Gene Patents Face Reckoning

by jeeg 2. January 2013 22:00

Last year, Quest Diagnostics Inc  spent $740 million to buy a company that owns rights to some patents on human genes. So the prospect of a Supreme Court ruling in 2013 striking down such patents might seem scary.

It isn't, said spokeswoman Wendy Bost. An end to gene patents could be a "positive development," she said, "because it would open new opportunities to develop new testing services based on gene discoveries."

Much has changed since 1990, when geneticist Mary Claire King first located the breast-cancer gene at the heart of the case the Supreme Court is hearing this spring. As genetic testing has entered everyday medicine, many companies offer a range of tests, and some sequence a patient's entire genome seeking clues to disease. Figuring out who owns the rights to all those genes isn't easy.

That is why some of the medical-testing industry's bigger players are finding gene patents can be as much a hindrance as a help, even if they own a few themselves. Should the high court decide that individual genes are products of nature and can't be patented, they see equal or faster growth in the already fast-growing business.

"This case will not have any impact on our diagnostics business," said a spokesman for Chicago-based Abbott Laboratories'  diagnostics business, one of the market leaders with Siemens AG  and Roche Holding AG. Abbott sells tests protected by its own patents as well as unpatented tests.

Quest Diagnostics also offers many kinds of tests, including those it obtained in its April 2011 acquisition of Thermo Fisher Scientific's  Athena Diagnostics unit, which specializes in genetic testing for neurological diseases like Alzheimer's.

Of course, not everyone in the industry is so sanguine—in particular, the company that is fighting at the Supreme Court, Myriad Genetics Inc. of Salt Lake City. After Dr. King's work led to the identification of BRCA1 and BRCA2, genes that may carry mutations tied to a significantly higher risk of breast or ovarian cancers, Myriad isolated the genes in the lab and patented them. It has aggressively enforced its monopoly on a diagnostic test, for which it charges about $3,000.

Myriad maintains it isn't genes that the company patented, but "isolated DNA molecules and processes" removed from the human body.

If the Supreme Court nullifies such patents, it would "severely impact the private investment that has fueled the explosion of advances in biotechnology and jeopardize many of the jobs created during this time frame," a Myriad spokeswoman said. "By way of example, it took Myriad 17 years and $500 million of investment to reach break-even."

The U.S. Court of Appeals for the Federal Circuit, a specialized court in Washington that hears patent appeals, has twice upheld Myriad's patents by a 2-1 vote. The lead opinion, by Judge Alan Lourie, reasoned that because isolating the gene breaks its covalent bonds to other molecules, it no longer is a naturally occurring material.

For the better part of a decade, however, the Supreme Court has repeatedly rebuked the Federal Circuit for granting patentees more power over innovation than Congress intended.

In their most recent such ruling, in March, the justices reversed the Federal Circuit and stripped patent protection from a blood test used to determine drug dosage for certain autoimmune conditions. "Patent law [should] not inhibit further discovery by improperly tying up the future use of laws of nature," Justice Stephen Breyer wrote for a unanimous court.

Concern about overreaching patents comes even from some who depend on patents for their livelihood. "I'm not a big fan of broad patents that can't be reduced to practice and prevent others from engaging in" research activity, said Merck  & Co. Chief Executive Ken Frazier.

A coalition of academics, medical organizations and cancer patients, represented by the American Civil Liberties Union, is challenging the Myriad patents, arguing in part that testing of the human genome could be impeded.

Myriad responds in its papers that "human ingenuity [is] required to create isolated DNA molecules," something it said the Patent and Trademark Office has recognized by issuing thousands of patents over the past 30 years.

The molecular diagnostic-test market will reach $5 billion world-wide this year, estimates Jonathan Witonsky, an analyst at Frost & Sullivan in Mountain View, Calif. Tests based on gene patents command significantly higher prices, and losing the patent protection would hurt profits at some firms, Mr. Witonsky said. He said Myriad may be unusual because of its heavy reliance on a single test backed by gene patents. Many firms such as Quest offer tests whose patents are outside the scope of the Myriad case or aren't patented at all.

Invalidation of gene patents would clear away hurdles to offering new tests, said Fareed Kureshy, chief executive of closely held AutoGenomics Inc. of Vista, Calif., which sells 50 genetic tests. "If the Supreme Court rules that gene patents are not applicable, you'll see a lot more tests" with competitive pricing, said Mr. Kureshy. "If they decide in favor of Myriad, it will be business as usual."

  Jonathan D. Rockoff  and Jess Bravin , Wall St. Journal


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