Biotech Industry at Stake in Human Gene Patent Decision

For 30 years, biotechnology innovators have secured thousands of U.S. patents on genes, defining the legal rights to medical and agricultural products worth hundreds of billions of dollars.

Now the U.S. Supreme Court is considering whether that was all a big mistake. The court next week will debate whether human genes can be patented, hearing arguments from doctors, patients and scientists who say patents are stifling clinical testing and research. The group is challenging Myriad Genetics Inc. (MYGN)’s patents on genes linked to breast and ovarian cancer.

A decision against gene patenting would ripple across a host of industries -- including biotechnology, agriculture, industrial microbiology and pharmaceuticals. The case has implications for the growing field of personalized medicine and efforts to map the human brain and discover new uses for embryonic stem cells.

It potentially could bar patents on discoveries outside the DNA context.

“The intellectual framework that comes out of the decision could have an impact on other patents,” said Robert Cook- Deegan, a public-policy professor at Duke University and its Institute for Genome Sciences and Policy. Beyond medicine, “this could affect agricultural biotechnology, environmental biotechnology, green-tech, the use of organisms to produce alternative fuels and other applications.”

Source: Continuum Health Communications via Bloomberg

The Myriad Genetics Inc. corporate campus stands in Salt Lake City, Utah. Close

The Myriad Genetics Inc. corporate campus stands in Salt Lake City, Utah.

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Source: Continuum Health Communications via Bloomberg

The Myriad Genetics Inc. corporate campus stands in Salt Lake City, Utah.

Valuable Treatments

The case, which the court will decide by June, is splitting the medical community. Trade groups for the biotechnology, agriculture and drug industries are siding with Myriad. They say gene patents have led to valuable treatments, including Amgen Inc. (AMGN)’s Epogen anemia drug and synthetic insulin developed by Genentech Inc., now part of Roche Holding AG.

Doctor groups such as the American Medical Association are backing the challengers to the patents. They have partial support from the Obama administration, which is urging the court to uphold parts of Myriad’s patents and void other aspects.

The administration’s stance marks a rejection of the longstanding policy of the U.S. Patent and Trademark Office, which has been awarding human gene patents since 1982.

The dispute comes to the court in an emotionally charged package, with patient advocates accusing Myriad of standing in the way of breast cancer diagnosis and treatment. The company at one point demanded that the University of Pennsylvania stop clinical testing of cancer patients. Breast cancer patient advocates are planning a demonstration outside the court.

Critics say Myriad’s patents effectively give the company ownership rights over a part of the human body.

‘Strong Aversion’

“There is a strong aversion to patents that cover any aspect of the human body,” said Andrew Torrance, who teaches patent and biodiversity law at the University of Kansas and is a visiting scholar at the Massachusetts Institute of Technology. “It’s a gut-level principle. We don’t like the thought of humans as property, and we think of patents as property.”

More broadly, the case has rekindled a debate over the longstanding concept that patents can’t cover “laws of nature.” The Supreme Court pointed to that legal principle in 1854 when it invalidated part of Samuel Morse’s telegraph patent because it sought to cover the use of electric current to transmit characters or letters.

“Einstein could not patent his celebrated law that E=mc2; nor could Newton have patented the law of gravity,” the high court wrote in a 1980 case. “Such discoveries are manifestations of nature, free to all men and reserved exclusively to none.”

Cancer Tests

The Myriad case tests the meaning of that principle against the backdrop of cutting-edge medical and scientific research. In 1994, the Salt Lake City-based company won a race among five research groups to pinpoint the genetic sequences associated with DNA mutations that indicate hereditary risk for breast and ovarian cancer. Myriad then developed tests for the mutations.

The group opposing Myriad says the company has used the patents to block other laboratories from testing the genes for mutations, in some cases depriving women of important information. The opponents also say the patents are so broad that they deter use of the genes for research.

Gene patenting “impedes your relationship to your physician,” said Daniel Ravicher, president of the New York- based Public Patent Foundation, which along with the American Civil Liberties Union represents the challengers. “It gives exclusive monopolistic control over a portion of your body to a corporation whose legally required interest is to maximize profits for its shareholders.”

$500 Million

Myriad says it deserves to be rewarded for its ingenuity. Mark Capone, president of the company’s Myriad Genetics Laboratories subsidiary, said in an interview that the company took a six-foot strand of DNA and identified a sequence that could fit on the head of a pin. He said the company spent $500 million over 17 years before it broke even on the project.

“There was an incredible amount of research that was required in order to identify exactly where in the DNA were these two genes located,” Capone said. A federal appeals court twice upheld Myriad’s patents.

The tests generated $405 million for Myriad during its most recent fiscal year, almost 82 percent of the company’s revenue.

Capone said the case won’t have any material impact on the company because the litigation affects only a fraction of its patent rights. Even so, Myriad shares fell 3.8 percent on Nov. 30, the day the high court said it would hear the case.

The case may turn on how the high court understands the underlying science. The disputed patents cover gene sequences in the form known as “isolated DNA,” after they have been removed from the body.

‘Snipped’ DNA

The challengers say isolated DNA is identical to the coding that exists naturally in the body and can be easily removed -- “snipped” from a cell, according to the Obama administration. Myriad says the process is far more complicated, transforming the DNA molecule’s physical structure and altering its chemistry.

The impact of the case in the human-gene field probably will be limited. Gene patenting peaked in the 1990s, meaning many patents have expired or are nearing the end of their 20- year life, and most of the human genome is now in the public domain. Companies now tend to focus on modifying genes or creating new ones in a laboratory.

“If the Supreme Court stays narrowly focused on human genes, it will be relatively insignificant or at least not as significant as people fear,” said Kevin Noonan, a patent lawyer with McDonnell Boehnen Hulbert & Berghoff in Chicago.

Affected Industries

Other fields would potentially feel a much greater impact. A ruling against Myriad might alter the work of animal health- care companies, such as Sanofi (SNY)’s Merial unit, that search for genetic sequences to find vaccines for common diseases affecting livestock and pets.

The case might also affect agricultural companies, including Monsanto Co. (MON), that insert genes into seeds so they can repel insects and withstand weed-killer. Industrial biotechnology companies might lose the ability to patent microorganism DNA that can be altered to improve biofuel manufacturing.

“If they rule that just because you isolate it from nature, that’s not good enough, where is going to be the incentive for someone to isolate something from a natural source and make it beneficial?” Noonan said. “That’s the danger. That’s why people are upset about this case.”

The case is Association for Molecular Pathology v. Myriad Genetics, 12-398.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net; Susan Decker in Washington at sdecker1@bloomberg.net.

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net.

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