The Economics of Open Source Pharma – What about data exclusivity?

This post is about something called data exclusivity. I’m asking whether data exclusivity might be a way to ensure the existence of a financial incentive for open source drug discovery and development.

I am actually asking, since I’m not clear on the language of the relevant law.

I was talking with some people at the SGC in Oxford recently about the possibility of some (any) kind of assurance to investors in open source drug discovery and development (e.g. the state) that they might make their money back when the medicine hits the market. I had been mulling over this idea of a retrospective patent (RP). I was thinking afresh about data exclusivity, which, unlike the RP, is already enshrined in law and which might achieve something similar. Instinctively I’m against exclusivity, but there’s something interesting here.

Data exclusivity is a period following a clinical trial where the funder of the trial (i.e. the people bringing the drug to market) have several years grace to market the medicine: to sell the medicine, you have to have generated the clinical trial data. This exclusivity is nothing to do with a patent – so for example generic versions of a medicine can be produced following the expiry of the period of exclusivity, unless a patent prevents that. Here’s a useful PDF background document. Other miscellaneous background can be seen here, here, a PDF from WIPO, and an argument that data exclusivity is a better incentive for invention than patents.

So: is the 5-10 year exclusivity on the use of clinical trial data a means of protection for an open project? Imagine we run an open source drug discovery/development project, and we run a clinical trial as part of that. We disclose all the data as soon as possible. Would we have some period of exclusivity to act on the data? Would that permit a fully open project to set the drug’s price at a level that covers costs? i.e. can one think of the exclusivity as a positive enabler of an open project, rather than as a necessary evil?

This hinges on whether the data can be public and still not acted upon by anyone else. In other words if you wanted to register your own version of the drug, you’d need to pay for your own trial. You’d have to pretend the original data aren’t there.

You could of course go ahead and pay for your own trial anyway – after all you’d have some confidence that the trial would work out OK.  You could then release a competing medicine. But I can’t imagine any shareholders thinking it would be a good idea to go up against an open consortium, committed to low prices and with a multi-year headstart. (Unless your country’s laws mandate you do this – which is the case in India – in which case the open data would undoubtedly make the trial a lot simpler and cheaper.)

So my conception here of “exclusivity” equates with a “manufacturing license” rather than “secrecy”. The ability to recoup costs might mean there is no need for patent protection and the associated secrecy.

What does the law say? The sticky part is whether the “exclusivity” means that nobody else can see the data or whether nobody else can use the data. The TRIPS agreement on this seems unclear. Article 39.3 of TRIPS says data should be “disclosed” if the disclosure is accompanied by steps to ensure that the data are protected against “unfair commercial use.” It seems to me that this caveat means that the data could be disclosed openly, and that you’d need regulatory vigilance to make sure nobody uses the data to undercut the exclusivity granted to the open project. That shouldn’t honestly be that hard.

Questions.

1) Is this stupid, or has someone made this point before?
2) Is anyone an expert on the letter of the law here? Can the data be seen but not used?

Update (April 14th 2018). More reading materials.
1. Using Market-Exclusivity Incentives to Promote Pharmaceutical Innovation, N Engl J Med 2010; 363:1855-1862.
2. Market Exclusivity Time for Top Selling Originator Drugs in Canada: A Cohort Study, J. Lexchin, Value Health 2017 Sep;20(8):1139-1142.
3. The Role of the FDA in Innovation Policy, R. S. Eisenberg, Michigan Telecommunications and Technology Law Review 2007, 13, 345-388.
4. Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals, C. Clift, In Intellectual Property Management
in Health and Agricultural Innovation: A Handbook of Best Practices (eds. A Krattiger, RT Mahoney, L Nelsen, et al.) MIHR: Oxford, U.K., and PIPRA: Davis, U.S.A..