The value of the compulsory licensing system may be undermined if a licensee faces obstacles to registering (gaining approval to market) the protected product. Such obstacles may originate from an expansive interpretation of article 39.3 of the TRIPs Agreement, as reportedly promoted in developing countries by the US government.

Article 39.3 of the TRIPs Agreement obliges countries to protect confidential data¹⁶⁶ submitted for the registration of new chemical entities, only if their generation involved a “considerable effort”. Article 39.3, however, does not create exclusive rights on such data. The only protection arguably conferred under the Agreement is against “dishonest” commercial practices in the framework of unfair competition law¹⁶⁷.

¹⁶⁶ These data generally consist of the results of tests made with a new product in order to prove its efficacy and lack of negative effects. They do not involve any inventive step, and are protected under the TRIPs Agreement in recognition of the investment made for their production, rather than on their value as “intellectual” assets.

¹⁶⁷ See, e.g. Dessemontet, in Correa and Yusuf, 1998, p. 258

Some countries provide exclusive data protection, but these are not mandated by the TRIPs Agreement. In Europe, the first applicant may obtain exclusivity for the use of test data for six or ten years from the date of authorization¹⁶⁸, while under NAFTA, a minimum five years period of exclusivity is recognized (article 1711.6).

¹⁶⁸ Directive 65/65, as amended by Directive 87/21.

It is important to note that article 39.3 of the TRIPs Agreement does not apply to pharmaceutical products which are not new, and that it only obliges to protect test data relating to “chemical entities”, thus apparently excluding polymorphs, compositions, delivery systems or uses, even if new. In addition, once data on a new drug have been submitted, national health authorities may approve subsequent applications of generic products on the basis of similarity¹⁶⁹, since such authorities will not have to examine or rely on confidential information¹⁷⁰.

¹⁶⁹ On the concept of “similarity” under European law, see the decision by the Court of Justice of the European Communities of 3.12.98 (Case -386/96).

¹⁷⁰ This reasoning has been applied by the Supreme Court of Canada in Bayer Inc., The Attorney General of Canada and the Minister of Health, Apotex Inc. and Novopharm Ltd., of 19.5.99., to admit the registration of a “similar” product even before the expiration of the five years exclusivity period in force in that country.

Some developing countries have been under pressure to adopt standards of protection on confidential data beyond those required by the TRIPs Agreement. The adoption of such standards may lead to a restriction of legitimate generic competition for products which are already in the public domain, particularly if exclusive rights were recognized. This issue, therefore, requires careful examination in the context of a policy aimed at increasing access to medicines.