Human Genes as Company Property Tested by Myriad Patent Case

As scientists successfully decode and isolate human DNA in the race for new drugs, the ability to protect and profit from what they find has yet to be mapped.

A federal appeals court is poised to tie that loose end when it hears arguments tomorrow on whether it should be legal to obtain U.S. patents on genetic material and on methods of using that DNA for medical diagnoses and treatments. Myriad Genetics Inc. (MYGN) has already built a business around the practice, part of an industry that has staked a claim to as much as 20 percent of known human protein-coding genes.

Madeleine Ball, a Harvard University geneticist, said entire regions of the human genome are at risk of becoming inaccessible to anyone who can’t afford to pay for patent licenses, stifling the information-sharing that’s vital to scientific progress. For personalized medicine companies like Optimal Medicine Ltd., the patents are about protecting billions of dollars invested in years of research.

“This isn’t three guys getting together in a garage,” Optimal founder Robert N. McBurney said in a phone interview. “It’s an industry that absolutely depends on intellectual property to underpin the work that develops from research.”

Both sides will be watching to see where the line is drawn. The U.S. Court of Appeals for the Federal Circuit sided with Salt Lake City-based Myriad last year in saying that isolated DNA -- where unneeded information is stripped out of genetic strands -- is eligible for patent protection.

Supreme Battle

Scientific groups appealed to the Supreme Court, which in March determined in a separate case that there should be some limits on patents for diagnostic tests using genetic material. The high court ordered the Federal Circuit to reconsider the Myriad dispute in light of that decision.

The high court ruling was so sweeping and jumbled that the lower court may stand by its original position, said Kathleen Williams, a lawyer with Edwards Wildman Palmer LLP in Boston, whose clients include McBurney.

“The Federal Circuit is more likely than not to go head- to-head with the Supreme Court on this issue” of what can be patented, Williams said in a telephone interview.

Aspects of seven Myriad patents were being challenged by the American Society of Human Genetics, the American Medical Association and other scientific groups. They argue that isolated DNA is the same thing as what is in the human body. The Supreme Court in March said that patents cannot be obtained on things that prevent others from the use of a natural law.

God’s Creation

“Patents are always a double-edged sword -- they benefit and harm society,” said Daniel Ravicher, president of the Public Patent Foundation in New York, which, along with the American Civil Liberties Union, is representing the researchers challenging Myriad’s patents. “The question is, do they foreclose the storehouse of knowledge that God gave us?”

Gene databases and technology to analyze them are being pursued by Myriad and other companies as the keys to future medical discovery, as well as new methods of agriculture and industrial processes. Annual U.S. spending on medical DNA testing will rise to $25 billion in the next decade from $5 billion in 2010, according to UnitedHealth Group Inc. (UNH), the biggest for-profit health insurer in the nation.

Myriad, which holds more than two dozen patents for a genetic test that indicates a hereditary risk of breast and ovarian cancers, reported $363 million in revenue in the first nine months of the year. Myriad’s BRACAnalysis genetic cancer test accounted for 81 percent of total revenue in its fiscal third quarter ended March 31, according to a company statement from May.

Cancer Tests

“If the patents are upheld, we might be in violation,” said Ball, who is working on the Personal Genome Project, a Harvard effort to put the full DNA sequences of individuals, along with their medical records, in the public sphere to speed genetic research. “Patent holders might not choose to enforce against us, but it would be more reassuring if the genes weren’t patented in the first place.”

DNA sequencing machines from San Diego-based Illumina Inc. (ILMN) and Carlsbad, California-based Life Technologies Corp. (LIFE) that analyze an entire human genome in days are spurring wider interest in the technology’s medical applications, such as predicting cancer risk. Increasing numbers of medical centers in the U.S. -- in Boston, Milwaukee and Kansas City -- are offering medical diagnostic services that look at the entire human genome, including patented regions.

Genomic Health Inc. (GHDX) is making tests to determine the likelihood of recurrence of breast cancer, Quest Diagnostics Inc. (DGX)’s Celera sells test kits for cystic fibrosis and Alnylam Pharmaceuticals Inc. (ALNY) is developing a treatment for a rare genetic disorder that causes a harmful accumulation of protein in the heart, nervous system and gastrointestinal tract.

2,800 Patents

“The patent office has almost 2,800 patents out there on isolated DNA,” Williams, the Edwards Wildman patent lawyer, said. “That’s considerable pressure in having consistency in what they do.”

While a 2005 study in the journal Science estimated that about 20 percent of known human protein-coding genes had been patented, other researchers have said that the portion under legal control is probably much smaller. Whatever the correct percentage, doctors who sequence genes may still trip over restricted areas.

Ravicher said the Association for Molecular Pathology and other researchers aren’t challenging every patent claim Myriad owns, including ones that cover the use of the isolated DNA with something else to come up with a new product. He said the group only wants to curb some of the claims on isolated DNA.

Patent Exclusivity

The Biotechnology Industry Organization supports Myriad, saying the patent protection is key to funding more research into personalizing medicine.

Protection of valid patents on inventions is vital to the biotechnology industry, said Dan Vorhaus, a lawyer who specializes in genetic issues for Charlotte, North Carolina- based Robinson Bradshaw & Hinson. Exclusivity also encourages companies like Myriad to invest in their products and related services without worrying that their advances will be quickly duplicated by competitors, he said.

In that vein, Myriad has worked to increase its understanding of the health implications of mutations in breast cancer genes, he said.

“They’ve been working this patch for more than two decades,” Vorhaus said. “They’ve acquired a unique and valuable set of data, and they did this -- and were able to do this -- because of the patent exclusivity they have.”

The case is Association for Molecular Pathology v. Myriad, 10-1406, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Association for Molecular Pathology v. U.S. Patent and Trademark Office, 09cv4515, U.S. District Court for the District of New York.

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net; John Lauerman in Boston at jlauerman@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Lisa Wolfson at lwolfson@bloomberg.net

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