Legal Discussion of Risks to Industry Sponsors
The committee examined, and in this appendix presents, the landscape of potentially relevant intellectual property protection laws encompassing trade secrets and confidential commercial information, data protection and exclusivity laws, and patents, as well as liability and antitrust. Because the legal and regulatory environment for medical devices may undergo significant change in the near future, the discussion focuses on small molecules and biologics.
INTELLECTUAL PROPERTY PROTECTION LAWS
Trade Secrets and Commercially Confidential Information
Outside the regulatory context, the issue of what constitutes a trade secret is addressed as an initial matter by state common law. The Uniform Trade Secrets Act (UTSA), which has been adopted in 47 states and the District of Columbia, defines a trade secret as
Information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.1
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1 Uniform Trade Secret Act, published 1979, amended 1985.
Under this definition, the categories of trade secrets and confidential commercial information overlap.
Trade secrets/confidential commercial information is typically protected from “misappropriation.” The ultimate determination of competing claims as to whether particular information meets the UTSA definition is highly fact-specific and must be made by a court. However, as the UTSA reference to “efforts that are reasonable . . . to maintain . . . secrecy” would counsel, entities that regard information they possess as being a trade secret reveal it (if at all) only pursuant to agreements wherein the recipient agrees to keep the information confidential.
Public access to nonsummary clinical trial data generated by industry sponsors and submitted to government agencies is governed by federal statutory law. The two relevant statutes are the Freedom of Information Act (FOIA),2 which addresses disclosure in response to citizen requests, and the Trade Secrets Act,3 which addresses the limits of affirmative disclosure by the government.
Determining how the test for confidential commercial information applies to clinical trial data is often quite fact-intensive. An example is a 1999 case, Public Citizen Health Research Group v. FDA,4 involving a FOIA request by Public Citizen for clinical study documents associated with trials that were discontinued because of serious safety concerns. The DC Circuit Court probed at some length the factual foundation for arguments made by the U.S. Food and Drug Administration (FDA) and Schering (the pharmaceutical firm in question) that document release would cause competitive harm. For four of the five investigational new drug applications (INDs) for which documents were sought, the court agreed with the FDA and Schering. For these INDs, the court focused on Schering’s argument that it was testing successor drugs, the design of which was specifically based on information learned from the failed INDs. The court determined that in that context, releasing the IND information would “eliminate much of the time and effort that would otherwise be required to bring to market a product competitive with the product for which Schering filed its most recent IND.” In contrast, in the fifth case, the court found Schering’s argument regarding substantial competitive harm to be “conclusory and generalized,” and rejected the applicability of Exemption 4. The arguments found to be conclusory and generalized included statements that the disclosure would reveal “disease models” as well as toxicology data and clinical protocols applicable beyond the failed drug in question.
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2 5 U.S.C. § 552.
3 18 U.S.C. § 1905 (1982).
4Public Citizen Health Research Group v. FDA, 185 F.3d 898 (D.C. Cir 1999).
Similarly, in a 2010 case, a DC district court rejected arguments by the U.S. Department of Health and Human Services (HHS) and the FDA that release of certain clinical study data and contractor names with respect to the drug ciprofloxacin would result in substantial injury.5 The court determined that blanket statements to the effect that the material could be used by a competitor to “support its own new drug application” were conclusory and generalized.
For the most part, discussion of the release of clinical trial data has focused on data associated with approved drugs. In the case of these data—as contrasted with the failed drug data at issue in the 1999 Public Citizen case6—the concern about data release leading competitors directly to successful alternative drugs may be diminished.
Under FOIA, which applies to clinical trial data submitted to the FDA for approval, a trade secret means “a secret, commercially valuable plan, formula, process, or device that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort.”7 Generally speaking, nonsummary clinical trial data should not include this type of formulation and manufacturing information or related information about analytical techniques used to characterize the intervention. If such information were included, it would be appropriate to redact it.
On the other hand, nonsummary clinical trial data may fall within the broader confidential commercial information provision of FOIA. Under the governing legal test, information is confidential if its release is likely “to cause substantial harm to the competitive position of the person from whom the information was obtained.”
In its submission to the committee for this study, the biopharmaceutical firm AbbVie argues that data release on approved drugs could reveal “subjective” information about “study results, clinical development decisions, rationales for study designs, and processes for running clinical trials” that presumably could be useful to competitors attempting to develop alternatives.8 According to AbbVie, however, this “subjective” commercially sensitive information can be segregated from other more “objective” information, including individual participant data. According to AbbVie, moreover, this “deliberative process and sponsor strategic decision-making information” are not necessary for purposes of conducting “useful re-analyses.” Similarly, although the European Medicines
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5Government Accountability Project v. HHS, 691 F. Supp. 2d 170 (D.D.C. 2010).
6Public Citizen Health Research Group v. FDA, 185 F.3d 898 (D.C. Cir 1999).
7 5 U.S.C. § 552.
8 Personal Communication, M. D. Rivas, AbbVie Inc., to the Institute of Medicine Committee on Strategies for Responsible Sharing of Clinical Trial Data, regarding Written Testimony of AbbVie Inc., October 17, 2013.
Agency (EMA) recently indicated that information about company strategy with respect to future clinical studies and “exploratory endpoints,” as well as company strategy with respect to regulators, could be confidential commercial information, the EMA’s “redaction principles” rest on the supposition that this information can be segregated (EMA, 2014).
Data Protection and Exclusivity Laws
Submissions to the committee from the trade organization Pharmaceutical Research and Manufacturers of America (PhRMA) and AbbVie further focus on the concern that competitors with access to full data sets on approved drugs could seek to register identical drugs in countries without strong regulatory data protection (RDP) regimes.9,10,11 Assume that, after a particular product had been approved by the FDA or the EMA, clinical data associated with that product were released. Pharmaceutical firms argue that in jurisdictions with limited RDP regimes, such as Australia, Brazil, and China, a competitor could take the data package and use it to submit a marketing application. According to PhRMA, “similar regimes are known to exist in several other South American countries including Chile, Mexico, and Peru, and in countries in the Middle East and Asia such as Egypt and Malaysia.”12
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9 Ibid.
10 Personal Communication, J. K. Francer, PhRMA, to the Institute of Medicine Committee on Strategies for Responsible Sharing of Clinical Trial Data, regarding Testimony of PhRMA, October 23, 2013.
11 An evaluation of arguments about competitive harm and RDP requires a brief background discussion of international intellectual property, specifically Article 39.3 of the Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) agreement, to which all World Trade Organization (WTO) members must adhere. Article 39.3 of TRIPS mandates that member countries that require test data as a condition of marketing approval for pharmaceutical products “protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected from unfair commercial use.”
12 Personal Communication, W. W. Chin and J. K. Francer, PhRMA, to the Institute of Medicine Committee on Strategies for Responsible Sharing of Clinical Trial Data, regarding Discussion Framework for Clinical Trial Data Sharing, April 14, 2014.
These arguments have merit (see Box C-1); however, their merit depends to some extent on whether regulatory authorities in “limited RDP” regimes currently require data submission. As a practical matter, a detailed data package can benefit competitors only to the extent that regulatory authorities in the “limited RDP” jurisdictions actually require detailed submissions in the first instance. If competitors can rely for their marketing applications on approval of the molecule by the FDA or the EMA, data release may confer little marginal advantage to the competitor.
Patents
Release of clinical trial data also raises the issue of whether such release may compromise future patents. As might be expected, the patent law bars protection for inventions that are in the public domain or are “obvious” given what is in the public domain. To the extent that firms expect to secure additional patents based on data associated with approved drugs, release may compromise these additional patents.
The sample agreement for data sharing being utilized by GlaxoSmithKline and other pharmaceutical firms reflects concerns about future patents. Not only does the agreement maintain tight control over the data so as to prevent any argument about public domain status, but it also specifically addresses in detail (Section 3) ownership and assignment of future intellectual property.
The detailed provisions of this sample agreement notwithstanding, it is not clear how many economically significant future patents are likely to emerge from clinical trial data on approved drugs. For most drugs, the most important composition of matter patents and method of use patents is generally filed at the time clinical testing begins. Additional patents—for example, on the use of the drug for certain subpopulations—may be relatively weak and easy to circumvent (Rai, 2012). Even so, as the EMA’s redaction principles for information regarding future uses make clear, measures to safeguard patentability are likely to be prudent.
To the extent that data release extends to abandoned applications, ensuring the possibility of future patent protection may be even more important. At least in the United States, use patents are more difficult to circumvent when the drug has not been approved for a prior use (Rai and Rice, 2014).
LIABILITY
Another concern raised by pharmaceutical firms is that broad availability of clinical data on approved drugs may yield analyses that increase liability risks. In recent years, mass tort claims, usually based on a theory
BOX C-1
Competitive Harm and Regulatory Data Protection
In the case of India, draft guidance issued in 2011 suggests that if a drug has been approved in jurisdictions such as Australia, Canada, the European Union, Japan, the United Kingdom, and the United States, approval in India is in fact based largely on approval in these other countries (CDSCO, 2011). Similarly, according to Raghu Cidambi, a former advisor to Dr. Reddy’s Laboratories in Hyderabad, India, India’s significant reliance on approval by other jurisdictions means that generic companies currently seek and obtain approval for molecules in India before (or without) originator entry (Kapczynski, 2014). “Generic-first” entry occurred, for example, with rasagiline mesylate, lenalidomide, and atomoxetine (Kapczynski, 2014). Similarly, according to a 2014 submission by Pharmaceutical Research Manufacturers of America (PhRMA) to the U.S. Trade Representative, “India conditions the approval of pharmaceutical products on prior approval by a regulatory authority in another country rather than requiring submission of the entire dossier for review by its regulatory authority. An applicant in India need only prove that the drug has been approved and marketed in another country and submit confirmatory test and other data from clinical studies on a very few (in some cases as few as 16) Indian patients” (PhRMA, 2014, p. 28).
China appears to provide another example of this dynamic. Although China nominally has 6 years of data exclusivity, the scope of this exclusivity appears to be restricted to originators that file first in China. Additionally, as PhRMA recently argued in its 2014 submission to the U.S. Trade Representative, China currently permits
non-originator, or follow-on, applicants to rely on a foreign regulatory agency’s approval of the originator product in another market during the RDP term in China. This practice gives an unfair commercial advantage to the follow-on manufacturer by permitting it to rely on the full clinical data submitted by an innovator to a foreign regulatory agency … while having to submit only a small amount of China-specific supplemental data to CFDA. (PhRMA, 2014, pp. 41-42)
of failure to warn of risks, have resulted in significant judgments against pharmaceutical companies. In a number of prominent cases, perhaps most notably the litigation over Fen-phen diet pills and Vioxx, companies have paid out $1 billion or more (Garber, 2013).
How much additional liability may be at issue is unclear, however. Many suits based on failure to warn rest upon risks that, even according to the plaintiffs’ own theories, were identified only after the drug had been approved. In that situation, data generated during clinical trials are not relevant.
Although liability concerns are particularly salient for pharmaceutical companies, they may also arise for other actors in the clinical trial system,
Of course, in the case of both China and India, the competitor does have to conduct some small, country-specific trials. However, as the PhRMA submission to the U.S. Trade Representative suggests, the cost of these trials is not likely to be large.
In sum, as matters currently stand, data release and wholesale copying of the data by competitors are likely to cause additional competitive harm to originators primarily in those jurisdictions that require detailed data submissions but give only limited, or no, protection to originator data. In countries that do not require data submissions in the first instance, competitors gain no additional benefit. However, it is worth noting that biologics may differ from small molecules to the extent that countries with limited regulatory data protection regimes may be less likely to permit approval for biologics than for small molecules without some submission of clinical trial data. For example, although Brazil—which has no data exclusivity for either small molecule chemicals or biologics—may allow marketing approval for small molecules based on approval of the drug in a respected regulatory jurisdiction, it appears to require at least some clinical data for biologics.* Thus, in the case of biologics, having data copied from originators would actually help with marketing approval, and the additional competitive risk associated with data release would presumably be higher.
In sum, despite certain limitations on the additional competitive harm data release may cause, policies that guard against wholesale copying of originator data packages for purposes of seeking regulatory approval and maintain the confidentiality of the data, as with data use agreements, may be prudent. Such policies are also consistent with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) obligation to protect data from “unfair commercial use.”
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*Personal communication, E. Lietzan, to the Institute of Medicine Committee on Strategies for Responsible Sharing of Clinical Trial Data, regarding report entitled “The Interaction Between Open Trial Data and Drug Regulation in Selected Developing Countries,” May 23, 2014.
such as Data and Safety Monitoring Boards responsible for ensuring patient safety and study validity for subjects enrolled in research studies (DeMets et al., 2004; Tereskerz, 2010). That said, the liability issue appears to be primarily a U.S. phenomenon.13 Judicial process rules adopted in other jurisdictions, especially the rule that losers pay the litigation costs of winners, tend to deter tort suits.
In general, positions on how to address liability risk turn significantly
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13 Virtual WebEx Open Session, L. Brown and G. Fleming, to the Institute of Medicine Committee on Strategies for Responsible Sharing of Clinical Trial Data, regarding clinical trial data sharing and product liability, April 9, 2014.
on the extent to which such risk is seen as a useful deterrent to socially undesirable corporate behavior. Proponents of the liability system argue that the FDA’s regulatory process is insufficient to deter such behavior. Opponents argue that because the judicial process does not efficiently weed out spurious cases, pharmaceutical companies often are forced to expend large sums on these cases, with the result being increased drug prices and decreased innovation.
Even with respect to liability under the current system, in which clinical trial data are not widely available, the RAND Institute for Civil Justice recently concluded that “there is scant empirical evidence to support the claims asserted on either side of the debate” (Garber, 2013, p. xiv). The social impact of potentially greater liability under a system of greater data availability is even more difficult to discern.
ANTITRUST
Academic researchers’ pooling of clinical trial data from multiple companies poses no obvious antitrust concerns. Some clinical trial data sharing activities may, however, involve direct collaborations between competitors. For example, public–private partnerships such as the Biomarkers Consortium (coordinated by the Foundation for the National Institutes of Health) involve companies in pooling placebo arm clinical trial data to develop models of disease progression. Whenever competitors collaborate, potential antitrust limits on such collaboration need to be addressed.
The U.S. Department of Justice and the Federal Trade Commission view most research and development collaborations between competitors as procompetitive and therefore evaluate them under the “rule of reason.”14 Rule of reason analysis focuses on whether the agreement in question “harms competition by increasing the ability or incentive profitably to raise price above or reduce output, quality, service, or innovation below what likely would prevail in the absence of the relevant agreement.”
The Biomarkers Consortium has a publicly available document on antitrust policy and guidelines that may provide generally useful guidance for competitors seeking to share clinical trial data. This policy makes clear that the competitors in question are collaborating for the “precompetitive” purpose of “identification, validation, qualification, and commercial development of biological disease markers and related healthcare products.” The policy also states clearly that the private-sector participants are free to engage in research and development on biomarkers outside the
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14 Antitrust Guidelines for Collaborations Among Competitors, Section 3.31(a).
Consortium, and that the Consortium will not attempt to exclude from the marketplace products or technology from non-Consortium members.
REFERENCES
CDSCO (Central Drugs Standard Control Organization). 2011. Draft guidance on approval of clinical trials & new drugs. http://www.cdsco.nic.in/writereaddata/Guidance_for_New_Drug_Approval-23.07.2011.pdf (accessed October 15, 2014).
DeMets, D. L., T. R. Fleming, F. Rockhold, B. Massie, T. Merchant, A. Meisel, B. Mishkin, J. Wittes, D. Stump, and R. Califf. 2004. Liability issues for data monitoring committee members. Clinical Trials 1(6):525-531.
EMA (European Medicines Agency). 2014. Redaction principles. http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&ved=0CCgQFjAB&url=http%3A%2F%2Fwww.ombudsman.europa.eu%2FshowResource%3FresourceId%3D1402406006491_INC2014-003908_2_Redaction%2520principles%2520DRAFT.pdf%26type%3Dpdf%26download%3Dtrue%26lang%3Den&ei=Qj9OVKPOO8uxyATzl4KYBw&usg=AFQjCNHYKYQJ1X47URHVduc2cr7gutNEEQ&bvm=bv.77880786,d.aWw (accessed October 27, 2014).
Garber, S. 2013. Economic effects of product liability and other litigation involving the safety and effectiveness of pharmaceuticals. Santa Monica, CA: RAND Corporation.
Kapczynski, A. 2014. The interaction between open trial data and drug regulation in selected developing countries. Paper commissioned by the Committee on Strategies for Responsible Sharing of Clinical Trial Data. www.iom.edu/datasharing (accessed December 19, 2014).
PhRMA (Pharmaceutical Research and Manufacturers of America). 2014. Special 301 submission 2014. http://www.phrma.org/sites/default/files/pdf/2014-special-301-submission.pdf (December 19, 2014).
Rai, A. 2012. Use patents, carve-outs, and incentives—a new battle in the drug-patent wars. New England Journal of Medicine 367(6):491-493.
Rai, A. K., and G. Rice. 2014. Use patents can be useful: The case of rescued drugs. Science Translational Medicine 6(248):248fs230.
Tereskerz, P. M. 2010. Data Safety Monitoring Boards: Legal and ethical considerations for research accountability. Accountability in Research 17(1):30-50.
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