**The following piece is part of a series exploring the state of diagnostics. Will recent decisions expanding the scope of ‘natural process’ mark a precedent, or merely outliers? Further, will a broader definition of ‘natural process’ create a chilling effect, or actually inspire more innovation?
Our venture into diagnostics culminates in a special panel devoted to the subject at the 6th Annual OneMedForum, January 7-9 in San Francisco. This investor conference will feature leading experts exploring changing investment strategies in the space, as well as private and public companies showcasing the most innovative diagnostics technology.**
Fallout from the the US Supreme Court landmark decision to deny two patents to Prometheus Laboratories may complicate the future profitability of the industry. If this is indeed a precedent-setting decision, biomarker patents may now fall under the realm of “law of nature”, cutting off the prospect of exclusive market penetration that once justified the significant research and development onus in the early stages.
Still, as some see it, will a liberalization of “natural process” lead to more shared development, and in turn more product development? Further, is this decision perhaps the exception to the rule, and not the beginning of a trend?
Prometheus discovered that in the treatment of certain autoimmune diseases, the body needs to maintain a certain level of a chemical known as thiopurine. The Lab held a series of patent claims for a process present in a medical test — which Prometheus markets — in determining whether a particular biomarker is present in a patient’s body (one that identifies thiopurine).
The patents in question cover two functions: administration of thiopurine to a patient; and the diagnostic process for determining the blood level of thiopurine (6–TG).
Mayo Medical Laboratories initially sent out its specimens to Prometheus for analysis and recommendations that used the patented correlations. After some time, however, Mayo’s researchers created what they believed was a more accurate assay that employed slightly different cut points for adjusting azathioprine doses. Mayo adopted this new assay and priced it 25% below the price of Prometheus’s test.
Mayo Labs and the ruling of the United States Supreme Court claims that these processes cannot be patented because they fall under “law of nature” stipulated by the 1952 Patent Act. Thus, Mayo’s technology does not infringe on any Prometheus proprietary platform. A process occurs naturally, and is not an advent of a particular group, person or company. If these processes were to be defined as part of this scope, any patents claiming proprietary rights to the identification of a biomarker within the body would be inadmissible.
After the hammer drops: choosing sides
Dr. Robert Wah, Chairman for the American Medical Association, in statement made about this particular case, supported this decision. According to Dr. Wah, the Supreme Court had “prevented irreparable harm to patient care with [the] unanimous decision to invalidate two patents that gave Prometheus Laboratories exclusive rights over the body’s natural responses to illness and medical treatment.” Dr. Wah went even further to define the decision as “a clear legal victory that ensures critical scientific data remain widely available for sound patient care and innovative medical research.” Without patent protection, innovators would be hard-pressed to recover the cost of developing biomarker technology. Biomarker technology is generally easy to copy, however, because once the biomarker and its significance is known, it becomes a relatively simple matter to detect and analyze the biomarker in a patient.
Consensus among experts has yet to be reached about whether this ruling will have any impact on healthcare costs.
However, this decision hasn’t slowed down the stream of companies and innovators filing their own claims on biomarker technology.
It seems the August 2012 decision (or more aptly, non-decision) in Association for Molecular Pathology v. Myriad Genetics may further complicate interpretation of the Court’s position. At the core of this issue is whether isolated DNA sequences can be patented. The Supreme Court has remanded the case back to the Federal Court, which determined isolated DNA sequences can remain patentable.
Still, Mayo’s official opinion is that enforcing the Prometheus patents will drive up healthcare costs. In addition, they insist the patents will force researchers to come up with uneconomical and costly methods of ‘loopholing’ the patents, to spend valuable time conducting patent searches, and to develop complex licensing agreements with patent holders.There is also a chance that doctors will be put into a strange ethical dilemmas.
However, proponents of personalized medicine are at odds with the American Medical Association. Jim Greenwood of the Biotechnology Industry Organization claims that gene patents do not hurt academic research;
“A 2008 study identified only six instances in which such patents had been briefly asserted against clinical diagnostic testing, and none against basic research. This finding is consistent with earlier reports by the US National Research Council and Walsh et al., which found little empirical evidence to support the notion that patents created obstacles to biomedical research… Gene patents, like other patents, are critical to the development of basic research inventions into cures and therapies for patients as well as drought- and pest-resistant crops and renewable sources of energy. Encouraging the notion that scientists today routinely incur legal liability whenever they conduct genetic research may inflame public debate over ‘gene patents’ but it has nothing to do with a realistic appraisal of the role of patents in academic research. The likelihood that a researcher will infringe a technology patent by using a smartphone is much higher than the risk of infringing a ‘gene patent’ by doing bench work.”
There have also been accusations of the Supreme Court holding favor against non-associative for-profit companies. While it is not surprising that the most vocal among critics of the ruling are patent attorneys, Kevin Noonan holds perhaps the best temperature check of how many smaller corporations and legal professionals are looking at this decision.
“The Court seems … ready to be influenced by the consumers of innovation, such as amicus the American Medical Association, who understandably wish to have the maximum freedom to have their patients benefit from new technology (and the minimum interference from patent holders who would reduce their opportunities to profit therefrom).”
The core issue is whether decisions against patent protection will further de-motivate capital investment in the space, which is already moribund.
The question is how innovators will be rewarded for their discoveries, or receive any notion of ‘liberal encouragement’ — a subject heavily weighted on the mind of Thomas Jefferson, who helped bring the patent law into the institution in american economics that it is today.
Is a chilling effect a real possibility?
Between 2011- 2012 numerous patents related to access to biomarkers have been granted. According to Sciclips.com; over 35,095 biomarkers for different diseases have been discovered, and about 95 percent of those have been reported in patent applications by various entities.
The full impact of the Mayo decision may not be evident for some time to come. Despite what will in all likelihood be a direct chilling effect for patent claims (as we’ve seen in Myriad, it seems the Court is aware of where to draw the line in the sand), we may experience a causation of risk aversion based on speculation. It is anticipated we may see many ‘case studies’ hit the papers from many upcoming patent applications.
“Rewarding with patents those who discover laws of nature might encourage their discovery,” wrote Justice Stephen Bryer wrote. “But because those laws and principles are ‘the basic tools of scientific and technological work,’ there is a danger that granting patents that tie up their use will inhibit future innovation,” Justice Bryer wrote.
Perhaps the issue is more clear-cut. What motivates drug developers: scientific innovation or money? Is this answer different for investors in the space?