Gene Patents Limited by Court in Mixed Ruling for Myriad

The U.S. Supreme Court restricted the ability of companies to patent human genetic sequences, issuing a mixed ruling in a case that raised questions about thousands of biotechnology, agricultural and drug patents.

The justices unanimously ruled that parts of Myriad Genetics Inc. (MYGN)’s patents on genes linked to breast and ovarian cancer improperly covered natural phenomena. Other parts, the court said, involve enough human intervention to be eligible for legal protection.

The decision left both sides of the debate claiming victory. Patient advocates, who have accused Myriad of blocking clinical testing and research, said the ruling will lead to less-expensive options for women seeking to be tested for cancer risk. The decision forces a change at the federal patent office, which has been awarding gene patents since 1982.

“Because of this ruling, patients will have greater access to genetic testing and scientists can engage in research on these genes without fear of being sued,” said Sandra Park, an attorney with the American Civil Liberties Union, which sued to challenge the Myriad patents.

Myriad said its tests for the BRCA1 and BRCA2 genes still are protected by 24 different patents. “We have a very strong patent estate around the BRCA test,” Myriad General Counsel Richard Marsh said in a telephone interview.

Myriad surged after the court ruled before plunging later in the day. It rose as much as 12.8 percent to $38.27, its highest level since 2009. By 4 p.m. it had fallen $1.91 to $32.01, down 5.6 percent, in New York.

Competition Coming

Ambry Genetics and researchers at the University of Washington each said they would immediately start offering tests for the BRCA genes as part of broader cancer gene panels that they already are performing.

Ambry, a private company in Aliso Viejo, California, will also offer the two BRCA genes as a stand-alone test. Quest Diagnostics Inc. intends to offer BRCA testing to doctors and patients starting later this year, company spokeswoman Wendy Bost said in an e-mail.

“Testing from many sources can now go forward,” said Mary-Claire King, the University of Washington geneticist who first proved that a single gene could dramatically raise the risk of breast cancer, leading to the BRCA1 discovery. “The tests that provide greatest accuracy, best service, and lowest costs will surface.”

Hereditary Risk

King said in a telephone interview that the university would immediately start including results for the two BRCA genes as part of its multi-gene test that scans more than 30 genes involved in hereditary risk for a variety of cancers. Before now, for legal reasons due to Myriad’s patents, those two genes had to be masked when doctors performed the scan on patients not involved in research studies.

Actress Angelina Jolie said in May she had a double mastectomy after Myriad’s tests showed she had a gene mutation linked to breast cancer.

Biotechnology, agriculture and drug industries backed Myriad in the case, telling the court that gene patents have led to valuable treatments. The decision will have implications for the growing field of personalized medicine and efforts to map the human brain and discover new uses for embryonic stem cells.

Genes are encoded strands of nucleotides in different sequences that are responsible for inherited traits. Myriad’s patents covered sequences in the form known as “isolated DNA” after they have been removed from the body.

‘Useful’ Gene

“Myriad did not create anything” with isolated DNA, Justice Clarence Thomas wrote for the court. “It found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.”

At the same time, Thomas said synthetic molecules known as complementary DNA, or cDNA, can be patented because they require a significant amount of human manipulation to create. Those molecules are stripped-down versions of the genetic sequence within the body, including only the parts of the gene that can encode proteins.

“The lab technician unquestionably creates something new when cDNA is made,” Thomas wrote. Thomas’s reasoning largely followed the position of the Obama administration.

The trade association that represents the biotechnology industry hailed that part of Thomas’s opinion.

‘Needed Certainty’

“cDNA is the commercially most important form of DNA used in biotechnology,” Jim Greenwood, chief executive officer of the Biotechnology Industry Organization, said in a statement. “Today’s decision offers urgently needed certainty for research-driven companies that rely on cDNA patents for investment in innovation.”

The decision creates a balance between researchers and businesses, said Matthew Dowd of Wiley Rein in Washington, who submitted a brief on behalf of James Watson, the co-discoverer of the structure of DNA. Watson, a Nobel Prize winner for his discovery who helped found the Human Genome Project, objected to patenting of the isolated DNA.

“It does free up and ensure the free use of human genes, which are naturally occurring products,” Dowd said in an interview. “At the same time, it will probably be viewed as providing enough incentive for those scientists developing biotech inventions.”

Doctors, Patients

A group of doctors, patients and researchers challenged the Myriad patents, arguing that isolated DNA is identical to the coding that exists naturally in the body. Those supporting the challenge included the American Society of Human Genetics, the American Medical Association and AARP, which represents older Americans. Lawyers at the ACLU and the Public Patent Foundation in New York represented the challengers.

Myriad argued that isolated DNA has a different physical structure and chemistry than genes within the body. Biotechnology companies contended that they have been getting patents on genes for 30 years, and can’t attract investment dollars unless they can protect their research from competitors.

Salt Lake City-based Myriad in 1994 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.

Gene databases and technology to analyze them can be the key to medical discoveries and more efficient ways of providing treatment. 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.

Personalized Medicine

Genetic testing is a hallmark of the growing field of personalized medicine, in which doctors determine whether a patient is susceptible to a particular disease or would be more responsive to certain medications.

The narrowness of the ruling may limit the impact among the many companies and industries that had been monitoring the legal fight. The ruling won’t hurt agribusinesses like Monsanto Co. (MON) or ones engaged in industrial microbiology such as developing new enzymes for paints, biofuel or dish soap, said Jonathan Masur, a professor at University of Chicago, who specializes in patent law.

“They might not be able to patent a particular enzyme but that’s not these companies’ business model,” Masur said. “They’re building their own biological material that lives outside of nature and coming up with new forms of life.”

The dispute came 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.

The U.S. Court of Appeals for the Federal Circuit largely sided with Myriad, saying isolated DNA could be patented.

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

To contact the reporters on this story: Greg Stohr in Washington at gstohr@bloomberg.net; Susan Decker in Washington at sdecker1@bloomberg.net; Robert Langreth in New York at rlangreth@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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