Robert Cook-Deegan contributed to this commentary. Dr. Cook-Deegan is Director of the Center for Genome Ethics, Law & Policy at Duke University Institute for Genome Sciences and Policy’s and is currently on leave at the Fondation Brocher in Hermance, Switzerland.
The past few months have brought a number of significant research and commercial developments in the BRCA diagnostic testing market, particularly in Europe. These developments have been met by enigmatic comments from the management of Myriad Genetics, the sole provider of commercial BRCA diagnostic testing in the United States and a defendant in ongoing and closely-scrutinized gene patent litigation. What can these recent developments tell us about Myriad’s future plans in both Europe and the U.S.?
The Next Generation of BRCA Testing. Myriad’s current BRCA diagnostic test, BRACAnalysis (pdf), uses a combination of two traditional technologies—Sanger sequencing and PCR—to identify mutations associated with a significant risk of breast cancer and/or ovarian cancer in the BRCA1 and BRAC2 genes. Although Myriad has dabbled with next-generation sequencing technologies, Myriad has yet to announce any concrete plans to apply any of the increasingly numerous and powerful next-generation sequencing technologies to its BRACAnalysis testing.
Others, however, are moving rapidly in exactly this direction.
In April 2010, Mary-Claire King and her colleagues at the University of Washington published a paper in PNAS (pdf) that described the massively parallel sequencing of 21 genes, including BRCA1 and BRCA2, but also 19 other genes that, when mutated, confer an increased risk of breast and/or ovarian cancer. They offered their research as “proof of principle for the application of solution capture and next-generation sequencing to mutation detection for patients at high risk of breast cancer.” A next-generation sequencing approach to breast cancer testing, they determined, could successfully detect far more deleterious mutations in far more relevant genes than the Myriad test detects, and could do so at a fraction of the cost of the commercial BRCA testing performed by Myriad in the United States.
Next, in October 2010, Stephen Salzberg and Mihaela Pertea published what they described as a “Do-it-yourself” approach to BRCA diagnostic testing. The Salzberg Screen, as it is known, analyzes previously obtained genomic sequence data (e.g., from whole-exome or full-genome sequence data, which is commercially available) for BRCA mutations by querying publicly available resources. Salzberg and Pertea freely acknowledged that a primary motivation in supplying the Salzberg Screen was “to empower any individual…to test for [BRCA] mutations and circumvent [Myriad’s] gene patents.” In assessing the Salzberg Screen and its impact on Myriad we noted that Salzberg and Pertea were taking a “calculated gamble” in this regard. The test separates the crucial steps of sequencing and interpretation, arguably avoiding direct infringement claims for many of Myriad’s broadest patents, although arguments based on inducement of infringement might remain viable. We wrote then that Salzberg and Pertea were likely gambling that Myriad simply lacked the stomach to initiate any additional BRCA-based litigation and, at least so far, their gamble appears to have paid off.
Importantly, the integration of next-generation sequencing data in BRCA testing is not just a subject for medical journals. It is also beginning to find its way into clinical and commercial applications.
This past October, two European research hospitals—Ghent University Hospital in Belgium and the University of Leeds Institute of Molecular medicine in the United Kingdom—announced plans to use next-generation sequencing technology to perform diagnostic sequencing for BCRA1, BRCA2 and other genes. And just this past week, a British company called NewGene announced plans to sequence the entire coding region of BRCA1 and BRCA2 genes for UK patients with a family history of breast cancer.
Both NewGene and the research laboratories intend to utilize so-called next-generation sequencing technology in performing BRCA diagnostic testing. Both New Gene and Ghent University Hospital employ the Roche 454 GS-FLX pyrosequencing platform, while Leeds is proceeding with Illumina’s Genome Analyzer.
Finally, last month, at the Advances in Genome Biology and Technology (AGBT) meeting, GenomeQuest announced a “clinical diagnostics reporting” service for whole-genome sequence data. Like the Salzberg Screen, GenomeQuest utilizes a software-based approach to analyzing already existing whole-genome or whole-exome sequence data. Unlike the Salzberg Screen, however, GenomeQuest’s product is explicitly commercial and intended for clinical diagnostics, including hereditary breast cancer.
A common motivation in each case is a desire to reduce the cost of diagnostic testing, and particularly of BRCA testing. The cost of Myriad’s BRACAnalysis test in the United States varies somewhat by payer but is generally in the $3,000 to $4,000 range (Myriad actually raised the cost of its test by several hundred dollars after last spring’s district court ruling invalidating a number of its key BRCA patents), with the possibility of significant additional costs where follow-up testing is needed.
The expectation among Myriad’s competitors, including commercial offerings from NewGene and GenomeQuest, is that next-generation sequencing can significantly reduce cost (as well as turnaround time) while maintaining or even increasing the accuracy and degree of coverage. NewGene, for example, has reported a median test cost of under $1,000. Similarly, GenomeQuest has touted the ability of its product to “perform every known genetic test in the GeneTests compendium in one single protocol that costs about as much as a single genetic test,” echoing a point we (and plenty of others) have been making for years: there is a fundamental tension between the falling cost of whole-genome sequencing and the continuing high cost of single-gene diagnostic tests.
Is a Commercial Confrontation Brewing? Not all of the recent developments in BRCA testing represent a near-term, or even a long-term, commercial challenge to Myriad’s business. But developments which appear first in the pages of scientific journals or, as in the case of the Ghent and Leeds tests, in the University hospital setting, are certainly capable of showing up in commercial offerings before long. More immediately, NewGene’s stated intent is to expand its test’s availability beyond the United Kingdom to the rest of the European market and, ultimately, to come to the United States. GenomeQuest, of course, is already available in the United States.
So what about Myriad? For the moment, Myriad remains the exclusive commercial provider of targeted BRCA diagnostic testing in the United States. A major concern, however, is the company’s extreme reliance on the sales of a single product (BRACAnalysis) in a single market (the United States). Thus far, Myriad has achieved comparatively modest success developing a market for its other products (which include diagnostic tests for colorectal and uterine cancer, melanoma and pancreatic cancer) within the United States and for any of its products (including BRACAnalysis) outside of the United States. Currently, BRACAnalysis testing accounts for a striking 88% of the company’s nearly $400 million in annual revenues, with only 2% of those sales occurring ex-US. Myriad’s limited geographic reach, its heavy reliance on BRACAnalysis testing and current and projected competition from a growing array BRCA testing providers utilizing next-generation sequencing represent several of the key factors which caused Goldman Sachs to initiate its coverage of Myriad Genetics last month with a “Sell” rating (pdf).
Myriad, for its part, has taken some steps to address these concerns, in particular by seeking to expand its presence in Europe. Last July, the company created a new position—Executive Vice President of International Operations—in support of what Myraid’s CEO Peter Meldrum declared was the company’s “goal of building a significant presence in Europe by the end of 2012.” The subject of Myriad’s European expansion surfaced again this past January, with Meldrum making several intriguing remarks to investors during a routine earnings call. First, Meldrum indicated that Myriad plans to set up a central lab in Germany to process BRCA samples from all across Europe. That represented a change in plans from July’s announcement in which the company declared its intent to pursue its international strategy on a country-by-country and product-by-product basis—a necessity, given that each country has its own healthcare and reimbursement system.
A Change in Myriad’s Patent Policy? But the real eyebrow-raiser came when Meldrum was asked about Myriad’s patent enforcement policy as it seeks to enter the European market. Meldrum’s response: “if I had my druthers, I would not want to go into a new market in a heavy-handed fashion trying to enforce patents.” He suggested that Myriad might choose instead to rely on its “other competitive advantages that may make such [patent] enforcement unnecessary.”
The exact status and strength of Myriad’s patents in Europe has been cause for uncertainty for quite some time now. Myriad’s five European patents were narrowed significantly by the European Patent Office (EPO) several years ago and, as a result, are thought to provide less protection than the company’s United States patents (which are themselves under attack). A “European patent” is in fact a bundle of national patents issued by a central authority, the EPO; individual infringement suits have to be brought in national courts, one case at a time, which opens up the possibility of local political influence, as well as considerable delay and expense. Moreover, France, Belgium, and Switzerland all changed their laws in recent years to enable a form of compulsory licensing. They did so with Myriad’s BRCA patents explicitly part of the policy debate and rationale for change. Germany has not yet modified its laws in a similar fashion, and is where Myriad plans to build its base, but any attempt to enforce patent rights there could well precipitate the kind of intense firestorm of criticism that swept Australia when Myriad’s licensee there tried to enforce patent rights in 2008, and led Myriad to offer to revoke one of its Australian patents.
As a result, whatever the infringement analysis when examining a particular European competitor’s offering against Myriad’s European patents (and, as we have noted previously, whether or not next-generation sequencing approaches would infringe Myriad’s patents is not at all clear), the practical prospects for Myriad becoming the sole provider of diagnostic BRCA testing in Europe based on patent enforcement are somewhere between slim and none. Even if Myriad were to engage in a country-by-country patent battle and win far-from-assured victories in each case, the company could still lose the war for payment. Myriad would have to fight on a second front with a variety of national health systems holding the power of coverage and reimbursement decisions.
Which perhaps is what Myriad and Meldrum have recognized in citing the company’s “other competitive advantages that may make such [patent] enforcement unnecessary” in Europe. So just what are these “other competitive advantages”? Meldrum highlighted two for investors: speed and accuracy. Regarding speed, he claimed a two week turnaround time for Myriad versus up to a year for current European tests, although it should be noted that NewGene claims a 4-6 week turnaround for its BRCA sequencing product. With respect to accuracy, Meldrum claimed a 2% rate of finding variants of unknown significance (VUS) at Myriad—which seems low—versus a 30% VUS rate for the European tests—which seems high. In light of these advantages, Meldrum concluded on the January call, “I don’t believe that trying to enforce the patents is either a good idea or warranted at this time.”
So what might all of this mean for Myriad’s near-term commercial plans and patent enforcement policies? One option is to take Meldrum’s comments at face value. Around the world, in the popular press and in the eyes of many patients and healthcare providers, Myriad has been widely criticized for enforcing its patent monopolies with respect to BRCA genes and testing. If Myriad believes it can compete successfully in Europe without relying on its patent monopoly, why risk a further public relations backlash by filing patent infringement suits? In addition, one would think that Myriad’s dealings with the many European regulatory and payment authorities—which are unavoidable and will be difficult in their own right—would be less confrontational without pending patent litigation.
Against this background, Meldrum’s comments might be read as an effort to put a positive spin on the specter of growing concern over the degree of practical and legal protection Myriad’s BRCA patents will provide in the future.
The Point of Patents? But there is another layer of meaning to consider. Suppose that Meldrum is right about Myriad’s huge advantages in speed and accuracy. What explains those advantages? At least with respect to interpreting VUS results, such an advantage would derive, in all likelihood, from Myriad’s vast—and currently proprietary—database of BRCA test data, including VUS data. Data that Myriad generally doesn’t share, at least not anymore.
Until 2004, Myriad contributed VUS data to the Breast Cancer Information Core (BIC) mutation database—and publicly touted (pdf) those contributions. The BIC is an open access resource maintained by the National Human Genome Research Institute (NHGRI) to coordinate the detection, interpretation and dissemination of breast cancer mutation data. After November 2004, however, Myriad stopped depositing additional VUS data into the BIC (and has largely ceased publishing its VUS data in peer-reviewed literature, which would have a similar effect).
With that bit of background in mind, a cynic might read Meldrum’s comments like this:
While exploiting our U.S. patent monopoly over the past two decades we accumulated a unique database of relevant DNA sequence and clinical data. Now our U.S. patents are threatened, and many of them are expiring in the next few years anyway. And our international patents aren’t worth trying to enforce. We run a really efficient sequencing lab, and we’ve spent years getting agreements with hundreds of payers for our main BRACAnalysis test. So our new business plan is to combine production efficiencies and expand payment agreements, leveraging our unique proprietary data to retain US market share and enter international markets.
We take pains to emphasize that here we are speculating and, even if Myriad did go this route, there would be nothing strictly contrary to patent law in its doing so. Still, leveraging a proprietary database from a decade’s patent monopoly would be troubling, and would further damage Myriad’s reputation with patients, healthcare providers and the scientific and policy communities.
Among other things, such a strategy would run contrary—at least in spirit—to a policy against extending patent monopolies beyond their terms. In addition, the hoarding of immensely important clinical data does not seem likely “to promote the Progress of Science and useful Arts”—the Constitutional purpose of the patent system—and would provide ample additional ammunition to critics who claim that the current biotechnology patent landscape fails to properly balance commercial interest against those of science and society.
More practically, the current political climate is characterized worldwide, and especially in the United States, by calls for fiscal responsibility and an increasingly close scrutiny of government expenditures. Nowhere is this more true than in healthcare, where spiraling costs place pressure on national health systems (as well as private insurers) to separate effective modes of care from those which are merely expensive. There is little question as to the efficacy of Myriad’s current BRACAnalysis product. But should the company seek to extend its decades-long patent monopoly by restricting access to clearly relevant medical and scientific data, at a potentially considerable cost to both payers and the healthcare system, Myriad’s current and comparatively narrow patent issues might well take a back seat to more pressing economic and political concerns.
Still, for the moment, all of that is speculation. When it comes to Myriad’s actual plans, our best guess is that even Myriad itself has yet to decide exactly how it will proceed in the coming months. What Myriad does in Europe and/or in the United States will undoubtedly be dictated in large part by continuing shifts in the commercial landscape on both continents, as well as whatever happens next in the gene patent litigation, slated for oral argument at the Federal Circuit on April 4 (pdf).