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Denehurst Chemical Safety Ltd

Cost sharing for REACH data

With REACH, it is essential to share vertebrate data and recommended to share other types of test data.   Coming to a 'fair' cost sharing arrangement with REACH is going to be difficult and the concept of fair for some is not the same as for others.

This short report tries to give an impartial view with a hope that different sides to arguments can be appreciated and industry will work towards a win-win solution.

To date, most arrangements seem fair, although some administration costs seem high; in some cases, legal firms have charged for copying and even a € 0.4 postage cost for invoicing by mail.  In one case, the SIEF asked for a full cost breakdown; this was duly provided, but the cost was an additional € 5000 to be shared by the SIEF. 

Keep arguments and disputes to a minimum as this can only drive up administration and legal costs.

Updated Sept 2010

Within the legal text of REACH, there is strong emphasis on the need to share vertebrate test data to avoid repeating or duplicating animal work. Guidance and industry recommendations suggest that non-animal should also be shared as this will reduce overall costs to industry. Data sharing must be considered in the context of working together on new laboratory work as well as agreeing compensation for access to earlier test data.

When sharing data was first being discussed in industry, there was an impression among many that it would be a case of simply buying and selling test reports and there was a strategy among a large part of industry to withhold non-animal data and not show anyone the results. However, it must be noted that all data held by the SIEF members will need to be given to the lead registrant to make a ‘master' lead IUCLID dossier and that key data points will be made public and published on-line.

Data share will not involve swapping test reports in most cases, but will instead be a case of paying for access to the lead dossier. The figure to pay will probably be arbitrary and some consortia are offering a fixed price for access with no picking or choosing which data access is being granted for. Whether the financial figure for access is ‘fair' or not is going to be difficult to determine, but often it may prove cheaper and certainly easier to pay an arbitrary figure and not spend time and money arguing about detail; a comparison is that when finishing a meal at a restaurant, do you argue over the bill to see who had a starter or not, or divide it evenly ?

Commercial and legal considerations will dominate much of this process, but science will play a part. Understanding the process and perhaps seeing both sides of complex commercial arguments will be essential. An objective should be to attain a ‘win-win' result and to avoid unnecessary arguments that can be costly and time consuming, but reality may not be that simple.

Which data to share ?
There are many references in the REACH legal text to the need to prevent repeating or duplicating animal testing. This is a politically important part of the Regulation that attempts to appease those who complain that REACH will result in a large number of animal tests. There is obviously a benefit to most in industry, but not everyone welcomed the concept of sharing data, preferring perhaps to make competitors pay for full data sets in the hope that these other suppliers decided not to register.

For the reason of attempting to make it more expensive for competitors, many data holders stated that they would only share the minimum data dictated by law and not share non-animal data. Some of the non-animal studies are themselves very expensive and commercial reasons were cited as to why it may be beneficial not to share such data. Interestingly, it appears that so far, in the early days of registration, the majority of data holders will apparently share all data.

Ultimately, all data will need to be entered into the lead dossier - even if the data holder has not granted (or been granted) access to that data. The lead dossier to be submitted by the lead registrant will need to include all data on the substance. If attempting to put data into a secondary joint registration dossier, there will be problems under the dossier checking on submission. IUCLID files submitted will be checked by computer for completeness and for adherence to ‘business rules' any data added to a non-lead dossier claiming to be part of a joint registration will cause problems. Those opting out of joint registrations are apparently likely to face extra scrutiny.

All data submitted in the lead dossier need to be taken into account as part of the robust summaries. It may be that certain data are disregarded during technical review as being invalid and will not be assigned the status of ‘key study' for any particular endpoint, but all data will need consideration. Therefore, the option of withholding data to prevent other SIEF members from seeing the results is not practical.

However, when access rights are negotiated, a data holder of non-animal test data can refuse access to other registrants; if this is a ‘key study' and is the only valid data for a specific endpoint, the other members of the SIEF would then be forced into generating new data (withholding access for vertebrate testing is actually illegal).

In practice, we are not aware of many data holders taking this course of action as the commercial advantages are questionable and it is beneficial for the data holder to simply obtain some cash-back for their data.

Data access or selling reports ?
The question of whether to sell the test report or to simply grant access to other registrants has been discussed at length by data holders and is ultimately a commercial decision. Simply giving access to REACH registrants will allow the holder to retain control, but selling rights to test reports could give the new co-owners rights to use the data for alternative regulatory regimes (eg. US TSCA or Japanese MITI notifications). Contracts needs consideration when selling access or test reports.

In practice, simply selling access to the lead dossier is the most common scenario as many registrants will not be interested in obtaining test reports.

The value of the deal will depend on whether selling access or giving a part share of the report.
Pooling data by consortia

Many consortia are collecting data from members and providing access within the consortia. This will then help members of the consortia to build up a better picture of the hazards and possible risks and in many cases, the data held as a result of such pooling of information will not only be beyond the minimum requirements of REACH but will also include duplicate end points.

It is to an obvious financial advantage to members of consortia to recover as much of the cost of this work if new members join the consortium or if non-members of the consortia who are in the SIEF need to access this data for REACH. However, it needs to be asked whether it is ‘fair' (or indeed legal) to insist on non-members to pay for access to duplicated data or for endpoints not required under REACH. The legal question is whether courts would consider such demands to buy non-essential data is an example of the consortia taking a ‘dominant' position in the market place to the detriment of other suppliers. Consortia will need to be very careful and seek legal advice when setting ‘fair' costs for access.

Remember that all SIEF members have equal rights irrespective of whether they join a consortium; being a member of a consortium can have other commercial advantages beyond REACH, but being a member is not mandatory for SIEF members.

How to estimate value of existing data?
There are several approaches suggested in different sources of information and each will be considered ‘fair' by some parties. Some guidance has been offered by ECHA and CEFIC, but different methods and concepts are outlined below. The perspective of ‘fair' will vary between those who hold data and those who need to pay for access and the scenarios set out below attempt to be impartial.

• 1. Data you need for tonnage band
There is a general acceptance that a ‘fair' price for data access relates to the data needed in the respective tonnage bands; in other words, a lower tonnage registrant in the 1 - 10 t band need only pay access for the data covered in Annex VII. However, whether their share of the cost for a study required in this band is the same as a higher tonnage registrant is open to question. It is perhaps fair that as both high and low tonnage registrants need such an endpoint that they both pay the same share of costs. Likewise, suggestions that small companies should pay a lower proportional share is not accepted by many.

2. Old for new costs
This considers old data to be worth its ‘replacement' value so that old work performed in 1980s but are valid are worth the cost of conducting the study today. This works two ways in that some work may have been performed at very expensive laboratories or performed to excessively complex protocols and their cost was much higher than the cost to perform an ‘adequate' study today to acceptable protocols. There seems a reasonable agreement among much of industry that this is ‘fair' and indeed research by Professor Fleischer1 into costs of testing in Europe has been cited as a guide to value data.

• 3. Quality of data
There is a division of opinion between those suggesting that the value of data is relative to the quality of the report or not. It is proposed by some that if a report is scored 2 or lower on the Klimisch scale 2 then it is of lower value. An alternative view is that any valid report that prevents the cost of a new study has equal value; for example, a non-maximised (Buehler) sensitisation report not performed to GLP in 1985 that gives a positive response has the same value in terms of preventing a new study being performed as a GLP local lymph node assay performed in 2008. (The dilemma posed by a conflict in data arising if the LLNA study was negative is not discussed here).

4. Surplus data
A lot of work has been done on many chemicals over the years that includes data end points not essential for registration. Some of the data may relate to specific markets, such as cosmetics, off-shore use in oil extraction, aerospace etc where a major supplier has invested heavily to demonstrate safe use in a high risk scenario. It is understandable that where substantial investments have been made by data holders, they will seek to recover a share of those costs from others in the same market. However, the legality of insisting that joint registrants pay a share of data not required for registration is debatable.

5. Private deals
It is quite likely that individuals will come to ‘private' arrangements between data holders to swap or share access. This is not contrary to the REACH legal text and could lead to competing offers from data holders to secure deals or exchanges; a big issue here is whether such activities are ‘anticompetitive' and there would need to be considerable care concerning legality before working in such a way.

Capital investment ?
If buying shares of test reports, this could be seen as capital investment for accounting purposes. Local VAT may also apply, but if buying into access, different rules could be applicable. It is strongly advised that local accounting and legal advice is sought to ensure correct tax is applied (if required) and to determine if the costs are capital expenditure, research or marketing. Different rules may apply in different member states and will also differ outside the EU.

Compensation for management costs
For the majority of registrations, there may only be one major data holder (if any) and most registrants will not be very interested in the data specifically, but just want to do the minimum for registration. It is also very likely that the majority of registrants who are not taking the lead for their substances do not have the time or technical ability to check that the data is what they need and is valid and will rely on the lead registrant to get the lead dossier right. The lead registrant does have extra work to perform in putting the dossier together or may incur expenses related to running new testing (visiting laboratories, monitoring work etc) or may have paid out for the use of consultants.

Determining if these expenses are ‘fair' will be difficult and there will be the arguments about whether the work could have been done without consultants or whether so many visits to the test laboratory were needed. Indeed, the choice of test laboratory will be contentious with complaints likely that work could have been done elsewhere for less money or that reduced protocols could have been followed.
For passive (or dormant) members of a SIEF, arguing against such costs after the event is will be difficult as the simple answer is that had they played a more active role in the process, they could have helped keep costs lower. For this reason, and to prevent later problems, it is strongly recommended that lead registrants keep their fellow SIEF members informed of decisions and costs as they arise - even if passive or dormant.

Letters of access
Reality is that most data will not be formally exchanged in the form of test reports, but letters of access will be provided by data holders to demonstrate that co-registrants have access to the data in the dossier. As indicated above, there will be test reports that are surplus to the minimum requirements and will be added to the dossier as weight of evidenced and although access is for the lead dossier, there will be dispute as to whether access extends to these additional data; this is largely irrelevant as access is not needed for such supplementary data, even though the data holder may want to recover some of the costs of such work that may ultimately help provide that the substance is safe for intended uses.

A letter of access will be granted by the data holder as a commercial transaction and will typically take place after the recipient of access has paid an agreed sum of money. In the case of consortia or where there is joint data ownership, this may be a little more complex, but the concept is that the registrants will have access to the key endpoints in the lead dossier that are appropriate for their tonnage band.

In one of the few references to the process of sharing costs, it is made clear in guidance that payment must be made before registration; however, the implication is that this can be just before registration so a late registrant in 2018 need not pay until then - even for as share of work performed in 2010.
Commercial issues will also apply and it is recommended that if a SIEF agrees to new testing, there must also be agreement on how and when payments are made; it would be ‘unfair' for one potential registrant to bear the burden of the test work and then just before the registration deadline, be told that other members of the SIEF are dropping out.

To be part of a joint submission, a ‘token' is needed for those referencing the lead dossier and this is the obvious point for payment to be made - ie. you buy or sell the access to allow submission.

The words ‘fair' and ‘REACH' do not fit well into the same sentence. Although it is best to aim for a win-win agreement can be obtained so that industry has the least amount of work and hassle for the lowest collective cost, there will always be parties who consider agreements unfair. One can only hope that in the long run, ‘good' and ‘bad' deals will balance each other out.

An analogy we use during training is for people going out to the restaurant; a better evening is have by all if the division of the bill is an amicable affair and if all parties agree. Evening of one day you do not have a desert and you pay full share of the bill, there will be another occasion when you do have a fillet steak and equality restored. As long as industry does not consistently waste money by having un-needed puddings and pick the most expensive item, a win-win result should be possible.

It must also be remembered that discussing costs and obtaining legal and financial help can be expensive - what you save on a ‘good deal' in data share could be completely wasted in legal and accounting fees or in air fares and waste time in meetings.

1 Testing costs and testing capacity in accordance with REACH requirements, M Fleischer, Journal of Business Chemistry, Volume 4, Issue 3, September 2007
2 Klimisch HJ, Andreae E and Tillmann U (1997). A systematic approach for evaluating the quality of experimental and ecotoxicological data. Reg.Tox. and Pharm. 25:1-5

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