Bio-Science Law Review

By Sangeeta Puran, Mayer, Brown, Rowe & Maw LLP

You are a senior business development manager of a biopharmaceutical company and you are seeking board approval for the acquisition of a drug candidate that has been developed in an EU Member State. The drug candidate is packaged as a bundle of exclusive rights to the patents protecting the formulation of the drug candidate and to the existing pre-clinical and clinical data that has been derived from testing the drug candidate up to Phase I of clinical trials. You explain to the board that the valuation attached to this acquisition opportunity assumes that your company will have exclusive rights to use the pre-clinical and clinical data in a submission for marketing authorisation once the drug candidate has been fully developed. A member of the board says that she understands that patents protect the formulation, but she is unclear on the intellectual property rights that would be relied on to enforce exclusivity over the clinical data. She has heard of data exclusivity but she understands that this attaches to clinical data only once a drug has been approved by a regulator. She asks you to clarify what intellectual property rights could be relied on to ensure exclusive use over the clinical data.

This note considers the intellectual property position in the EU with respect to clinical data and, in particular, the extent to which database rights can be asserted over clinical data; and the risks associated with transferring rights to clinical data without first establishing precisely what intellectual property rights attach to that data.

Clinical Development and Clinical Data

Clinical Trials

‘Clinical data’ refers to data derived from the various phases of testing a drug candidate on humans. After the discovery of a potential chemical or biological drug candidate, it is tested for pharmacological activity and toxicity in both laboratory environments and animal models to ascertain a preliminary safety and efficacy profile. Positive findings at this stage will lead to the drug candidate being tested on humans in the following phases of clinical trials:

• Phase 1

Testing of the drug candidate is conducted on a small number (calculated in tens) of healthy volunteers to establish safe dosages and to gather information on the absorption, distribution and excretion of the drug candidate in the body. A Phase I clinical trial may last from one to two years.

• Phase II

Phase II clinical trials represent the first time the drug candidate is tested on patients of the targeted indication. Testing occurs among 100 to 300 patients and may also last one or two years.
Successful Phase II clinical trials verify the safety of the drug candidate and also provide preliminary data on efficacy.

• Phase III

Phase III clinical trials involve large scale trials on patients to obtain additional evidence on efficacy. The aim is to find statistically significant benefits, and to observe any possible adverse reactions that may occur infrequently in patient populations. Consisting of tests on 1000 to 3000 patients, this
phase is the most costly part of drug development and can last two to four years.

Clinical trials indicate that a drug is in the more advanced stages of development. Marketing authorisation to launch a new drug will only be applied for if the results from the trials
demonstrate the necessary levels of safety and efficacy.1 Preparation for market launch (including sales force construction) is usually carried out alongside Phase III clinical trials to ensure immediate sales as soon as marketing authorisation is issued.

After marketing authorisation is granted, a Phase IV clinical study may be carried out to further investigate the long term risks and benefits of the drug when used more widely in the population.

Clinical Data

The precise data collected in a clinical trial depends on factors such as the relevant phase of clinical development, the objective of the clinical study and the targeted indication.

Clinical data can generally be grouped as follows:

• data collected to characterise the subject/patient population, for example, data relating to demographics and the medical history of the subjects;
  

• data collected to evaluate the effects of the drug, for example, baseline data, dosing data and toxicity data; and
  

• safety, efficacy and other statistically significant data derived from the analysis of the above categories of clinical data.

Structured databases are used to collect, organise and analyse clinical data. The data collection and analysis process is repeated for each phase of clinical development.

Relevance of Clinical Data

Clinical data evidences the safety and efficacy of a drug when tested on humans. The sponsor of the drug will need to rely on this to secure the right to market the drug. However, before this stage and even in the case of a clinical trial producing negative results, clinical data provides certain informational advantages to its holder, for example:

• The results of clinical trials assist in the assessment of whether to discontinue the relevant research and development programme and invest resources in other programmes, or to continue and possibly accelerate the programmes.
  

• Clinical trial results can be applied to make adjustments to other research and development projects in the same or a related therapy area.
  

• The results from each phase of clinical development assist in forecasting the probability or the likelihood of the research and development programme leading to a marketable product.

Forecasting is integral to modelling the financial value of the drug development project in question. The resulting value is key to internal research programme prioritisation, negotiations for licensing, investor funding decisions and equity analysis.

Database Rights

In comparison to other heads of intellectual property, database rights are a relatively recent development and unique to the EU. They were introduced in the EU in 1996. At the time, database rights were seen to address the lack of uniform legal protection for those types of works across the
EU Member States. In the case of clinical data organised into clinical databases, database rights are an obvious head of intellectual property to consider.

Database Rights

Database rights are a sui generis right conferred by Chapter III of the European Parliament and Council Directive 96/9/EC on the legal protection of databases (‘the Database Directive’).2

Article 7 of the Database Directive provides database rights
to be:

… a right for the maker of a database which shows that there has been qualitatively or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilisation of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database.

A key condition for the subsistence of database rights is that there must have been ‘a qualitative or quantitative substantial investment in either the obtaining, verification or presentation of the contents of the database’. Nearly a decade after the introduction of database rights, the European Court of Justice in British Horseracing Board v William Hill (‘the BHB case’),3 clarified this investment
condition.

The BHB analysis

The first step is to identify the precise database over which database rights are to be asserted. The investment condition must then be satisfied in relation to this database.

The ECJ clarified that the expression ‘investment in the obtaining, verification or presentation of the contents’ refers to investment in the creation of that database. More significantly, any investment made in the creation of data is excluded. The question to ask is whether the relevant database is one of ‘existing independent’ materials, in which case the work and resources associated with creating the database will fulfil the investment condition. A database comprising data that is collected into the database without any verification or stamp of approval prior to its inclusion into the database is likely to be a database of ‘existing independent’ data.

The database in the BHB case was the BHB’s official list of horse racing data. The ECJ held this list already had the BHB’s stamp of authority and only the BHB could provide it. In particular, the ECJ held that the nature of the information changed with the stamp of official approval, resulting in the
relevant database no longer being a database of ‘existing independent’ material.

Database Rights and Clinical Data

A separate database will exist for each phase of the clinical trial process. The basic data collection process involves recording data on a case report form and then entering it into a clinical database. A double data entry mechanism is usually employed to check errors in the entry of data.

‘Existing independent’ clinical data?

Certain of the raw data characterising the subject population, for example the age of subjects, is likely to constitute ‘existing independent’ data. Even in this case it could be argued that
the nature of the clinical information changes when the data is processed (for example, codified) to ensure compliance with personal data protection and privacy regulations.4 The implications of any compulsory processing of data were not considered in the BHB case.

Other raw data, for example the blood pressure of a subject, does not come into existence until the relevant measurements and tests have taken place. Data such as dosing data and toxicity data is collected to study the effects of the drug candidate as administered in accordance with the clinical trial protocol, and on this basis, is neither existing nor independent data.

Similarly, data resulting from safety and efficacy calculations
and statistical analysis clearly only comes into existence once
these have taken place.

If the maker of a clinical database collects the clinical data and then engages in verifying and approving it before entering it into a database of the official results of the clinical trial, the difficulty that arises is establishing that a substantial investment is made between the step of deciding that the data is an official result and its entry into the database.

Wider investments sought to be protected by database rights?

It could be argued that the investment sought to be protected by the assertion of database rights over a clinical database includes the investment in the clinical trial process. Clinical development is the most costly part of drug development 5 and outweighs the resources invested in establishing the
physical clinical databases.

The BHB case did not consider how database rights would apply where other wider investments gain protection by the assertion of database rights. However, against a determination that such rights did not apply to protect investments associated with the creation of data, the use of database rights as a tool for protecting wider investments would be difficult.

Right type of database?

The fundamentals of database rights also require the database owner’s investment to have been in a system which contributes to an information market. Commercial transactions under which rights in clinical data are transferred indicate an information market trading in that data. In most cases, however, this trade occurs as part of a wider trade of rights relating to the drug candidate in question. The BHB case did not address how database rights apply where the predominant objective of establishing the database is to support a market wider than an information market.

Other Intellectual Property Rights

Copyright

Copyright protection of databases is also governed by the Database Directive, but Article 3(2) of the Database Directive provides that copyright protection of databases does not extend to their contents and is without prejudice to rights subsisting in the contents themselves. Copyright protection
of a database under the Database Directive protects only the selection and arrangement of the database,6 meaning that the protection of the data contents of a database must rely on
establishing database rights, unless the contents themselves are copyright works.

If a clinical database falls outside the definition of ‘database’ under the Database Directive, then the existence of copyright protection for the relevant recording of clinical data will depend on the copyright laws of the Member State in which protection is sought. These laws may provide some basis for copyright protection extending to a work recording clinical data. Yet it is difficult to think of an example of a recording of clinical data falling outside the definition of ‘database’ in the Database Directive:

A collection of independent works, data or other materials arranged in a systematic or methodical way
and individually accessible by electronic or other means.

Arguably, the above definition captures even a printed table or report containing clinical data. The technical analysis of clinical data would, in most cases, require it to be arranged in a systematic or methodical way and to be individually accessible.

Accordingly, in the case of clinical databases, the following multiple scheme of copyright protection can be considered:

• The arrangement of the database could be protected by copyright protection under the Database Directive, but this protection would not extend to the individual data.
  

• The contents of a database could be protected by databases rights under the Database Directive, but, as discussed in the previous section, this is far from assured in respect of the clinical data contents of a clinical database.
  

• The contents of a database could themselves be copyright works protected under the copyright laws of a member state, but generally, it would be very difficult to maintain that individual numbers constitute copyright works.
  

Rights in Confidential Information

Rights in confidential information are not strictly proprietary rights, but rather a function of an action for breach of confidence. To rely on an action for breach of confidence for the unauthorised use of clinical data, the data must have retained the quality of confidence and must not have been
disclosed other than subject to the imposition of a duty of confidentiality on the recipient.

Sensitive clinical data is likely to qualify as confidential information because it is not generally known and it is not of a trivial nature. There is currently no obligation on sponsors of clinical trials to make public the results of each trial as completed. Under the ‘Joint Position on the Disclosure of Clinical Trial Information via Clinical Trial Registers and Databases’, the pharmaceutical industry7 committed to publicly disclose the results of clinical trials. However, the commitment, aside from being non-binding, is limited to disclosing the results of clinical trials conducted on approved drugs, which are commercially available in at least one country.

In the case of clinical trials conducted by medical institutions, hospitals and universities for a sponsor, these bodies will usually wish to reserve the right to publish the results of a
clinical study. The common compromise is for the sponsor to permit publication except where necessary to preserve patentability, but the publication of the clinical data itself may not be relevant to preserving patentability. The scope of any permission to publish should be considered from the wider perspective of preserving the interests necessary to maintain an action for breach of confidence.

An action for the breach of confidentiality will also require that the clinical data has not been disclosed other than subject to a duty of confidentiality. Particularly, in the case of clinical data that has been acquired from external sources, not only must there be a careful consideration of the scope
and implications of any existing disclosures, but it is also important to consider whether the divesting party itself should be made subject to ongoing obligations of nondisclosure and non-use.

Data Exclusivity

Rights of exclusivity in clinical data are conferred by Directive 2001/83/EC on the Community Code relating to medicinal products for human use. Typically, an application for marketing authorisation for a drug must be accompanied with, amongst other information, the results of pre-clinical tests and clinical trials conducted on the drug.8 Article 10 provides an exception to this by providing that an applicant is not required to provide the results of pre-clinical tests and of clinical trials if he can prove that the medicinal product is a generic of a product which has been authorised in a Member State for not less than eight years. However, if a generic application is successful, then the generic cannot
be launched until ten years have elapsed from the initial authorisation.9 Hence on this basis, data exclusivity is said to provide a relevant eight-year period of exclusivity from generic applications being permitted to rely on clinical data of an approved drug, and once a generic application is
permitted, data exclusivity further requires the generic launch to be delayed until the relevant period of ten years has elapsed.

These rights provide limited safeguards for the holder of clinical data. For instance, Article 10 only applies to clinical data attaching to a drug that has been approved and operates only to limit generic applications from relying on the clinical data of interest.

Relevance of Establishing the Existence of Intellectual Property Rights in Clinical Data in Commercial Transactions

Examples of commercial transactions involving the transfer of intellectual property rights in clinical data are set out below:

• Aquisition or in-licence of rights to exploit a drug. The acquisition or in-licence will typically be to a package of rights which includes rights to patents and existing preclinical and clinical data. The acquiring party will usually ask for rights to the clinical data, distinct from the patent and other intellectual property rights protecting the drug.
  

• Acquisition of clinical data to support regulatory filings. This may be undertaken where, for example, a public body has conducted comparator studies involving the sponsor’s drug and the inclusion of the resulting clinical data will increase the statistical power of the sponsor’s findings on the drug.
  

• Engagement of contract research organisations and medical institutions to conduct clinical trials. The sponsoring party will want to own or have exclusive rights to the clinical data coming out of clinical trials conducted by the engaged party.
  

• Collaborations where one partner is responsible for initial research and development, and the other partner takes over the final stages of development and commercialisation. The partner providing most of the funding will want to own or have exclusive rights to the clinical data coming out of any clinical trials conducted as part of the programme by the other partner.
  

The ‘acquirer’ of clinical data will rely on assignment provisions to effect the transfer of intellectual property and other proprietary rights to the clinical data of interest. It is not unusual for the parties to commercial transactions to assume that proprietary, exclusive and protectable intellectual
property rights attach to the data. This assumption is made even though clinical data is not subject matter to which intellectual property rights clearly attach.

From the perspective of the acquirer, understanding the intellectual property rights existing in the clinical data is critical to understanding what rights to the clinical data are being acquired, for example, whether the acquirer is acquiring:

• The exclusive right to rely on the clinical data in submissions for marketing authorisations;
  

• exclusive access to the technical information captured within clinical data on the success or failure of the research associated with the relevant drug candidate and the targeted therapy area; exclusive rights to use such technical information in its other research programmes; and/or
  

• the right to control and prevent use of the data by others, including for any of the above purposes.
  

Where clinical data is acquired as part of the acquisition of a partly developed drug, these rights will be central to assessing the financial value to be ascribed to the drug.

The risks associated with the failure to establish precise intellectual property rights also highlights the importance of due diligence specifically addressing intellectual property criteria relating to rights in clinical data. For example, an investigation of the extent to which database rights exist would involve understanding the processes pursuant to which the data is generated, checked, approved and entered into databases. These investigations go beyond the more typical clinical data due diligence in transactional scenarios, which tend to focus on a technical analysis of the data itself and a
regulatory audit of the clinical trial process.

Conclusion

The importance of clinical data to securing marketing authorisation for a drug product is well understood. Clinical data, however, provides wider advantages relating to information on the likely success or failure of a drug candidate and a targeted therapy area, which cannot be accessed other
than by expensive and lengthy research. Yet the intellectual property rights underpinning the ability to secure rights to clinical data are unclear. From the perspective of a party acquiring clinical data, this lack of clarity reinforces the importance of due diligence investigations to establish precisely
the scope of the intellectual property rights attaching to the data of interest. It is also important that the acquiring party takes into account this lack of clarity, not only when considering the value
of the clinical data asset, but also when modelling the financial value of the drug candidate and the development programme to which the clinical data is associated.

References

1) The drug will be launched in the relevant markets by its sponsor on marketing authorisation being granted. In the EU, individual marketing authorisations may be sought on a Member State by Member State basis. For example, in the United Kingdom this involves an application to and assessment by the Medicines and Healthcare Products Regulatory Agency (‘MHRA’). The marketing authorisation itself will be determined and granted by the Licensing Authority. Alternatively, a wider EU authorisation may be sought by using either the centralised or decentralised (also referred to as the ‘mutual recognition’) procedure. The centralised procedure involves application to and assessment by the European Agency for the Evaluation of Medicinal Products (‘EMEA’) and the authorisation is granted by the EU Commission. Under the decentralised procedure, an application can be made based upon an existing marketing authorisation granted in a Member State or a new application can be made to the EMEA. Assessment of the application is by an appointed ‘reference’
Member State. The authorisation will also be granted by the relevant reference Member State, and it will then be subject to mutual recognition by the other Member States.

2) The Directive was implemented in the United Kingdom by the Copyright and Rights in Databases Regulation 1997 (SI 1997/3032).

3) Case C-203/02. The case concerned a database created by the British Horseracing Board, which contained details of registered horses, their owners and trainers, their handicap ratings, details of jockeys and information containing fixture lists. The establishment, maintenance and development of the database involved a great deal of work (approximately 80 employees and extensive computer software and hardware), and its annual cost was approximately €4,000,000. A painstaking process of verifying pre-race information was undertaken to ensure complete accuracy and reliability.

4) Article 5 of Directive 2005/28/EC requires that all clinical trial information shall be recorded, handled, and stored in such a way that it can be accurately reported, interpreted and verified, while the confidentiality of records of the trial subjects remains protected.

5) The often-cited figure from the Tufts study of the cost of developing a new drug to the point of regulatory review is US$ 802 million, which was based on totalling the costs found by the authors to be incurred in pre-clinical development of US$ 335 million and clinical development US$ 467 million.

6) For this copyright protection, the relevant database must be ‘original’. A database is ‘original’ if, by reason of the selection or arrangement of the contents of the database, the database constitutes the author’s own ‘intellectual creation’. Whether the selection or arrangement of a clinicaldatabase, typically comprising rows representing patients and columns representing variables (such as age, dosing data, toxicity data etc) satisfies the requisite intellectual creativity will depend on the precise format of the particular database.

7) Represented by the European Federation of Pharmaceutical Industries and Associations (EFPIA); the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA); the Japanese Pharmaceutical Manufacturers Association (JPMA); and the Pharmaceutical Research and
Manufacturers of America (PhRMA).

8) Article 8(3) of Directive 2001/83/EC.

9) This ten-year period is extended to 11 years if, during the first eight years
of those ten years, the sponsor of the existing product obtains an authorisation
for one or more new therapeutic indications which are held to bring significant
clinical benefits in comparison with existing therapies.

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