Data Exclusivity: Making the Case

Data exclusivity (DE)—the right of inventors to prevent unauthorized disclosure of essential competitive information submitted for market authorization—is facing a strong new wave of opposition. Root causes behind the assault include the growing commercial tension between brands and generics, continued concerns about access barriers in the fight to treat the global pandemic of neglected diseases, and a newly assertive industrial policy among key emerging market countries seeking to exploit gaps in multilateral standards for DE, as evidenced in the 1994 WTO Agreement on Trade Related Intellectual Property Rights (TRIPS). At the same time, patent expiries, longer development times, and slower payer uptake of new medicines make preservation of the innovators data assets more important than ever.

Hence the key question for all Big Pharma today: How do we build a constructive case against the criticism and maintain the relevance of DE as an essential driver of new drug innovation? Most of the criticism of DE comes at a time when governments are experiencing the disconnect between a demographic of soaring healthcare costs, and a fiscal and debt crisis that makes them unable to provide patient access to the latest medicines. Since healthcare costs are projected to skyrocket by more than 70 percent over the next 10 years, there is fear that the period of data exclusivity—which varies among countries—will have a negative impact on health budgets by preventing patient access to innovative life-saving medicines or vaccines that can treat multiple chronic conditions or prevent and cure emerging diseases.

These fears seem misguided when examined in the context of a drug innovation process that is increasingly high risk. DE provides a measure of certainty to innovators that they will be provided with a period of protection for their efforts in testing a drug among many thousands of patients and complying with the higher thresholds of safety and efficacy demanded by regulatory authorities. Providing the right incentives to protect and develop future new innovative medicines can be a key ingredient to both lowering healthcare costs, and for solving some of the world's most challenging health problems. Therefore, policymakers should reassess the importance of DE—here are five reasons why.

Less innovative medicines can be costly to society. It is evident for the United States that continued investment into R&D for the development of innovative pharmaceutical/biological medicines will be indispensable in dealing with an aging population and a rising number of chronic conditions, including cancer, diabetes, obesity, and Alzheimer's disease. For example, strictly in terms of economics, if we were to look at treatment for Alzheimer's disease alone, we find that the care required for a patient with Alzheimer's in 2050 will cost Medicare and Medicaid around $800 billion a year, a figure higher than the total cost of these two programs today. When you add in other costs, it will be more like $1 trillion a year. This is a staggering amount and an exorbitant pull on public services. If there was one pill that could be invented that would delay Alzheimer's by even five years in the average patient, it would likely save the United States close to half a trillion dollars. Progress in this struggle is challenged by the elusive biology of this and other CNS diseases, which adds years to the development cycle. The only guarantee that inventors have in protecting their decade or more commitment of funds and human talent is the avoidance of a premature disclosure of their development data to an imitator. This is what DE means in practice.

The supplemental value of DE. Some critics of DE argue that DE is unnecessary due to the protection provided by a patent: it's a superfluous "double dip." Of course, patents are the most visible and perhaps most important form of intellectual property, but their application is far from universal when viewed in a global context. Historically the scope of patent protection has been quite varied—in some countries there is sometimes no patent protection at all, due to local patent eligibility criteria that exclude specific sectors like pharmaceuticals; some countries have only recently enacted patent protection for pharmaceuticals, which "grandfathers" many compounds out of the framework for coverage. As a result, in these countries, DE may be the only realistic method of protecting drugs.

Likewise, for smaller- or medium-sized companies, the high unpredictability of legal interpretations of today's patent laws makes it confusing or costly to build a strong bulwark of patent protection, in which case the more straightforward application of DE can provide the protection necessary for the investment into R&D. Further, DE can act as a back-up system for R&D, should a patent on an innovative breakthrough medicine be challenged and invalidated; or to recoup the investment cost in product liability suits, which are costly to defend and often based on unanticipated adverse side effects.

DE can encourage R&D in developing countries. DE has become a topic of intense discussions when addressing access to medicines in developing countries; DE is seen as an insurmountable obstacle that keeps cheaper copies of brand name drugs off the market, which then results in higher prices paid for medicines.

A linchpin to the debate is TRIPS Article 39.3, which states that undisclosed data are subject to protection against unfair commercial use or disclosure. This period of DE (which is not defined in TRIPS but varies between five and 11 years among countries that provide DE) means that another company when applying for a marketing authorization for a generic medicine, may not directly or indirectly use or rely upon the data submitted by the innovator to prove safety and efficacy.

DE is often criticized as encouraging excessive profiteering but that assertion should be weighed against the growing cost and resource burden of conducting clinical trials, often across geographies and varied populations whose medical needs are often subsidized by the inventor even after a trial ends, making even larger capital investments necessary. It is becoming evident that only the largest companies can actually afford or take the risk to bring these medicines to market.

With regard to the TRIPS agreement and access to medicines, the 2001 Doha Declaration on TRIPS and Public Health, acknowledges that a balancing of interests (between private and public rights) is needed in order to accommodate access and innovation. It provides exceptions that countries can implement on the national level to address public health issues such as seeking voluntary licenses or compulsory licensing. This selective approach might be tried first before endorsing the wholesale dismemberment of DE rights. Another is access to medicines secured through corporate sponsored patient-access programs, which apply innovative strategies to make medicines accessible and affordable in resource constrained regions. This remains an important way for patients to obtain patented medicines.

Data exclusivity can promote R&D into personalized medicines. The pharmaceutical industry is in the process of re-inventing itself by rethinking how it has historically approached R&D. The continued investment of substantial sums by the industry into R&D for personalized medicines (PM), although in the short term may be more costly to the consumer, is expected in the long run to reduce costs; advanced technology may help to minimize time on R&D side. The good news is that PM will be targeted to patients that are genetically programmed to benefit to ensure the patient has the best and safest drug for them. Protecting and maximizing the right incentives for such important work will be paramount to the substantial investment made into PM. DE protects that repository of specific data that developers produced to show regulators how a target drug can work efficiently in the right patient; without such exclusivity, one wonders how fully the promise of PM can be realized.

The importance of DE to our innovation strategy. DE can be an important tool in our national innovation strategy that will continue to keep the United States relevant and globally competitive, and it is worrisome that anti-innovation forces are working to water down the value of DE in raising the critical early stage capital that is necessary for R&D into medicines. Truly breakthrough drugs that can cure or prevent chronic diseases, cancer, or other emerging diseases can potentially lower healthcare costs and keep our nation at the forefront of science. Policymakers should therefore maximize the benefits of DE by considering even enhanced periods of exclusivity for truly breakthrough drugs—perhaps given through the FDA, which grants marketing approval. It is important that we do not deter the incentives into R&D, if we want to remain a global leader in cutting edge medicines.

Lastly, DE can incentivize and encourage companies to disclose all of their trial information as it provide a much needed measure of certainty to the innovator.

Carol Ann Williams is Senior IP Policy Specialist for Pfizer Inc. She can be reached at (212) 573-1593.