Following its passage in the Senate, the legislation promptly stalled in the House of Representatives and, several months and numerous committee hearings later, that is where it remains. Fierce lobbying and political maneuvering have thrown multiple key provisions of the reform legislation into doubt. Leading areas of debate include the constitutionality of a proposed change from a “first-to-invent” to a “first-to-file” patent system and a provision that would allow the patent office to retain user fees to fund its own operations.

While it remains unclear whether patent reform will actually occur, the latest round of legislative wrangling has introduced one proposal of particular interest to Genomics Law Report readers. Among 86 pages of proposed amendments (pdf) to H.R.1249 (the House version of the patent reform legislation) offered earlier this week is a provision that, if adopted, would provide an infringement safe harbor for second opinion genetic diagnostic testing.

Permitting Second Opinions in Certain Genetic Diagnostic Testing. Introduced as part of the Manager’s Amendment (pdf) submitted by Representative Lamar Smith (R-TX), the proposal is conceptually simple. It would create a new Section 287(d) under the Patent Act to establish a safe harbor for second opinion genetic diagnostic testing providers, much like the safe harbor that already exists at Section 287(c) for medical practitioners’ performance of medical activities.

Under certain conditions (more on those below),  performing a genetic test “solely for the purpose of providing the individual with an independent confirmation of results” previously obtained from a patented diagnostic test would not subject the second opinion test provider to infringement liability under the Patent Act. The safe harbor provision would not actually define second opinion testing as non-infringing behavior—the act of performing the second opinion test could still constitute infringement under Section 271 of the Patent Act—but it would eliminate the normal infringement remedies (Sections 281, 283, 284 and 285) from the patent owner’s arsenal.

The actual legislative proposal, of course, is slightly more complex. Here is the full text:

Sec. 27. PERMITTING SECOND OPINIONS IN CERTAIN GENETIC DIAGNOSTIC TESTING

(a) IN GENERAL. – Section 287 of title 35, United States Code, is amended by adding at the end the following:

(d)(1) With respect to a genetic diagnostic test provider’s performance of, or offering to perform, a confirming genetic diagnostic test activity that constitutes infringement of a patent under section 271(a) or (b) of this title, the provisions of section 281, 283, 284 and 285 of this title shall not apply against the genetic diagnostic test provider with respect to such confirming genetic diagnostic test activity.

(2) For the purposes of this subsection:

(A) The term “confirming genetic diagnostic test activity” –

(i) means the performance of a patented genetic diagnostic test, by a genetic diagnostic test provider, on an individual solely for the purpose of providing the individual with an independent confirmation of results obtained from another test provider’s prior performance of the test on the individual, where such prior test was performed by, or under license from, the owner of the patent that is infringed by the acts specified in paragraph (1), and where independent confirmation of the prior test is not available from another test provider under a license from the patent owner; but

(ii) does not include –

(I) the performance of a patented genetic diagnostic test on an individual for the purpose of monitoring or reconfirming the individual’s medical or genetic status over time, for therapeutic treatment selection or determining responsiveness to treatment, and for other purposes that require repeated genetic diagnostic testing of the individual;

(II) the use of a patented machine or article of manufacture in violation of such patent;

(III) the use of a patented composition of matter that is commercially available to the genetic diagnostic test provider; and

(IV) the practice of a patented process other than the process of testing claimed in the patent owner’s patent referred to in paragraph (I).

(B) The term “genetic diagnostic test provider” means any person or entity that performs a confirming genetic diagnostic test activity, and includes a clinical laboratory or other health care entity at which, on behalf of which, or in association with which the confirming genetic diagnostic test activity is conducted, such as a nursing home, hospital, university, medical school, health maintenance organization, group medical practice, or medical clinic.

(C) The term “patented genetic diagnostic test” means a patented diagnostic method that is specific to the detection of a mutation or a pattern of mutations of one or more particular genes in an individual, as well as the use of a patented composition of matter, or the practice of a patented use of a composition of matter, where such composition of matter is specific to and necessary for the practice of the diagnostic method and is not commercially available to the genetic diagnostic test provider. When performed in the course of a confirming genetic diagnostic test activity, such term is not limited to the particular embodiments of the patented diagnostic method or composition of matter that were practiced by or under the authority of the patent owner in providing the prior genetic diagnostic test.

(D) The term “independent confirmation” is not limited to the replication of the results of a prior genetic diagnostic test, and includes providing the individual with information that is not otherwise available from the provider of such prior test and that affirms, clarifies, disproves, corroborates, or otherwise aids the individual in interpreting the results of such prior test, including in instance where such results were inconclusive.

(3) The infringer shall have the burden of establishing the limitation on remedies under paragraph (1), including the production of contemporaneous documentary evidence proving, or tending to prove, that the diagnostic test activity meets the definition of a confirming diagnostic test activity under paragraph (2)(A) at the time the confirming diagnostic test activity was performed.

(b) EFFECTIVE DATE. – The amendment made by subsection (a) shall take effect on the date of the enactment of this Act and shall apply to confirming diagnostic test activity performed on or after such date.

A Safe Harbor’s Uncertain Waters. A close examination of the text reveals that, however simple its intent, if passed as drafted the second opinion safe harbor would leave genetic testing developers and providers, patent holders and courts with considerable uncertainty about the safe harbor’s appropriate interpretation and application.

Perhaps the easiest way to identify many of the unclear and (likely) controversial provisions of the second opinion safe harbor provision is to read the amendment proposed by Rep. Smith side-by-side with the amendment-to-the-amendment (pdf) proposed by Representative Debbie Wasserman Schultz (D-FL) who, as Patent Docs notes, first offered the second opinion safe harbor amendment on the House floor in April.

An examination of the first three amendments suggested by Rep. Wasserman Schultz reveals the high degree of uncertainty and controversy embedded in the current second opinion safe harbor proposal:

WS Amendment #1. As proposed by Rep. Smith, Section 287(d)(2)(A)(i) limits a “confirming genetic diagnostic test activity” subject to the safe harbor protections to those situations where independent confirmation is “not available from another test provider under a license from the patent owner.” That would seem to close the safe harbor except when there was, in fact, only a single licensed provider of a particular test (as is currently the case with Myriad Genetics and its diagnostic test for mutations in the BRCA1 and BRCA2 genes). The safe harbor would appear to be inapplicable in any scenario in which there were two providers.

It is unclear, however, whether this would be the case even if both “test providers” offered the exact same test using the exact same laboratory procedures (would that even be a truly confirmatory test?) or if the multiple test providers were controlled by a common entity. Also uncertain is when a test would be considered “available” for purposes of the safe harbor provision. Would the requirement of availability require that the test be “affordable and readily accessible to the patient” or simply “available in some form, to some patients at some price”?

Rep. Wasserman Schultz addresses these concerns in her own amendment by simply striking the requirement that the test be unavailable except from the sole test provider, which would appear to broaden the provision to apply even in situations where the patents were licensed on a non-exclusive basis to multiple genetic testing providers.

WS Amendment #2. Rep. Smith’s version of the safe harbor provision would also not apply where a genetic diagnostic test was used for “therapeutic treatment selection” (Section 287(d)(2)(A)(ii)(I)). While that term is not defined, it could be interpreted broadly to exclude from the second opinion safe harbor any genetic diagnostic test the results of which could cause a new or modified clinical course of care.

Such a reading would dramatically limit the scope and relevance of the safe harbor, since most patients, providers and payers are likely to pursue a second opinion only in those situations where a different test result would alter the course of the patient’s care.

In her own amendments, Rep. Wasserman Schultz’s proposal simply strikes the “therapeutic treatment selection” limitation.

WS Amendment #3. In addition to the “therapeutic treatment selection” exception to the safe harbor, Section 287(d)(2)(A)(ii)(I) would also exclude genetic tests “for the purpose of monitoring or reconfirming the individual’s medical status over time” or for any other purpose that required “repeated genetic diagnostic testing.” The presumed intent is to avoid depriving the rights-holder (the patent owner or its licensee) from serving as the first option for any re-testing conducted later in time.

Rep. Wasserman Schultz’s proposal retains this language, but provides an exception-to-the-exception that would permit an infringing genetic diagnostic test to take advantage of the safe harbor, even for repeated diagnostic testing, if the test “utilizes different technologies or has performance characteristics that are sufficiently different from the patented tests that the results can provide information not provided by the patented test.”

The goal would appear to be the encouragement of second opinion testing using non-identical genetic tests (“different technologies or…performance characteristics”), although it is unclear whether this would operate in conjunction with Rep. Wasserman Schultz’s first amendment to prevent the developer of a separate and patented diagnostic test from enforcing its rights when its test was performed following any previous diagnostic test covering the same condition.

All told, Rep. Wasserman Schultz offers ten amendments to the language proposed by Rep. Smith, including this “Rule of Construction”:

The amendment made by subsection (a) [the second opinion safe harbor amendment] shall not be construed to reflect any expression by the Congress with respect to the patentability of genetic material or genetic diagnostic testing.

Will Congress Intervene in the Gene Patent Controversy? It remains highly uncertain whether Congress will manage to pass any patent reform legislation during its current session. Furthermore, should patent reform become a reality, there is no guarantee that the second opinion exemption will be retained. The safe harbor for genetic diagnostic testing was not included in the version of the legislation the Senate passed in March and, even if the House manages to include the provision in its version of the legislation, it could easily be removed during the reconciliation process.

Finally, even if Congress is ultimately able to reach an agreement, the questions about how to interpret and apply a second opinion safe harbor are unlikely to end there. They would almost certainly carry over from Congress to the courts if and when companies and individuals begin seeking shelter in the new safe harbor, should it ever materialize.

Despite these several barriers to the adoption of a second opinion safe harbor for genetic diagnostic testing, the possibility that change could come to the personalized medicine patent landscape should not be entirely ignored.

It is no coincidence that the safe harbor proposal comes just one year after the now-defunct Secretary’s Advisory Committee on Genetics, Health, and Society (SACGHS) published its controversial report on Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests (pdf). In that report, SACGHS found that “when there is a patent-enforcing sole provider [of a genetic test], patients cannot obtain independent second-opinion testing” and, as a result, recommended several statutory changes, including “the creation of an exemption from liability for infringement of patent claims on genes for anyone making, using, ordering, offering for sale, or selling a test developed under the patent for patient-care purposes.”

And Rep. Wasserman Schultz’s “Rule of Construction” notwithstanding, the safe harbor proposal must also be viewed as a direct Congressional reply to the ongoing and widely publicized Myriad gene patent litigation. The Myriad litigation was initiated more than two years ago by a diverse group of plaintiffs, including several women seeking genetic testing for mutations linked to breast and ovarian cancer. The plaintiffs’ complaint (pdf) included the allegation that Myriad Genetics’ patents and licensing practices operated to prevent women from “obtaining information about their health risks from anyone other than” Myriad, including denying women access to second opinion testing. As the Myriad litigation enters its third year, some members of Congress are undoubtedly feeling pressure to address the effects of gene patents in the practice and development of personalized medicine using more expeditious means.

[Update, 6/16: The American Civil Liberties Union (ACLU), the group largely responsible for coordinating the Myriad litigation, is leading a group of organizations in opposition to the proposed amendment (pdf). The ACLU-led coalition argues that the proposed second opinion safe harbor “would fail to block all patent holder objections to [second opinion] testing, fails to address the many other limitations on scientific research arising out of the issuance of [gene patents], and risks allowing gene patent holders to argue that Congress implicitly endorses the validity of such patents.” The group urges Congress to reject the amendment to avoid creating “unintended harms to patients, medical professionals and genetic researchers.” According to the ACLU’s letter, the American Medical Association has also written separately to Congress to oppose the amendment. The swift response from organizations like the ACLU, the AMA and others suggests that the second opinion safe harbor may be closer to becoming a reality than was previously suspected.]

Although the second opinion safe harbor proposal seems unlikely to pass at this time, at least in its current form, Whether the safe harbor proposal passes or not, it should serve as a stark reminder that even as patent attorneys and biotechnology companies anxiously await the Federal Circuit’s ruling in Myriad—which could come any day now and significantly alter the personalized medicine patent landscape—Congress will continue to loom in the background, with the ability at any moment to completely rewrite the rules of the game.

Robert Cook-Deegan contributed to this commentary. Dr. Cook-Deegan is

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).

Stay tuned.

[Editor's Note: This post originally appeared as a

Last week, New York State assemblyman J. Gary Pretlow introduced the descriptively named “act to amend the insurance law, in relation to requiring coverage for genetic testing in accident and health insurance polices.”

While not accompanied by a press release, or widely covered by media outlets, the bill merits close attention. While the substance of the bill is striking, its greater import lies in what it reveals about the United States’ current framework for personalized medicine regulation and in what the bill portends for the future of personalized medicine innovation and investment in this country.

The Basics and Breadth of the Pretlow Proposal. Despite its broadly worded title, New York bill #A02325 has a specific goal: to require insurance companies to “provide coverage for genetic testing” for any individual who, “in the opinion of an attending physician, [is at] significant risk of contracting cancer.”

Though not discussed in the text of the bill of itself, the bill’s accompanying memorandum clarifies an intent to specifically require insurance companies to reimburse the cost of genetic tests for individuals deemed to be at significant risk of developing breast cancer (more on this below). With the new legislation, at risk patients “will be able to seek genetic screening and counseling that will be paid for by insurance.”

Whether the bill would require coverage for genetic tests aimed at any type of cancer (as the bill’s text implies), or only for breast cancer (as the explanatory memorandum indicates), its scope is significant. In addition to requiring insurance companies to provide coverage for these genetic tests, it would also require insurers to cover “any subsequent treatment resulting from the results of such test” (emphasis added).

Remember: It’s Only a Bill. Before we go any further, it is important to clarify that this is an introductory legislative proposal. Assemblyman Pretlow has attempted, unsuccessfully, to introduce similar insurance mandates in the past and his current attempt has only been read once and referred to the assembly’s Committee on Insurance. It is not the law of the State of New York. It is not even up for a vote.

Whatever the factors that prompted the bill’s introduction, it would seem to stand little chance of passing in its current form. A primary substantive objection is the exceedingly vague scope of the bill as presently drafted. Assemblyman Pretlow’s proposal does not specify the nature of the genetic tests for which insurance coverage would be required. For example, would it cover multiplex or whole-genome sequencing to identify all identified genetic markers of cancer susceptibility, or only more narrowly tailored susceptibility tests (e.g., Myriad Genetics’ BRACAnalysis)? Similarly, the bill fails to circumscribe the extent of “subsequent treatments” which must be covered by insurers. Would coverage extend to genetic counseling and/or other preventative measures, such as an elective mastectomy in the case of breast cancer, or would it be broad enough to encompass subsequent (and far more costly) therapeutic treatments in the event a cancer materializes?

These and other questions demand significant clarification. Meanwhile, preliminary reaction from the insurance industry has been strongly negative, suggesting that the likelihood of Assemblyman Pretlow’s proposal passing is slim, at least in its current form. But because of what it reveals about the state of personalized medicine regulation in this country, and what that implies about the future of personalized medicine globally, it is a bill that is noteworthy by virtue of its mere proposal.

A Local Solution; A National Problem. In 2008, the now-defunct Secretary’s Advisory Committee on Genetics, Health, and Society (SACGHS) published a comprehensive review of the “U.S. System of Oversight of Genetic Testing” (pdf). The 276-page report, which remains the most comprehensive analysis of its kind to-date, identified “significant gaps in the U.S. system of oversight of genetic testing that can lead to harms,” including incomplete, inconsistent and overlapping regulations at the state and federal level.

Nearly three years later, little has changed. As we wrote earlier this month, even as the number of genetic tests and other personalized medicine technologies and treatments proliferates, and despite significant talk about overhauling numerous aspects of this regulatory framework – from the NIH’s proposed Genetic Testing Registry to the FDA’s proposed oversight of Laboratory Developed Tests, among numerous other proposals yet to be implemented – the regulation of genetic tests, and of personalized medicine more broadly, continues to remain a messy, patchwork affair.

While regulators and regulated companies struggle to make sense of the current landscape, genetic testing has garnered increasingly high-profile media and political attention in several areas, including the viability of direct-to-consumer (DTC) genetic testing and the patentability of the DNA sequences and methods underlying certain genetic tests. As these issues remain unresolved – the Myriad litigation, for example, is now nearly two years old, and a resolution unlikely to arrive soon – the pressure on lawmakers to act continues to grow.

For example, one the key allegations raised by the Myriad plaintiffs in their initial complaint (pdf) was that Myriad Genetics’ patents on two key breast cancer genes (BRCA1 and BRCA2) mean that “many women at risk [of breast cancer] cannot even be tested because they are uninsured and/or cannot afford the test offered by Myriad.” It is hardly a stretch to view Assemblyman Pretlow’s proposal as a direct, legislative response to perhaps the most politically salient issue posed by the Myriad litigation.

A National Problem; A Global Shift? Taken purely from the perspective of women at risk of hereditary breast cancer who happen to live in New York state, Assemblyman Pretlow’s proposal to require insurance coverage of applicable genetic tests is a positive development. But viewed through a broader lens, the Pretlow proposal is symptomatic of a troubling and ongoing trend: the use of legislative band-aids (e.g., insurance coverage mandates) in an attempt to mitigate the effects of deeper and more serious problems in our personalized medicine regulatory framework.

While significant for a subset of individuals, a bill which would create separate insurance coverage criteria for a subset of genetic tests and follow-on services in a single state would further complicate the existing personalized medicine landscape for national insurers, healthcare providers, genetic test developers and patient advocacy groups. Far from addressing the problems identified by SACGHS three years ago, it would make them worse.

Continued legal and regulatory development in this direction could be tragic for personalized medicine – both the industry and the patients it seeks to serve – in the United States over the long run.

Last week, the global consulting firm PwC published its Medical Technology Innovation Scorecard. The full report (pdf) evaluates the capacity and capability of nine key countries, including the U.S., for medical technology innovation. One of PwC’s key findings was that “the medical technology innovation ecosystem, long centered in the United States, is moving offshore.”

According to PwC there are a number of reasons why this is happening, including the increasingly labyrinthine United States regulatory system:

The citizens of countries with more efficient and less uncertain, capricious and complex regulatory approval processes will gain earlier access to innovative medical technology, and providers in those countries will benefit from more experience in using new devices…Countries with long, complex, arbitrary, nontransparent, costly approval pathways will discourage entrepreneurs and investors, causing them to launch new products elsewhere.

The PwC report made a splash when it was released last week, in part because it attempted to quantify what SACGHS and so many other advisory groups, executives and investors both before and since have noticed: bringing medical and healthcare innovation to market in the United States is an increasingly time-consuming, expensive and frustrating process.

As Luke Timmerman of Xconomy notes, although the United States may not be moving in the right direction, its fall from the top of the heap is hardly inevitable. Timmerman suggests that a few strategic “policy moves could be enough to keep the U.S. in the lead of med-tech innovation for a long time.” That’s probably correct, but it’s important that those moves are timely made.

It is becoming increasingly clear that the regulatory, reimbursement and intellectual property structures that both support and constrain personalized medicine innovation and commercialization in this country are all in need of a strategic and comprehensive overhaul.

The PwC report is a reminder that this overhaul must come relatively soon if it is to head off a significant and long-term shift in the geographic center of gravity for personalized medicine innovation and investment. And the Pretlow proposal, no matter how well-meaning, is a reminder of the “uncertain, capricious and complex” legal and regulatory framework that will continue to frustrate personalized medicine innovation in the meantime.

After several months of courtroom quiet, the briefs began rolling in to the CAFC last week. Most, including Myriad’s own appellant brief (pdf), presented the argument we would expect. Myriad and its supporters frame Judge Sweet’s ruling as an erroneous application of settled patent law and policy that, if upheld, “would have far-reaching negative consequences” (pdf) for the continued development of biotechnology.

And then there is the United States government. In an amicus brief filed on Friday (pdf) the Department of Justice (DOJ), on behalf of the United States, dropped a minor bombshell. Contradicting the longstanding policy of the United States Patent and Trademark Office (PTO), the government’s brief argues that isolated human genes, without further modification, are a product of nature and do not constitute patent-eligible subject matter under § 101 of the Patent Act.

The Government “Reevaluates” Gene Patents. The government’s brief begins by highlighting the distinction between “isolated but otherwise unmodified genomic DNA” and other “human-engineered DNA molecules, such as cDNAs” (p. 1). For at least two decades the PTO has granted patents on both types of DNA molecules and on Friday, for the first time, the United States weighed in on the propriety of that policy.

The question, according to the government, is whether isolated genes constitute patentable subject matter under § 101. It is a question that, despite a decades-long PTO policy of issuing patents on isolated genes, had never been directly addressed by a court prior to Myriad, and one which the United States had not “previously expressed its view…in litigation” (p. 6).

According to the government’s brief, Judge Sweet’s March opinion “prompted the United States to reevaluate the relationship between [isolated genomic DNA] patents and the settled principle under Supreme Court precedent that the patent laws do not extend to products of nature” (p. 18). On Friday, the government made the conclusion of that reevaluation quite clear: “genomic DNA that has merely been isolated from the human body, without further alteration or manipulation, is not patent-eligible” (p. 10, emphasis added).

The Brief’s Argument, In Brief. In support of this conclusion, the government employs several complementary lines of argument. The primary distinction, not surprisingly, is the familiar “human-made inventions” vs. “products of nature,” with the government taking the position that the latter – within which it includes isolated genes – belongs to “the storehouse of knowledge of all men…free to all men and reserved exclusively to none” (p. 9).

Despite supporting several critical pieces of Judge Sweet’s district court ruling, the government is not prepared to go all the way in siding with Sweet. Its brief takes pains to point out where it believes Sweet erred, including two important categories it still considers patent-eligible under § 101: (i) “man-made transformation or manipulation of the raw materials of the genome” (p. 11), including cDNA, even when the resulting molecules are valuable, like natural DNA, due to their information-carrying capacity and (ii) the processes of “identifying, isolating, and using” (p. 17) products of nature (including genes), which may be patentable even if the products of such processes are not.

From the government’s perspective, the “fundamental question” of patentability under § 101 is “whether the inventor has created something through the application of human ingenuity or merely exposed something previously unappreciated in nature.” The government’s position is that isolated genes, including the BRCA-1 and BRCA-2 genes subject to Myriad’s patents, fall into the latter category.

Welcoming the White House to the Myriad Party? There are several key takeaway points from the government’s amicus brief, but the most significant may be the fact that there is a brief to review at all. That the U.S. government would express its views on the Myriad litigation, particularly at this stage of the proceedings, was hardly a foregone conclusion.

This is due at least in part to the significance of the issue and the competing priorities and constituencies different elements of the government bring to the table, particularly when it comes to gene patents. The brief acknowledges as much, noting that the issue “implicates the expertise and responsibilities of a wide array of federal agencies,” including the PTO, NIH, DOJ and many others.

Even more telling is that the position staked out in the brief is expressly acknowledged as “contrary to the longstanding practice of the Patent and Trademark Office, as well as the practice of the National Institutes of Health and other government agencies that have in the past sought and obtained patents for isolated genomic DNA” (p. 18). In the eyes of the government, isolated genomic DNA no longer satisfies the § 101 test for subject matter patentability.

It is not every day that one governmental entity (the DOJ) presumes to tell another (the PTO) that, despite everything it may think it may know within its area of expertise (patents), it has been going about things all wrong. But that, more or less, is what appears to have happened here. The New York Times’ Andrew Pollack notes that an absence of PTO lawyers signing on to the brief may indicate that the PTO “opposed the new position but was overruled by other agencies.”

It is extremely unlikely that the DOJ reached this conclusion completely on its own initiative. Which leaves us to speculate that the decision to reverse federal course on gene patents originated higher up the federal food chain. We have as yet seen no public indication that the White House is paying particular attention to the Myriad litigation. However, given the former-junior-Senator-from-Illinois’ interest in genomics and personalized medicine, and the obvious importance of gene patents to the future of personalized medicine, it would not come as a surprise to find that the White House has taken an active interest in the outcome of the Myriad litigation.

Implications for the Biotechnology Industry. The initial reaction to the government’s amicus brief from many within the biotechnology industry is likely to be concern. There is, after all, an oft-told tale of biotechnology’s dependence upon patents, including gene patents, to ensure continued investment and innovation.

The Biotechnology Industry Organization (BIO) and The Association of University Technology Managers (AUTM) set out this familiar position in an amicus brief of their own (pdf):

Unless reversed, the decision below promises to cause serious harm to U.S. biotechnological innovation. The biotechnology industry depends heavily on patent protection to encourage the investment of time and capital necessary to develop inventions—including those discovered industrially or in-licensed from world-class universities in support of further academic research—into real-life products (p. 25).

The government’s brief, on the other hand, goes to great pains to reassure anxious biotechnology companies, investors and commentators that it is not advocating the abolishment of all biotechnology patents. It is not even suggesting that all gene patents fail the § 101 test. Quite to the contrary:

New and useful methods of identifying, isolating, extracting, or using genes and genetic information may be patented (subject to the prohibition against patenting abstract ideas), as may nearly any man-made transformation or manipulation of the raw materials of the genome, such as cDNAs. Thus, the patent laws embrace gene replacement therapies, engineered biologic drugs, methods of modifying the properties of plants or generating biofuels, and similar advanced applications of biotechnology (p. 11).

and:

Nearly every biotechnological or pharmaceutical application of genomic DNA will involve a welter of potentially patentable products and methods: engineered DNA molecules, including cDNAs; processes of extraction and purification; optimized pharmaceutical compounds (pills, vaccines); methods of preparing and administering the same; and so on (pp. 35-36).

However, the government is equally explicit that a biotechnology invention is not patentable simply because it is “useful or requires investment to identify” (p. 34). Article I, Section 8 of the Constitution authorizes Congress to award patents to “promote the Progress of Science and useful Arts,” not to reward investors.

Creating an economic incentive for companies to develop scientific discoveries into commercial products is a byproduct of our patent system, but it is not an end in and of itself. If it were, we would award patents for difficult discoveries as well as novel and useful inventions. Instead, according to the government’s brief, patentability under § 101 hinges upon whether the claimed invention involves “something more than identifying and isolating what has always existed in nature, no matter how difficult or useful that discovery may be” (p. 11).

As for what all of this means for the biotechnology industry, the short and simple answer is “nothing,” largely for reasons described below. The slightly longer answer is that even if the government’s position was adopted verbatim – which is not particularly likely – plenty of biotechnology patents, including various gene-based patents, would survive.

Awaiting the Court’s Decision. After Judge Sweet’s district court ruling, newspaper headlines raced to declare the death of gene patenting. It is inevitable that some will similarly overstate the significance of this latest development. (Investors, for example, reacted to the development by sending Myriad’s stock down nearly 5% at the open on Monday.) Remember: this is an amicus curiae brief and not the decision of the court.

As the gene patent drama continues to unfold, there will be several opportunities for a binding legal result capable of lending significant clarity to the patentability of genes and related gene-based products and processes. Direct treatment and guidance in an opinion from the CAFC or the Supreme Court are the most likely possibilities. An act of Congress, while much less likely, would also fit the bill. The opinion of the Department of Justice, for all its significance, does not.

It is possible that the government’s brief signals a formal change in the PTO’s policy with respect to the patentability of genes, although our guess is that the PTO will wait for the CAFC’s ruling before making any significant changes. [Update 11/1: Pharmacogenomics Reporter's lengthy summary of the government's brief includes this statement from a PTO spokesperson: “The USPTO will maintain the status quo while this matter is pending resolution by the Federal Circuit.”] Even if that change does occur, its practical significance will likely be minimal given that the PTO is not believed to be issuing many new gene patents at this point in time, with obviousness likely a significant factor. (A shift in the PTO’s gene patent policy could, however, have implications for other areas of biotechnology if it results in a broader, lasting change in the way the PTO applies the product of nature doctrine for purposes of  subject matter eligibility.)

The more significant aspect of the government’s brief is the undeniable weight it will be given by both the CAFC and even the Supreme Court, should the Myriad litigation wind up there. Neither court is bound by the government’s conclusions or reasoning, but the government’s obvious interest in the issue makes a direct treatment of the fundamental issue – whether an isolated gene is patentable, and why – more likely than ever before. Such a decision, which would effect not only new gene patent applications but previously issued gene patents as well, would be truly significant for the biotechnology industry.

The software-based test can be downloaded from the website of the University of Maryland’s Center for Bioinformatics & Computational Biology, where Salzberg is the director and Pertea is on the faculty. The test purports to test genomic sequence data against a set of known mutations in the BRCA genes. In addition to representing a conceptual alternative for those seeking to evaluate their risk of hereditary breast cancer, the so-called “Salzberg Screen” is also a direct challenge to Myriad Genetics, the FDA and the existing legal, regulatory and policy regimes that continue to struggle to keep pace with the science and technology of genomics and personalized medicine.

Below, we examine how the Salzberg Screen fits—or does not—within the current legal and regulatory landscape, as well as what it signals for the future of do-it-yourself genomics, whole-genome sequencing and the law.

BRCA Background. First, a quick primer on the clinical and legal significance of the Salzberg Screen’s target: the BRCA genes. BRCA-1 and BRCA-2 are perhaps the two most well-known human genes. This stems in part from the role which mutations in those genes play in dramatically increasing the risk of breast and/or ovarian cancer for certain individuals.

The notoriety of the BRCA genes has also been significantly enhanced in the past year thanks to high-profile litigation in both the United States and Australia challenging the validity of the BRCA gene patents held by Myriad Genetics. Myriad’s patents covering the isolated BRCA-1 and BRCA-2 genes, as well as certain methods of diagnosing breast cancer susceptibility, were ruled invalid by Judge Robert Sweet of the Southern District of New York earlier this year. Judge Sweet’s opinion is currently being appealed to the Court of Appeals for the Federal Circuit, where hearings are expected to get underway later this fall. Despite the litigation, Myriad’s BRCA patent portfolio has enabled it to serve as the sole (lawful) provider of BRCA screening in the United States and numerous other countries worldwide.

The Salzberg Screen. Myriad’s role as exclusive provider of BRCA screening is a fact that has clearly irked both Salzberg and Pertea:

We believe that any individual should be allowed to interrogate his or her genome for all mutations of interest, regardless of whether a private company claims to ‘own’ the rights to particular gene mutations. To challenge the restrictive gene patenting system, we have developed a computational assay that, as a proof-of-concept, tests for 68 known variants of the BRCA1 and BRCA2 genes. In other words, we empower any individual using our software (whether this is a private individual, a clinician or a clinical or basic researcher) to test for these mutations and circumvent the gene patents.

The Salzberg Screen compares whole-genome sequence data (or, presumably, data from targeted sequencing of the BRCA genes) against a list of “68 known mutations in the [BRCA] genes” drawn from the Online Mendelian Inheritance in Man (OMIM) database. Salzberg and Pertea readily admit that their DIY screening tool is far from perfect, noting that “…the 68 mutations used in this proof-of-concept assay do not represent a comprehensive list of BRCA mutations,” but pointing out that “additional mutations could easily be added to our test…”

In addition to only testing for a fraction of the publicly identified BRCA mutations, a number that does not include additional proprietary information about BRCA mutations possessed by Myriad Genetics, the Salzberg Screen also possesses another significant current limitation: cost. Myriad’s BRACAnalysis test costs several thousand dollars, but it includes targeted sequencing of the individual’s BRCA genes. While the Salzberg Screen is free to use, it requires the user to come up with her own whole-genome sequence data.

At the moment, whole-genome sequencing is still more expensive than Myriad’s BRACAnalysis, a test which is covered by many insurers where clinically indicated. The price of a whole-genome sequence is a moving target and depends upon the quality of the sequence (including accuracy and depth of coverage), whether it is generated in a clinical (i.e., CLIA-certified) or research facility, the level of associate interpretation or analysis that is provided and a host of other factors. Current best estimates put the cost at anywhere from $1,000 to $10,000 per genome, although Salzberg and Pertea, like so many others, note that we are “rapidly approaching the day when it will be cheaper to fully sequence a genome before testing the sequence for all known genetic mutations associated with a given disease than to conduct multiple separate tests for each disease.”

While that day is not quite at hand, Salzberg and Pertea’s goal is not to create a computational screen that is a replacement, right now, for Myriad’s test. Instead, they have developed a “…template that can easily be modified to test for almost any known genetic mutation,” and thereby one day circumvent not only Myriad’s testing monopoly, but also all human gene patents.

What This Means, Part I: Myriad and its Patents. More than a year ago we wrote about the impending collision between single gene sequencing, such as that provided by Myriad, and inexpensive whole-genome sequencing (see: Whole-Genome Sequencing and Gene Patents Coexist (For Now)). As the cost of gene sequencing continues to fall, we expect that more and more software-only tools like the Salzberg Screen will spring up. But can such tools be used, as Salzberg and Pertea hope, to “empower any individual…to test for [BRCA] mutations and circumvent the gene patents”? More pointedly, can such tools circumvent gene patents legally?

Infringement, Direct and Indirect. A patent can be infringed in two ways: directly or indirectly (see Section 271 of the Patent Act). Direct infringement consists of someone making, using, offering to sell, or selling the patented product or process. Usually, the infringer must be duplicating the patented invention exactly as described in one of the patent claims; in patent jargon, the infringed patent claim must “read on” the infringer’s activity, element-by-element. Indirect infringement comes in two forms: inducement and contributory infringement. Inducement, sketchily codified in Section 271(b), requires knowledge of the patent and an affirmative act to cause or direct a third party to carry out an act of infringement. In other words, you can’t escape liability by contracting with someone else to make a patented product or carry out a patented process. Contributory infringement, codified in considerable detail in Section 271(c), usually consists of selling a component of a patented invention, knowing that the component has no use except in that invention. The theory here is to prevent a conspiracy of infringers from escaping liability by individually selling pieces of the protected invention. Significantly, you can’t be guilty of indirect infringement unless someone is engaging in direct infringement.

So the first and most important question here is whether use of the Salzberg Screen would result in someone infringing one or more of Myriad’s patents. That is, would either the individual or someone else (for example, a clinician or genetic counselor helping the individual use or understand the Salzberg Screen or a similar service) be making, using, or selling a product or process covered by a Myriad patent? (This whole analysis assumes, of course, that the relevant Myriad patents are not ultimately found invalid at the conclusion of the ongoing Myriad litigation.)

It’s worth remembering that Myriad’s patents include both product and process claims. On the product side are claims like Claim 1 of U.S. Patent 5,747,282 (pdf):

An isolated DNA coding for a BRCA1 polypeptide, said polypeptide having [a listed] amino acid sequence.

Would anyone in the chain of use of the Salzberg Screen be making or using this gene in isolation? That is a factual, scientific question that turns on whether the particular sequencing technique involves using “the gene.” Our science sources tell us that the answer depends on the sequencing method, but, at least for whole-genome sequencing, it is probably “no.” (Sequencing just the BRCA genes, as opposed to whole-genome sequencing, would likely be a different story.)

There are also claims like Claim 5 of the same patent: “An isolated DNA having at least 15 nucleotides of the DNA of claim 1”—i.e., any 15-mer oligonucleotide that can be found in the patented gene. While almost no one expects a claim like this to survive in the Federal Circuit, if it did, then almost any sequencing process might infringe solely as a matter of statistical probability (pdf).

A Method of Inducement? On the process side, Claim 1 of U.S. Patent 5,709,999 (pdf) is one of the broadest. Here is how the claim reads:

A method for detecting a germline alteration in a BRCA1 gene, said alteration selected from the group consisting of the alterations set forth in Tables 12A, 14, 18 or 19 in a human which comprises analyzing a sequence of a BRCA1 gene or BRCA1 RNA from a human sample or analyzing a sequence of BRCA1 cDNA made from mRNA from said human sample with the proviso that said germline alteration is not a deletion of 4 nucleotides corresponding to base numbers 4184-4187 of SEQ ID NO:1

And here is how Judge Sweet, in his Myriad opinion (pdf), translated that claim, shortly before finding it to be invalid:

Claim 1 of the ‘999 patent is directed to the process of ‘analyzing’ a BRCA1 sequence and noting whether or not the specified naturally-occurring mutations exist. The claimed process is not limited to any particular method of analysis and does not specify any further action beyond the act of ‘analyzing.’”

Under that reading, would Claim 1 of the ‘999 patent cover the activities of an individual who downloaded and ran the Salzberg Screen in order to “analyze” their BRCA-1 sequence? Would it cover the activities of a clinician or genetic counselor assisting a user in interpreting the Salzberg Screen’s results? That would be a matter for a court to decide, although it is certainly possible that, depending on the specific court and specific set of facts, the answer could be “yes.” If so, there would be an act of direct infringement.

If a court were to find an act of direct infringement, then Salzberg and Pertea could well be liable for indirect infringement, most likely in the form of inducement of infringement.

A Calculated Gamble? Salzberg and Pertea are clearly aware of the Myriad patents (a requirement of inducement) and explicitly invite individuals to “test for [BRCA] mutations and circumvent the gene patents.” They also readily acknowledge that they are asking Salzberg Screen users to commit patent infringement.

In creating this software, we are not violating the BRCA patents directly but any user would be, because even a noncommercial use (such as examining one’s own genome) is considered to be patent infringement.

The fact that Salzberg and Pertea claim not to be violating the BRCA patents “directly” suggests that they are aware of the risk of indirect infringement. They do not, however, appear to be overly concerned that Myriad will pursue such a claim.

For Myriad to make out a claim of indirect infringement against Salzberg and Pertea, it would likely first have to show that individual users are directly infringing Myriad’s patents. Suing a direct infringer could involve challenging in court the activities of an individual using a freely available software program to examine her own genes from the privacy of her own home.

But Myriad wouldn’t have to actually sue the direct infringer—it could decide to sue only Salzberg and Pertea for indirect infringement. In fact, the whole premise of indirect infringement is that it provides a patent holder an avenue of redress when it isn’t feasible to pursue the direct infringer. Still, given the substantial negative publicity that continues to swirl around Myriad’s BRCA patents, and the fact that suing for infringement would also mean subjecting its patents to a new set of invalidity challenges (a near-certain argument in defense from any alleged infringer), Salzberg and Pertea may be taking a calculated gamble that Myriad simply does not have the stomach to initiate any BRCA patent infringement litigation, whether direct or indirect.

Myriad’s Next Move. Myriad derives 90% of its revenues from its BRACAnalysis product, so neither the company nor its investors are likely to take any challenge to its BRCA business lightly. At present, however, the Salzberg Screen does not pose a credible commercial threat to Myriad. It does not test for the full range of deleterious mutations covered by Myriad’s BRACAnalysis, and it also requires something few people have: access to a high-quality copy of their genome. For those reasons, and in light of the negative publicity that would flock to any attempt Myriad might make to quash the Salzberg Screen, the strong likelihood is that Myriad will simply ignore this development, at least for the moment. What’s more, as Myriad is no doubt aware, pending the appeal of Judge Sweet’s decision invalidating certain of Myriad’s patents, an alleged infringer could use that decision to defend itself under an arcane legal doctrine called “issue preclusion.”

Conceptually, however, whole-genome sequencing has always been a threat for single-gene diagnostic companies such as Myriad. The Salzberg Screen brings that tension into particularly sharp relief. Once individuals routinely have access to high-quality whole-genome sequences, they are likely to ask why they need to pay the Myriads of the world several thousand dollars to analyze a handful of genes when they could pay far less—or perhaps nothing at all—to have the same analysis automatically performed by a software program.

As the technical limitations fade in the face of ubiquitous whole-genome sequencing, the Salzberg Screen, or perhaps one of its descendants (Salzberg and Pertea have created a fully open source piece of software), will come to present a viable alternative to Myriad’s test, at least in certain circumstances (e.g., for second opinion or confirmatory testing). How quickly this will occur remains unknown, but there is a strong likelihood that it will be before 2015, which is when the first group of Myriad’s BRCA patents are set to expire.

In many ways, the Salzberg Screen is every bit the frontal attack on Myriad’s patents that the ACLU-initiated litigation represents.  Like the ACLU litigation, it publicly, deliberately and unapologetically challenges Myriad’s right to control access to BRCA information. Allowed to evolve unchecked, it could one day threaten Myriad’s core business. So even if Myriad takes no action right away, you can safely bet that the company will be watching the development of the Salzberg Screen with considerable interest.

What This Means, Part II: Regulatory Acronym Soup or: WGS means more LDTs go DTC and DIY, creating a problem for FDA. While Salzberg and Pertea focus a majority of their attention on circumventing Myriad’s gene patents, their conclusion recognizes at least one other potential obstacle to widespread adoption of their BRCA screening test:

Finally, we recognize that there may be some controversy about giving ordinary individuals the ability to test their own DNA, without also providing expert genetic counseling.

The “controversy” is a nod to the FDA’s recent and widely discussed proposal to more aggressively regulate not only direct-to-consumer (DTC) and do-it-yourself (DIY) genetic tests, but all laboratory developed tests (LDTs). As we wrote earlier this fall, “recent developments suggest that innovation in personal genomics is an increasingly difficult undertaking.” From Pathway Genomics’ short-lived attempt to offer its product on Walgreens’ shelves, to U.C. Berkeley’s unsuccessful attempt to innovate genomics education by offering non-clinical genetic testing to its incoming freshmen, the recent regulatory climate has been none-too-kind to those intent on thinking outside the box in the personal genomics space.

Salzberg and Pertea are aware, no doubt, of these recent events, but remain resolute in their desire to liberate individuals from the strictures—patent, regulatory or otherwise—that would inhibit personal genomic access:

Nonetheless, the door to this new technology is already open and it cannot be closed. Rather than trying to keep patients in the dark, we need to embrace the technology and work harder to educate both physicians and patients about the power and the limitations of genetic tests.

With the FDA in the middle of developing a formal proposal to regulate all LDTs, including those offered DTC, there’s simply no knowing whether or how the FDA will respond to this development. While we think any immediate and public FDA reaction unlikely, the Salzberg Screen should be setting off alarm bells at the agency.

Regulating Tomorrow’s LDTs Today. At the recent public meeting convened by the FDA to solicit feedback on the agency’s plan to regulate all LDTs, there were two areas of discussion in particular that were defined less by disagreement over how or whether to implement FDA regulatory oversight and more by the creeping suspicion that neither the FDA nor any other regulatory agency is  currently prepared to address the issue: (1) testing based on multiplex or whole-genome sequencing data and (2) software-only bioinformatics or genetic testing services.

After Day 1 of the FDA’s public meeting, we wrote:

What about tomorrow? Another area of considerable confusion, if not necessarily disagreement, was what to do with the coming wave of multiplex diagnostic tests including, ultimately, a proliferation of whole-genome sequence data and corresponding interpretive tools. This was not an issue that the FDA tackled directly, but it was clear in the afternoon question and answer session that many of the panelists, at least, were unsure how the next generation of diagnostic tests would fit into the current (or contemplated) regulatory model. The challenges posed by the next generation of sequencing and bioinformatics tools are hardly new, but designing a regulatory framework equipped to survive the next decade will be one of the FDA’s greatest challenges.

While there is no greater clarity today than there was back in July, the unveiling of the Salzberg Screen crystallizes the importance of addressing these issues today, before the coming proliferation of whole-genome sequence data and associated bioinformatics tools.

The arrival of inexpensive and widespread genomic data will be followed, nearly simultaneously, with an explosion of new genomic-based tools and services prepared to analyze that data. These will not be LDTs in the traditional sense, and many will be unlikely to have any need for a laboratory at any stage. Targeting individuals with data in hand, they may well look like more sophisticated versions of the Salzberg Screen, bringing together data and returning personalized genomic analyses.

The Salzberg Screen is not the first computational test that relies on the individual to supply raw data. A familiar example is the Reynolds Risk Score, which takes as inputs user-supplied risk factors such as blood pressure, cholesterol and family history and then “predict[s] your risk of having a heart attack, stroke, or other major heart disease in the next 10 years.”

The Salzberg Screen adopts a similar DIY model for genomic data. In addition to a number of similar open-source and/or academic tools and projects already in progress (the Personal Genome Project, Genomes Unzipped and DIYgenomics all offer good examples), commercial variants of this model are also in the works. A new California-based start-up, Existence Genetics, recently described its plans to leverage the coming decline in whole-genome sequence data. According to CEO Brandon Colby, although the company today supplies both genetic tests and analysis to patients, “eventually … we see ourselves disengaging from utilizing gene chips completely, disengaging from all lab work, and instead solely being an analysis company.”

Colby, to his credit, recognizes that such a model will undoubtedly attract the attention of the FDA:

Colby said that he expects the agency to provide clear guidelines and regulations for LDTs soon, and when they do, ‘we really do look forward to working with them. The big question is how they’re going to regulate and what the timeline is … but once both of those are worked out by the FDA, we’re going to be front and center and willing to work with them and make sure we comply.’

With the FDA still “trying to decide what [its] options are,” Colby may be more optimistic than most in viewing  “clear guidelines and regulations for LDTs” as likely to arrive “soon.” Regardless of when those LDT guidelines actually do arrive, the more important question remains whether they will provide a meaningful degree of insight into the agency’s plans for reviewing multiplex and whole-genome sequencing products and the software-only bioinformatics services that will be developed to leverage low-cost whole-genome sequencing.

Drawing the Right Lines. The examples presented by the Reynolds Risk Score calculator, Salzberg Screen and Existence Genetics products, among others, challenge us, and particularly the FDA, to carefully establish what constitutes an appropriate regulatory target. As genomic tests and services move out of the laboratory and into the genomics data cloud, where and how will the FDA direct its regulatory energies?

If the FDA focuses on the risk level of the condition analyzed, how will it respond to multiplex or whole-genome interpretations that analyze both high- and low-risk conditions simultaneously? If the FDA seeks to install clinician gatekeepers between data and interpretations, even when those interpretations are not coupled with a laboratory test or other traditional medical device, will the agency also attempt to forbid individuals from accessing or attempting to analyze their medical records or raw genomic data on their own?

Drawing the right lines will be exceptionally difficult, and will require considerable foresight if the regulatory framework now being developed is to be sufficiently flexible to accommodate what are likely to be substantial changes in the way health information is collected, interpreted and delivered. The recently disbanded Secretary’s Advisory Committee on Genetics, Health, & Society (SACGHS), which had been slated to take up the implications of whole-genome sequencing, might well have helped the FDA in this process. Instead, the onus now falls more heavily on the FDA, as well as other public and private regulatory and advisory bodies, to think prospectively and creatively about these issues before the Salzberg Screen and its kin become the norm in personal genomics.

A Final Thought: Keeping Up With the Salzbergs. Even more fundamentally than its challenge to Myriad’s gene patents or to the FDA’s preparedness for a future in which whole-genome sequencing exists alongside do-it-yourself personalized medicine, the Salzberg Screen is a reminder of the Herculean task lawmakers, policymakers and regulators face in attempting to keep up with the pace of scientific and technological innovation in the fields of genomics and personalized medicine.

Whatever we think of Salzberg’s Screen and his aggressive challenge to the status quo of gene patents and federally regulated access to genetic testing, we must applaud the work that Salzberg and others do to continually push forward both the science and the application of genomics and personalized medicine. It’s doubtful that the Salzberg Screen will effectively undermine Myriad’s patents or cause the FDA to wholeheartedly embrace DIY genomics, at least in the short term. But by forcing all of us to think more concretely about such possibilities, Salzberg is spurring valuable discourse and forcing lawmakers, policymakers, regulators and businessmen to respond. We hope that the response, when it comes, will include a recognition that even if we cannot keep up with the Salzbergs—those bent on innovation, no matter how much it strains our current structures—we can do much more, now, to anticipate where they are leading us.

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Note: The image that appears is used and modified with the permission of DIYgenomics.

According to Palombi, “Myriad’s objective in surrendering the ['004 Patent] is to bring the proceedings to a premature end.” Palombi contends that Myriad’s effort to surrender the ’004 Patent (pdf) is designed to avoid Australian litigation that could set a harmful (even if non-binding) precedent in similar and ongoing U.S. litigation. Myriad, for its part, has so far refused to comment publicly.

A Successful Strategy? As we wrote last week, even if this is what Myriad intends, we are not so sure they will succeed. Offering up the ‘004 Patent for surrender may be a first step in heading off litigation, but without more it is difficult to explain (1) why the plaintiffs would accept the patent surrender, particularly given their stated objective (pdf) to use this litigation as a “test case” for the validity of gene patents or, (2) even if the surrender is successful, why the plaintiffs would refrain from bringing a second “test case” challenging one or more of Myriad’s other patents covering BRCA-1 and BRCA-2 and methods for diagnosing mutations in those genes. (The plaintiffs’ current complaint identifies several of these patents, but challenges the validity of only the ’004 Patent.)

Other commentators have speculated that, given the apparently limited financial upside to Myriad from the Australian testing market, Myriad may not be interested in investing the time and expense (including negative publicity) necessary to litigate this issue in Australia. Even though Myriad’s President, Mark Capone, recently told investors that the company had secured representation for its legal activities at a fixed cost of $200,000 – a bargain made possible because, according to Capone, “the lawyers want their names on [the Myriad litigation]” – it is surely the case that Myriad would prefer to avoid this litigation and all of its attendant costs if possible.

Still, no matter how expensive or inconvenient the litigation, or unimportant the Australian market to Myriad’s bottom line, it is unlikely that Myriad would be willing to surrender the remainder of its Australian patent portfolio simply to avoid litigation. Doing so would not only open up additional competition within Australia, potentially impacting Genetic Technologies Limited, Myriad’s exclusive licensee in that country, it might also permit would-be Myriad competitors to provide Australian-based BRCA testing to customers in the United States, Europe and elsewhere. That could, in turn, threaten Myriad’s BRACAnalysis product, which accounts for nearly 90% of the company’s revenues.

Cause for Delay? While it is possible that Myriad’s offer of surrender might succeed in halting the Australian litigation before it even begins, the more likely scenario is that it will serve to delay the litigation. Indeed, that appears to have already happened: the first hearing in the Australian litigation, initially scheduled for September 1st, was recently rescheduled for October 14th. That delay is likely related to Myriad’s offer to surrender the ‘004 Patent and the statutory requirement that all offers of surrender be held open for public comment for one month following its publication in the Australian Official Journal of Patents before any ruling is made. Further delays in the Australian litigation could result if the surrender is successful and the plaintiffs are forced to file new litigation challenging one or more of Myriad’s remaining patents.

Regardless of the reason, every delay increases the likelihood that the Australian litigation will lag behind its U.S. counterpart, thereby reducing the likelihood that an unfavorable ruling in Australia could serve as an unwelcome (from Myriad’s perspective) precedent for a U.S. court. Either way, with the deadline for public comment on Myriad’s offer of surrender now passed, and upcoming court proceedings in both Australia and the U.S., it will not be long before the next chapter is written.

Here in the U.S., the gene patent litigation shows no signs of reaching a swift resolution. Over the summer, Myriad appealed March’s widely-discussed district court ruling invalidating several of its key BRCA patents and claims, and the current appeal is unlikely to be the last, regardless of the outcome. In Australia, however, Myriad appears to be taking a different tack: offering to surrender its BRCA patent.

An Offer to Surrender. The development was first reported by the Australian news program Four Corners, which earlier this month ran a program (transcript) on the gene patenting debate and its impact on the availability of genetic testing in Australia. The program concluded with the following:

Three weeks ago, lawyers acting on behalf of Myriad offered to surrender ownership of its Australian breast cancer patent. In a letter obtained by Four Corners, the company stated:

‘Myriad wishes to gift Australian Patent No 686004 [the ‘004 Patent] to the people of Australia.’

Myriad’s critics argue it’s a cynical ploy to kill of [sic] any legal challenge in Australia which could bolster the New York court decision.

Significantly the company pointed out:

‘Myriad’s offer does not constitute an admission that the [‘004 Patent] is invalid.’

In the twists and turns of the genes war, the battle is far from over.

While the GLR has been unable to locate a complete copy of the letter, Myriad has filed with the Australian Official Journal of Patents an “offer to surrender” the ‘004 Patent, which claims “in vivo mutations and polymorphisms in the 17q-linked breast and ovarian susceptibility gene” (pdf).

The main claims in the ’004 Patent (pdf) largely track those of Myriads’ BRCA-1 patents that are at the core of the U.S. litigation. The primary difference is that the Australian patent’s claims are not directed at the normal BRCA-1 gene, but at a set of “bad” mutant or polymorphic versions of that gene. Despite this difference, the Australian claims still appear to be valuable for purposes of BRCA diagnostic testing.

Will Myriad’s Surrender be Accepted? Pursuant to Chapter 12, Section 137 of the Australian Patent Act, the Commissioner of Patents may accept an offer to surrender a patent from a patentee (i) “after hearing from all interested persons who…wish to be heard” regarding the proposed matter and, (ii) “where relevant proceedings in relation to a patent are pending,” only with “either the leave of the court or the consent of the parties to the proceedings.”

As in the U.S., the Australian litigation is being positioned by the plaintiffs as an opportunity to argue that genes, including the BRCA genes, are “not an invention capable of patent protection.” With the plaintiffs taking the position in the press that patenting genes is “morally wrong,” it seems reasonably likely that the plaintiffs might object to Myriad’s patent surrender, at least to the extent it moots some or all of their claims.

What about the Rest of Myriad’s Portfolio? Given that Myriad’s notice of surrender refers solely to the ‘004 Patent, the Australian litigation may go forward irrespective of whether Myriad’s surrender is successful. The company is also listed as either the sole patentee or a co-patentee on several related patents, including patents for a “method for diagnosing a predisposition for breast and ovarian cancer” (pdf) or for a “17q-linked breast and ovarian cancer susceptibility gene” (pdf).

These patents bear substantial similarities to those at issue in the U.S. litigation, and it is unclear – and seemingly doubtful – whether the surrender of the ‘004 Patent would materially impair Myriad’s (or its licensee’s) ability to control the market for BRCA testing in Australia.

What Happened to GTL? As we discussed in our earlier post, in 2002 Myriad granted an exclusive license to perform diagnostic testing in Australia and New Zealand of the BRCA-1 and BRCA-2 genes to Genetic Technologies Limited (“GTL”). (We note that GTL is not identified as a licensee of the ‘004 Patent or of the other breast cancer-related patents identified in the IP Australia database, although GTL has publicly discussed its exclusive license.)

According to reports, when GTL first licensed the BRCA intellectual property from Myriad, the company announced that it would refrain from enforcing its rights as a “gift to the people of Australia and New Zealand.” GTL briefly changed that policy in 2008, announcing a “commercial decision to enforce the rights granted to it under an exclusive license from Myriad.” GTL sent warning letters to government testing laboratories around Australia, only to quickly back off in response to substantial public outcry.

But as Myriad attempts to gift at least one of its BRCA patents back to the people of Australia and New Zealand, what are GTL’s rights and what, if anything, does it think of Myriad’s decision?

In a very brief op-ed earlier this year in The Australian, GTL’s CEO, Paul MacLeman, clarified that, contrary to popular belief:

In fact, [GTL] would materially benefit from any scaling back of genetic patent rights in this area, as we are the only entity paying for the right to use it even though the test is quite widely used.”

In light of this, it is possible that GTL and Myriad have taken steps to terminate the BRCA license. Or it may be that the license never applied to the ‘004 Patent at all.

Both scenarios are pure speculation, and neither explain Myriad’s apparent decision to pull back on only a portion of its Australian patent portfolio. For the moment, we do not know nearly enough about the rationale behind Myriad’s decision to attempt to surrender the ‘004 Patent while retaining its other patents.

What Does this Mean for Myriad in the U.S.? The simple answer is very little, particularly for the moment. As we wrote when the Australian litigation was first announced, the status of Myriad’s or any other party’s Australian patents is unlikely to have any direct bearing on the validity of Myriad’s U.S. patents. There has been some speculation, including by Four Corners, that Myriad’s patent surrender is a defensive gesture meant to “kill of [sic] any legal challenge in Australia which could bolster the [U.S. district court ruling].” However, given the differences in Australian and U.S. patent law, as well as the likelihood that the Australian litigation will proceed despite Myriad’s attempted surrender of the ’004 Patent, this seems an unlikely – and at any rate, likely unsuccessful – strategy for Myriad to pursue.

Still, the Myriad gene patent litigation is about more than any specific set of patents or claims. It is an attempt, particularly by the plaintiffs in both the U.S. and Australia, to put the patentability of genetic information and associations on trial in the court of public opinion as well as in the courtroom. So perhaps Myriad’s decision is nothing more than a somewhat puzzling attempt at public relations maneuvering.

As we wrote in June when the Australian litigation was first announced:

…the new Australian case will be, at a minimum, a chance for that country to engage in a public debate over the wisdom and legality of patenting genes—which is exactly what is happening in the United States as a result of the ACLU litigation.

As the debate over the patentability of genes continues to rage on, its effects will be felt in the form of high-profile government investigations (e.g., the SACGHS gene patent and licensing report and the Australian Senate’s similar investigation), more closely observed and contested patent proceedings and myriad other ways beyond the courtroom, in the United States, Australia and around the world.

We should first disclose that one of us (John) has a dog in this fight, albeit a small one. In 2003, (along with biologist and patent lawyer Roberte Makowski), John published an article in the Journal of the Patent and Trademark Office Society entitled Back to the Future: Rethinking the Product of Nature Doctrine as a Barrier to Biotechnology Patents (pdf). In that article, Roberte and John laid out an argument for challenging Myriad-style patents on “isolated” genes as claiming products that are only trivially different from the naturally-occurring versions. Judge Sweet cited this article and, in several parts of his opinion, followed the roadmap it created. So, if you oppose the Myriad patents, you’re welcome; if you like them, we’re sorry.

What Summary Judgment Means. As Dan noted, and John first wrote last fall, it is rare for plaintiffs to win on summary judgment. For either side to receive summary judgment, it must show that there are no disputed issues of fact that require a trial to resolve, and that, on the undisputed facts, the law mandates judgment in its favor. This standard is especially hard for a plaintiff to meet, since it bears the burden of proof at trial. At the summary judgment stage, a defendant can usually create an issue of fact and thereby avoid summary judgment just by saying “they have the burden of proof at trial, and a jury might not believe them.” Although this is an unusual case in that the basic facts—most notably Myriad’s patent claims and the fundamental biology and genetics that makes possible those claims—really are not in dispute, a summary judgment ruling for the plaintiffs nonetheless sends a clear message about how strong this particular judge thought their case was—and how weak he thought Myriad’s was.

The Road to Invalidation. The court broke Myriad’s patent claims into two major groups: (i) those claiming isolated DNA sequences and (ii) those claiming methods for comparing or analyzing gene sequences to identify the presence of mutations corresponding to a predisposition to breast or ovarian cancer (p. 2). Both sets of patents were rejected under Section 101 of the Patent Act, which enumerates the permissible categories of patentable subject matter: processes, machines, manufactures, and compositions of matter. As the judge noted, a long history of cases forbids claims on laws of nature, abstract ideas, and natural phenomena, which include products of nature.

Isolated DNA Sequences. The claims to DNA sequences in isolation were held to be insufficiently distinct from naturally occurring genes in the body—the product of nature version. This conclusion embodied several critical steps. First, the court emphasized that whether a patent applicant claims patentable subject matter is a free-standing inquiry, separate from the determination of whether the invention also satisfies the standards of novelty, utility, and non-obviousness. In other words (and contrary to arguments often made by patent lawyers), you cannot prove that something is a patent-eligible, human-made invention—and not a product of nature—by showing how new and useful it is. It either is patentable subject matter or it isn’t.

Having established this principle, the court went to assess just how different an “isolated” gene would have to be to avoid characterization as a product of nature. Myriad defined “isolated” in its patents as “substantially separated from other cellular components which naturally accompany a native human sequence [such as] human genome sequences and proteins” (p. 92). Myriad relied heavily on some cases going back to the early twentieth century—especially one involving purified adrenaline—to argue that this was enough of a difference.

The judge disagreed, strongly. He went back even further, to nineteenth-century cases involving line fibers and wood pulp, as well as later cases involving such things as pure tungsten, and concluded that “purification of a product of nature, without more, cannot transform it into patentable subject matter. Rather, the purified product must possess ‘markedly different characteristics’ in order to satisfy the requirements” (p. 121).

Not Markedly Different. Myriad’s isolated genes failed this test. In his search for “markedly different characteristics,” Judge Sweet focused—and this is the most radical part of the opinion—on the critical functional property of a gene, whether in the body or in isolation: its ability to carry the information sufficient and necessary to code for a protein.

DNA represents the physical embodiment of biological information, distinct in its essential characteristics from any other chemical found in nature. It is concluded that DNA’s existence in an ‘isolated’ form alters neither this fundamental quality as it exists in the body nor the information it encodes (pp. 3-4).

And again:

In light of DNA’s unique qualities as a physical embodiment of information, none of the structural and functional differences cited by Myriad between native BRCA1/2 DNA and the isolated BRCA1/2 DNA claimed in the patents-in-suit render the claimed DNA ‘markedly different.’ This conclusion is driven by the overriding importance of DNA’s nucleotide sequence to both its natural biological function as well as the utility associated with DNA in its isolated form. The preservation of this defining characteristic of DNA in its native and isolated forms mandates the conclusion that the challenged composition claims are directed to unpatentable products of nature. (p. 125).

Why is this so radical? Since the inception of gene patenting a generation ago, patent lawyers have taken the position that genes are just chemicals. Their information-carrying function is irrelevant to their patentability, the lawyers say. Because genes are chemically different in isolation, at least in a literal sense, they can’t be considered products of nature. The USPTO and the courts, including the Federal Circuit (the patent court of appeals), have uniformly acquiesced. Now a federal court has said that, no, genes aren’t just chemicals—precisely because they carry information. Genetic exceptionalism has become a principle of law, at least in Judge Sweet’s court.

Next Go the Process Claims. Myriad’s process claims got even less respect. In just a few pages, out of 156 in total, the court concluded that they all failed the Federal Circuit’s “machine or transformation” test for method claims. (This test comes from the recent Bilski case. Although the Supreme Court will soon issue its own opinion in Bilski, the machine or transformation test is the law unless and until the Supremes order otherwise.) Judge Sweet found that none of the methods were tied to any particular machine, nor did they bring about a tangible transformation of anything. Rather, “because the claimed comparisons of DNA sequences are abstract mental processes, they also constitute unpatentable subject matter” (p. 4).

Judge Sweet also added that, even if the claims were construed in such a way that they constituted “physical transformations associated with isolating and sequencing DNA, they would still fail the ‘machine or transformation’ test under §101 for subject matter patentability.” (p. 147).

Taking it to the Next Level. Where do we go from here? Myriad will surely appeal to the Federal Circuit (it has a right to that appeal), a process that could take a year or more. It is possible that the District Court’s judgment invalidating the Myriad patents will be stayed, or suspended, during that appeal. Judge Sweet’s order will not affect any patents not directly involved in the case, nor be binding on any other court, and it is highly unlikely that the USPTO will change its gene patent examination standards just because of this decision.

Then it will be up to the Federal Circuit. Our initial guess is that the court will end up affirming Judge Sweet on some or all of the process claims, but will cut way back on his broad attack on gene patents. But that decision is way down the road and, of course, will be informed by what the Supreme Court decides to do with Bilski. Even farther down the road is an appeal from the Federal Circuit to the Supreme Court, where all bets would be off.

To summarize, as breathtaking as this opinion may be, its legal effect is currently very limited. Another federal district judge would be free reach exactly the opposite conclusion tomorrow (if another comparable case were pending, which it isn’t). Things won’t get serious (legally) until the Federal Circuit rules, since its opinion will bind all federal courts except the Supreme Court.

Practical Implications. With the decision only hours old, the headlines are already starting to roll in. “The End of Gene Patenting?” “Judge Rejects Patents on Genes.” “Judge Nullifies Gene Patents.” While it is clear that this decision is headline news, it is equally important not to overstate either its legal significance or its likely practical effect. The limited legal reach of the opinion—unless and until it is upheld by a higher court—has been discussed above. Less certain is its practical effect, including how businesses, clinicians and patients may change their behavior in response to the ruling.

As a recent report on gene patents (pdf) from the Secretary’s Advisory Committee on Genetics, Health and Society (SACGHS) emphasized, the existing gene patent landscape has created considerable uncertainty as to how and by whom many genetic and other diagnostic tests may be performed. That uncertainty prompted SACGHS to recommend a pair of exemptions from patent infringement liability: one for genetic testing for “patient care purposes” and another for the “use of patent-protected genes in the pursuit of research.”

It would, of course, be incredibly risky to rely on the SACGHS recommendations—which are only recommendations, and not binding law—to justify otherwise infringing activities for, as we wrote last month, there is a very long road from advisory committee recommendation to Congressional legislation. Similarly, it would be mistake to view a District Court decision as paving the way to ignore all of Myriad’s BRCA patents, let alone providing the ability to disregard gene patents more broadly. This opinion may stick, but it is at least as likely that it won’t.

Of course, just because something would be risky, legally speaking, does mean that it won’t happen. It’s within the realm of possibility that commercial or even non-commercial (e.g., academic or research) laboratories could take Judge Sweet’s opinion as an invitation to challenge Myriad’s monopoly of BRCA1/2 testing head on. (Isaac Ro and Jeff Ares, of equity research firm Leerink Swann, however, think that a commercial challenge would be unlikely to succeed (pdf) given the combined strength of Myriad’s current commercial position and its remaining, unchallenged BRCA patent portfolio.) Risky or not, there is a possibility that Judge Sweet’s opinion will prove in time to have let the gene patent horse out of the barn in a way that cannot easily be undone, even by a subsequent reversal at a higher court. For the moment, however, we do not foresee this decision producing any radical changes in commercial, clinical or other activity surrounding Myriad’s BRCA patents, or gene patents more broadly.

In the broader policy debate surrounding gene and biotechnology patents, however, this decision is the latest, unmistakable shot across the bow of gene patent holders, particularly those such as Myriad Genetics that have developed businesses around patent-protected genetic tests supported by exclusive rights in underlying gene patents. As we wrote last summer, and as the SACGHS report pointed out in detail, there is a coming crisis at the intersection of multiplex genetic testing and whole-genome sequencing and biotechnology patents, particularly gene patents. This decision is sure to intensify the public policy discussion surrounding the appropriateness of gene patents, and ratchet up the media and public attention paid to the issue.

But to what practical effect? It seems unlikely that this decision, at least for the moment, will make Congress any more likely to take up the Supreme Court’s longstanding invitation—recently reiterated by SACGHS—to sort out the whole biotech patent area. In fact, it might make legislators even more reluctant to act, on the (erroneous) assumption that the courts have everything under control. Biotechnology businesses and investors are similarly unlikely to use this decision as the basis for significant departures from their current approaches with respect to gene patents.

What everybody will undoubtedly be doing is waiting and watching, closely, to see what comes next. The patentability of genes—as well as the broader issues of biotechnology commerce and access to and development of genetic tests that today’s opinion touches upon—is an issue that has long demanded a clearer resolution. To that chorus of voices we can now add Judge Sweet in the Southern District of New York. This is an important step—but only a step—along the road to resolving that issue. Next stop, in all likelihood: the Supreme Court’s decision in Bilski.

The AMA’s brief (pdf), not surprisingly, supports the Federal Circuit’s Bilski decision, although it argues that it does not go far enough. Bilski’s claims are not patentable, the brief argues, not so much because they fail to use a machine or make a physical transformation, but “because their lack of machine or transformation indicates that they do not involve what has traditionally been considered to be patentable subject matter”—that is, because they preempt basic scientific principles. Applying this logic to medical diagnosis, the brief argues for a narrowing of what is patentable: “the preemption standard prevents patentees from attempting to cover every possible application of a scientific observation, and requires them to limit their claims to a particular new and useful application or use of the observation.” On a policy level, the brief contends that scientific relationships with diagnostic significance represent the kind of knowledge that physicians are ethically obligated to share, and that allowing patent monopolies on such knowledge will detract from the quality of health care and add to its cost.

The AMA brief also attacks the Federal Circuit’s September 16, 2009 decision in Prometheus Laboratories Inc. v. Mayo Collaborative Services, in which it held that methods for calculating optimal drug dosages for treating autoimmune diseases satisfied the machine-or-transformation test. According to the AMA’s brief, that patent extends to “the basic fact that certain test results correlate with a given physical condition,” and “would preempt the physician from doing anything with the knowledge” when “it should be used in the diagnosis and treatment of patients.” While the AMA’s brief does not directly attack gene patents such as Myriad’s, it does bear on other claims at issue in the ACLU litigation that are directed methods of testing and interpretation.

Then, at a public meeting earlier this month in Washington, the Task Force on Gene Patents and Licensing of the Health and Human Services (HHS) Secretary’s Advisory Group on Genetics, Health and Society (SACGHS) presented a report recommending potentially far-reaching statutory and policy changes in the biotechnology patent regime. (Webcasts and other materials from the meeting are available here, and summaries of the meeting are available from GenomeWeb and the PHG Foundation.) Most significant is the recommendation of an exemption from liability for infringing gene patents for making, using, ordering, or selling a patient care test. Note that this would not invalidate gene patents, but simply make them unenforceable against those engaged in testing for patient care—on the model of the current law that makes surgical technique patents unenforceable against surgeons. A second recommendation is an exemption for those using patented genes for research purposes. The Task Force also urged that HHS discourage (in unspecified ways) what it called “simple association patent claims”—presumably a reference to Prometheus-type claims—because of their potential to preempt basic laws of nature. SACGHS’s final report is expected in December.

The Task Force was motivated by its belief that while gene patents do not serve as “powerful” incentives for investment in genetic research and genetic testing, they may limit clinical access to tests. Much of the commentary at and surrounding the Washington meeting was directed at Myriad and its BRCA1-2 patents. A patient advocacy group called Facing Our Risk of Cancer Empowered urged SACGHS to monitor and regulate the direct marketing of genetic testing to consumers and doctors by Myriad and others. Mega-health insurer United Healthcare charged that as many as 80% of the women getting Myriad’s BRACAnalysis test don’t need it, and announced a prior notification requirement for Myriad tests. The Task Force itself referred to the problem of patent-based “sole providers” limiting access to tests and stifling competition, and stressed that unpatented genetic discoveries “routinely” lead to clinical tests. Its belief is apparently that breaking patent monopolies will lead to more competitive markets without taking away the incentives needed to make the fundamental discoveries that underlie genetic testing. Although others, including members of the Task Force and the Biotechnology Industry Organization (BIO), have voiced their displeasure, Myriad has not yet commented publicly on the recommendations, but it would presumably disagree as well, raising the don’t-kill-the-goose-that-lays-the-golden-eggs argument.

These recommendations have a long way to go before becoming law. The biggest hurdle, of course, will be Congress, which has thus far been unresponsive to the hue and cry to rein in biotechnology patents in any significant way. The recommendations themselves leave some major questions unanswered, including how testing for patient care purposes will be defined, and what kinds of “research” would fit under the proposed exemption. What about, for example, the R&D efforts of for-profit direct-to-consumer (DTC) genetic testing companies?

Even less clear (to me, anyway) is who is right in this debate. In the draft report it issued last spring, SACGHS acknowledged that the evidence on gene patents impeding research was equivocal. A recent study in the journal Nature Biotechnology on “Legal uncertainty in the area of genetic diagnostic testing” does little to suggest that the situation has cleared much in the past year. While the ACLU and others have marshaled some compelling horror stories about patents contributing to limited clinical care options, I tend to be dubious about building policy on the alleged malfeasance of a single company. And when a company like United Healthcare enters the debate as a friend of consumers, I become even more suspicious. I also wonder if the assumption that genetic testing would continue to develop without enforceable patents might not be a bit glib—hope masquerading as evidence?

One thing that is clear is that Myriad’s patents (and others like them) are now under siege from every conceivable direction. (Although Myriad is not showing any signs of slowing up in its attempts to develop diagnostic genetic tests based on issued gene patents, as evidenced by last week’s announcement that it had entered into an exclusive license with Johns Hopkins University for the rights to JHUs patents related to the PALB2 gene, which is indicated for an increased risk of pancreatic cancer.) If the ACLU’s primary motive was to raise public awareness of gene patents and what they do, it has succeeded spectacularly. All this should have little if any influence on the outcome of its case at the district court level—the law seems clear that genes are patentable. However, the Federal Circuit and the Supreme Court, if it ultimately takes the case, will have considerable freedom to rethink what the Patent Act—drafted before Crick and Watson—“says” about gene patenting, and these sorts of policy arguments could well tip the balance.

Contributed by Allison Williams Dobson of the Center for Genomics and Society at the University of North Carolina at Chapel Hill.

As reported last week by GenomeWeb, on September 21, 2009, a team led by Shyam Sharan from the National Cancer Institute (NCI) published the development of a new BRCA1 test based on mouse embryonic stem cells. Potentially, the test could prove useful for a much broader range of patients than the controversial Myriad Genetics BRCA1 tests.

The NCI approach focuses more on protein production than DNA analysis. The BRCA1 gene serves as the blueprint for an important tumor suppressor protein. If BRCA1 protein is not produced in sufficient quality and/or quantity, a propensity to develop cancer in the breast tissue often results. The traditional genetic testing approach asks whether a subject carries any of the BRCA1 gene variants that have been associated with increased risk for breast cancer in studies of afflicted families. NCI’s approach asks a significantly different question—rather than focusing on an identified set of “bad” gene variants, NCI asks whether a subject carries BRCA1 variants that serve as adequate blueprints for a functional protein, whether those variants have been previously identified or not. It does this by testing the protein product of the gene.

Until now, women with a family history of breast cancer have been most likely to seek a BRCA genetic test and represent the principal source of BRCA genetic data. Thus Myriad’s patented tests are based on a set of culprit BRCA gene variants found by studying primarily families with a strong propensity toward breast cancer, despite the fact that only 5-7 % of breast cancers are familial. As a result, the Myriad tests only offer useful information about a subset of BRCA1 variants. But many people (both with and without family history) carry other BRCA1 variants of unknown significance (VUS). There just are not enough empirical data yet to support conclusions about the risk associated with VUS.

The new NCI test can theoretically detect any bad BRCA1 variant, regardless of whether it is manifest in family history data. As the title of one commentary notes, the test works by “separat[ing] the harmful from the harmless,” rather than just identifying gene variants known to run in families with high rates of breast cancer. Consequently, the NCI test should be reliable as a tool for estimating breast cancer risk for any patient, regardless of family history or ancestry. What’s more, the data previously available for familial variants serve as an accuracy check to prove that the NCI test works.

For non-biologists who want to better understand the new test, consider the following: The NCI team created a little blueprint reader that was installed in the nucleus of the mouse embryonic stem (ES) cells. This reader is designed to read the instructions contained in a BRCA1 gene. The scientist can insert the sequence of either one of your two BRCA1 genes into this reader, and the ES cell’s natural machinery then uses those instructions to build the protein.

At the same time as the test BRCA1 gene is examined by the reader, another “switch” is thrown, and the ES cell inside which all of this is going on suddenly has to have BRCA1 protein coming from the test BRCA1 gene blueprint in order to survive. If the BRCA1 protein is sufficiently functional, the ES cell survives. If the protein is defective or lacking, the cell dies. In reality the test is much more complicated (as well as time- and labor-intensive), but the basic idea is an elegant one.

What does this new NCI test mean for Myriad, its BRCA1 and BRCA2 patents and patients interested in determining their risk of breast cancer? It is possible that aspects of the new test might infringe some of Myriad’s broadest patent claims to “isolated DNA” with specific BRCA1 sequences, because testing a subject using the NCI method seems to require “isolation” of BRCA1 sequences at some point. However, the sequences used do not necessarily have to be the exact sequences claimed by Myriad.

Moreover, depending on assignments, licenses, or cooperative agreements that may exist between federal health agencies, Utah and Myriad, a government lab such as NCI may have the right to use or even license the technology. And NCI senior author Shyam Sharan has indicated that, while clinical testing is still needed, NCI ultimately wants to license the test. However, at the moment it is unclear whether such licensing (e.g., to Medicare, Medicaid or to private diagnostic providers) will go unchallenged. As Robert Cook-Deegan, of the Duke University Center for Genome Ethics, Law & Policy and Institute for Genome Sciences & Policy, notes: “This makes the point that just knowing patents and claims, which are public, does not give you the info you need to know about freedom to operate. Lack of transparency is a really important source of uncertainty and high transaction costs in this system.”

Ultimately, the infringement issue, at least with respect to NCI’s BRCA1 test, is unlikely to be tested in the immediate future. Although, technically speaking, even the development of such a test might infringe Myriad’s patents, it is extremely doubtful, for pragmatic reasons, that Myriad would bring an infringement claim against a government laboratory engaged in the development of a novel and potentially valuable test that is neither commercialized nor widely available at this time. Although NCI has indicated its intent to out-license its test, further development and testing is needed before the test will be available for clinical diagnostic purposes and, depending on how long that process takes, Myriad’s original BRCA1 patents (derived from a 1994 application) could be in their final years before the new test gets to market.

Stepping back to look at the bigger picture, however, shows Myriad and other gene patent holders facing a host of challenges to their patents that are arriving with accelerating speed and from all directions. From constitutional challenges brought by the ACLU to potential patent policy reforms (pdf), and from the widespread availability of whole-genome sequencing to novel forms of genetic testing, which suggest the possibility that science may be able to invent around existing gene patents, gene patent holders interested in preserving the status quo must be increasingly prepared to respond to litigation, policy reform attempts, and scientific advances all designed to bring genetic information into the hands of patients and consumers more quickly and at a lower cost.