After the withdrawal of the United States of America from the Trans-Pacific Partnership Agreement (“TPP”) in late January of 2017, Chile seeks to move forward in getting this agreement signed with its remaining members, as it could be the largest multilateral trade agreement for the Asia Pacific region. The month of November 2017 has been set as a defining month for TPP members to reach a broad agreement based on certain proposals of amendments and suspensions of parts of the treaty, originated from said withdrawal, and for the establishment of a new framework for a final draft of the agreement. Internal discussions and review sessions of the TPP in Chile, between the civil society and the Ministry of Foreign Affairs – through its General Direction of International Economic Affairs (DIRECON) – have been advancing, and it is possible to appreciate the Chilean Government’s position in certain matters within the scope of this agreement, particularly intellectual property protection.
Like most trade agreements, the TPP has an intellectual property chapter that sets forth protection standards for its signatory members. Specifically, it is important to address the provisions on exclusivity and protection of the data required for marketing approval of pharmaceutical products (which falls far away from the scope of classic intellectual property rights, and very often is not considered as such). There is a basis for comparison between the Chilean legislation on data protection and exclusivity and the provisions of TPP’S Chapter 18 on this subject; wherein the latter offers a broader scope of protection to data holders or proprietors, brand pharmaceutical companies in general, which ultimately has the potential to bolster innovation in this area but also impact the market and population’s access to medicines.
The Chilean Industrial Property Law No 19.039 establishes a protection that favors proprietors or holders of undisclosed data concerning the safety and efficacy of a pharmaceutical product, but only when such product contains a new chemical entity that has not been previously approved for market. This means that this protection does not apply to data of already approved chemical entities nor to data of a new use, indication, dosage, administration, changes in the form, formulation, combinations, and salts or crystalline forms of a chemical entity from a previous approval.
The law also establishes an obligation of the Chilean regulatory authority, the Institute of Public Health (ISP), of not disclosing nor using undisclosed data for the granting of another approval, without the permission of the data holder or proprietor. The term of said protection and obligation is 5 years from the date of first marketing approval, and it needs to be requested when filing the application for marketing approval for the pharmaceutical product. The Law has a series of exceptions for not granting this protection, for example, in cases where the data holder or proprietor by using the data has incurred in practices declared by the Competition Court to be contrary to free competition; public health; national emergency and national security reasons; compulsory licenses; lack of commercialization for 12 months from the date of marketing approval or if the application for marketing approval in Chile was made after 12 months from the date of the first marketing approval obtained abroad.
TPP – in Chapter 18 Subsection C – differs from the Chilean Industrial Property Law No 19.039 by including protection of new biologics and, within protection of undisclosed test or other data, the alternative of extending such protection to new indications, formulations or methods of administrations of a previously approved pharmaceutical product.
Regarding new biologics, the TPP establishes protection for 8 years from the date of the first marketing approval of the pharmaceutical product that contains it over undisclosed data that cannot be used for the granting of an approval to third parties for a same or similar product; or alternative protection for 5 years from same date and with the same prohibition but including “other measures” of effective market protection “to deliver a comparable outcome in the market” as to the first alternative for 8 years of protection (Subsection C Article 18.51 b (ii). Those “other measures” could be, for example, direct marketing exclusivity by prohibiting the regulatory authority from approving another version of the same product, provided certain requirements are met (e.g. type of disease) and under certain limitations (e.g. prohibition only for the same indication of the biologic and when the new requested approval is not for a clinically superior product), tax credit for the cost of conducting the clinical trials or government grants for research (under a broad interpretation of “other measures” of Subsection C Article 18.51 b (ii).
Said examples are part of the protection and incentives granted to orphan drugs and biologics under the U.S. Orphan Drug Act 1983, wherein the marketing exclusivity extends for 7 years from the date of approval and could very well be replicated (if not already) by TPP members even though the United States of America is no longer part of the treaty. In the case of Chile, there is no protection to new biologics concerning its direct marketing nor to its undisclosed data used for market approval. Thus, our legislation would have to adapt to provide effective regulatory protection to new biologics under one of the alternatives mentioned above, for a market that is at a very early stage of development.
On the extension of protection to undisclosed data for new indications, formulations, or methods of administrations of a previously approved pharmaceutical product, the TPP considers an alternative for members to provide protection to undisclosed data for a period of 3 years from the date of marketing approval. As previously stated, Chile currently excludes from protection and exclusivity this kind of data. Under the TPP, it is difficult to determine whether Chile will amend its legislation to opt for this alternative and extended regulatory protection to undisclosed data for the approval of new indications, formulations, or methods of administrations of previously approved pharmaceutical products. The latter – considering that there has been a lot of pressure lately by the Competition Authority (FNE), NGOs, and generic pharmaceutical companies on the granting of patents over new drug compositions, uses, or administrations – is viewed by them as an “evergreening” practice and an abuse of dominant position sanctioned under Chilean Competition Law (for more information, see the Celebra/Celecoxib http://www.fne.gob.cl/english/2016/11/10/tdlc-approves-settlement- agreement-between-fne-and-g-d-searle-llc-that-foments-the- participation-of-competitors-in-the-market-of-drugs-that-contain- celecoxib/ published by FNE). Consequently, government and congress will probably find significant social resistance and legal considerations in an amendment of this nature, even if it is a valid way to incentivize and compensate companies for their innovation.
According to the Internal discussions and review sessions mentioned in the first paragraph, there seems to be a general acceptance by the Chilean government on the TPP provisions on protection of new biologics and undisclosed data for approval of new pharmaceutical products, which currently has the extension of protection – discussed in the paragraph above – as an alternative instead of an obligation for members. Some NGO’s of the civil society and some members of the congress will likely refuse these provisions, mainly under considerations of being detrimental to the market and population’s access to medicines, since it has been argued that it delays the entrance of generic pharmaceutical companies with lower priced products. On this point it is important to highlight that the TPP expressly allows parties to take measures to protect public health in accordance with TRIPS and recognizes their right to promote access to medicines for all. Moreover, one of the annexes in the TPP expressly states that the proposed regulation on new biologics and undisclosed data for approval of new pharmaceutical products will not prevent Chile from applying or maintaining article 91 of the Industrial Property Law No 19.039, which contains exceptions for not granting regulatory protection on these matters, such as practices against free competition by the holder or proprietor of the data caused by the use of the data, public health, or compulsory licenses. This is an important point to keep in mind when having to reach consensus in Congress for future amendments to our intellectual property legislation.
Finally, and despite everything mentioned, this month’s round of meetings between the representatives and negotiators of the 11 country members, should provide more certainty regarding what provisions will continue in the next draft of the treaty (and hopefully closer to a definite one), and which provisions will be amended or suspended, to have a complete understanding of how this treaty will change Chile’s legislation. Along with that, throughout the signatory countries, regarding intellectual property rights and regulatory matters for new biologics and undisclosed data protection and exclusivity.