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Here?s a penny for your pill

Govt must bring some form of data exclusivity if it wants local firms to invest more in R&D, writes Shoibal Mukherjee.

india Updated: Aug 09, 2006 03:19 IST

India is unable to decide whether signing the WTO’s Agreement on Trade-Related Intellectual Property Section (Trips) in 1995 means that it has to legislate in favour of a five-year period of data exclusivity for pharmaceuticals and agrochemicals. These are sectors that require ample evidence of substantial research data in order to gain marketing approvals.

As of now, India has no such rule. Article 39.3 of Trips requires   signatories to prevent unfair commercial use, by other companies, of the proprietary data that is submitted to drug regulatory authorities by the developer. The flourishing practice in India has been the usage of such data, painstakingly generated by one company through years of developmental research, by regulatory authorities to simultaneously approve the marketing of products containing the same ingredient. The basic blueprint in hand, any pharmaceutical company can use the formula or processes.

This leads to a situation where one company does all the hard work while another company enjoys the benefits. The latter is able to seriously undercut the former, having avoided the big developmental expenses. In order to rectify this situation, other countries — both developing and developed — mandate a five-year data exclusivity period. In this period, only the company that generates the data is allowed to market the product. This restores the incentive for companies to spend resources to develop promising, new formulations, new routes of administration, and so on.

One may well ask why data exclusivity is required when companies developing new drugs can avail of patents to stave off unfair competition. After all, new products are expected to enjoy market exclusivity for eight to 10 years after their launch as per patent protection regulations. What is often not realised is that many smaller research companies, universities and institutions across the world cannot afford to patent in all countries all the molecules they invent. For these entities, it is viable to patent their invention only in the largest markets in Europe and America. Patenting is expensive and 99 per cent of the compounds often turn out to be unsuitable for marketing and are discarded at some point during development.

Human testing is also expensive. As a result, most of the inventions that show promise in laboratory and animal studies are sold to large pharmaceutical companies for further development and worldwide marketing. But by then the patenting window has closed,  which leaves the invention vulnerable to unfair copying in many smaller markets.

All this impacts the licensing fee payable to the smaller company. The buyer’s development effort is expected to be protected with the provision of data exclusivity —  something Indian law is as yet reluctant to provide.

Sections of local companies keep a safe distance from the risks of innovation and have no stake in the protection of intellectual property. To expect enthusiasm for data exclusivity from such quarters would be illogical.

But there are more powerful voices which oppose the idea of data exclusivity. This is not out of burning self-interest but something more altruistic — the cause of the underprivileged patient. To them, it matters little that over 60 per cent of our population has little or no access to organised healthcare. The larger concern is that the provision of data exclusivity will inevitably mean higher prices for new medicines and render them unaffordable for an even larger proportion of patients. This concern is so acute that it leads activists, social workers, NGO executives, the Health Ministry and WHO officials to accept admittedly unfair regulation — anything that can help keep drug prices down.

But this is a fallacious argument. What these avowed altruists miss completely is the disservice they are doing to the long-term interests of the nation. There seems to be no faith in the country’s ability to use data exclusivity to its own advantage.

One must understand that patents provide little protection when it comes to research with existing drugs and the development of natural substances and herbals as medicinal products. Yet these are the very areas where our strengths lie. Ayurvedic and traditional remedies cannot be patented, so what incentive is there for a company to standardise and perfect a formulation and conduct clinical trials to establish its efficacy and safety in comparison to allopathic therapy?

An independent healthcare practitioner discovers the wound-healing properties of an existing natural substance and wants to sell the concept to a drug company. But why should any company risk spending resources on buying the concept and developing a marketable product if anybody can, subsequently and immediately, launch a similar product based on the developing company’s clinical data? At the same time, these ayurvedic and traditional remedies will not be the exclusive property of any company. One must realise that it’s really not the multinationals who will be keen to take this forward, but the small Indian companies that one would expect to be most keen on leveraging the opportunities provided by data exclusivity. Incremental innovation is a given with data exclusivity.

It is not that innovative start-ups do not exist in the pharmaceuticals space, or that they do not comprehend the value of full intellectual property protection. But their comparative numbers and clout are still far below the threshold needed to make their voices  heard over the strident rhetoric against intellectual property law.

So, will data exclusivity lead to relatively higher prices for data-protected new combinations? This is bound to happen in some cases. Then, is denying data exclusivity the way to prevent such price rise? Certainly not. While the State is obligated to provide needy patients access to life-saving medicines, this obligation cannot be fulfilled by perpetuating unfair trade practices. Moreover, the State’s burden of access cannot be transferred to a section of the industry, while creating an unfair advantage for another.

The answer and way ahead lies in vitalising the State’s healthcare  delivery mechanism by increasing government spending on healthcare. The 0.9 per cent of GDP that public healthcare spending accrues to is marginal. Even Bangladesh spends a greater proportion and the average among peer developing countries is 4 to 5 per cent. A doubling of public spending on healthcare, as the Prime Minister has promised, will bring in over $ 5 billion (Rs 25,000 crore).

The answer also lies in creating public-private partnerships that focus on building the necessary infrastructure to ensure access. As for the vast majority of non-essential new therapies that are not proven to be superior to existing treatment, effective alternatives are widely available.

We want to be proud of our science. For this to happen, the administration must realise that it has to protect the work of its scientists. India must have faith in its entrepreneurial acumen if it wants to find a place among the stars in biomedical research that is set to dominate science, together with information technology, in the years ahead.

The writer is Senior Director, Medical Pfizer Limited, India