Diagnostic Kits/SACGHS Gene Patents and Licensing Practices Final Report

• Secretary's Advisory Committee on Genetics, Health, and Society—Public Consultation Final Draft Report on Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests September 17, 2009

• "Specifically, the Committee set out to detect any evidence of the benefits of patents and licensing practices in promoting the development of genetic tests and any evidence of the costs of patents and licensing practices: particularly, whether patents and licensing practices have limited the quality of known genetic tests, the availability of these tests to patients at reasonable prices, and the ability of clinical, research, and commercial communities to develop new genetic tests. (Page 2)
  • Ultimately the study is a study of access at both the clinical and patient level as well as the role of intellectual property as a motive to innovate.

• Study Scope
  • "The scope of this study and report, however, is on those genetic tests that rely on analysis of nucleic acid molecules to determine human genotype, whether used for diagnostic, predictive, or other clinical purposes." (Page 4-5)
  • This is a broad definition of genetic tests and it does rule out protect based diagnostic tests.

• case studies focused on: (page 6)

1. inherited susceptibility to breast/ovarian cancer and colon cancer;
2. hearing loss;
3. cystic fibrosis (CF);
4. inherited susceptibility to Alzheimer disease;
5. hereditary hemochromatosis (HH);
6. spinocerebellar ataxias;
7. long QT syndrome (LQTS); and
8. Canavan disease and Tay-Sachs disease.

• "For example, most of the Alzheimer disease researchers “expressed ambivalence about patenting and none attributed the intensity of the races [to discover Alzheimer disease genes] to patent priority. Rather, they stated that the races were driven by wanting priority of scientific discovery, prestige, scientific credit and the ability to secure funding for additional research based on scientific achievement.”21 Nor did the prospect of a patent encourage the researcher who discovered the Tay-Sachs gene, HEXA, or the researchers who discovered the cystic fibrosis gene, CFTR. Many public commenters, including those from university technology transfer offices and companies, also stated that scientists are motivated by concerns apart from patents." (page 8)

• Important Conclusions (page 12)
  • Committee reached the following overall conclusion:
    • "Patents do not serve as powerful incentives for genetics research in the diagnostic arena, disclosure of gene-disease associations, or development of genetic tests."
    • While this showing of a lack of incentive is important it does not go further to show that patents are a barrier to innovation. Can we conclude that patents should not be appropriate subject matter in the diagnostic arena without a barrier being shown?

• Licensing Conclusions(page 14)
  • "Exclusive licenses may be needed in some cases to provide a sufficient incentive to develop an invention, but, under certain market conditions, exclusive by field of use licenses and coexclusive licenses do not discourage development efforts and, in fact, can lead to more widespread technology availability than would occur under exclusive, all fields of use,licensing. For example, in the case of cystic fibrosis, broad non-exclusive licensing has resulted in a thriving testing industry that encompasses academic laboratories and commercial laboratories that provide testing services and private companies that develop and market cystic fibrosis test kits." (page 16)
  • What does this say about licensing practices? What are the certain conditions that make non-exclusive licensing more appropriate? Would they suggest guidelines similar to NIH?

• Lab Access
  • "There is evidence that in some cases patents associated with genetic tests and licensing practices have limited laboratories’ ability to perform testing—patent holders, for example,have used their rights to clear the market of other laboratories that were offering testing. The patent holder or the exclusive licensee then becomes the sole provider of the test. But even when a patent holder non-exclusively licenses to multiple providers, some laboratories may not be able to perform the test when they cannot afford or are unwilling to pay the royalty associated with the non-exclusive license." (page 21)

• Approaches to Addressing Patent Thickets (page 32)
  • "Patent pools are one possible solution to patent thickets." (page 32)but they risk being anticompetitive in operation.
  • A royalty-collection clearinghouse has also been proposed by some patent law observers as a potential solution to patent thickets in genetics (Page 34)

• Test Developers Have Limited Protection from Infringement Liability
  • "First, the common law experimental use exemption most likely would not protect test developers from liability for using patent-protected isolated gene molecules or associations in the course of developing a new test." (page 36)
  • Common Law
    • no common law experimental use exemption (for genetic test developers) (page 37),
  • Statutory Law
    • "a statutory exemption is found in the Hatch-Waxman Act and provides an exemption from patent infringement liability for using a patented invention for the purpose of developing and submitting information under a Federal law regulating drugs." (page 37)

• Legal Developments That Are Affecting Patents Associated with Genetic Tests (page 39)
  • ACLU Challenges the Patentability of Nucleic Acid Molecules
  • Diamond v. Chakrabarty, 447 U.S. 303 (1980)
    • patentable statutory subject matter under § 101 to “include anything under the sun that is made by man.” (page 39)
  • Parke-Davis & Co. v. H.K. Mulford & Co., 189 F. 95 (C.C.S.D.N.Y.1540 1911)
    • "purified products of nature are patent-eligible" (page 40)
  • "No case, however, has squarely considered the question of whether isolated, purified nucleic acid molecules are patentable subject matter" (page 41)

• Recent Case Law Relevant to Association Patent Claims (page 42)
  • "The patented process in question in Bilski was not a process for simply associating a genotype with a phenotype, but “a method of hedging risk in the field of commodities trading.” Whether a typical genetic test would pass the “machine-or-transformation” test is an open question"
  • Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 370 F.3d 1354 1648 (2004) (page 34)
    • validity of an association patent claim
    • "LabCorp sought review of the case by the U.S. Supreme Court, which dismissed it after initially granting certiorari and hearing oral arguments.159 Justice Breyer, joined by Justice Stevens and Justice Souter, dissented from the dismissal. In his dissent, Breyer addresses the patentability of the process in Lab. Corp. and argues that the diagnostic process was nothing more than an unpatentable natural phenomenon.160 (Rader’s separate opinion in Bilski was in part a rebuttal to Breyer’s viewpoint.)"

• Recommendations
  • "In short, the Committee concluded that patents provide limited benefits in promoting the development of genetic tests and involve costs in terms of the quality of genetic testing and patient access to genetic testing." (page 60)

• Notable Letter of Dissent by Brian R. Stanton, Ph.D. an "ad hoc member" of the Task Force
• He urges that "The Body of the Report is confused, illogical, presented in a biased manner, and fails to support the Recommendations" and finds no no evidence of systemic harm.
  • In support of this he cites
    • the per-unit price of the full-sequence BRCA test as being found to be reasonable
    • the Cavanan’s disease controversy showed that redress was possible and it resulted in access by the public.
  • He additionally criticizes the reports use of opinion and observation in a way that makes it hard to identify whether the comment is an opinion or an observation
  • He responds to the Report's Recommendations:
    • he rejects any change to the scope of subject matter protection as premature
    • he finds it unclear whether additional regulation is required.

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