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6 Data Protection Issues

Data protection for pharmaceutical and agricultural chemicals was (first) introduced as an issue in the General Agreement on Tariffs and Trade (GATT) Uruguay round. Issues were further discussed by the international community, and an agreement was reached in the form of the Trade Related Aspects of Intellectual Property (TRIPs) agreement, to which New Zealand is a signatory. The TRIPS agreement, and in particular Article 39.3 concerning the utilisation of new chemical entities, was passed into New Zealand law via the Medicines, Pesticides, and Animal Remedies Acts [In 1997 these last two Acts were incorporated to the Agricultural Compounds and Veterinary Medicines Act.] in 1995.

The HSNO Act provides data protection by cross-referencing the relevant provisions in the ACVM and Medicines Acts. Where these provisions apply, information cannot be released to another party or used by regulatory agencies, including ERMA, in the consideration of other applications.

During the development of the Hazardous Substances Strategy, some industry sectors argued that:

  • while HSNO/ACVM provisions generally implement TRIPS satisfactorily, there are some exceptions, such as turf care products
  • significant national benefits would accrue if data protection were given to applications involving new uses of existing formulations (eg, where new information is provided to support an application for the use of glyphosate to control aquatic weeds)
  • while the HSNO Act and ACVM are complementary, the HSNO Act should have stand-alone data protection provisions to give greater certainty. (The data package is often split between regulatory agencies, with environment and public health data submitted to ERMA but not to the New Zealand Food Safety Authority as ACVM regulator.)

6.1 What is 'data'?

'Data' covers the required studies and information (sometimes referred to as the data package) supplied to regulatory authorities such as ERMA by applicants for approvals. The size of the package varies depending on the type of application. For a new agrichemical, the package of supporting studies may extend to hundreds of thousands of pages of written material. The data package, therefore, represents a very significant investment in intellectual capital by the applicant company, and one that could potentially be of considerable value to competitors.

Data protection is well-established in the agrichemical regimes of all Organisation for Economic Co-operation and Development (OECD) countries. The aim is to:

  • prevent unauthorised access by others
  • prevent the use of data by the regulator in a way that might benefit others ('cross-referencing')
  • establish a specific period of time for the owner to realise the value of the investment (the 'protection period').

Data exclusivity periods commonly run concurrently with patent protection.

Data protection is concerned with the investment of companies in generating data; a patent, on the other hand, rewards a party for an invention (investment in innovation) by preventing another party from using that invention in any form, again for a defined period of time.

6.2 Consideration by government: past and present

The HSNO Act's purpose concerns environmental protection, health and safety. Commercial considerations do not sit easily in the HSNO framework. The government's decision at the time the HSNO Bill was considered was to deal with commercial aspects by referring to the ACVM and Medicines Acts and the public's right to know via the Official Information Act.

More recently, government gave limited consideration to data protection in the context of the New Organisms and Other Matters (NO&OM) Bill. This consideration was confined to the recommendations of the Royal Commission on Genetic Modification. Two of the key issues here were whether data protection should be extended to new organisms and, concerning the public's right to know, whether there should be an explicit definition of 'confidential supporting information'.

Other work under way with a bearing on this issue is the review of the Patents Act. Agrichemicals are not in the scope of this review, whereas pharmaceuticals are.

Data protection will also be considered in the context of developing policy for amendments to the ACVM Act.

6.3 Policy in other OECD countries

During May 2002, and in the context of a study of the application of data protection in other countries, an officer from the Australian Department of Agriculture, Fisheries and Forestry (DAFF) visited Canada, the USA, Germany and the UK. Among the observations reported for the countries visited were:

  • at least 10 years of data exclusivity had been in place for many years (New Zealand has five years only)
  • there is a propensity for larger companies to manipulate the chemical market and eliminate smaller companies
  • schemes that provide periods of exclusivity for extension of use and significant formulation changes can potentially allow larger companies to extend the data protection indefinitely
  • the proportion of generic companies in the agrichemicals market of the countries studied was very low
  • the US and Australia were the only countries with schemes to enable compensated cross-referencing (CCR [A scheme whereby, provided suitable compensation is paid, the owner of a data package cannot prevent a regulatory authority from making use of the data in the assessment of applications from competitor companies.] ).

6.4 Discussion

Data protection issues are complex, but there are two distinct sets of issues. The first relates to the right to know about a substance or product. The public must be adequately informed in order to best contribute to HSNO processes. However, there is a tension between the right to know and considerations of commercial sensitivity. In New Zealand law, the Official Information Act provides the bridge between these two opposing points of view. In the context of the NO&OM Bill, government rejected the need for any new legislation in this area.

More recently, ERMA has developed criteria for defining 'confidential supporting information' and protocols for improving the public's access to information that is not confidential.

The second broad set of issues concerns competition policy and regulation of commercial behaviour in the national interest. Data packages represent a significant commercial investment for the multinational companies in the agrichemicals market and are a means of gaining competitive advantage. If that investment is not adequately secured, companies may well decide to bypass the New Zealand market.

There has been no recent first principles consideration of the national interest in New Zealand other than the decision to sign and implement the TRIPs agreement. If government agrees that an overhaul of data protection policy is warranted, decisions need to be taken on the scope and purpose of the exercise. Our preliminary view is that the scope of any such review should be restricted to agrichemicals. There is no indication that data protection is a significant issue for industrial chemicals, and issues relating to pharmaceuticals are already under consideration.

Issues to be considered in a review might include the need to consider:

  • our implementation of TRIPS - should we pick up turf care products by expanding the definition of 'agricultural compound'? should we give data protection to applications for new uses, new formulations and/or data provided as part of a reassessment?
  • our alignment with Australia (and other OECD countries) in the matter of the data protection period [Data protection provisions are important in trade negotiations. The recent Australia -US Free Trade Agreementnecessitates changes in Australian law.]
  • the need for compensated cross-referencing, and mechanisms to achieve this
  • how any new policy decisions might be implemented (eg, should the HSNO and ACVM Acts be de-linked?).

These five issues could be picked up in a terms of reference for the review.

6.5 A policy overhaul process described

A policy overhaul process might unfold as follows:

  • formation of an officials group, including the Ministry for the Environment, ERMA, Ministry of Agriculture and Forestry, New Zealand Food Safety Authority, Ministry of Economic Development, Ministry of Foreign Affairs and Trade
  • formation of an external reference group, including suppliers and users of agrichemicals, community interest groups
  • review of background studies such as the Australian DAFF study and, if necessary, commissioning a parallel study of the New Zealand agrichemical market
  • issue identification (eg, would more data protection increase the range of agrichemicals in the marketplace, and what would be the effects on prices?)
  • discussion within the reference group
  • preparation of a report
  • policy proposals to Cabinet that could result in amendment of the HSNO and ACVM Acts.

QUESTIONS

22. Do we need an overhaul of data protection policy?

23. Do you agree that the scope of any such review should be restricted to agrichemicals, and focus mainly on the commercial aspects?

24. Section 6.4 suggests some issues to be covered in a review. Do you wish to add or delete anything from this list?

25. What comments to you have on the policy process proposed in section 6.5?

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