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October 1, 2015

The Real "Death Sentence": Limiting Data Exclusivity

 
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Public Citizen is highlighting a cancer victim who is protesting at the Trans-Pacific Partnership (TPP) meeting in Atlanta.  

Public Citizen quotes the protester as saying: "When you have breast cancer today, you can’t wait 8 years or 7 years or 6 years for a treatment to become available or affordable. When you have cancer, even a one-year delay in affordable medicine can be a death sentence. That is why we call this proposed provision of the TPP a ‘death sentence clause.’  If it passes, thousands of women like me will die waiting.” 

She (along with many others) is urging the TPP negotiators to push back against U.S. insistence on “data exclusivity,” or the time an innovator drug company can retain its proprietary data, in this case for biologic products, before sharing it with other companies that want to make a generic version. The U.S. provides 12 years of data exclusivity, but some want that period reduced in the agreement to five or six years, or even less. The patient cited above apparently thinks even one year is too long. 

One can sympathize with that patient’s plight without conceding to her logic, because her (and the protestors’) solution would be the real “death sentence.” 

The data generated during biologic development, refinement and testing comes at great cost and is an important incentive to innovation in itself. Different than a patent, data is a proprietary asset, and its disclosure is not required in exchange for the grant of a patent.  

The economic fallacy here is that if you deprive an innovator company of an appropriate period of data exclusivity, a generic version will come out sooner and that will lower drug costs. Actually, it would do just the opposite.  

By eliminating or reducing the period of data exclusivity, you would only force the price higher, or . . . an even worse possibility: that the drug never gets invented at all. In other words, the marginal cost of innovation and risk-taking would simply be too high. So compressing the data-exclusivity timeline effectively cancels who knows how many new treatments because they can’t provide the necessary returns in the allotted time.  

And this problem is exacerbated with diseases such as cancer, such as the protestor has, because the patient population treated by many of the new and upcoming therapies are often small.  

Of course, the logic of the protestors would apply equally to patent in general—patents are alleged to make drugs expensive, and so somehow if we could get rid of patents and data exclusivity, drugs would suddenly somehow become much more affordable. 

The protestor erroneously assumes the innovator companies will just pour in billions of dollars anyway, regardless of risk or the cost of innovation, even it they can’t recoup their costs at all. But they won’t. 

The truth is that, without incentives to innovation like patents and data exclusivity, the drugs wouldn’t be cheap—they would be nonexistent. They would never be developed. And “never” is the real death sentence.




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