July 10 (Bloomberg) -- Myriad Genetics Inc., a provider of tests for breast-cancer risk, is asking a federal court to stop two competitors that set up shop after a mixed U.S. Supreme Court ruling last month on patenting human genes.
Ambry Genetics Corp., a closely held clinical laboratory in Aliso Viejo, California, and Houston-based Gene By Gene Ltd., said June 13 they would offer the breast and ovarian cancer tests hours after a high court ruling that invalidated some of Myriad’s patents on genes linked to the diseases. The tests look at genes known as BRCA to determine if there is a hereditary risk of developing the diseases.
In separate lawsuits, Myriad said the tests by Ambry and Gene By Gene infringe patents it owns or licenses on the testing process, which wasn’t part of the Supreme Court case. The other owners of the patents -- the University of Utah, the University of Pennsylvania, the Hospital for Sick Children in Toronto and Endorecherche Inc. -- also joined in the suits.
“They are clearly using the same processes we are using in our testing,” Richard Marsh, Salt Lake City-based Myriad’s general counsel, said yesterday in an interview on the Ambry case. “They are infringing the claims of our patents in the way they are doing their testing.”
Ambry, which proclaimed on its website that “Your Genes are Still Free,” pledged to fight the complaint.
“Ambry Genetics supports the Supreme Court’s decision and will vigorously defend its position,” Ambry Chief Executive Officer Charles Dunlop said in a statement. “We have had an overwhelming response from our clients seeking an alternative laboratory to perform BRCA testing and Ambry is fully committed to supporting our clients and patients moving forward.”
Kate Croft, a spokeswoman for Gene By Gene, said the company had no immediate comment as it hadn’t been notified that it is being sued.
The suit against Ambry, involving 10 patents, was filed yesterday; the one against Gene By Gene was filed today and involves nine patents.
Myriad filed a request for an order late yesterday to prevent Ambry from offering any BRCA tests while the lawsuit is pending. According to the complaint, those tests include Ambry’s BRCAplus, BreastNext, OvaNext and CancerNext. Myriad said it needs the immediate order because the competing products are having an effect on Myriad’s relationships with insurers.
“Some third-party payors have already begun to exert pressure on Myriad to lower its prices in response to Ambry’s discounted tests,” Alexander Ford, Myriad’s chief commercial officer, said in a court filing to support the request.
Ambry is selling its test at $2,280 compared with Myriad’s BRACAnalysis test price of $4,040, he said in the filing. Ford said Myriad’s test has a “near-perfect” rate of error in determining if there is a mutation of the gene, while Ambry’s rate may be as high as 4 percent and is more probable to report a genetic variation without information on whether there is any significance to that.
Ambry’s test will reduce Myriad’s diagnostic revenue, which in turn will mean lower royalty payments for the patent owners, according to the complaint filed in Myriad’s hometown of Salt Lake City. It seeks compensation and an order that Ambry provide to the patent owners, including Myriad, all products that infringe the patents so they can be destroyed.
Myriad pays 8 percent of its test profits to the four patent owners, or about $57 million so far, and the amount will rise as the test becomes more widely used, said Ron Rogers, a company spokesman.
Public awareness of the tests has grown since Academy Award-winning actress Angelina Jolie said in May that she had a double mastectomy after Myriad tests showed she had the mutation linked to the cancer that killed her mother at 56.
“If Ambry is allowed to free ride into the market with its infringing tests, Myriad will lose significant market share whether it lowers its prices or not,” Myriad said. The company said its reputation and that of the other patent owners also could be harmed.
The Supreme Court case dealt only with whether certain gene-related patents improperly covered natural phenomena, and said certain types of human genetic material could be patented as long as there is sufficient intervention by people.
The ruling made clear that applications using knowledge of the genes were eligible for legal protection, and it’s those types of patent claims that are the subject of the federal complaint filed yesterday in Utah.
“It’s like any other company that’s got a patent portfolio: you would expect them to protect it,” Amanda Murphy, a William Blair & Co. analyst in Chicago, said by telephone.
Myriad has a database of 16,000 gene mutations that gives the company “a pretty meaningful advantage” over competitors relying on less rich public information.
“Some of the labs have talked about kind of competing on price in order to gain market share,” Murphy said. “I find it difficult to understand how a doctor would use a test that has a lower level of sensitivity than a Myriad test.”
Myriad has been criticized for the price of its tests and for its past efforts to prevent others from creating a competing exam.
“This is more of Myriad’s arrogant, monopolist behavior that is so harmful to patients, science and health-care costs,” said Dan Ravicher, president of the New York-based Public Patent Foundation which, along with the American Civil Liberties Union, represented the challengers in the Supreme Court case.
“This is just an attempt to save face with Wall Street, so they can keep up their story that they have a viable moat around their business, which they do not,” he said.
Myriad pledged that it wouldn’t curb any non-commercial research into the subject genes, nor would it interfere with the ability to get a second opinion.
The company also said it has various programs to ensure affordable access to tests for all those in need, and many people will be able to get them for free once provisions of the federal Affordable Care Act take effect.
Myriad has invested more than $500 million to create a diagnostic test for hereditary breast and ovarian cancer cases related to the genes it discovered, which are known as BRCA1 and BRCA2, the company said in the complaint.
The efforts “have revolutionized patient care and provided medical diagnosis and treatment options never thought possible,” Myriad said in the complaint.
Myriad owns five of the patents and is exclusive licensee of the other five. Elements of three of the licensed patents were part of the civil court challenge; not all aspects of the patents were part of that case and remain in force.
The Ambry case is University of Utah Research Foundation v. Ambry Genetics, 13cv640, The Gene By Gene case is University of Utah Research Foundation v. Gene By Gene LTD., 13cv643, both U.S. District Court for the District of Utah (Salt Lake City).
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