1. Introduction

Agreement on Trade-Related Aspects of Intellectual Property Rights, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations, 320 (1999), 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994) [hereinafter TRIPS Agreement or TRIPS].

World Trade Organization, Understanding the WTO: The Agreements: Intellectual property: protection and enforcement, http://​www.​wto.​org/​english/​thewto_​e/​whatis_​e/​tif_​e/​agrm7_​e.​htm (last visited 2 June 2016).

Art 7 TRIPS.

Art 8(1) TRIPS.

This is reflected in the patent legislations of developing countries that incorporate various exceptions and limitations to patent rights over pharmaceuticals, but not with regard to the rules on test data protection. There may be many reasons for this neglect. For starters, patents are more mainstream topic of discussion as compared to test data protection. TRIPS also tackles patent in a more comprehensive way as compared to the protection of test data which is contained in a very vaguely worded provision placed right at the end of Part II of TRIPS. Other provisions of TRIPS such as Art 65 and 70 also put patents at the head of the relationship between intellectual property and pharmaceuticals.

For example, the US chastised its trading partners for not providing adequate protection under Art 39(3) TRIPS, ultimately resulting in a dispute with Argentina, which was eventually settled between the parties. See notes 5 and 6 and accompanying discussion in Chap. 3. Similarly, the US concluded various IPR agreements with other countries such as Sri Lanka, Ecuador, Latvia and Cambodia in the early and mid-1990s, some of which contained specific provisions regarding test data protection. See note 15 in Chap. 5 and accompanying discussion. In the WTO TRIPS Council too, developed countries took interest in the way Art 39(3) was implemented by other WTO Members. See notes 123 and 124 accompanying discussion in Chap. 3.

IFPMA, Encouragement of New Clinical Drug Development: The Role of Data Exclusivity, 1 (2000) available at http://​www.​who.​int/​intellectualprop​erty/​topics/​ip/​en/​DataExclusivity_​2000.​pdf (last visited 4 August 2015) [hereinafter IFPMA (2000)].

Some national laws may not allow that the generic applicant submit the application within the term of the exclusivity. See, for example the relevant provision of the US law at 21 U.S.C. §355(j)(5)(F)(ii) and Section C.08.004.1(3)(a) of the amended (Canadian) Food and Drug Regulations.

IFPMA, Data Exclusivity: Encouraging Development of New Medicines, 5 (July 2011) available at http://​www.​ifpma.​org/​wp-content/​uploads/​2016/​01/​IFPMA_​2011_​Data_​Exclusivity_​_​En_​Web.​pdf (last visited 2 June 2016) [hereinafter IFPMA (2011)].

See Art 10 of Directive 2001/83/EC as amended by Directive 2004/27/EC.

Aaron Xavier Fellmeth, Secrecy, Monopoly, and Access to Pharmaceuticals in International Trade Law: Protection of Marketing Approval Data Under the TRIPs Agreement, 45(2) Harvard Int'l L. J. 443, 447 (2004) [hereinafter Fellmeth (2004)]. However, this definition omits the most important qualification: this exclusivity is with regard to approval of another pharmaceutical product for only a limited period of time. Unlike trade secret protection that may continue till the requirements of such protection exist, test data exclusivity is essentially a finite protection, which is claimed to have been introduced as a compromise to allow generics competition in the pharmaceutical market. The title of world’s first test data exclusivity law which was enacted in the United States, ‘The Drug Price Competition and Patent Term Restoration Act of 1984’ (commonly known as the Hatch-Waxman Act (1984)) aptly reflected this compromise. Title I of the Act provides the procedures for the approval of generic versions of originator drugs where as Title II restores patent term that has been lost because of the requirement of approval of pharmaceutical product from the Food and Drug Administration. Ellen J. Flannery & Peter Barton Hutt, Balancing Competition and Patent Protection in the Drug Industry: The Drug Price Competition and Patent Term Restoration Act of 1984, 40 Food Drug Cosmetic L.J. 269, 270 (1985) [hereinafter Flannery & Hutt (1985)]; Henry Grabowski & John Vernon, Longer Patents for Increased Generic Competition in the US: The Waxman-Hatch Act after One Decade, 10(2) PharmacoEconomics 110 (1996).

Raymond L. Woosley, One Hundred Years of Drug Regulations: Where Do We Go from Here? 53 Annu. Rev. Pharmacol. Toxicol. 255 (2013); Lembit Rägo & Budiono Santoso, Drug Regulation: History, Present and Future in Drug Benefits and Risks: International Textbook of Clinical Pharmacology 65, 65 (C. J. van Boxtel et al 2^nd ed. 2008) [hereinafter Rägo (2008)]; Elizabeth S. Weiswasser & Scott D. Danzis, The Hatch-Waxman Act: History, Structure, And Legacy, 71 Antitrust L.J. 585, 587 (2003) [hereinafter Weiswasser (2003)].

Carol Ballentine, Taste of Raspberries. Taste of Death: The 1937 Elixir Sulfanilamide Incident, FDA Consumer Magazine (June 1981) available at http://​www.​fda.​gov/​AboutFDA/​WhatWeDo/​History/​ProductRegulatio​n/​SulfanilamideDis​aster/​ (last visited 2 June 2016).

Weiswasser (2003) at 587–8.

Richard F. Kingham, Data and Marketing Exclusivity for Pharmaceutical in the European Community, 55 Food & Drug L.J. 209 (2000) [hereinafter Kingham & Castle (2000)]. Also see Sect. 4.​2.​1.

Rägo (2008) at 65–6.

For example, the US law requires submission of ‘full reports of investigations which have been made to show whether or not such drug is safe for use and whether such drug is effective in use’. 21 U.S.C. §355(b)(A). According to Art 8 of the amended Directive 2001/83/EC, the application for marketing authorisation have to be accompanied by ‘[r]esults of […] clinical trials’.

IFPMA (2011) at 5; Bruce N. Kuhlik, The Assault on Pharmaceutical Intellectual Property, 71 U. Chi. L. Rev. 93, 94 (2004) [hereinafter Kuhlik (2004)]. For a synopsis of originator company’s risks in new drug research and development see Sidney Taurel, The Campaign Against Innovation in Ethics and the Pharmaceutical Industry, 326, 329–31 (Micheal A. Santoro & Thomas M. Gorrie eds. 2005) and Oliver Gassmann, Gerrit Reepmeyer et al, Innovation: Key to Success in the Pharmaceutical Industry, in Leading Pharmaceutical Innovation, 1, 10–12 (2^nd Ed. 2008). For a brief literature review of time expenditure and costs of pharmaceutical research and development see Christian R. Fackelmann, Clinical data, data exclusivity and private investment protection in Europe in Pharmaceutical Innovation, Competition and Patent Law: A Trilateral Perspective, 141, 146–7 (Josef Drexl & Nari Lee ed. 2013) [hereinafter Fackelmann (2013)]. However this claim is not without critique. See for example, Donald W. Light & Rebecca Warburton, Demythologizing the high costs of pharmaceutical research, 6 BioSocieties 34, 37–43 (2011); Public Citizen, Critique of the DiMasi/Tufts Methodology and Other Key Prescription Drug R&D Issues, available at http://​www.​citizen.​org/​congress/​article_​redirect.​cfm?​ID=​6532 (last visited 4 August 2015); Marcia Angell, The Truth About the Drug Companies: How they deceive us and what to do about it, 37–51 (2004); Merrill Goozner, The $800 million pill: the truth behind the cost of new drugs, 231–46 (2004); Richard G. Frank, New Estimates of Drug Development Costs, 22 J. Health Econ. 325 (2003); Fackelmann (2013) at 148–9.

‘A generic drug product is one that is comparable to an innovator drug product in dosage form, strength, route of administration, quality, performance characteristics and intended use.’ FDA webpage on Abbreviated New Drug Application (ANDA): Generics, available at http://​www.​fda.​gov/​Drugs/​DevelopmentAppro​valProcess/​HowDrugsareDevel​opedandApproved/​ApprovalApplicat​ions/​AbbreviatedNewDr​ugApplicationAND​AGenerics/​default.​htm (last visited 2 June 2016) [hereinafter FDA, ANDA]. A ‘generic medicinal product’ is defined in Art 10(2) of the amended Directive 2001/83/EC as ‘a medicinal product which has the same qualitative and quantitative composition in active substances and the same pharmaceutical form as the reference medicinal product, and whose bioequivalence with the reference medicinal product has been demonstrated by appropriate bioavailability studies’.

‘Generic drug applications […] are generally not required to include preclinical (animal) and clinical (human) data to establish safety and effectiveness. Instead, generic applicants must scientifically demonstrate that their product is bioequivalent (i.e., performs in the same manner as the innovator drug). One way scientists demonstrate bioequivalence is to measure the time it takes the generic drug to reach the bloodstream in 24 to 36 healthy, volunteers. This gives them the rate of absorption, or bioavailability, of the generic drug, which they can then compare to that of the innovator drug. The generic version must deliver the same amount of active ingredients into a patient's bloodstream in the same amount of time as the innovator drug.’ FDA, ANDA. According to the European Medicines Agency [hereinafter EMA], ‘[t]he purpose of establishing bioequivalence is to demonstrate equivalence in biopharmaceutics quality between the generic medicinal product and a reference medicinal product in order to allow bridging of preclinical tests and of clinical trials associated with the reference medicinal product’. EMA, Guideline on the Investigation of Bioequivalence, CPMP/EWP/QWP/1401/98 Rev. 1/Corr **, 4 (January 2010) available at http://​www.​ema.​europa.​eu/​docs/​en_​GB/​document_​library/​Scientific_​guideline/​2010/​01/​WC500070039.​pdf (last visited 2 June 2016).

Kuhlik (2004) at 95.

IFPMA (2000) at 7.

Nuno Pires de Carvalho, The TRIPS Regime for Antitrust and Undisclosed Information, 260 (2008) [hereinafter de Carvalho (2008)].

Kuhlik (2004) at 96 (internal citations omitted).

IFPMA (2000) at 6–7.

It has to be understood that this exclusivity does not necessarily result in monopoly prices in the relevant market. The exclusivity only operates to exclude others from benefiting from the right holder’s test data. Other manufacturers, both originators and generics, may target the same market and may get their product approved by generating their own test data. In that case, the price of the product of the first right-holder will not be a monopoly price but will be adjusted in reaction to the prices of substitutable products. At the same time, the prices of the substitutable pharmaceutical products subsequently entering the market, for which safety and efficacy tests have been repeated, will also be higher than the marginal cost so as to recoup the sunk cost of such tests.

Generic pharmaceuticals provide consumers cheaper versions of the originator pharmaceutical products even if they do not suppress prices of originator products once the exclusivity period expires. Competition among generic products can drive the generics average price from 60 % to as low as 20 % of the originator product. See generally, Congressional Budget Office (CBO), How increased competition from generic drugs has affected prices and returns in the pharmaceutical industry, (July 1998) available at http://​www.​cbo.​gov/​sites/​default/​files/​cbofiles/​ftpdocs/​6xx/​doc655/​pharm.​pdf (last visited 2 June 2016) [hereinafter CBO (1998)]. Saha found that the prices of originator products react to generics entry, dropping 0.2 % with the entry of each additional generics product in the market. Atanu Saha et al, Generic Competition in the US Pharmaceutical Industry, 13(1) Int. J. Econ. Bus. 32 (2006).

‘A monopoly creates a loss of what in economic terms is called “consumer surplus,” some of which is retained by the monopolist in the form of profits, and the remainder of which constitutes a deadweight loss.’ Fellmeth (2004) at 471. The effect of test data exclusivity on consumer and producer surpluses as well as on the deadweight loss may or may not be same as that of monopoly prices, depending upon the number of alternate products available in the relevant market. However, it is more likely that exclusivity will result in a similar situation as Fellmeth describes, otherwise test data exclusivity will have no value for the originator.

For the historical origins of secrecy of test data see Jane A. Fisher, Disclosure of Safety and Effectiveness Data under the Drug Price Competition and Patent Term Restoration Act, 41 Food Drug Cosmetic L. J. 268, 269–72 (1986) citing Flannery & Hutt (1985) at 275–6. For a general overview see Aaron S. Kesselheim & Michelle M. Mello, Confidentiality Laws And Secrecy In Medical Research: Improving Public Access To Data On Drug Safety, 26(2) Health Affairs, 483 (2007). For arguments in support of disclosure of test data in the context of United States see Thomas O. McGarity & Sidney A. Shapiro, The trade secret status of health and safety testing information: reforming agency disclosure policies, 93(5) Har. L. Rev., 837 (1980). For recent developments, see Mustafa Ünlü, It is time: Why the FDA should start disclosing drug trial data, 16 Mich. Telecomm. Tech. L. Rev., 511, 523–25 (2010) [hereinafter Ünlü (2010)].

‘The non-disclosure obligation […] loses most of its relevance if exclusivity is granted.’ Fellmeth (2004) at 469.

Pugatch (2006) at 100; Fackelmann (2013) at 172.

For a detailed discussion of the US and the EU test data exclusivity regimes, see Chap. 4.

For a discussion of patent term extensions and regulatory delay compensation under US domestic law as well as the US FTAs, see Frederick M. Abbott, Intellectual Property Provisions of Bilateral and Regional Trade Agreements in Light of U.S. Federal Law, 6–7, Issue Paper No. 12, UNCTAD-ICTSD Project on IPRs and Sustainable Development (2006) available at http://​unctad.​org/​en/​docs/​iteipc20064_​en.​pdf (last visited 4 August 2015) [hereinafter Abbott (2006)].

But see notes 29 and 30 and accompanying text.

Pugatch (2006) at 100.

Razvan Dinca, The “Bermuda Triangle” of Pharmaceutical Law: Is Data Protection a Lost Ship?, 2005 J. of World Intell. Prop. 517, 542 (2005) [hereinafter Dinca (2005)] (arguing that denying exercise of a compulsory license by virtue of test data exclusivity would be against public interest and hence should not be allowed); Charles Clift, Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals in Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices, 431, 433 (Anatole Krattiger et al ed. 2007) [hereinafter Clift (2007)] (opining that ‘data exclusivity may act as a barrier to compulsory licensing of a patent’); Carlos M. Correa, Protecting Test Data for Pharmaceutical and Agrochemical Products under Free Trade Agreements in Negotiating Health: Intellectual Property and Access to Medicines, 81, 91–3 (Pedro Roffe et al ed. 2006) [hereinafter Correa (2006)] (discussing effects of data exclusivity protection on compulsory licensing in the context of Free Trade Agreements). See generally, Brook K. Baker, Ending Drug Registration Apartheid: Taming Data Exclusivity and Patent/Registration Linkage, 34 Am. J. L. & Med. 303 (2008).

See generally, Canada – Patent Protection of Pharmaceutical Products, Report of the Panel, WT/DS114/R dated 17 March 2000 available at http://​www.​wto.​org/​english/​tratop_​e/​dispu_​e/​7428d.​pdf (last visited 2 June 2016).

This may happen where the test data exclusivity protection is longer, such as in the European Union. See Sect. 4.​2.​2.

Fackelmann (2013) 172 (‘data exclusivity shows independent impact particularly if the respective drug is non-patentable or patents covering the drug have expired’).

For detailed discussion of these exclusivities see Sects. 4.​1.​1.​2 and 4.​2.​2.​2.

Cook (2007) at 440, 438–9 and Fackelmann (2013) at 169.

See notes 116–25 and accompanying text in Chap. 4.

For the analysis of ‘unfair commercial use’ as used in Art 39(3) TRIPS see Chap. 3.

The term Free Trade Agreements as used in this work should be understood to also encompass the preferential and regional trade agreements.

See the WTO webpage on RTAs at http://​rtais.​wto.​org/​UI/​PublicAllRTAList​.​aspx (last visited 2 June 2016) [hereinafter WTO RTAs Webpage]. According to the World Trade Organization, a WTO Member on average is party to thirteen preferential trade agreements (PTAs) as of 2010. See World Trade Organization, World Trade Report 2011, 47 (2011) [hereinafter World Trade Report (2011)].

Notable examples of FTAs involving more than two countries are NAFTA, DR-CAFTA, ASEAN, the Commonwealth of Independent States (CIS), South African Development Community, the Central European Free Trade Agreement (CEFTA), South Asian Free Trade Agreement among others. For a more elaborate list see Frequently Cited Regional Trading Agreements and the Parties to them, in The World Bank, Global Economic Prospects: Trade, Regionalism, and Development, xxiii-xxv (2005) available at http://​elibrary.​worldbank.​org/​doi/​pdf/​10.​1596/​0-8213-5747-6 (last visited 2 June 2016) [hereinafter World Bank (2005)].

Only 25 RTAs were in force on 31 December 1994. WTO RTAs Webpage.

For example, the US-Israel FTA contained only one article related to intellectual property. It reaffirmed parties’ obligations under respective bilateral and multilateral IP agreements and most-favored nation treatment for the nationals of both parties. See Art 14 of the US-Israel FTA available at http://​tcc.​export.​gov/​Trade_​Agreements/​All_​Trade_​Agreements/​exp_​005439.​asp (last visited 2 June 2016). In contrast, the two notable agreements that contained provisions related to intellectual property before TRIPS were the North American Free Trade Agreement (NAFTA) and the EC Treaty (for the latter, more detailed provisions were specified in secondary legal instruments such as regulations and directives). The EFTA FTAs with Turkey and Israel that entered into force on 1 April 1992 and 1 January 1993 respectively, also contained separate annexes on intellectual property. See Turkey and Israel FTA webpages on www.​efta.​int/​free-trade/​free-trade-agreements (last visited 2 June 2016).

There can be multiple reasons for the inclusion of intellectual property provisions in FTAs. The most obvious is the possibility of introducing TRIPS-plus standards in both or either of the parties’ domestic laws. Lynch (2010) at 2–9. North–south FTAs, may be seen as an attempt of the developed country party to export its higher standards of protection in various areas of IP to the domestic laws of the developing party to the FTA. From the perspective of the developing country, the inclusion of IP in FTA negotiations can provide an additional bargaining tool for its own interests, such as preferential market access or promise of increased foreign investment. IP provisions in an FTA may also be used to prevent future unilateral rollback of higher standards in the domestic laws of the FTA party. For example, the US FTAs with Australia and Singapore included provisions on test data exclusivity, even though the respective domestic laws already provided such protection. FTAs are especially useful in the area of IP as compared to unilateral measures, as the latter may run afoul Art 1 TRIPS prohibition of coercion for ‘more extensive protection’. Moreover, proliferation of higher IP standards through FTAs is further bolstered by the Most-Favored-Nation (MFN) principle incorporated in Art 4 of TRIPS. TRIPS’ MFN principle requires that countries accepting higher standards in an FTA extend the same protection to non-FTA members, even if the FTA is with a non-WTO country. Unlike Art XXIV of the General Agreement on Tariffs and Trade, another WTO agreement, MFN principle in TRIPS does not provide for an exception to FTAs. Thus as Drahos put it, ‘[…] the MFN principle [in TRIPS], when combined with bilateralism on intellectual property, will have the effect of spreading and setting new minimum standards of intellectual property faster than would have happened otherwise’. Peter Drahos, Bits and Bips: Bilateralism in Intellectual Property, 4(6) J. World Intell. Prop. 791, 802 (2001).

All post-TRIPS US FTAs include specific chapters on IP though the number of provisions, the issues addressed therein and the specific standards differ.

All EFTA FTAs except with Canada (entry into force 1 July 2009) contained specific provisions on IP either as a separate chapter or, in majority of the cases, as a separate annexure. See generally, www.​efta.​int/​free-trade/​free-trade-agreements (last visited 2 June 2016).

The term ‘flexibility’, with regard to the TRIPS Agreement, can be understood as the ‘room to maneuver’ suggesting all implicit and explicit options WTO Members have in implementing TRIPS provisions in their national laws. Deere defines it as ‘a range of rights, safeguards and options that WTO Members can exploit in their implementation of the TRIPS Agreement.’ Carolyn Deere, The implementation Game: The TRIPS Agreement and the Global Politics of Intellectual Property Reform in Developing Countries, 68 (2009). According to WIPO, flexibilities are ‘different options through which TRIPS obligations can be transposed into national law so that national interests are accommodated and yet TRIPS provisions and principles are complied with.’ Page 12, WIPO, Document CDIP/5/4, ‘Patent Related Flexibilities in the Multilateral Legal Framework and their Legislative Implementation at the National and Regional Levels,’ prepared for the fifth session of the Committee on Development and Intellectual Property (CDIP) held from 26 to 30 April 2010. Moreover, WIPO has also clubbed TRIPS flexibilities in four categories: (1) flexibilities as to the method of implementing TRIPS obligations, (2) flexibilities as to the substantive standards of protection, (3) flexibilities as to the mechanism of enforcement and (4) flexibilities as to areas non-covered by TRIPS. See webpage on Advice on Flexibilities under the TRIPS Agreement at http://​www.​wipo.​int/​ip-development/​en/​legislative_​assistance/​advice_​trips.​html (last visited 2 June 2016).

As argued regarding ‘unfair commercial use’, in Chap. 3, WTO Members providing for test data exclusivity will also be considered to be complying with Art 39(3).

See Chap. 3.

Art 1 TRIPS.

See Chap. 7.

See Sect. 2.​3.

With the exception of the Comprehensive Economic and Trade Agreement (CETA) which is being negotiated between Canada and the EU.