicines in the first year of its implementation and an overall increased pharmaceutical spending of over 103 million USD per year within seven years from the agreement.
Another review (by Md Deen Islam, et al) presented a broader picture of data exclusivity implications in a range of countries and its impact on access to medicines. Unsurprisingly, and similar to other studies, the adverse impact of data exclusivity regimes are evident. For example, the impact of patent extension and data exclusivity on expenditure of HIV/AIDS and Hepatitis C medicines in Brazil meant the antiretroviral therapy expenditure will increase by 69% and the expenditure on Hepatitis C will increase by more than 3000% in 35 years.
A working paper by Michael Palmedo evaluated the impact of data exclusivity on the price per kilogram of pharmaceutical imports for countries that have enacted data exclusivity within their domestic legislation. He applied econometric tests and relied on trade data from the UN Comtrade database, finding that enactment of data exclusivity was associated with a higher rate of pharmaceutical import price inflation in a heterogeneous set of 42 countries. Similarly, a report by IFARMA analysed the impact of Decree 2085/2002 that introduced protection of test data in Columbia subsequent to the EU-Colombia FTA, between 2012 and 2019, finding an average delay of 3.1 years for generics to enter the market and total overcost due to lack of competition at over 2 billion pesos. Forecasts on the impact of data exclusivity and patent extension proposals in the Thai pharmaceutical market were no different with medicine prices expected to increase by 32 per cent. Readers must note that all the countries mentioned above introduced data exclusivity as part of their trade agreements with either the US or the EU.
If nothing, before the CDSCO moves forward with the introduction of a data exclusivity regime, it must consider having an impact study, keeping pricing and access to medicines in mind!
Some Background on Data Exclusivity (And do we have some form of it already?!)
In the absence of a data exclusivity regime, like in India, bioequivalence (BE) and bioavailability (BA) studies are mandated to be submitted by generic manufacturers to ensure that the generic drug is at par with the originator drug. However, BE and BA studies are not the general rule but in fact the exceptions! A ‘new drug’ retains its status for 4 years (with some categories of drugs such as vaccines or monoclonal antibodies retaining this status for lifetime) during which period, generics sought to be introduced must provide clinical trial data. But courtesy of an exception to this rule, Rule 122B(3) of Drugs and Cosmetics Rules, 1945, exemptions can be made by the licensing authority in ‘public interest’, which it does in virtually all cases. This is where bioequivalence and bioavailability studies come in and are not waived. At the same time, beyond this 4 year period, even BE/BA studies are not required.
(The Ranjit Roy Choudhary Committee also recommended for these studies to be made mandatory for all generics, a recommendation rejected by the CDSCO’s consultative committee. Readers may refer to Prof. Shamnad’s and Prashant’s brilliant posts, when data exclusivity for pharmaceuticals was in news a decade ago. Another paper that I co-authored with Swaraj might be of interest to our readers, where we briefly discuss the tragic state of affairs with our drug regulatory bodies.)
Access to Generics
As is obvious, introduction of data exclusivity is detrimental for generic and biosimilar manufacturers who would no longer be able to rely on originator test data to obtain marketing approval for their generic / biosimilar drugs, leading to delayed entry of lower-cost treatments into the market. One can assume that the introduction of data exclusivity will mean BE/BA studies will no longer satisfy regulatory requirements for the period of exclusivity. Generic companies can of course undertake clinical trials which is time taking, leading again to a delayed entry into the market. And if a similar rationale for data exclusivity is employed, generic medicines will no longer be immune from high costs, an unfavourable end result from the patient’s perspective.
Patents and DE: Are we looking at extended monopoly?
In contrast with patents, data exclusivity is not subject to tests like novelty or inventive steps, but rather only concerns the introduction of the drug in a market. Data exclusivity can therefore exist independently or can overlap with patents. In the former scenario, data exclusivity may extend well beyond the period of patent protection, leading to extended monopoly. An additional likely scenario is the extension of protection to even incremental innovations from known molecules, new formulations, or new use, none of which are barred in a data exclusivity regime, but can easily be argued to be a new drug in the market. Another contrast with patents is the absence of necessary circumventions or flexibilities such as compulsory licenses or government use.
Conclusion
As I wrote earlier, even if the CDSCO and relevant authorities are considering data exclusivity for pharmaceutical products in India, it must be accompanied by clear evidence and impact studies. India, though attempting to introduce data exclusivity that both the US and the EU had introduced years ago, may not necessarily be moving a step forward but rather back, importantly with AI’s role in drug development today! Swaraj in a post back in 2015 (when data exclusivity was in news) wrote, which still seems relevant today and perfectly sums up the debate, if any – ‘we certainly do have regulatory issues that need to be fixed, and incentive mechanisms that may need to be changed, but if that is the issue, then let us focus on that, rather than this pseudo proxy mechanism which seems to be based in rhetoric and lobbying, rather than empirical evidence.’ Ironically, in 2010, the then BJP opposition (and now in the government) had opposed data exclusivity clauses in the Pesticides Management Bill, 2008, citing “American pressure”, “monopolisation leading to exploitation”, and “dangerous consequences for developing countries such as India”. I wonder which one of these has changed for the government to undertake a “somersault in its stance”. If it is indeed the US and the EU we are keen to follow as role models for our pharmaceutical policies, what next for the detriment of access – patent linkage? (P.S. I have no intention of giving any ideas to the Indian regulatory body!)
(Thanks to Swaraj for his inputs on the post.)
