Diagnostic Kits/Paper

Are patents clogging the pipeline: The effects of intellectual property on commercialization and access to genetic diagnostics
(A Summary Paper of our Research to date)
By Carolina Rossini, Andrew Clearwater, and Mackenzie Cowell

Last Draft: December 3, 2009

Introduction

Description of the GDx Market

Defining Genetic Diagnostics

from Educational_Materials#Field_Definition

Brief History of GDx and Related Technology

• chemical patents at turn of century (see Palombi's work)

Overview of IP Landscape

from Overview_of_Economics_of_Intellectual_Property_in_Kits see overview]

Forces affecting the GDx Industry

Intellectual Property

Patenting Trends

• • Patents
    • History of the market shows a trend towards consolidation (Diagnostic Test Service Commercialization in Multiplex and Esoteric Testing)
    • There has been "an increase in patents on the inputs to drug discovery (“research tools”)." (Cohen et. al., 2003)
      • no substantially barriers have been found as a result of this increase in patents on the inputs to drug discovery (Cohen et. al., 2003)
      • no substantially barriers found to university research (Cohen et. al., 2003)
      • THE EXCEPTION: "Restrictions on the use of patented genetic diagnostics, where we see some evidence of patents interfering with university research, are an important exception. There is, also, some evidence of delays associated with negotiating access to patented research tools, and there are areas in which patents over targets limit access and where access to foundational discoveries can be restricted. There are also cases in which research is redirected to areas with more intellectual property (IP) freedom. Still, the vast majority of respondents say that there are no cases in which valuable research projects were stopped because of IP problems relating to research inputs." (Cohen et. al., 2003)
    • The perception of rising patent litigation rates in the area of DNA-based patents is most likely false (Mills, A.E. & Tereskerz, P., 2008)
    • A patent thicket?
      • Committee on Intellectual Property Rights in Genomic and Protein Research and Innovation (US National Research Council of the National Academies) which shows that there is currently no substantial evidence of a patent thicket.
      • On the other hand, patent holders of gene based diagnostics are more active in asserting their patents which gives some support for the conclusion that diagnostic kit research is currently being inhibited. (Esther van Zimmeren et al. 2006)
    • Justifiable scope of protection for gene patents
      • This topic is rarely discussed in the literature (Verbeure, et al., 2005) but the implications of broad or narrow claim recognition are important to our research.
    • Bayh-Dole
      • The Bayh-Dole Act may not be serving its purpose in the genetic testing context. If genetic research is inhibited by patenting behaviors then the fact that at least one study found “[t]he majority of the patent holders enforcing their patents were universities or research institutes, and more than half of their patents resulted from government-sponsored research” means that the act holds a central role in creating a barrier to access (Cho et al. 2003).
  • Licenses
    • Four licensing approaches: (Geertrui Van Overwalle et al., 2005)
      • Free access to the genetic sequences but royalty payments for the commercial test kits
      • Licensing to laboratories at a rate that makes the commercial test kit more economical
      • Exclusively licensing to a limited number of laboratories
      • Biological Innovation for Open Society license that makes improvements to the patent shared as a way to facilitate cooperative invention.

Proposed Alternative Protection Schemes

• Patent Pools
• Patent Clearing Houses

Licensing

• Licensing Approaches

Van Overwalle defines four licensing approaches (Geertrui Van Overwalle et al., 2005) First, access to the genetic sequences is free but commercial test kits require a royalty. Second, the license for the commercial test kit to labs is set at a price that makes access to the genetic sequences more expensive. Third, an exclusive license is given to laboratories in a way that limits access. Lastly, there are open licenses which allow improvements to the patent to be shared as a way to facilitating cooperative invention (ie. Biological Innovation for Open Society). Given these options presented by Van Overwalle, there were several trends in licensing behavior that are important to the development of genetic diagnostic tests. The likelihood of granting a license for patented DNA sequences was found to be similar for firms and nonprofits but nonprofits were far more likely to grant exclusive licenses. This use of exclusive licensing demands further study to find out if the use of these licenses is justified or merely a default practice with little substantive justification. (Henry, M. et al. 2002) Next, it is important to consider that changes in patent ownership and licensing complexities can have measurable effect on the development and performance of genetic testing. (Merz, J.F. et al., 2002) A industry trend towards greater complexity has not been shown but Merz demonstrates a case where the transaction costs due to changes in patent ownership and licensing reduced innovation and research for that area of genetic diagnostic tests.

• Licensing Behavior

Licensing behavior varies by entity. The study conducted by Henry et. al found that for profit and non-profit entities approach patent and licenses differently. (Henry, M.R. et. al., 2003) Patenting behavior of for-profit entities showed a tendency towards filling patent applications for all new technologies and then deciding what to pursue based on commercial interest. Non-profit entities, on the other hand, were more selective about when to apply for a patent. Licensing behavior was found to be fairly uniform with both types of entities, licensing was most often used as a method of commercialization with licensing for research was very infrequently. Despite these similarities, nonprofits were more than twice as likely to license exclusively as compared to for-profit companies (Henry, M.R. et. al., 2003).

• Compulsory Licensing

Existing and Evolving GDx Models

Commercialization of Basic Research

• Licensing of research to existing GDx company
• Licensing of research to new GDx start-up
• Usage of research in public domain by existing GDx company? (multiplex kits?)

Paths to Market

• ASRs
• Kits
• DTC