By CRG staff - interview with Richard Marsh, Myriad Genetics

Richard Marsh, JD, is Executive Vice President, General Counsel and Secretary of Myriad Genetics.

The Department of Justice recently released a friend-of-the-court brief agreeing with Myriad on some points, but holding that isolated DNA molecules are a product of nature and therefore not patentable. Would you count yourself among the many people who were surprised by this position?

Yes, absolutely we were surprised. Particularly when you look at the past 30 years of practice of both the courts and the Patent and Trademark Office, which has now issued literally thousands and thousands of isolated DNA patents for human, plant and animal application ... to see this shift now was very surprising. A curious note is that David Kappos, the director of the Patent and Trademark Office has said that at the PTO, they're continuing business as usual, that they're not following the position of the Department of Justice.


Did you get the sense that the PTO had not exactly signed onto this position?

Clearly, as far as the brief, they did not sign on, they did not participate. The best that we can tell at this point is that the PTO does not agree with this position. I think what we find kind of curious-but maybe not too surprising, given the current administration and the things they have been trying to implement-is that here you have the PTO, 30 years of practice, and ten years they've had these guidelines which were put in place after public notice, public hearings, public comments; and now you have this shift in position which was done overnight, behind closed doors, with no public comment and no notice, which runs against 30 years of established industry practice.

The other thing which is troubling is recognizing that all we have because of the birth and growth of the biotech industry, which is now $30 billion in R&D spent in 2008 alone ... a tremendous industry has sprung up, all of which is now in jeopardy; that in today's economic times, when we're trying to find jobs and stimulate the economy, the current administration would take a position which will result in a loss of jobs and revenue. To take a position against all of that is rather surprising and troubling.


That's one of the common arguments in favor of gene patenting, that they incentivize capital investment to fund research; but there are also plenty of people who argue that gene patents actually inhibit research. Is there anything you can point to that convinces you that gene patents incentivize rather than stifle research?

I would absolutely refute those allegations. They were postured in the lawsuit to try to influence Judge Sweet's decision making. As to Myriad specifically, they're absolutely false. How can you say that Myriad has ever, just once, told anyone not to do research? Not once. In fact there have been over seven or eight thousand articles which have been published on the BRCA1 and BRCA2 genes. Over 18,000 different authors have been researching this. It's just mind boggling to think that anyone would make that premise. As to the BRCA patent, specifically, it's just not supported by the record whatsoever. And it's very curious ... you'll notice that halfway into the litigation, once Myriad proffered all the proof and showed how widespread this has been researched and published, the ACLU attorneys started changing their posture and saying, "Well, patents do give you the right to prohibit research." And they're right, they technically do, but nobody so utilizes them.

One of the best things you can do is to read the amicus brief filed by Chris Holman and Robert Cook-Deegan. It wasn't filed in support of a specific party, but it does contain a very appropriate listing of various reports that were done, all of which concluded that there was no evidence that patents hinder research, that patents drive prices up or result in more expensive testing. It's easy for me to say all of these things-I do have a biased opinion-but if you go look at that evidence, put forth by a third party unaffiliated with Myriad who felt it was so important that they took the time to address that of all of these perceived evils, none of this is taking place. There's no evidence to suggest that these things actually happened.


Does that mean you would support a law or precedent that would continue to allow patents on isolated DNA molecules but would prevent patent holders from prohibiting research on those genes?

Myriad would have no problem with that position. In fact, there are a few instances in which Congress has already said that you cannot enforce a certain patent against medical practitioners if it's necessary in connection with human treatments. Congress clearly can do that, and we'd be fine with it. If you think about it, for practical purposes, for a diagnostic company, you need research done. When we first developed the BRCA test, none of the doctors would do the testing. The medical societies which dictate the guidelines about what doctors should and should not do-the American Congress of Obstetricians and Gynecologists, the American Society of Clinical Oncology-we needed them to publish guidelines to advise doctors to recommend our tests. The only way guidelines get published is if people do research and talk about this, so we're out there paying people and giving them samples, telling them to do more research. In the health care industry, the last thing any medical diagnostic provider would do is tell someone "don't do that research."

So that certainly would be a very appropriate suggestion, and I think some people have suggested it before, that there ought to be a research exemption. We would support that.


So if research isn't a threat, when does Myriad have the motivation to enforce patents? There must be some situations when these patents need to be enforced-that's why they're important, right?

Well, it's difficult to say. There has been a lot of use of the patents out there in the world. The only two instances when we've done anything were ten years ago, when two professors at a University of Pennsylvania lab started doing commercial level testing. Our belief back then was that we have spent all this time and effort, we were spending hundreds of millions of dollars to make the investment to commercialize the test and have a gold standard test, and that was an instance where we thought it was inappropriate for them to ride our coattails, if you will. We had raised that issue with them, and the University asked them to stop doing the testing.

Since then, you've raised a good question: When will we enforce the patents? Well, I would like to think that Myriad has now become the gold standard, and because of the quality and turnaround time of our tests, that's why people come to us. There hasn't been a need to enforce the patents, just because, I think, people have come to seek us out not just because of our patents, but more so because of the quality of the test we're providing.


If that's the case-that it's less about the patents on the specific gene than the quality of the actual diagnostic test-why not tell the Penn professors, "You can't use the same test that we do, but you can come up with some other test that still involves the BRCA gene?"

If you think about it, this is the bedrock of the patent system: In exchange for this limited period of exclusivity, you are required to disclose your invention, talk about your discovery, and indicate how it can be practiced, in order to spur innovation, so people can design around it.

People can come up with alternative manners and mechanisms by which they can come up with a predictive test. That all would be outside the scope of our patent, we would not have the ability to prohibit that. That's why it spurs innovation: if you make disclosures, others can design around it and improve upon it.

The problem is that, if patent protection not in place, the original incentive to spend the dollars and effort to make the inventions doesn't happen. Secondly, instead of disclosing inventions, they are kept as trade secrets and not disclosed, so people don't learn about the advancements in science.

Although it seems like if you had a secret way of coming up with a diagnostic test, people would be pretty reluctant to buy the test if they don't know how the results are being determined.

So you have to explain it to the medical society, you have to show why your gene panel test really will be predictive of the outcome. That's my point: Myriad, for example, never would have spent the over $500 million we now have spent-it took us over ten years to even recoup our investment-but we did it because we knew we had patent protection. If we didn't have that, we would not have spent the money. This is why I say that without gene patents, we would have less innovation, we would have less personalized medicine testing coming on the market, because people would just not spend the money to develop it.


Does Myriad conduct any research or commercialize any products using genes on which it does not own the patents-or, for that matter, genes which have been patented by somebody else?

No, we don't. We now have eight different molecular diagnostic products. Half of them are predictive medicine, where we'll look at genes and try to determine if there are mutations; some of them are personalized medicine, where we'll try to decide, based on biomarkers in the body, whether someone is getting an effective dose of a drug. But every time we look at a test, one of the first questions we ask is: What is the intellectual property position on this? Can we get a license to it? For instance, some of the work for a pancreatic test we're doing was developed at Johns Hopkins, and we got a license from them to go ahead and do this test. We will not do a product unless we know there's intellectual property protection, because we know it will take years to publish it, to teach doctors about it, and we're not going to do all that work just to have someone come in behind us and start doing the same test.


Couldn't it actually benefit Myriad in some projects not to have to deal with intellectual property issues?

The investment just wouldn't happen, because there's no guarantee that we'll be able to get a return on our investment. The last company I worked for was Iomega-remember, they made zip drives-but this is not like that, a product which you can just develop and immediately put it on the market place. You have to validate it, you have to prove that the gene panel works. We're looking a lot more like a pharmaceutical product in the regulatory approval that takes place. Nobody will spend the three to five years of development if there's no patent protection. Look at the pharmaceuticals: they won't launch a product unless there's patent protection to do it.


But how much of all that money is really involved in locating and isolating the gene, as opposed to the cost of actual commercialization?

That's a very important question. I think lots of people get lost in this idea that the gene would have been discovered anyway. That's absolutely right. But with the discovery of the gene, you're just getting out of the starting block. In 1996, when we launched our test, if you took a female patient who walked into some OBGYN clinic and said, "Hey doctor, I'm concerned about my family breast cancer history," the doctor would just give them a mammogram. Nobody knew about cancer predisposition risk, and this is what we've been doing, taking the time to help sponsor research and educate medical societies and the insurance industry.

And who does that? You've got to have a company, you've got to have a medical department, an accounting department, a legal department ... I mean, we're a 1,000 employee company. The discovery alone just barely starts the process. It's discovery plus commercialization that actually benefits society.


It does seem that the initial research to isolate the BRCA genes would have happened anyway.

We can all speculate. We have to take a step back and consider the big picture here: If we're wondering whether the patent system works, we shouldn't let a single isolated case rule what's most appropriate. In this case, yes, there were other groups looking for it, and I presume they would have found it. But that gets to my point before: discovery alone doesn't commercialize and promote the science, all it does is result in discovery. There have been lots of discoveries that have never made it to the market for a variety of reasons. But you're right, there were other groups looking for the BRCA gene, and I presume would have found it ... but Myriad found it first.


Myriad recently offered to surrender one of its gene patents in Australia. I've seen various speculation as to why ... can you clear up the reasoning behind that decision?

It's always comical to sit back and listen to the speculation, when if they would just call and ask we could enlighten them. In Australia, we actually don't have the commercialization rights. Ten years ago, we gave that to a company called Genetic Technologies. They have the exclusive rights to commercialize BRCA testing there. As a matter of their commercialization strategy, they had earlier made a "gift" of the patents. They can't make a gift of the actual patents, but they told the Australian people, "We are not going to enforce these patents against anyone." In other words: "We'll compete with anyone else just on the quality of our testing."

So, when this lawsuit came, it was kind of a copycat of the U.S. case-the nonprofit bringing the case picked Myriad since that's what they did in the U.S. Well, when we got sued, we said, "Wait a minute-the patents aren't being enforced against anybody. Everyone's free to practice the patents. There's no issue here." The problem is we're now being forced to spend the patent litigation costs, literally millions and millions of dollars, and our initial response was, "Why would we spend millions and millions of dollars when this is not an issue? You're free to practice it, the patent is not being enforced." So, to try to underscore that point, we said, "Look, we'll even surrender the actual patent, because it makes no difference." Right now we're still in the process of telling them it's nonsensical-why are we having litigation over patents that aren't being enforced? Go find someone who is enforcing patents if you want a real live case.

That's the only reason we offered to surrender the patent-because it wasn't being enforced.


And do you know whether that licensee in Australia, Genetic Technologies, is getting by financially without the BRCA patent?

I don't know much about that. They're not like Myriad, where it's a substantial part of our business. They do a variety of other types of testing, so for them the BRCA analysis testing is not a main product.


Is that difference the reason it's worthwhile for Myriad to spend millions in legal fees for the case in the U.S. instead of just surrendering the patent and relying on the quality of its testing?

Let me give a little color to that ... this case is not about Myriad. They only sued us on 15 claims of seven patents, and we have 23 patents that cover BRCA analysis. If we were to lose all 15 claims, we'd still have all 23 patents. Patents don't just go away because you lose a claim here or a claim there. This lawsuit will not have an impact on Myriad. Our intellectual property position will remain strong. It's going to have a much greater impact on the biotechnology industry as a whole. Actually, it did cross our minds: Why even bother to appeal this? It's just Judge Sweet, it's not a binding decision, this case is not impactful on Myriad ... why spend all the money and the effort? And the reason is, this is an important issue to the biotechnology sector. We clearly believe that the patent system works. We believe we are a poster child of the success of how public science has been promoted because of the patents granted on the genes. We firmly believe that society as a whole has benefited. I clearly appreciate that there will always be a few anecdotal stories, there will always be a handful of individuals who because of their personal circumstances may be negatively affected. I don't want to minimize that-it is a real issue for someone who has a family history and can't afford the test. Myriad specifically provides free testing for those who fall below a certain welfare level.

Having said that, if you take society as a whole, clearly society has been benefited by the patenting of the BRCA genes and all the biotech patents out there. Look at all the personalized medicine products out there today. And remember, in a few short years our patent is going to expire, and this benefit goes back to the public as a whole.


If losing this case isn't going to have a big impact on Myriad in terms of business, are you saying that Myriad is footing the bill on behalf of the entire biotech industry?

We clearly are being forced to respond to this lawsuit. We would love it if the ACLU would find someone else who is enforcing their patents against people. We'd be happy if they would go find some company that has a patent on toe fungus. But obviously they picked Myriad because we have the breast cancer gene, because women's health is a very high profile and emotional area. Let's all recognize what this is-that's the only reason they picked us. It's not necessarily because we have isolated DNA-there are tens of thousands of isolated DNAs out there, so why didn't they go pick on DuPont or Monsanto or Eli Lilly or anyone else? They picked us because they knew they could sensationalize and get a lot of emotion behind this area. And we acknowledge that it's a very important issue. But that's why they call these things test cases, we're having to bear the burden, if you will, of going forward. Now, I know that as of Friday there are 15 or so amicus briefs who have either filed in support of us or posturing a position in support of patents. So we're the named party, but we're not alone in this.


I know Myriad is not alone in its position, but this appeal must cost a significant amount of money. It seems there was an option not to appeal the decision, and if it's not important to Myriad's business, why take on all the court costs? Or am I wrong-is anyone helping out with the costs?

Nope, it's just us, there's no one sponsoring us or supporting us. We're footing the bill entirely on our own. It's just a fact of life when you're in the business world. You hope to avoid it, and you try to avoid it when you can, but that's just litigation.

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