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Indian Journal of Law and Technology
Volume 10 Issue 1 Article 1
2014
The Data Exclusivity Debate In India: Time For A Rethink?

Prashant Reddy T.
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Recommended Citation
Reddy T., Prashant (2014) "The Data Exclusivity Debate In India: Time For A Rethink?," Indian Journal of
Law and Technology: Vol. 10: Iss. 1, Article 1.
DOI: 10.55496/ROGS5690
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Vol. 10 [2014] Prashant Reddy T. 8
THE DATA EXCLUSIVITY DEBATE IN INDIA: TIME FOR A RETHINK?

*
Prashant Reddy T.
Data exclusivity or regulatory marketing exclusivity is a concept that has been subject to much debate in the Indian
context – with specific reference to the Indian pharmaceutical and agro-chemical industries. This debate has been
carried on in the backdrop of obligations under the TRIPS as well as the Indo-EU Free Trade Agreement.
In this paper, the author discusses the concept of data exclusivity in the light of the existing regulatory regime for
pharmaceuticals and agro-chemicals in India. He also examines various Committee reports to glean the Indian stance
on data exclusivity for agro-chemicals as well as pharmaceuticals and the contradictions therein. The paper proposes
data exclusivity as an incentive for drug companies to conduct clinical trials, particularly local clinical trials in India
rather than free-riding on foreign trials. Although such local clinical trials are in the interest of public health, they
remain almost prohibitively expensive. Therefore, it is necessary that the conduct of such trials is incentivised. As the
high threshold for patentability in India deters patents from being employed as such incentive, this paper nominates
data exclusivity as a possible solution.§
INTRODUCTION
For the last few years India has been witness to several debates on the suitability of a data exclusivity
regime for the country, initially in the context of TRIPs and later in the context of the proposed
Indo-EU FTA.1
By way of a brief introduction, ‘data exclusivity’, which is also known as ‘regulatory data protection’,
aims to provide a period of marketing exclusivity for those manufacturing pharmaceuticals or agro-
chemicals. Such marketing exclusivity is granted only for those pharmaceuticals and agrochemicals
§ Supplied by Editorial Board.

* B.A. LLB, (Hons.)National Law School of India University (’08). Masters of Law (Law, Science &
Technology) Stanford Law School (’13). The author would like to thanks the readers of SpicyIP for
comments on earlier drafts along with other people from industry and the legal practice who lent him their
valuable time in reviewing earlier drafts of this paper. Last but not the least, the author would like to thanks
the Editorial Board of IJLT for their assistance with this paper.
1K.G. Narendranath, IPA takes on global pharma majors rejects data exclusivity obligation, ECON. TIMES (Oct. 25,
2002) available at: http://articles.economictimes.indiatimes.com/2002-10-25/news/27354556_1_data-
exclusivity-ipa-undisclosed-test; Susan Finston, Data exclusivity law brooks no delay, HIN. BUS. LINE., (Jul. 18,
2006) available at: http://www.thehindubusinessline.in/2006/07/18/stories/2006071800221100.htm; PTI,
India against inclusion of data exclusivity in any FTA, ECON. TIMES (Apr. 6, 2011) available at:
http://articles.economictimes.indiatimes.com/2011-04-06/news/29388653_1_data-exclusivity-drug-seizure-
issue-data-protection
The Data Exclusivity Debate in India: Time for a Rethink?
which are required by the law to go through rigorous clinical trials or field trials, in order to validate
safety and efficacy of the product.2 The limited period of exclusivity allows the first mover, who has
conducted the extensive testing, to recover the costs of the clinical or field trials, failing which there
would be no incentive for any of the other firms to conduct extensive testing for any of their
products.3
The Indian stand on ‘data exclusivity’, be it the reports of Government of India (GoI) or
Parliamentary Standing Committees, has been quite perplexing and marked by several contradictions
and oversights not to mention the occasional gaffe. For instance, in a press release put out by the
GoI during the Indo-E.U. FTA negotiations, the Minister for Industry & Commerce was quoted as
stating that data exclusivity is well beyond the provisions of Article 39.3 of TRIPs and that India
does not provide data exclusivity for pharmaceuticals and agro-chemicals.4 The statement was
factually incorrect because unlike the pharmaceutical industry, the agro-chemical industry in India
has had a data exclusivity regime since 2007, albeit through delegated legislation and not
parliamentary legislation.5
In fact, at the time of the press release, the very same Government was actively trying to push for
the Pesticide Management Bill, 2008 in Parliament; which bill would not only strengthen but also
lengthen the existing data exclusivity regime for the agro-chemical industry.6 For the GoI to make
such a gaffe during sensitive trade negotiations is probably without precedent. More interestingly
however this statement also exposes the contradiction of denying data exclusivity for the
2See generally Aaron Xavier Fellmeth, Secrecy, Monopoly, and Access to Pharmaceuticals in International Trade Law:
Protection of Marketing Approval Data under the TRIPs Agreement, 45 HARV. INTL. L.J. 443 (2004)
3Id.
4 Article 39.3: Members, when requiring, as a condition of approving the marketing of pharmaceutical or of
agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other
data, the origination of which involves a considerable effort, shall protect such data against unfair commercial
use. BS Reporter, India will not provide data exclusivity: Anand Sharma, BUS. STAN. (Mar. 30, 2011) available
at:http://www.business-standard.com/india/news/india-will-not-provide-data-exclusivity-anand-
sharma/430285/; PRESS INFORMATION BUREAU: Anand Sharma Chairs Consultative Committee of
Parliament on Challenges in IPR-International and Domestic(Mar. 29th, 2011) available at:
http://pib.nic.in/newsite/erelease.aspx?relid=71341 (For text of the press release)
5Infra n. 64.
6Infra n. 62.
pharmaceutical sector on the grounds that it is ‘TRIPS-plus’ but actively pushing for a ‘data
exclusivity’ regime for the agro-chemical sector.
Gaffes aside, there is a need to understand the policy debates that preceded the GoI’s decision to
proceed with data exclusivity for agro-chemicals in order to explain the contradiction in not
extending similar protection to the pharmaceutical sector. Why is it that the GoI applies the TRIPS
yardstick to deny data exclusivity for the pharmaceutical sector, while applying a different yardstick
for approving a ‘data exclusivity’ regime for the agrochemical industry? Working towards this end,
this article aims to examine key policy documents which influenced the GoI’s decision on data
exclusivity and explain the oversights and shortcomings with the arguments against a data exclusivity
regime for the pharmaceutical industry in India.
The essay hopes to force a rethink of the present GoI position on a ‘data exclusivity’ regime for
pharmaceuticals and at the very least stir the pot with some new arguments
The basic structure of this essay will be as follows:
(i) Part I seeks to introduce the concept of data exclusivity followed by a discussion of the
regulatory regime for Indian pharmaceuticals;
(ii) Part II seeks to examine the Indian policy debates on data exclusivity and the
contradictions therein, with specific reference to reports on the subject commissioned by the
GoI or the Parliament.
(iii) Part III seeks to question the assumption that it is acceptable for India to free-ride off
foreign clinical trial data instead of conducting its own clinical trials on the Indian population
in order to validate drugs on the Indian people who often are of a different genetic
disposition from the population in the more developed countries and who also live in a
different socio-economic context from people in the more developed countries. This part of
the essay seeks to establish a direct link between the regulatory requirement for local clinical
trials in India and a data exclusivity regime to incentivise such clinical trials in India. If it can
be argued that India should conduct more rigorous clinical trials on Indians, it necessarily
follows that India can no longer free-ride off clinical trial data in foreign countries to grant
its regulatory approvals. Once it is established that India cannot free-ride off foreign clinical
trial data, it follows that India will have to put in place measures to incentivise clinical trials
on Indians, especially since the threshold for patent protection in India has been placed so
high. In the circumstances, data exclusivity could effectively prove to be just the incentive
required to encourage more companies to conduct local clinical trials.
(iv)Part IV, seeks to examine the possibility of spurring innovation in the pharmaceutical
industry, especially in the areas of Fixed-Drug-Combination (FDC) and traditional
knowledge (TK) medicine. Incentives for innovation in both of these areas are poorly served
by Indian patent law and a data exclusivity regime may serve as a better incentive.
PART I – PHARMACEUTICAL INNOVATION, DRUG REGULATION & CLINICAL TRIALS IN

INDIA
Pharmaceutical innovation is, by any measure, one of the most complicated ventures faced by
mankind and according to widely accepted estimates it can easily take up to almost a decade and
close to a billion U.S. dollars to deliver a new drug from the laboratory to the market.7 Most
pharmaceutical innovation begins in the laboratory with the screening of thousands of chemicals to
either identify or synthesis a suitable drug candidate for the disease in question.8 Once a suitable
drug candidate is identified, it is required to undergo rigorous clinical trials on animals, initially and
later on human beings in order to establish both safety and efficacy of the drug.9
The history of rigorous clinical trials can be traced to the tragic ‘thalidomide tragedy’ in Europe. The
U.S. was saved from this tragedy due to the vigilance of its drug regulator, the USFDA. The
‘thalidomide tragedy’ however led to a fundamental restructuring of the manner in which
pharmaceutical drugs would be tested for safety and efficacy.10
7Seegenerally Di Masiet. al., The Price of Innovation: new estimates of drug development costs, 22 J. HEALTH ECON.
151 (2003).
8See also Di Masiet. al.,Cost of innovation in the pharmaceutical industry, 10 J. HEALTH ECON. 107(1991).
9Id.
10See generally Food & Drug Administration (FDA) – Legislation – available at

http://www.fda.gov/RegulatoryInformation/Legislation/default.htm; See also Food & Drug Administration
(FDA) –Thisweek in FDA History – July 15, 1962 – available at
http://www.fda.gov/AboutFDA/WhatWeDo/History/ThisWeek/ucm117836.htm.
It is likely that several drugs will fail to cross this barrier i.e. they may be efficacious but unsafe in the
long run or they may not demonstrate the same level of efficacy as predicted during laboratory tests.
If a drug clears this final threshold it will enter the market and may proceed to become a blockbuster
drug which earns billions. However if the drug fails to clear the threshold of regulatory approval it
will result in the sinking of the entire investment into the development of the new drug. Given the
claimed investments and the risk in the innovation process it is hardly a surprise then that firms
involved in the innovation process seek significant protection in the form of ‘data exclusivity’ and
patent protection.
At this stage it is necessary to highlight the conceptual difference between patenting and data
exclusivity since both concepts are often confused in the Indian context. The intellectual property in
the invention or discovery of a new drug is usually protected by filing a patent application. Usually a
patent application is filed at the very initial stages, almost as soon as the drug candidate
demonstrates some efficacious properties during in-vitro testing. Not every patented drug will
necessarily make it to the market since the patenting process is absolutely distinct from the
regulatory process which certifies the safety and efficacy of the drug for the patient market.
Therefore while patenting is based on whether the drug in question is novel and inventive when
compared to prior art, regulatory approval for marketing of the drug is based on how safe and
efficacious the drug is on both animals and human beings. ‘Data exclusivity’ is linked to the
regulatory process i.e. the clinical data submitted by the innovator to the regulatory cannot be used
by the regulator to grant generic pharmaceutical companies approval to manufacture generic
versions of the same drugs.11
Traditionally, innovator firms in the U.S. had complete and perpetual control of ‘clinical trial’ data
i.e. life-long exclusivity over their clinical data. In principle, any generic firm could enter the market,
subject to the patent status of the drug, provided that such a firm could carry out its own clinical
trials and submit its own data to the regulator.12 However, there was enough empirical evidence to
demonstrate that generic firms were reluctant to carry out their own clinical trials due to the costs
11Seegenerally Uttam Gupta, Data-Exclusivity vs patent: The myths and the realities, HIN. BUS. LINE., (May. 16,
2006).
12See generally, Ashlee B. Mehl, The Hatch Waxman Act and Marketing Exclusivity for generic drug manufacturers: An
entitlement or an incentive?, 81CHI.-KENT L. REV. 649 (2006).
involved and also because of ethical issues of replicating clinical trials.13 All of this changed when the
U.S. Congress enacted the Drug Price Competition and Patent Term Restoration Act (also known as
the ‘Hatch-Waxman Act’) in the year 1984.14
The aim of this legislation was to increase competition amongst generic pharmaceuticals with an
intention to lower the overall prices of drugs for the patient. The legislation sought to achieve this
objective of lowering its drug prices by simplifying the process for granting regulatory approval to
generic drugs. Pertinently, the legislation waived the requirement for generic firms to duplicate
expensive and ethically problematic clinical trials which had already been conducted by the
innovator firm.15 Instead, generic firms were granted marketing approvals for their drugs, on the
basis of clinical data generated by the innovator, provided that the generic firm was able to establish
that its drugs were bioequivalent to the innovator drugs.16 Bioequivalence tests establish that both
drugs are chemically equivalent therefore confirming that the generic drug will act in a manner
similar to the innovator drug.17 Given that bioequivalence tests were relatively inexpensive when
compared to duplicating entire clinical trials it was no surprise that these amendments spurred the
development of a whole new generic pharmaceutical business in the U.S.A.18
However in order to maintain some incentive for innovator firms to continue conducting clinical
trials, especially in cases where the innovator firm would not enjoy patent protection, the U.S.
Congress continued to give innovator firms a 5 year period of data exclusivity during which no other
firm could enter the market through mere bioequivalence trials.19
13Id.
14Id.
15Id.
16Id
17Id.
18Id.
19Id.
The above is the brief history of ‘data exclusivity’ in the U.S.A. Eventually the concept of data
exclusivity as a sui generis mode of protection spread to other jurisdictions across the globe.20 Before
going any further on the ‘Data Exclusivity’ question it is first necessary to discuss in some detail the
drug regulation scheme under the Drugs and Cosmetics Act, 1940 which is the legislation that
governs the pharmaceutical regulatory sphere in India.
THE REGULATORY REQUIREMENTS UNDER INDIAN LAW FOR NEW DRUG APPROVALS
The Drugs & Cosmetics Act, 1940 (“DCA”) is the primary legislation covering the sphere of drug
regulation in India. This legislation which was enacted in 1940, even before India declared its
independence from the British has remained in place with a few minor amendments. The DCA is
quite a skeletal legislation which only lays down a legal framework for the institutions which are
required to carry out regulatory functions along with definitional clauses on sub-standard or spurious
or misbranded drugs. The primary regulatory requirements, including the clinical trial protocols, are
delegated by the DCA to the GoI which for its part has enacted the Drugs and Cosmetics Rules,
1945 (“DCR”).21 These rules can be amended by the GoI without prior approval from Parliament
and as such these rules or any amendments to them are rarely ever debated in Parliament. Discussed
below are the key provisions which lay down the requirements for clinical trials for new drugs in
India.
(i) Rule 122E – Definition of ‘New Drug’: Contrary to the normal scheme of Indian legislations,
the definition of ‘New Drug’ is found in the DCR, 1945 and not the DCA, 1940. The relevant rule is
Rule 122E.22 This provision classifies a new drug into the three following categories:
(a) Any drug, “including bulk drug substances, which has not been used in the country to any significant
extent under the conditions prescribed, recommended or suggested in the labelling thereof and has not been
recognized as effective and safe by the licensing authority”;
(b) A new drug already approved by the licensing authority for “certain claims, which is now
proposed to be marketed with modified or new claims, namely indications, dosage, dosage form (including
20See
generally Valerie Junod, Drug Marketing Exclusivity under United States and European Union Law, 59 FOOD
DRUG L.J. 479.
21S. 33 of the Drugs & Cosmetics Act, 1940.
22Part XA of the Drugs & Cosmetics Rule, 1945.
sustained release dosage form) and route of administration”. It should be noted at this stage, that new
uses or incremental innovations not resulting in increasing therapeutic efficacy are not
patentable under Section 3 of the Indian Patents Act, 1970.
(c) “A fixed dose combination of two or more drugs, individually approved earlier for certain claims, which
are now proposed to be combined for the first time in a fixed ratio, or if the ratio of ingredients in an already
marketed combination is proposed to be changed, with certain claims, viz. indications, dosage form and route
of administration”. This component of Rule 122E, pertaining to ‘fixed dose combinations’
(“FDC”) will have to be read along with Appendix VI to the DCR, 1945. The Appendix
specifies in some detail the various clinical trial requirements for FDCs of different
permutations and combinations. For instance, if one or more of the active ingredients are
new, the resulting FDC will necessarily have to undergo clinical trials. If both active
ingredients constituting the FDC have been individually approved, the resulting FDC may
still be required to undergo clinical trials. Similarly if the ratio of active ingredients in an
already approved FDC is sought to be changed, there may be a need to carry out clinical
trials depending on certain parameters.
(ii) The clinical trials requirements – Rule 122A, Rule 122B &Schedule Y to the Drugs &
Cosmetics Rules, 1945: Rules 122A & 122B lay down the regulatory requirements to either import
into India or manufacture in India a new drug as defined in Rule 122E. Both Rules 122A (Import) &
Rule 122B (Manufacture) require that new drugs meet the regulatory requirements laid down in
Schedule Y to the DCR, 1945.23
‘Schedule Y’, which is titled ‘Requirement and Guidelines on Clinical Trials for Import and
Manufacture of New Drug’, lays down the requirements for the three phases of clinical trials.
According to Schedule Y, the three phases of a clinical trial are as follows:
Phase I: The main objective of Phase I of clinical trials is to determine the maximum
tolerated dose in humans; pharmacodynamic effects; adverse reactions, if any, with their
nature and intensity; and pharmacokinetic behaviour of the drug as far as possible.
23The relevant portion of the provision reads as follows “(2) The importer of a new drug when applying for permission
under sub-rule (1), shall submit data as given in Appendix I to Schedule Y including the results of local clinical trials carried out
in accordance with the guidelines specified in that Schedule”;
Phase II: The main objective of Phase II of clinical trials is to evaluate the effectiveness of a
drug for a particular indication or indications in patients with the condition under study and
to determine the common short-term side-effects and risks associated with the drug. While
Phase I trials are carried out on a small group of healthy volunteers, Phase II trials are
required to be carried out on a small group of patients.
Phase III: Also known as “therapeutic confirmatory trials”, these are the most rigorous and
extensive phase of trials and are designed to “to confirm the preliminary evidence accumulated in
Phase II that a drug is safe and effective for use in the intended indication and recipient population.” This
phase tests the dosage related effected, usage in different population groups, in different
stages of disease and the safety/efficacy of the drug in combination with other drugs. Phase-
III trials are typically the most extensive and by implication the most expensive.24
(iii) Waiver of Clinical Trials: While the clinical trial requirements themselves seem to be rather
rigorous, Schedule Y actually begins by providing an exemption from conducting Phase I, Phase II
& Phase III clinical trials in those cases where the drug has already received foreign regulatory
approval. Given that most new drugs are introduced in the market after they have received foreign
regulatory approval, the Indian drug regulator, routinely, exempts manufacturer or importers, of the
new drug, from carrying out any clinical trials and approval is instead granted on the basis of bio-
equivalence tests.25 However even if all three phases of clinical trials are waived, Schedule Y, still
requires local clinical trials on 100 Indian patients.26 The logic behind local clinical trials is to confirm
the safety and efficacy of the drug on Indian patients since it is presumed that clinical trials carried
out predominantly in Western countries, on Western populations need to be re-confirmed on Indian
people who maybe genetically different from western population and also live in a different socio-
economic context.27
24DiMasi; supra note 7.

25Infra n. 77.
26The relevant part of the definition reads: If the drug is already approved/marketed in other countries, phase III data
should generally obtained on at least 100 patients distributed over 3-4 centres primarily to confirm the efficacy and safety of the
drug, in Indian patients when used as recommended in the product monograph for the claims made.
27Infra n. 69.
Predictably, a proviso in Rule 122 A (Import) or Rule 122B (Manufacture) allows for the Indian drug
regulator to waive even local clinical trials on Indian patients on the grounds of ‘public interest’. The
proviso reads as follows: “Provided that the requirement of submitting the results of local clinical trials may not be
necessary if the drug is of such a nature that the Licensing Authority may, in public interest decide to grant such
permission on the basis of data available from other countries.” The grounds of ‘public interest’ are not
explained and as will be explained in a later Section of this essay, this provision has come under
withering criticism from a Parliamentary Standing Committee.28
PART II – THE ‘GREAT INDIAN DEBATE’ ON THE REQUIREMENT OF A DATA

EXCLUSIVITY REGIME FOR PHARMACEUTICALS AND AGRO-CHEMICALS
The ‘data exclusivity’ debate in India essentially began with the negotiation and eventually the
signing of TRIPs. In fact, the focus of the debate continues to be Article 39.3 of TRIPs. The
provision reads as follows:
3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural

chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the
origination of which involves a considerable effort, shall protect such data against unfair commercial use. In
addition, Members shall protect such data against disclosure, except where necessary to protect the public, or
unless steps are taken to ensure that the data are protected against unfair commercial use.
As evident from a reading of the text, Art. 39.3 required member-countries to protect test-data
related to trials of pharmaceutical or agricultural chemical products to be protected against “unfair
commercial use”. Since TRIPS never defined the meaning of “unfair commercial use”, the entire
debate surrounding Art. 39.3 is centred on this one phrase.29
While the innovator’s lobby in the US and Europe interpreted that particular phrase as requiring
India to put in place a ‘data exclusivity’ regime, the lobby of generic companies, left-leaning
academics and generic pharmaceutical companies interpreted the phrase as requiring at the most a
‘data protection’ regime wherein the drug regulator would be mandated to ensure the confidentiality
of the submitted information, while continuing to grant approvals to generics on the basis of such
28Infra n. 78.
29See generally Watal, Jayashree, Intellectual Property Rights in the WTO and Developing Countries (2001) pp. 201-204.
confidential information.30 In order to resolve the conflict on the interpretation of Article 39.3 the
GoI commissioned at least one study and carried out yet another study by itself.
This Section of the paper will briefly summarize the above studies along with some other reports,
such as reports by Parliamentary Standing Committees which although not binding on the GoI, have
great persuasive value on the policy making apparatus of the GoI.
(i) The CUSAT study: The first comprehensive study on ‘test-data protection’ was conducted by
the School of Legal Studies at the Cochin University of Science & Technology (CUSAT) in January,
2004, with funding from the Department of Commerce, Ministry of Commerce & Industry,
Government of India.31
This study, titled ‘Study on Testdata Protection in India’ was reportedly “undertaken to identify the
suitable mode of protection of test data in India considering the interest of the Indian industry, while complying with the
TRIPS obligations.”32 Towards this end the CUSAT study focussed on three objectives: (a) The TRIPs
requirements under Article 39.3; (b) The existing safeguards for ‘protection of test-data’ in India &
(c) The perspective of the Indian Pharmaceutical Industry on the topic.
After examining the history of TRIPs and the negotiating history of Article 39.3 TRIPs the CUSAT
study concluded by stating: “the argument that data exclusivity is the only mode to protect test-data against unfair
commercial use is not correct”.33 Further the report also stated that “data exclusivity will only be a TRIPS plus
approach and not bound by member countries”.34 Instead, the study suggested that the bar against “unfair
commercial use” in Article 39.3 could be restricted to “protection through non-disclosure” which
prohibited others “from accessing this test data for unfair commercial use” i.e. giving ‘test data’ the
30See generally: Carlos María Correa, Protection of data submitted for the registration of pharmaceuticals: Implementing the
standards of the TRIPs agreement, SOUTH CENTRE (2002); Position Paper – Data Exclusivity: A Major Obstacle to
Innovation and Competition in the E.U. Pharmaceutical Sector, European Generic Association (EGA) (2000);
Position Paper – Regulatory Data Protection – A building block for pharmaceutical R&D, Organization of
Pharmaceutical Producers of India (2008).
31Prof.N.S.Gopalakrishanan et. al., Study on Test-data Protection in India, CUSAT (2005) at (This study was later
published as a book by the Eastern Book Company).
32Ibid at p [v];
33Ibid at p. 45;
34Id.
status of confidential or trade secret information.35 This mode of protection would still allow the
introduction of generics on the basis of bio-equivalence data and would have little effect on keeping
generics from the market.
With regard to the requirements of the domestic Indian pharmaceutical industry, the study, after
extensive consultations with the domestic generic pharmaceutical industry, concluded that the
Indian industry “was demanding strong protection of confidentiality” for test-data but not a data
exclusivity regime.36As a result, the CUSAT study limited its recommendations to the introduction
of new laws pertaining to the non-disclosure of test-data submitted to the pharmaceutical and agro-
chemical regulatory authorities.37 The demand for data exclusivity or ‘non-reliance’ on the test-data
of innovator companies by follow on generics was clearly rejected by the study. It must be noted,
that ‘data-protection’ per se, i.e. a mere confidentiality of clinical trial data is no longer the most
pressing demand of the innovator pharmaceutical lobby in 2013 because companies like GSK and
Roche have announced their intention to make available all clinical trial data publicly available, in
order to ensure that the medical community has access to complete information.38
The CUSAT study did not include within its purview any of the possible beneficial effects of a data
exclusivity regime on public health, especially the utility of the data generated from local clinical
trials on Indian citizens. Furthermore, the CUSAT study despite raising a warning flag with regard to
drug regulatory mechanism in India and calling for “putting effective systems” in place, omits to
critically examine the manner in which local clinical trials were being supervised by the DCGI. 39 As
will be explained later in this article, the requirements of local clinical trials have a direct bearing on
the need for data exclusivity and it is absolutely crucial to study the manner in which these studies
are being administered.40
35Ibid at p. 45-46.
36Ibid at p. 46.
37Ibid at p. 46-48.
38 Rupert Neate, GlaxoSmithKline to publish clinical trial data, GUARDIAN (Feb 5, 2013) available
at:http://www.guardian.co.uk/business/2013/feb/05/glaxo-smith-kline-publish-clinical-trial-data (last
visited on 4th March, 2013)
39Supra note 32 at p.45.
40See generally Part III.
(ii)Report of the Inter-Ministerial Committee setup by the Government of India: Towards the
end of the 10 years period provided to India to make it laws TRIPs compliant, the Government of
India constituted a special inter-ministerial committee to examine the data exclusivity issue.
This committee constituted on the 10th of February, 2004 was headed by Mrs. Satwant Reddy,
Secretary and Mr. Gurdial Singh Sandhu, Joint Secretary, to the Department of Chemicals &
Petrochemicals, Govt. of India. The Committee also had as its members, representatives from other
relevant Ministries of the Government of India.41 The final report submitted by the Committee was
officially titled “Report on steps to be taken by Government of India in the context of Data
Protection Provisions of Article 39.3 of TRIPs Agreement”42 (Hereinafter ‘Reddy Committee
Report’).
The ‘office memorandum’ constituting the Committee required it to examine and consider the steps
to be taken by the Government of India in the context of the provisions of Article 39.3 of the
TRIPs Agreement, for the protection of undisclosed regulatory information.43 The Committee was
also required to look at whether data protection can be offered under the existing legal provisions or
whether the Government was required to create a new mechanism.44
In its final report submitted on the 31st of May, 2007 the Committee examined separately the
requirements of the agro-chemical industry, the pharmaceutical industry & the traditional medicine
sector. Surprisingly, the Committee made different recommendations for each sector i.e. it
recommended a ‘data exclusivity’ regime for agro-chemicals but only a ‘non-disclosure’ or
confidentiality regime for the information submitted by the pharmaceutical sector and the sector of
traditional knowledge medicines industry i.e. the test data would be considered confidential but a
regulator could still depend on this information to grant approvals to generics. The detailed
reasoning of the committee for each sector is explained below:
41The committee had a total of 15 members, most of whom were bureaucrats from various Ministries also
had as its members academics, lawyers and the Drug Controller General of India.
42Mrs. Reddy et. al., Report on steps to be taken by Government of India in the context of Data Protection Provisions of
Article 39.3 of TRIPs Agreement, GOVT. OF INDIA (2007).
43Notification No.11025/7/2003-PI-II, Department of Chemicals and Fertilizers, Ministry of Chemicals and
Fertilizers, Government of India, 19th February, 2004.
44Id.
(a) The Agro-chemical industry: The Committee assessed the suitability of a ‘data exclusivity’
regime for the agro-chemical industry without any discussion on the minimum international
obligations that India was required to fulfil under Article 39.3 of TRIPs.
Instead, the Committee adopted a more ‘nationalistic approach’ i.e. it decided to approach the issue
of ‘data exclusivity’ not from the perspective of TRIPs but instead on the overall effect of such a
policy on India and its farmers. The Committee very pertinently notes that India cannot depend on
foreign data while approving the safety and efficacy of agro-chemicals since “efficacy tests for agro-
chemicals must be repeated in every country, even in several regions in a country due to differences in crops, pests,
agronomical practices, climate conditions and terrains.”45
The committee also noted that as a result of India not providing ‘data exclusivity’ protection to agro-
chemicals, the Indian farmers were being deprived of the latest agro-chemicals since there was no
way for originator companies to protect their test-data from being exploited by free-riders.46
As a result the Committee recommended that test data generated by originator agro-chemicals be
given a three year ‘data exclusivity’ term during which the regulatory authority could not rely on the
data of the originator to grant approvals to generics.47
(b) The Traditional Medicines industry: While assessing the requirement of a ‘data exclusivity’
regime for the traditional Indian medicines, a category of medicines that is formally recognized
under Indian law, the Committee once again stayed away from any TRIPs analysis, focussing instead
on the existing incentives under the law for innovation of traditional knowledge. The Committee
notes that in the absence of patent protection for traditional knowledge under the Patents Act, 1970,
there are few incentives for the traditional medicine industry to continue innovation.48 The
committee also notes that the Government was in the process of establishing a regulatory
mechanism for traditional medicines and that the sector would have to conduct rigorous trials to
validate the safety and efficacy of these medicines.49 Given the increasing regulatory demands of the
45Supra n. 43at p. 23-26.

46Id.
47Ibid at p. 39 (para 7.4).

48Ibid at p. 36-37; Section 3(p) expressly prohibits the patenting of traditional knowledge.
49Id.
sector and the lack of any other incentives for the sector, since patent protection is banned for
traditional medicines, the Committee recommended a five year ‘data exclusivity’ regime be granted
for traditional medicines for the following purposes50:
“i) Data in support of new use or new dosage forms for traditionally used medication.
ii) Data generated in respect of standardization of products.
iii) Data generated for safety / efficacy / stability / quality / process standardization of an existing or a new
product.”
(c) The Pharmaceutical industry: With regard to the pharmaceutical industry, the Committee was
of the opinion that India’s minimum requirements under Article 39.3 of TRIPs would be fulfilled by
strengthening the ‘data-protection’ laws to ensure that the drug regulators maintained the
confidentiality of the ‘test data’ submitted to it.51 It however recommended, that in the long run,
India should move towards a ‘data exclusivity’ regime for even pharmaceuticals and went ahead to
suggest a possible model for the same.52
Interestingly, the Committee distinguishes its recommendations for the agro-chemical industry and
the pharmaceutical industry on the grounds that while the former could not depend on ‘foreign data’
for regulatory approval in India, the latter industry was allowed to depend on ‘foreign data’ for
regulatory approval within India. In pertinent part the report states: “Unlike pharmaceuticals,
efficacy tests for agro-chemicals must be repeated in every country, even in several regions in a
country due to differences in crops, pests, agronomical practices, climate conditions and terrains.”53
As noted elsewhere in the Committee’s report, the law in India allows companies to secure
approvals on the basis of ‘foreign test-data’ and data from local clinical trials on a small number of
Indian patients along with bio-equivalence tests. According to the report, the cost of local clinical
50Ibid at p. 42-43.
51Ibid at p.44.
52Ibid at p. 46-53.
53Ibid atp.23.
trials and bio-equivalence tests is a “far simpler exercise requiring much less time, effort and money
than conducting the full set of clinical trials”.54
The Committee therefore links it final recommendations on data exclusivity for ‘pharmaceuticals’ to
the requirements of regulatory laws in India. However, if the regulatory requirements of the law
itself are questioned, the conclusions of the Committee will have to be re-examined.
The question therefore that will be examined at a later stage in this essay is the paradox of India
prescribing rigorous local trials for agro-chemicals but exempting pharmaceuticals from the same.
This is important because as explained earlier the requirement for ‘data exclusivity’ is intrinsically
linked to the regulatory requirements of Indian laws.
(iii) Report of the Parliamentary Standing Committee on the ‘Patents & Trademarks System
in India’: This Parliamentary Committee, consisting of 30 odd Members of the Indian Parliament,
across party lines, was conducting a general study on the ‘Patents & Trademarks System in India’
and it tabled its final report before Parliament on October 24th, 2008.55
Since major pharmaceutical organizations for both innovator and generic companies along with
‘access to medicine’ NGOs had deposed before the Committee, the issue of ‘data exclusivity’ was
also examined by this Committee.56 In pertinent part the Committee notes:
“The Committee feel that conceding to demand for Data Exclusivity would amount to agreeing to TRIPS
plus provisions.”57
“5.48 Since the consequences of Data Exclusivity are quite serious, the Committee strongly recommend that
the Government should not fall prey to such demands of MNCs.”58
54 Ibid at p.15.
5588th Report on Patents & Trade Marks System in India, Department Related Parliamentary Standing
Committee on Commerce, RajyaSabha, Parliament of India (2008).
56 Ibid at para 5.47-5.48.
57 Ibid at para 5.47.
58 Id.
For reasons best known to the Committee it did not make any reference to the Reddy Committee
report despite the same being brought to its notice by one of the organizations which deposed
before the Committee.59
The Committee also completely failed to acknowledge the fact that the Government of India had
already implemented a ‘data-exclusivity’ regime for the ‘agro-chemical’ industry through a
notification of the Central Government.60 If the Committee had taken note of this particular fact, it
would have been hard-pressed to state that India should not adopt a ‘data-exclusivity’ regime merely
because it is a ‘TRIPs-plus’ regime.
(iv)Report of the Parliamentary Standing Committee on the ‘Pesticide Management Bill,

2008’: In 2008 the Central Government, acting on the recommendations of the Reddy Committee
Report, incorporated a ‘data exclusivity’ clause into the Pesticide Management Bill, 2008 which was
subsequently introduced into Parliament on the 30th of September, 2008 by the Ministry of
Agriculture, Government of India.61 Clause 12(6) of this Bill, which is the ‘data exclusivity’ clause,
prohibited the Indian regulators from relying on the data submitted by an originator for granting
approval for a period of 3 years. As is the usual practice the Bill was referred to a Parliamentary
Standing Committee for examination and public consultations. Not only did the Standing
Committee approve of the ‘data exclusivity’ clause, it recommended that the period of ‘data
exclusivity’ be extended from 3 years to 5 years.
In pertinent part the report states “In order to encourage the introduction of newer pesticide molecules in the
country, the Committee recommend that the data protection period should be increased to five years. Applicants may be
asked to declare in their applications the ‘Trade Secret Data’ that require protection. However, Central Government
should have the power to disclose the ‘Trade Secret Data’ information when it is absolutely essential in public
interest.”62
59Ibid at Annexure IX.

60Infra n. 63.
6146th
Report on the ‘Pesticide Management Bill, 2008’, Department Related Parliamentary Standing
Committee on Agriculture (2008).
62Ibid at para 33.
Unlike the other Parliamentary Standing Committee referred to earlier, this particular committee
made no reference to TRIPs at all. The Pesticide Management Bill, 2008 has been pending before
the Parliament of India for the last four years.
It may also be pertinent to mention that the Government of India was so keen to enforce a ‘data
exclusivity’ regime in India that instead of waiting for Parliament to pass the aforementioned Bill, it
issued two notifications creating a ‘data-exclusivity’ regime for the agro-chemical industry.63
PART III: THE IMPORTANCE OF LOCAL CLINICAL TRIALS TO INDIAN PUBLIC HEALTH –
THE MISSING LINK IN THE DATA EXCLUSIVITY DEBATE
A. THE LINK BETWEEN LOCAL CLINICAL TRIALS AND DATA EXCLUSIVITY

By implication, most of the Indian arguments against data exclusivity for pharmaceuticals presume
that India does not need to provide an incentive for clinical trials in India since it can effectively
‘free-ride’ off the regulatory data that pharmaceutical companies are bound to generate for the
prosperous markets of North America & Europe. Such a negotiating strategy bears close
resemblance to India’s historic decision in 1970 to do away with pharmaceutical patents.64
The assumption in that case was that regardless of the legal position in the Indian market,
pharmaceutical companies would continue with innovation for foreign markets.65 It is however
doubtful whether such logic can be replicated in the context of local clinical trials which are carried
out to validate drugs in the socio-economic-genetic context of the Indian sub-continent. In other
63No.17-2/2006-PP.I dated 30th October, 2007, Department of Agriculture & Co-operation, Ministry of
Agriculture, Government of India, F.No.17-2/2006-PP.I dated 18th February, 2008, Department of
Agriculture & Co-operation, Ministry of Agriculture, Government of India;
64Seegenerally Shamnad Basheer, India’s Tryst with TRIPS: The Patents (Amendment) Act, 2005, 1 IND. J. L. &
TECH. 15 (2005). One of the main reasons given by the Government of India to justify the decision to bring
back pharmaceutical patents in 2005, apart from its TRIPs obligation, was the hope that Indian companies
were capable of carrying out pharmaceutical innovation for neglected diseases i.e. diseases afflicting
developing countries like India and which were ignored by western pharmaceutical companies who were
more concentrated on drugs for diseases affecting the more prosperous markets of the West. This dream of
Indian scientists focussing on Indian diseases was partly realized when Indian scientists at Ranbaxy
successfully concluded clinical trials of the first low-cost Indian drug against malaria. See generally Mansi Mithel
,Ranbaxy launches home-grown malaria drug, BUS. WORLD, Apr. 30, 2012. Available at:
http://businesstoday.intoday.in/story/ranbaxy--malaria-drug-synriam/1/24381.html
65See generally N.R. AYYANGAR, REPORT ON THE REVISION OF THE PATENTS LAW (1959).
words, the innovator firm has to carry out such trials exclusively for the Indian market and it is only
incentives in the Indian market that are going to influence the decision of the innovator firm.
If there is a consensus on the fact that such local clinical trials are vital to meet the public health
requirements of Indian patients, it follows that Parliament must provide innovators an incentive to
carry out local clinical trials in India. In normal circumstances if a pharmaceutical drug already had
patent protection, there would be no need to grant an added incentive to carry out local clinical
trials. Instead, the drug regulator could withhold regulatory approval until such tests are carried out.
However as we have witnessed in India, a large number of drugs on the market do not have patent
protection due to a high threshold under the Indian Patent Act, 1970 and if India were to mandate
local clinical trials without any added incentive, it is possible that most pharmaceutical companies
would have little or no incentive to carry out such trials without added incentives since the law does
not prevent their competitors from ‘free-riding’ on the original clinical trial data.
Data exclusivity could be one such incentive for pharmaceutical companies to carry out local clinical
trials.As explained earlier, the requirement of local field trials for testing pesticides in local Indian
conditions was one of the main reasons that the Indian Government is pushing for a data-exclusivity
regime for agro-chemicals. The issue thus that we are required to examine in this context, is whether
the Indian govt. has factored in the importance of ‘local clinical trials’, while arguing against a data
exclusivity regime for pharmaceutical companies.
B.THE REPORT OF THE PARLIAMENTARY STANDING COMMITTEE ON HEALTH & ITS
IMPLICATIONS FOR LOCAL CLINICAL TRIALS
In the budget session of the Indian Parliament in 2012, the Parliamentary Standing Committee on
Health & Family Welfare, which has as its members 30 MPs, from across the political spectrum, had
tabled a damning report on the state of drug regulation in India.66 The report, which is probably the
first ever comprehensive study of the Indian drug regulatory framework focussed on the functioning
of the Indian drug regulator and also the manner in which local clinical trials were being routinely
waived by the drug regulator without any cogent reasoning.
6659thReport, The functioning of the Central Drug Standard Control Organization (CDSCO), Department Related
Parliamentary Standing Committee on Health, RajyaSabha, Parliament of India (2012).
In a scathing indictment of the drug regulator - the CDSCO – the report stated the following “The
Committee is of the firm opinion that most of the ills besetting the system of drugs regulation in India are mainly due to
the skewed priorities and perceptions of CDSCO. For decades together it has been according primacy to the
propagation and facilitation of the drugs industry, due to which, unfortunately, the interest of the biggest stakeholder
i.e. the consumer has never been ensured.”67
On the point of local clinical trials, the parliamentary panel examined three specific points: (i) The
importance of local clinical trials for India; (ii) the regulatory requirements for local clinical trials in
the DCR, 1945 & (iii) the manner in which local clinical trials were being waived.
Given the scathing and eloquent critique by the Panel report, the writer has extracted in whole, the
relevant statements made by the Panel:
(i)The importance of local clinical trials for India: The committee had the following to
state on the issue of local clinical trial in India: “The basic purpose of Phase III trials is to determine
if there are any ethnic differences that can alter the metabolism, efficacy and safety of the drug when
administered to patients of different ethnicities living in India (such as Indo-Aryans, Dravidians,
Mongoloids, Tribals etc.). There is evidence that the effect of some drugs can vary among various ethnic
groups. For example, the blood levels reached after intake of lipid lowering agent rosuvastatin are far higher
in Asians, compared to Europeans and North American Caucasians, Hispanics and Blacks needing
lowering of dosage. Failure to lower dose in Indians can result in severe toxicity, including life-threatening
muscle injury leading to fatalities. Hence, testing drugs in the Indian ethnic groups is of paramount
importance before approving any drug of foreign origin.”68
This issue raised by the Committee is of utmost interest in the Indian context since it
questions a longstanding assumption that India could free-ride on foreign regulatory
approvals, especially approvals granted by the United States Federal Drug Regulatory
Authority (USFDA). It should also be noted that the rationale provided by the Committee in
order to push for more local clinical trials on Indians, has also been used in the West to
67Ibid at para 2.2.

68Ibid at para 7.10;
question the practice of outsourcing clinical trials to countries like India which differ in their
genetic makeup from countries in the West.69
Although the Committee does not exactly examine the manner in which USFDA approvals
are granted, the writer has sought to fill in this minor oversight, by explaining the ethnicity
and race requirements for clinical trials in the USA.
Traditionally, USFDA ‘Guidance for the Industry’ on ‘Collection of Race and Ethnicity Data
in Clinical Trials’70, have recommended that data be collected in the following format for
different races: (a) American Indian or Alaska Native (b) Asian (c) Black or African
American (c) Native Hawaiian or other Pacific Islander (d) White.71 Although there is no
separate category for Indians, the definition of ‘Asian’ stretches from persons having origins
in the Far East to persons from the sub-continent i.e. from Japan to Pakistan.72 Prima facie,
this classification seems to be suspect since a majority of Indians are not of the Mongoloid
race as is the case with most people who have their origins from countries like China or
Japan. In fact, India is one of the most genetically diverse populations. It must be
remembered that the USFDA guidance is not binding and recent studies have concluded
that an overwhelming majority of patients enrolled in clinical trials in the US are ‘white’.73It is
worrying to note such statistics because the USFDA is often considered to be the gold-
standard when it comes to the issue of regulatory approval for pharmaceutical products.
It should also be noted that the lack of local clinical trials is a global problem not limited to
India. While studying the AIDs situation in Africa, the All Party Parliamentary Group
(APPG) of the United Kingdom has complained of ‘missing information’ for the African
patients infected with the HIV+ve virus since most clinical trials were designed for the
69SethGlickman etc. Ethical & Scientific Implications of the Globalization of Clinical Research, N. ENG J. MED 816-
823 (2009).
70Guidance
for Industry: Collection of Race & Ethnicity Data in Clinical Trials, USFDA (2005) available at:
http://www.fda.gov/downloads/RegulatoryInformation/Guidances/ucm126396.pdf
71Ibid at p. 5.
72Id.
73Evelyn et. al., Participation of Racial/Ethnic Groups in Clinical Trials and Race Related Labelling: A Review of New
Molecular Entities approved 1995-1998. 93 Journal of the National Medical Association (2001).
markets of developed countries. In pertinent part the report stated “As well as missing medicines
and diagnostics there is missing data about the suitability of some of the existing medicines for a developing
country context. Clinical trials are often designed with a view to registration in the developed world, to capture
maximum commercial benefits.”74
It may help to mention, that there has been a long-standing demand even within the U.S.,
for making available clinical trial information as per various subsets including sex, race and
ethnicity. In response, the U.S. enacted, in July 2012, the Food and Drug Administration
(FDA) Safety and Innovation Act (FDASIA) which “makes available information about differences
in safety and effectiveness of medical products according to demographic subgroups, such as sex, age, racial,
and ethnic subgroups, to health care providers, researchers, and patients.”75 This new requirement
however extends to only reporting requirements and does not extend to mandatory clinical
trials on a more diverse range of patient groups.
Given the above circumstances, the GoI probably needs to re-examine the kind of clinical
data that is being submitted to the USFDA and take steps to incentivise the collection of
more data on the native Indian population, from different parts of the country to ensure that
the medical community has more accurate information on the effects of pharmaceutical
drugs on different groups. In order to incentivise such trials, the GoI will have to provide
some kind of incentive such as a ‘data exclusivity’ regime.
(ii) The regulatory requirements for local clinical trials in the DCR, 1945:On the point
of re-examining Indian regulatory requirements, the Committee had this to say: “The
Committee is of the view that taking into account the size of our population and the enormous diversity of
ethnic groups there is an urgent need to increase the minimum number of subjects that ought to be included in
Phase III pre-approval clinical trials to determine safety and efficacy of New Drugs before marketing
permission is granted. In most western countries the required numbers run into thousands. However since the
major objective in India is to determine the applicability or otherwise of the data generated overseas to Indian
74The Treatment Time Bomb: Report of the Enquiry of the All Party Parliamentary Group on AIDS into
Long-Term Access to HIV Medicines in the Developing World (2009) (U.K) at p. 26.
75S. 907, Food and Drug Administration Safety and Innovation Act (FDASIA); See also Press Release, Clinical
trials reporting by sex, race and ethnicity signed into law, The Society for Woman’s Health Research, (July 2012)
available at http://www.womenshealthresearch.org/site/News2?page=NewsArticle&id=13470
population, the requirement should be re-assessed and revised as per principles of medical statistics so that
major ethnic groups are covered. A corresponding increase in the number of sites so as to ensure a truly
representative sample spread should also be laid down in black and white. Furthermore, it should be ensured
that sites selected for clinical trials are able to enrol diverse ethnic groups. For domestically discovered drugs,
the number of subjects should be revised as well. This can be easily achieved by changes in the Good Clinical
Practice (GCP) guidelines.”76
If the above recommendation of the Committee is accepted by the GoI, and it is hard to see
as to how the Govt. is going to ignore such a recommendation, the regulatory authorities will
have to re-examine why and how innovator firms will carry out local clinical trials when they
have no way to prevent free-riders from entering the markets on the basis of such data
thereby corroding the competitive advantage of the innovator firms. As explained earlier,
this question is all the more pertinent given the high threshold for pharmaceutical patent
protection in India.
(iii) The manner in which local clinical trials were being waived: While studying the
manner in which the Indian drug regulator was conducting local clinical trials on the Indian
population, the committee noted, and shockingly so, that a total of 31 new drugs were
approved for the Indian market in the period of 30 months without any local clinical trials
being conducted in India.77 The local clinical trials were reportedly waived on the basis of the
‘public interest’ provision in Rule 122A & B. When the Regulator was asked for the basis of
determining ‘public interest’ to waiver local clinical trials, it was not given a satisfactory
answer. In pertinent part, the report states “The Ministry explained that under the rules, DCGI has
the power to approve drugs without clinical trials in “Public Interest.” No explanation is available as to
what constitutes Public Interest. How can approvals given to foreign drugs without testing on Indians be in
Public Interest?”78
When the regulator attempted to defend its actions on the basis that these drugs had been
tested rigorously in foreign countries, the Committee countered this by stating that the
76Supra n. 68 at para 7. 29.

77Ibid at para 7.16.
78Ibid at para 7.17.
regulator was waiving local clinical trials on mere presumptions that the drugs would work
similarly on Indians and that the committee had not been offered any evidence to prove this
presumption.79 Commenting on how most of foreign clinical trials were being conducted on
ethnicities not found in India, the Committee reminded the regulator that “The interest is in
those ethnicities that live in India, not Slavs, Caucasians, Hispanics and Negroes.”80
(iv) Incentivizing local clinical trials through a data exclusivity regime: It follows from
the report of the Parliamentary Committee, that the GoI should seriously consider revising
the clinical trial rules to ensure that larger Phase III, clinical trials are conducted on various
sub-groups of the Indian population. The obvious issue that presents itself at the juncture, is
whether innovator pharmaceutical companies or for that matter, even generic
pharmaceutical companies will invest in such clinical trials without the added incentives.
Normally a patent regime would have provided such an incentive but as we have seen in
India, the threshold for patentability is extremely high and the Indian patent office has been
liberal in turning down patent applications filed by innovator pharmaceutical companies.
Would these companies invest in clinical trials, knowing fully well that generic
pharmaceutical companies could free-ride of their data and enter the market at a much lower
price? Or would generic pharmaceutical companies invest in clinical trials knowing well that
their competitors would free-ride off their data? The answer is likely in the negative in both
cases.
If pharmaceutical companies are expected to invest in local clinical trials, it follows that the
State will have to give them some kind of incentive and as things stand now, a data-
exclusivity regime appears to be the best model to incentivise such trials.
PART IV: INCENTIVIZING PHARMACEUTICAL INNOVATION THROUGH A DATA

EXCLUSIVITY REGIME
Conventionally, pharmaceutical innovation has always been viewed through the prism of patent law.
However there are circumstances in which patent law cannot incentivise innovation. Two such
79Ibid at para 7.19

80Id.
examples are pharmaceuticals based on traditional knowledge and fixed-dose combinations of either
new or existing pharmaceuticals. For reasons, explained below, although both classes of
pharmaceuticals are not patentable, they still have to go through a rigorous clinical trials process
before being approved for sale to the public.
(A) CREATING INCENTIVES FOR INNOVATION IN THE TRADITIONAL KNOWLEDGE BASED
PHARMACEUTICAL INDUSTRY:
The provision barring the patenting of traditional knowledge in the Patent Act, 1970 reads as
follows:
Section 3 (What are not inventions) (p) – an invention which in effect, is traditional knowledge or which is
an aggregation or duplication of known properties of traditionally known component or components.
The above provision is a sub-provision of Section 3 of the Patent Act, which describes all that
subject matter which is not patentable in India. Section 3(p) was inserted into the Act through the
Patent (Amendment) Act, 2002. This provision was introduced in the backdrop of several much
publicized cases in the U.S. and Europe where attempts were made to patent properties of neem,
turmeric and basmati despite the fact that these properties had been known in India for several
hundred years.81
While the overall intention behind Section 3(p) is laudable, it does point to the need of providing
other incentives to stir innovation in the traditional knowledge sector, especially since India enjoys a
comparative advantage in this sector because of its long history in traditional knowledge related
medicines.82
The three broad categories of traditional medicines dealt with under the Drugs and Cosmetics Act,
1940 are as follows: Ayurvedic, Siddha and Unani drugs.83 These traditional medicines are
considered to have several advantages over the allopathic medicines and have been providing
81Soutvik Biswas, India hits back in ‘bio-piracy’ battle, BBC (Dec. 7, 2005) available at
http://news.bbc.co.uk/2/hi/south_asia/4506382.stm (last visited March 1, 2013).
82See generally Priyanka Pulla, Ayurveda: Hoax or Science?, OPEN (Feb. 1, 2013) available at
http://www.openthemagazine.com/article/living/ayurveda-hoax-or-science(last visited March 1, 2013).
83See generally Chapter IVA, Drugs & Cosmetics Act, 1940.
increasingly stiff competition to allopathic industry. The greatest selling point of these traditional
medicines is that they are natural in the sense that they are usually not chemically synthesized.84
However as noted by a report of the World Health Organization (WHO) just because a medicine is
‘natural’ it does not automatically follow that the medicine is ‘safe’.85 The same WHO Report states
that there is a common belief that long use of a medicine, based on tradition, assures both safety and
efficacy. Most importantly the WHO Report notes that several of these medicines are being used
outside of their traditional cultural and social context and that some of these medicines are used in
combination with heavy metals and chemicals.86 Given these concerns the WHO Report
recommended that such traditional medicines be brought within the ambit of national drug
regulatory systems.87 This demand for more clinical trials has also been backed by a Section of the
medical community which has been demanding concrete scientific evidence of the validity of these
traditional knowledge based drugs.88
In India the Drugs and Cosmetics Act regulates and monitors only the manufacturing of Ayurvedic,
Siddha and Unani medicines. There is no mechanism for requiring these drugs to go through clinical
trials and there have been few trials involving Ayurvedic drugs.89The logic for this conclusion seems
to be that traditional medicines which have worked for centuries do not require fresh validation.
84See
generally Birgit Heyn, Ayurveda: The Indian Art of Natural Medicine and Life Extension (1990) &Chopra A,
Doiphode VV. Ayurvedic medicine-core concept, therapeutic principles, and current relevance, Medical Clinics of North
America. 2002; 86(1):75–88.
85THE IMPORTANCE OF PHARMACO-VIGILANCE: SAFETY MONITORING OF MEDICINAL PRODUCTS, World
Health Organization (2002) at p.21.
86Id.
87Ibid at p. 23.
88RakeshKalshian, Old Drugs, New Bottles, OUTLOOK, (June 07, 1999) available at
http://outlookindia.com/article.aspx?207589 (last visited March 1, 2013).
89Seegenerally Lodha R. Bagga A, Traditional Indian systems of medicines, Annals of the Academy of Medicine, 2000
Jan-29(1):37-41.
In response to the above mentioned concerns, the GoI had announced that it would make it
mandatory to conduct pre-clinical and clinical trials for new Ayurvedic formulations.90 It was hoped
that the validation of these new Ayurvedic formulations through clinical trials would not only help in
establishing the safety and efficacy of these drugs but also boost international regulatory and
consumer confidence in these drugs.91 The government is yet to put in place any regulations
requiring mandatory clinical trials.
This proposal of the Government however has come under fire from the manufacturers of
Ayurvedic medicines, their main objection being that the cost of clinical trials would drive up the
costs of the drugs.92 Although none of these industries have articulated their concerns in terms of
the ‘free-rider’ problem, this does seem to be one of the reasons for opposition to a stronger
regulatory regime. If the entire industry is allowed to free-ride off the clinical results that were
generated by one company, through considerable investment, then in that case it is unlikely that any
company would have an incentive to generate clinical data. Therefore in order to incentivise the
generation of clinical data it is absolutely necessary to provide some kind of exclusivity to the
company generating such clinical data, through considerable investment.
A ‘data exclusivity’ incentive is completely in sync with the Central Government’s recent move to
enforce higher regulatory standards for the industry. This recommendation is also keeping in line
with the Reddy Committee Report which in pertinent part stated the following:
“As per WHO study, traditional medicines are popular with almost 70% of the Indian Population. Since
most of these medicines are already in the public domain, there is no patent protection for these under the
Indian Patent Act. There is, however, a need to develop proprietary medicines based on the raw materials
described in the classical texts by promoting greater research and development, improving their efficacy and to
find new uses for these. Data protection can play an important role in this regard. It was discussed that a
90C.H.Unnikrishnan, Ayurvedic drugs too will need to be clinically tested, say govt., MINT (Jul. 7, 2010) available at
http://www.livemint.com/Home-Page/fcpNVX6GXqmJCnQ4TWkNuJ/Ayurvedic-drugs-too-will-need-to-
be-clinically-tested-says.html(last visited March 1, 2013).
91Id.
92 P. K. Krishnakumar, Clinical trials for new Ayurvedic formulations find few takers, ECON. TIMES (Feb 18, 2009)
available at http://articles.economictimes.indiatimes.com/2009-02-18/news/27639980_1_ayurvedic-drugs-
clinical-trials-new-ayurvedic(last visited March 1, 2013).
fixed period of data protection for five years with non-reliance by the Drug Regulator on the data submitted
by the first applicant while approving second and subsequent applicants, should be appropriate.”93
It is time for the Government to seriously consider implementing the above recommendations of
the Reddy Committee Report.
(B) CREATING INCENTIVES FOR INNOVATION IN THE FIXED-DOSE-COMBINATION (FDC)

CLASS OF PHARMACEUTICAL INNOVATION:
FDCs deserve a special mention in this article because for better or for worse, the Indian
pharmaceutical industry is churning out these FDCs at a prodigious rate.94As was the case with
traditional knowledge, FDCs are not patentable in most cases, in large part, due to Section 3(e) of
the Patent Act, 1970 discussed below:
Section 3 (e): A substance obtained by a mere admixture resulting only in the aggregation of the properties
of the components thereof or a process for producing such substance:
This provision of the Patents Act renders un-patentable ‘a mere admixture resulting only in the
aggregation of the properties of the components thereof’. This provision specifically affects FDCs
because this class of drugs consists of formulations of two or more active ingredients combined in a
single dosage form and where one or both of the active ingredients may have already received
regulatory approval.
However not all FDCs are un-patentable. Those FDCs showing a ‘synergistic effect’ are patentable
under Section 3(e). A FDC is considered to demonstrate a synergistic effect, when the FDC results
in a magnification, and not a mere aggregation of properties of the individual drugs. Only FDCs
showing a mere aggregation of properties of the individual drugs are considered to be not patentable
under Section 3(e).
FDCs have a significant role to play in public health because a single FDC can treat more than one
disease at the same time. From the perspective of doctors operating in a challenging environment,
FDCs are invaluable to patient case because these drugs increase patient compliance substantially.
93supra note 43 at 6.4.3.

94See generally Chandler Gautam & Lekha Saha, Fixed Dose Combinations (FDCs): Rational or Irrational – A
viewpoint, BR J CLINPHARMACOL. 2008 MAY; 65(5): 795–796.
The reason for this is the fact that the patient will now have to take only one drug instead of two or
three or more drugs. This can be a boon for patients who are being treated for complex diseases like
AIDS and tuberculosis, both of which require a multi-drug treatment and the WHO has been
extremely appreciative of the role played by FDCs in the treatment of the aforementioned diseases.95
In the absence of a FDC, patients may often forget to consume the different medication, leading to
complication in their treatment regimens and even dangerous side-effects such as resistance to
future treatment. Easy and increased compliance of patients makes the overall treatment safer, more
effective and substantially cheaper.96
Although FDCs are un-patentable per se, these drugs may still be subject to the requirement of
clinical trials. As per Rule 122E of the Drugs and Cosmetics Rules, 1945, a Fixed Dose Combination
is a ‘new drug’ thereby necessitating clinical trials. For certain categories of FDCs especially those
involving a new active ingredient it is mandatory to carry out clinical trials.
Such clinical trials require investment and the pharmaceutical company planning to introduce a
novel FDC into the market will be required to invest substantial resources in order to establish the
safety and efficacy of the FDC. The question therefore is whether or not a pharmaceutical company
will have an incentive to create a novel FDC even though it will not be provided with any form of
monopoly marketing or manufacturing rights, either under patent law or data exclusivity legislation?
The answer to this question is both a yes and a no.
As noted by one Report by the U.K. Parliament on the treatment of AIDS in Africa, Cipla, a leading
Indian pharmaceutical company was one of the first players in the market to create a novel FDC by
combining three known active ingredients which had already been invented by three different
companies.97 The Report commended Cipla for creating this novel FDC because not only did the
FDC greatly simplify the treatment of HIV/AIDS in Africa, but also because the drug was
attractively priced.98 The Report also very pertinently pointed out that Cipla created this FDC in
95Fixed Dose Combinations for HIV/AIDS, Tuberculosis and Malaria, World Health Organization, (2003) available
at http://apps.who.int/medicinedocs/en/d/Js6172e/ (last visited March 1, 2013).
96Ibid at p. 30.
97Supra note 75 at p. 26.
98Id.
reaction to the market demand and had done so despite no patent (or data exclusivity) incentives for
the same.99
At first glance the above observation seems to change the rules of the game of pharmaceutical
innovation especially because substantial amounts had to be sunk into clinical trials that were carried
to validate the safety and efficacy of the drugs for not only the WHO pre-qualification program but
also US FDA approval.
The counter-point to this debate that is often missed is the unique set of conditions that were
usually attached to the sale of some of these novel FDCs at a truly attractive price. The conditions as
noted in a new report by the New York Times noted that: “each country must submit large,
irrevocable purchase orders and pay cash. Someone other than the drug company must bear the
costs of registering each drug in each country, which might include lobbying Parliament or fighting
patent lawsuits. There also must be a guaranteed supply of the raw active ingredients at fixed
prices.”100
Such conditions basically assured companies like Cipla with economies of scale, a constant cash
flow, an uninterrupted supply chain and a possible waiver of the cost for expensive clinical trials
(which is usually the only substantial investment in developing a new FDC). Pharmaceutical
companies were able to negotiate such conditions and achieve economies of scale because of the
fact that the campaign against AIDS in Africa was being spearheaded by a handful of international
organizations, which collectively represented millions of patients thereby lowering transactions costs
for negotiations as also facilitating bulk orders at a low cost.
Moreover some of the expensive clinical trials carried out to validate the FDCs created by Indian
Pharmaceutical Companies were funded by Institutions such as The European and Developing
Countries Clinical Trials Partnerships (EDCTP).101 The EDCTP was instrumental in funding the
99Id.
100 Donald G. McNeil, Plan to bring generic AIDs drugs to poor nations, N.Y.TIMES, (Apr. 6, 2004) available at
http://www.nytimes.com/2004/04/06/health/plan-to-bring-generic-aids-drugs-to-poor-nations.html(last
visited March 1, 2013)
101Press Release, HIV/AIDS infected children can now benefit from a European and Developing Countries Clinical Trials
Partnership-funded trial, European and Developing Countries Clinical Trials Partnerships, IP/07/1336 (Sept. 14,
2007) available at
clinical trials of a crucial FDC for children affected with HIV/AIDS.102 This drug was the first
paediatric FDC approved by the USFDA for the treatment of AIDs. 103 The main intention behind
explaining in such great detail the causes for such low-priced FDCs is not to belittle the
achievements of Cipla. The reason instead for going into such details is to point out the unique
conditions behind these novel attractively priced FDCs. It is unlikely that such conditions will
replicate themselves in other markets for diseases other than AIDS because there is no other disease
against which has managed to capture the political activism that has fuelled the sustained campaign
against AIDS.
How then does one provide an incentive to pharmaceutical companies to develop new FDCs for
diseases other than AIDS? This question is of special significance for the Indian Pharmaceutical
Industry which has created a massive market for such drugs in India by flooding the market with
FDCs of nearly every permutation and combination. Ordinarily, if new FDCs were being constantly
introduced into the market there would be no need to provide any additional incentive. The truth
however is that several of the hundreds of FDCs marketed in India were objected to by the Indian
drug regulator on the grounds that there were either ‘irrational’ or that their safety and efficacy had
not been validated through clinical trials.104 The drug regulator has faced a stiff fight from the
industry which has fought tooth and nail against the ban.
The most recent concern has been expressed by the Parliamentary Standing Committee which
expressed extreme distress at the state of affairs regarding regulation of the FDCs and it urged the
government to ban and prohibit several FDCs. In pertinent part the report states “There is a need to
make the process of approving and banning FDCs more transparent and fair. In general, if an FDC is not approved
anywhere in the world, it may not be cleared for use in India unless there is a specific disease or disorder prevalent in
India, or a very specific reason backed by scientific evidence and irrefutable data applicable specifically to India that
http://europa.eu/rapid/pressReleasesAction.do?aged=0&format=HTML&guiLanguage=en&language=EN
&reference=IP/07/1336(last visited March 1, 2013).
102Id.
103Id.
104DCGI lifts ban on certain FDCs, INDIAN. EXP. (Jul. 16, 2013) available at
http://www.indianexpress.com/news/dcgi-lifts-ban-on-certain-fdcs/336641 (last visited March 1, 2013).
justifies the approval of a particular FDC. The Committee strongly recommends that a clear, transparent policy may
be framed for approving FDCs based on scientific principles.”105
The solution is not to impose a blanket ban on FDCs. The solution lies in better regulation and
incentives to validate innovative FDCs through clinical trials. The DCGI is now attempting for
better regulation but since there is no patent protection for a good portion of new FDCs it is also
necessary to discuss the issue of a complete lack of incentive for private firms to invest in clinical
trials in the absence of a data exclusivity regime.106The reason for this reluctance is that such
innovators of novel FDCs have no means to avoid the very same ‘free-rider’ problem that we
discussed in the context of the traditional knowledge medicine sector.
If clinical trials are conducted for a new FDC, the resulting product will necessarily have to be priced
higher in order to recover the costs of the trials. Competitors however will be able to skip potentially
expensive clinical trials by getting approval for their FDCs by establishing the bio-equivalence of
their product with the first FDCs that has gone through the clinical trials. The competitors will be
able to sell their FDCs minus the cost of clinical trials therefore ensuring that their product is
cheaper than the company which has carried out the clinical trial. As a result the innovator of the
FDC will have to incur losses and will be dissuaded from developing new FDCs which require
clinical trials. As a result there will be no FDCs left to copy. This is a classic case of the tragedy of
the commons. There is thus a need for some kind of exclusive monopolistic rights in order to
stimulate research and development of those novel FDCs that cannot be protected under patent law.
In the opinion of this author a period of data exclusivity for FDCs which have been validated
through clinical trials, conducted through considerable investment, will provide an adequate
incentive for the development of new FDCs. A period of data exclusivity will ensure that for a
limited period of time no other manufacturer will be allowed regulatory approval on the basis of the
clinical data generated by the originator FDC. The period of monopoly will allow the originator
FDC to recover the costs of the clinical trials plus profits.
105Supra note 67 at para 9.8.

106See
Letter from DCGI to all State Drug Regulators regarding approval of safety and efficacy of FDCs, Jan
15, 2013 available at http://cdsco.nic.in/Approval_of_the_safety_and_efficacy_of_FDC.pdf (last visited
March 1, 2013).
CONCLUSION: THE WAY AHEAD FOR THE INDIAN DEBATE ON ‘DATA EXCLUSIVITY’
Like most IP-related debates in India, the data exclusivity debate has often been overtaken by
concerns regarding its effects on pricing and access to medicine. While these concerns are legitimate,
it is also necessary for Indian policymakers to understand that quality of clinical trial data available to
the medical community is as important as pricing. Pricing issues need to be dealt with frameworks
other than the IP frameworks. The most efficient way to deal with the issue of pricing is through
‘price-control’ legislation.
As demonstrated in this paper, the rationale behind the GoI applying the TRIPS yardstick of ‘data
exclusivity’ differently to the pharmaceutical and agrochemical industry is unclear. If the GoI were to
accept the Parliamentary Standing Committee’s recommendation to conduct more local clinical trials
in India there is little doubt that the GoI will have to introduce some kind of incentive to induce
innovator firms to carry out such trials on Indian citizens.
Such an incentive could be in the form of data exclusivity or government funding of clinical trials.
Similarly, the incentive requirements for innovation in the field of traditional knowledge medicine
and fixed-dose-combination, both of which are not patentable under Indian law, will be well-served
by data exclusivity incentives.
To this end, the GoI must review the need for a data exclusivity regime along with a substantial
review of India’s drug regulatory framework.

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Indian Journal of Law and Technology

Volume 10 Issue 1 Article 1

The Data Exclusivity Debate In India: Time For A Rethink?

Follow this and additional works at: https://repository.nls.ac.in/ijlt

Part of the Law Commons

THE DATA EXCLUSIVITY DEBATE IN INDIA: TIME FOR A RETHINK?

§ Supplied by Editorial Board.

The basic structure of this essay will be as follows:

PART I – PHARMACEUTICAL INNOVATION, DRUG REGULATION & CLINICAL TRIALS IN

10See generally Food & Drug Administration (FDA) – Legislation – available at

24DiMasi; supra note 7.

PART II – THE ‘GREAT INDIAN DEBATE’ ON THE REQUIREMENT OF A DATA

3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural

45Supra n. 43at p. 23-26.

47Ibid at p. 39 (para 7.4).

(iv)Report of the Parliamentary Standing Committee on the ‘Pesticide Management Bill,

59Ibid at Annexure IX.

A. THE LINK BETWEEN LOCAL CLINICAL TRIALS AND DATA EXCLUSIVITY

B.THE REPORT OF THE PARLIAMENTARY STANDING COMMITTEE ON HEALTH & ITS

IMPLICATIONS FOR LOCAL CLINICAL TRIALS

67Ibid at para 2.2.

76Supra n. 68 at para 7. 29.

PART IV: INCENTIVIZING PHARMACEUTICAL INNOVATION THROUGH A DATA

79Ibid at para 7.19

(A) CREATING INCENTIVES FOR INNOVATION IN THE TRADITIONAL KNOWLEDGE BASED

(B) CREATING INCENTIVES FOR INNOVATION IN THE FIXED-DOSE-COMBINATION (FDC)

93supra note 43 at 6.4.3.

The answer to this question is both a yes and a no.

105Supra note 67 at para 9.8.

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