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Wall Street BioBeat : Apr 1, 2010 (Vol. 30, No. 7)

IP Position Critical to Biotech Investment

Looming Battle over Gene Patenting Could Jeopardize Medical Advances
  • Lisa A. Haile, Ph.D.

The American Civil Liberties Union (ACLU), the Public Patent Foundation, and others filed a lawsuit in 2009 (Association for Molecular Pathology, et al. v. United States Patent and Trademark Office, et al.) challenging patents on two human genes associated with breast and ovarian cancer. It is the plaintiffs’ contention that these gene patents stifle research that may lead to important cures and potentially prevent options with regard to treatments.

The lawsuit against the U.S. Patent and Trademark Office (USPTO) and owners of the patents on mutations in the BRCA genes, Myriad Genetics and the University of Utah Research Foundation, has the potential to be a landmark case for the biotechnology industry.

The patents at the center of the lawsuit are based on the initial identification of mutations within two genes, called BRCA1 and BRCA2, which appear to be the cause of the majority of cases of hereditary breast and ovarian cancers. The lawsuit states that the patents on the two human genes are unconstitutional and invalid because “human genes are products of nature, laws of nature and/or natural phenomena, and abstract ideas or basic human knowledge or thought.”

The patent system has evolved over time and, at least in the U.S., is typically understood to have successfully promoted innovation in various fields, including biotechnology and the pharmaceutical industry. Patents help to stimulate investment in research and development, giving a limited monopoly to the inventor or patent owner while requiring in return full disclosure of the invention to the public.

“While it is unfortunate, I have seen quite a few technologies over the years that would be of potential great benefit to patients, but the intellectual property was simply not there to support protecting the product from fast followers in the market place,” explains Robert More, a general partner at Frazier Healthcare Ventures.

“Unfortunately, because of the enormous sums of money required to discover, develop, test, and approve anything in the healthcare sector, quite aside from the time it takes, IP is critical.” More further states that since “patents have definitive lifetimes, 20 years or less of exclusivity, and then an infinite time in the public domain, I think that is a small price for us to pay for innovation.”

Gene patents have been issued in the U.S. for decades, and they are not likely to stop being issued based on the filing of the ACLU lawsuit. In 1980, the U.S. Supreme Court upheld the first patent in the field of genetic engineering for the invention by microbiologist Ananda Mohan Chakrabarty of a type of bacteria that can ingest oil.

In 1982, the USPTO issued the first gene patent to the Regents of the University of California for work carried out on the construction of a plasmid contained in a bacterium and expression of genes for chorionic somatotropin. Thousands of patents have since been issued by the USPTO for a wide variety of biotechnology inventions. 

Gene patents are patents that contain claims to nucleic acid sequences, including full-length genes or fragments of genes, vectors containing the genes (e.g., plasmids), probes, and nucleic acid sequences that inhibit expression of genes, for example. These patents were and still are the foundation of the biotech industry.

Whether patents are for genes encoding therapeutic proteins such as insulin and growth hormones, antibodies such as Herceptin® and Rituxan®, or mutated genes that are indicative of breast or ovarian cancer, precluding patents on this subject matter will halt the forward progress that has been made in the biotech industry over the past 30 years since Chakrabarty was decided.

Translational medicine, or movement of inventions and technologies from the university/nonprofit research institutes’ laboratories to partnerships with larger companies, does not occur without large investments of money and resources. Whether an invention is a new therapeutic or a molecular diagnostic, as in the Myriad Genetics test, the decision on whether to invest the time and money it takes to bring a product to market is typically dependent on having a patent or series of patents covering the product or technology.

If there were no exclusive rights in the final product, there would be little incentive to pour money into the research, development, and commercialization of a product, whether it is a new therapeutic or a genetic test such as the BRCA test.

BRCA Monopoly

Since the USPTO granted patents on the BRCA genes (and more specifically the association of particular mutations in the genes) to Myriad Genetics (and the U.S. government), Myriad is the only source of BRCA gene mutation diagnostic testing.

Myriad has the rights to the patents for the BRCA gene mutations and, therefore, they can prevent others from making, using, or selling products that would use the patented genes.

According to the ACLU, Myriad’s monopoly on the BRCA genes is harmful to women and does not allow them to get second opinions or to seek out alternative tests that include BRCA genes. In addition, the ACLU argument is that Myriad is free to charge a high price for the test and many women are unable to afford it (it is currently $3,000).

In essence, the lawsuit challenges the entire field of gene patenting when it seems that the true question is whether our healthcare system provides access to specific genetic tests (or therapeutics). As noted previously, it should be expected that a patent in the healthcare field for a genetic diagnostic, a new drug, or a new device should provide some benefit to the patent holder or exclusive licensee.

In this case, why shouldn’t Myriad have the right to charge more for its test when it invested in the discovery and development and paid for the regulatory approval process for the genetic test including the patented genes?

The U.S. patent system, which has been in place for over 200 years, should and does provide incentive for others to design around patented products or methods and create the next generation of tests or drugs, or discover new genes, tests, or drugs. Without some promise of a return on their investment, these incentives are lost, and the industry and, ultimately, patients will suffer in the end and technology will never advance at the rate that it has historically.   

“When evaluating opportunities to determine whether we will come in and underwrite the deal, we look at the IP position as one of the key questions,” explains Robert Dentice, head of life sciences investment banking at Cantor Fitzgerald. “We know that if the IP position is not strong, it is unlikely that we will pursue the opportunity further, knowing that the IP strategy and position will be one of the top three questions that the investors will ask about.”

One of the arguments set forth by ACLU and others against gene patents is that such patents should not be allowed, so that patients could have access to alternative and cheaper versions of tests. This argument could be applied to any other patentable subject matter in the healthcare space including drugs and medical devices.

If ACLU’s arguments prevail, do they next go after Genentech because it has patents and a market for Herceptin for Her2 positive breast cancer; Pfizer and AstraZeneca, for their patents on statins; Biogen-Idec for Rituxan for the treatment of certain types of B-cell non-Hodgkin lymphoma; or Bristol-Myers Squibb, which sells Erbitux?

Where do you draw the line to say that access to medical care, whether it is diagnostic, therapeutic, device, or instrumentation is being hindered by patents? Generally speaking, isn’t the patent system working the way it was intended to work? Those that have been granted patents are given a limited monopoly for their inventions and after the patent term expires, the patented invention is placed into the public domain.

While it is important not to lose sight of the central purpose of the patent system, which is to encourage public disclosure of new inventions, the reality is that in the biotechnology field, companies and researchers are incentivized by patents to develop new and innovative drugs or tests to avoid prior issued patents and the research and development typically requires a significant financial investment.

Takeaways: The Case for Gene Patents

  • Gene patents are the foundation of the biotech industry and precluding them would halt forward progress.
  • The patent system promotes innovation and stimulates investment in R&D.
  • If there were no exclusive rights in the final product, there would be
    little incentive to invest time and money into developing it.
  • Without the incentives offered by the issuance of patents, the industry and, ultimately, patients would suffer.