Federal Privacy Regulation and the Financially Troubled DTC Genomics Company
Last month, the Genomics Law Report prepared a three-part series entitled What Happens if a DTC Genomics Company Goes Belly Up? The series, which was originally published on Genetic Future (see Parts 1, 2 and 3), reviewed the privacy policies of several genomics companies to determine whether they prohibit the transfer of private data to third parties. We also discussed the fact that a bankruptcy court may approve such a transfer notwithstanding a policy to the contrary. In this post, we examine whether federal regulations may restrict the dissemination of private genomic data—including the new rules proposed earlier this month under the Genetic Information Nondiscrimination Act of 2008.
1. Is DTC Getting HIPAA? The Health Insurance Portability and Accountability Act of 1996 (HIPAA), the most prominent federal regulation governing the privacy of medical records, established the Privacy Rule to provide national standards for protected medical records. HIPAA’s Privacy Rule currently applies only to “covered entities” and business associates of covered entities. A covered entity is a health plan, health care clearinghouse, or a health care provider. Since a company providing genomic sequencing services is not a health plan or a health care clearinghouse, HIPAA will apply only if such a company is determined to be a health care provider or a business associate of a covered entity.
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What Happens if a DTC Genomics Company Goes Belly Up?
The following post was originally published in three parts on September 14, 15 and 16 in Genetic Future.
Direct-to-consumer (DTC) genomics companies are not immune to the current recession. When TruGenetics, a new player in the DTC genomics space, announced in June that it would be handing out 10,000 free genome scans, both Genetic Future and the Genomics Law Report raised questions about the financial viability of its business model, particularly in the current economic climate. Sure enough, on August 21, TruGenetics announced that it had been unable to secure funding sufficient to support its business model as contemplated. Frequent readers know that TruGenetics is not the only DTC genomics company that is struggling. The financial struggles of deCODE Genetics have been well chronicled (see here, here and here) and even new market leader 23andMe has undergone a dramatic shift in its top management as it pursues a new round of financing.
Ultimately, it was a recent headline here at Genetic Future—“deCODE Genetics on the brink of insolvency”—that started us thinking: what would happen if an established DTC genomics company actually went bankrupt? More specifically, what would happen to the genomic (and other) data held by the company? Genomic data is likely to be the company’s most valuable asset. Can that data be sold off to help meet the company’s debts? Bankruptcy can be a confusing and arcane process, with real risks and uncertainties for companies, their creditors and their customers.
The Wild, Wild East of DTC Genomics and the Need for Meaningful Self-Regulation
Earlier this month CNN reported on the launch of a new program by the Chongqing Children’s Palace (CCP), in Chongqing, China, “that uses DNA testing to identify genetic gifts and predict the future.” In a story seemingly more appropriate for the Onion than for CNN, the article reports that Chinese scientists at the CCP are using the test, which is developed by the Shanghai Biochip Corporation, to “isolate eleven different genes” that will provide “information about a child’s IQ, emotional control, focus, memory, athletic ability and more.”
Shockingly, the CNN story expresses only the barest skepticism about the scientific claims made by CCP. Thankfully, Daniel MacArthur of Genetic Future, stepped in to provide a dose of clarity:
A quick note for any Chinese parents considering having this test performed on their children: you’re wasting your money (and we’re not talking small change – the test costs US$880).
The genetic variants that are currently known to affect traits such as athletic performance and height explain only a tiny fraction of the variation in these traits, so predictions made from genetic tests are extremely weak. In fact, for a trait such as height, parents can make substantially better predictions simply by measuring their own height than they can using the best that modern genetics has to offer…
…this is a scam, pure and simple, preying on parents’ willingness to believe in the power of science and to pay through the nose for anything they think might give their child an extra edge.
Although disappointing, the outlandish scientific claims made by CCP are unfortunately far from unique. Atlas Sports Genetics, which sells a $149 test that promises to predict a child’s natural athletic strengths, has been criticized for using genetic testing “to sell new versions of snake oil.” A Swiss-based DNA dating website, GenePartner, claims to measure the “genetic compatibility between two individuals and make[] an accurate prediction of the strength of their basis for a long-lasting and fulfilling romantic relationship” which, if true, would offer many a $99 insurance policy against vastly greater sums paid to divorce attorneys later in life.
Will Funding Break Through the Bioinformatics Bottleneck?
Earlier this month, the NIH announced the renewal of a grant program that awards up to $275,000 over two years to academic institutes, small businesses, non-profits and other groups, to support research aimed at developing new ways of managing, manipulating and interpreting genomic and other biological data. But the utility and necessity of such grants is not entirely clear.
To be sure, the biomedical community has recognized a potential for a “bioinformatics bottleneck” as the cost of genome sequencing plummets and the sheer quantity of raw data rises, potentially without a corresponding increase in the capacity to interpret that data. And the NIH’s focus on funding innovative, “high risk/high impact” research projects is certainly welcome. But it is far from clear that a handful of two-year, $275,000 grants will produce the right type of innovation, on the right time-scale, to put a dent in the problem. And perhaps more to the point, it is worth taking a closer look at whether any amount of public funding would address some of the other issues at the root of the impending shortfall in biomedical informatics and computational biology research and development.
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