The Eleventh Annual Honorable Helen Wilson Nies Memorial Lecture in Intellectual Property; Rethinking the Role of Clinical Trial Data in International Intellectual Property Law: The Case for a Public Goods Approach

Article excerpt

   A. The Egregiously High Costs and Risks of Clinical Trials
   B. The Domestic Response
   C. The Drive for Global Protection of Clinical Trial Data
      1. From NAFTA (1992) to TRIPS (1994)
         a. The NAFTA Provisions
         b. The Softer TRIPS Provisions
      2. The Posterior Free Trade Agreements
         a. Expanding Protection for Clinical Trial Data in
         Developing Countries
         b. Recent Constraints on USTR's Negotiating
   D. A Missed Opportunity: The Cost-Sharing Alternative
      1. An Early U.S. Proposal Envisioned a Liability Rule
      2. Implementing a Compensatory Liability Regime
   A. The Flawed Logic of Marketing Exclusivity
      1. Evaluating the Incentive Rationale
      2. Why a Sui Generis Exclusive Property Right?
   B. From Private to Public Goods: The Most Logical Reform
      1. Public Disclosure: Only the First Step in a Broader
      2. The Case for Treating Clinical Trials as a Public
         a. The Drug Companies' Costs Would Decline with
         Government Funding of Clinical Trials
         b. Lower Drug Company Costs Would Benefit
         Consumers in the Short Run
         c. Long Run Efficiencies in Drug Discovery and
            (1) Stimulating More Investment in Innovative
            R&D with Lower Costs and Better
            (2) A Secondary Market for Remedial Improvers
      3. Implementing a Public Testing Program
         a. Awarding Clinical Tests to the Most Qualified
         b. Revenue Neutral Financing with Cost Sharing and
         Social Funding Criteria
         c. Phased Implementation
         d. Globalization of the Public Good Concept


News about clinical trial data is constantly before our eyes lately, and little of it is good. Again and again we learn that some major drug has produced deleterious side effects. (1) Internal memos emerge showing that the pharmaceutical companies knew or should have known about negative results from the clinical data, but that they overlooked or deliberately suppressed them. (2) In the recent case of Zetia, for example, the manufacturers reportedly ignored test results indicating that the cholesterol-lowering drug combination of Zetia and Zocor was ineffective and potentially dangerous as well. (3)

On reflection, one might begin to ask why this trend seems so surprising. Clinical trials cost vast sums of money, and, as will be shown later, these costs are rising so fast that they may become unsustainable over time. (4) A negative outcome will sink an entire research project, which, from the lab to the trial, may entail a loss of hundreds of millions of dollars. (5) The costs of such failures must then be made up from the few products that do succeed, which, according to some estimates, means that the aggregate breakeven costs of clinical trials for any successful new chemical entity may reach one billion dollars. (6) So one may suspect that there is a moral hazard here because if the pharmaceutical companies pay for the tests, they have a perverse incentive to paint the end results in the rosiest possible light. (7)

The pharmaceutical companies have also lobbied successfully for regulatory relief from the burden of recouping the cumulative costs of clinical trial data in the form of a backdoor intellectual property right known in the United States as "marketing exclusivity" (8) and in the European Union as "data exclusivity." (9) By these means, originator pharmaceutical companies obtain a period of time, ranging from three to ten years, during which would-be generic producers of existing drugs cannot themselves obtain regulatory approval for a competing drug if they rely--directly or indirectly--on the results of the originator's own undisclosed test data, which will have been provided to governments under strict conditions of trade secrecy. …