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April 01, 2010 (Vol. 30, No. 7)

IP Position Critical to Biotech Investment

Looming Battle over Gene Patenting Could Jeopardize Medical Advances

  • 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.

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