The Myriad decision

The Supreme Court on June 13 issued its decision on Association for Molecular Pathology v. Myriad Genetics. The case was of great interest because we covered it in class this semester. To understand the case, I read more than a dozen articles or commentaries on the decision: in addition to the decision itself, the most useful were a same day report by Jason Rantanen of the PatentlyO blog and this week’s analysis by John Conley of the Genomics Law Report.

The case centered on Myriad’s discovery of two genes (BRCA1 and BRCA2) linked to a greater inherited risk of breast cancer. In an opinion written by Clarence Thomas, the Supreme Court held unanimously that Myriad was not allowed to patent isolated DNA but was allowed to patent composite DNA (cDNA).

As the slip opinion reported:

At issue are claims 1, 2, 5, 6, and 7 of U. S. Patent 5,747,282 (the ’282 patent), claim 1 of U. S. Patent 5,693,473 (the ’473 patent), and claims 1, 6, and 7 of U. S. Patent 5,837,492 (the ’492 patent).

and specifically whether these claims are patentable under 35 U. S. C. §101::

§ 101 - Inventions Patentable:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

The difficulty of the case (as with any patent case the Supreme Court is willing to accept) is trading off two conflict policy goals. As Thomas wrote:

patent protection strikes a delicate balance between creating “incentives that lead to creation, invention, and discovery” and “imped[ing] the flow of information that might permit, indeed spur, invention.”

From the opinion, it’s clear that this case sets a key precedent for DNA patenting, building upon the seminal Diamond v. Chakrabarty (1980) and last year’s Mayo v. Prometheus.

Diamond v. Chakrabarty was the first case to allow DNA patenting, in this case for a new organism created by GE microbiologist who created a new oil-degrading microbe. In retrospect, it doesn’t seem controversial at all, but the case was narrowly decided by a 5-4 margin, with the two conservative judges joined by three swing justices (vs. the four liberal justices).

Last year, in the Prometheus case, a unanimous SCOTUS held that “Laws of nature, natural phenomena, and abstract ideas are not patentable.”.

Despite efforts by Myriad to argue otherwise, in this case the court agreed with plaintiffs that isolating DNA corresponded to “laws of nature”. In this regard, they seemed heavily influenced by the opinion of William Bryson, the dissenting justice in a 2-1 decision favoring Myriad at the U.S. Court of Appeals for the Federal Circuit.

However, all three appeals justices (and all seven SCOTUS justices) agreed with Myriad’s argument that the cDNA is manmade and thus entitled to patent protection. As Thomas wrote:

the lab technician unquestionably creates something new when cDNA is made. cDNA retains the naturally occurring eons of DNA, but it is distinct from the DNA from which it was derived. As a result, cDNA is not a “product of nature” and is patent eligible under §101…

What was particularly instructive was the final (III) section of Thomas’ opinion, which begins: “It is important to note what is not implicated by this decision.” If DNA patents are invalid, two related patent areas are not.

Myriad did not assert any method claims: if it had, it appears the court would have upheld them. Similarly, the case did not consider any applications (of the unique DNA knowledge Myriad developed). As appeals justice Bryson noted, Myriad both “was in an excellent position to claim applications of that knowledge. Many of its unchallenged claims are limited to such applications.”

What is unresolved is the business impact of this decision. On the one hand, Myriad’s lead attorney told Bloomberg “We have a very strong patent estate around the BRCA test,” protected by 24 patents. However, as Bloomberg (and others) noted, the plaintiffs and many other private and university entities will be offering BRCA-based tests. Presumably these competing approaches will test the validity (or effectiveness) of Myriad’s patent barriers.

A second key issue is how the decision will impact university research, Rantanen (writing at PatentlyO) suggests two possible outcomes:

In terms of the effects on my friends here at the University, I can see at least two consequences. First, it may allow researchers more freedom to engage in whole-genome sequencing because they won't need to deal with a multitude of isolated DNA patents for individual sequences. On the other hand, because early-stage research on newly discovered DNA sequences cannot be patented, it may encourage companies - and perhaps universities - to pursue greater secrecy over those early stage discoveries. Social research norms may cut against this - particularly in universities - but there may be some increased pressure, particularly at the margins, towards secrecy of potentially valuable inventions.

Finally, there is some question as to how long the cDNA distinction will last. Forbes quoted biochemist and IP attorney Brenda Jarrell as disputing the court’s finding that “cDNA is not a product of nature.” When this argument is made in a future case, it’s possible that the justices will reconsider where they have drawn the line between nature and invention.

That points to the final (and best) part of the entire Slip opinion, the concurrence by Antonin Scalia:

I join the judgment of the Court, and all of its opinion except Part I–A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief.

Although Scalia relied on the same distinction between natural and manmade used by the other eight justices, he did not feel qualified (nor necessary) to deliver a two page tutorial on molecular biology. Some would count this as an all-too-rare example of humility by any member of the high court.

Myriad: does it matter?

Today marks the Supreme Court hearings in the Myriad patent case. It is no exaggeration to say this is the most closely watched life science patent case in more than a decade.

In one sense, the case has the potential to be as significant as Diamond v. Chakrabarty. That is the 1980 Supreme Court decision that (to quote a 2005 review) “held that a live, man-made microorganism is patentable subject matter” under the patent code.

There is more than a little posturing on both sides. The patients’ rights, open IP crowd is promulgating op-eds in the Washington Post and Los Angeles Times asserting that no company “should own our DNA”. Not surprisingly, the news pages of the New York Times are promoting sympathetic stories on the anti-IP crowd.

In response, the CEO of Myriad Genetics submitted an op-ed to Forbes and letters hoping to rebut these op-eds. The argument is summed up by the title of the Forbes piece: “We're Not Patenting Your Genes, But Our Research.”

We used the HBS case on Myriad in my Innovation Management class at KGI this semester. The students really enjoyed it. It provided very interesting discussion questions at the intersection of genomic medicine, patent law and public policy. It didn’t hurt that this is a high-profile unsettled question of the law.

For the legal issues, a great place to start is the PatentlyO blog. For example, a December 3 article listed the conventional wisdom among legal scholars. A February 11 article lists the questions to be addressed by the two parties:

1. Are human genes patentable?
2. Did the court of appeals err in upholding a method claim by Myriad that is irreconcilable with this Court's ruling in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)?
3. Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court's decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), that petitioners who have been indisputably deterred by Myriad's "active enforcement" of its patent rights nonetheless lack standing to challenge those patents absent evidence that they have been personally threatened with an infringement action?

The arguments on each side were highlighted in an August 17 summary of the appeal at the Genomics Lab Report, as well as a blog posting the same day on Derek Lowe’s “In the Pipeline” blog.

However, probably the most interesting article was in my Sunday morning paper here in San Diego, by Bradley Fikes, the longtime biotech reporter who’s one of the few North County Times reporters after it was acquired last year by the San Diego Union. His lead on the Union story captures it all:

No matter which way the Supreme Court rules on the Myriad Genetics BRCA breast cancer gene test patenting case, the importance of such patents is diminishing over time. Biotechnology is moving beyond patents derived from naturally occurring gene sequences. The most important biotech patents nowadays are becoming synthetic gene and RNA sequences, proteins and other indisputable contrivances of human ingenuity.

The article highlights the important pioneering efforts of Craig Venter (now in San Diego) who competed with the Human Gene Project.

In the long run, will Myriad matter? The experts consulted by Fikes think not, for two reasons. First, the relevant patents are expiring and thus at some point won’t be enforced anyway. Second, the IP strategies of biotech companies are getting more sophisticated, emphasizing synthetic organisms rather than isolated DNA strains from natural organisms. Meanwhile, as the New York Times reports, Myriad’s latest business model is using trade secrets for its database.

So in the end, this may be tempest in a teapot. In a decade or two, the industry will have moved on, and the patent lawyers will need something else to debate.

Practical uses for DNA sequencing

Although we at KGI focus on genomic sequencing as an antecedent to the Brave New World of genomic medicine, in the mass market it’s probably best known for “Finding Your Roots.” However, the LA Times (and the Boston Globe before it) report on a much more direct impact on the average consumer: fish fraud.

As the Times reports

Tests on seafood sold at Los Angeles sushi bars, restaurants and grocery stores have revealed that more than half is not labeled correctly, [Oceana] a nonprofit organization is reporting today.
…
The U.S. Food and Drug Administration prohibits so-called species substitution. Still, the practice remains prevalent. Consumer Reports found that 18% of seafood samples its researchers collected from retail stores and restaurants on the East Coast last year was mislabeled. A 2011 investigation by the Boston Globe reported that 48% of the fish it collected from Boston restaurants, grocery stores and seafood markets was sold with the wrong species name.

FDA spokesman Douglas Karas said the agency is working to determine how often, or at what point in the supply chain, fish substitution occurs. Most of the seafood fraud complaints the FDA receives come from consumers at the retail level, Karas said. The FDA is conducting a yearlong DNA test of about 800 fish collected across the nation.
…
In the L.A. samples, red snapper was misidentified 100% of the time, DNA tests showed. Tilapia and pollock were popular substitutes, the report said. Dover sole was discovered to be Asian “sutchi catfish” or common sole, and white tuna was often actually escolar, a snake mackerel with known diarrheal effects. The fish has been banned in some countries.

Sushi restaurants had the highest incidence of mislabeling in L.A., the study found. Oceana reported that 87% of the samples of 10 types of fish it took from 21 sushi eateries were not correctly identified.

All of the red snapper sushi sampled was mislabeled. Half of it was tilapia. Eighty-nine percent of the white tuna sampled at sushi restaurants turned out to be escolar.

Samples of yellowtail sold at sushi restaurants were often Japanese amberjack. Flounder was frequently sold as halibut, and sea bream was substituted for sea bass.

As someone who loves sushi and seafood more broadly, this is distressing. Sea bass is perhaps my favorite fish entrees, while I usually have yellowtail and other tuna when I eat sashimi.

This does seem like technology will allow us to solve a problem of economic fraud — minor as it may be.

How "Perfecting Medicine" will reshape the life science industry

At his talk this morning at KGI, Dr. Paul Billings argued that the vision for 21st century medicine needs to go beyond personalized medicine to “perfected medicine.”

The chief medical officer of Life Technologies, Billings started by reviewing where medicine was for centuries, and the progress that was made in the 20th century to improve upon that. He illustrated the 19th century state of the art with “The Doctor,” pained by Sir Luke Fildes after his son died in 1877 of tuberculosis. As an MD working for a life science company, Billings argued for a world that both keeps the personal attention of the caring physician while providing doctors with the best science for preventing and curing illness.

Unfortunately, while the 20th century brought many lifesaving therapeutics, the approach towards selecting and dispensing these therapies is remains one of “trial and error.” He showed a chart that failure rates for post-heart attack medications and mammographs of are more than 10%, while airline flights have a fatality rate of less than 1 PPM. Billings lamented that having hospitals "more like bagging handling is not what I'd like to see about healthcare delivery".

From the perspective of systems biology, a solution proposed for this existing paradigm has been proposed through approach of “4P medicine”: predictive, personalized, preventive, participatory.

However, Billings argues that we need to go further: "We want 1P medicine: perfected medicine.” Such an approach would rebuild healthcare from the ground up, to tailor solutions for individuals make choices based on scientific understanding. To support this vision, he cited the 2008 report of a presidential advisory board, “Priorities for Personalized Medicine.”

Billings wants sequencing to be more mainstream in healthcare, the way that imaging and other modalities are: "I don't want to be in the basement of hospitals any more — I want it to be on the ground floor”. (Of course, Billings works for one of the major vendors of sequencing products.)

Based on the research of Jonathan Rothberg (of Ion Torrent), DNA sequencing has shifted optical-based sequencing to semiconductor-based sequencing. For the audience, Billings waved around a DNA sequencer chip the size of a postage stamp. A $50k sequencer that in 2013 will soon do a sequence in 2 hours for a marginal cost of $1,000.

Billing predicted that the performance improvements by this CMOS-based sequencing will continue indefinitely — as did microprocessors — and allowing sequencing to shift from sequencing specific genes to whole genome sequencing. (Of course, there is the nagging problem of the cost of the data analysis to make sense of that data).

But, Billings argues, the benefits are not just limited to price. Instead of sequencing in batches and taking weeks, the results will come back in hours. Various conditions — such as a heart attack, TV or sepsis — need answers much much sooner than weeks to make the appropriate clinical intervention. Cheap sequencing will also allow applying therapeutics — especially expensive biologic compounds — only for those patients who will benefit.

In an era of limited resources for healthcare, there’s a need to also demonstrate this technology can (as in the case of Sir Luke’s personal tragedy) to deliver "outcomes that matter". He provided the example of the May 2011 fatal E. coli outbreak in Germany, in which a DNA sequencer was used to characterize the bacteria and develop a scalable screening process in less than a week. (See the PLOSone article for more info.)

This is going to be highly disruptive to existing business models. For example, when Billings put up a slide showing how a series of existing tests might eventually be replaced by a singled sequencing test, I immediately thought about all the buggy whip makers that are going to put out of business.

I raised this question during the subsequent panel discussion, a discussion that included Billings, Board of Trustees chairman (and health care VC) Bob Curry, Advisory Council member Russ Teagarden of Medco, and Professor Jim Osborne (formerly of Beckman Coulter).

To Billings, I suggested that if firm can’t sell diagnostic tests, they’ll try to extract patent royalties from their gene patents from companies that are selling the all-in-one tests. I’ve lived this world in my previous research, as it’s S.O.P. for cellphones and other parts of the telecom industry. Diagnosing human disease with a single whole genome test will bring patent stacking that will go far beyond any pocket-sized device (at least until the patents expire).

Billings noted that companies who have such gene patents are aware of the problem (although he doesn’t know or wouldn’t say what they think the solution is). As an example, he mentioned the controversial diagnostics company Myriad Genetics, whose sequencing of cancer genes has done so much to improve our understanding and treatment of breast cancer. (At lunchtime, we discussed whether the gene patenting industry needed an Apple to impose an iTunes-like pricing model, or whether it could organize an ASCAP or BMI to collect and allocate royalties among rightsholders).

Ready or not, the existing businesses are going to be disrupted in a classic Schumpeterian example of “creative destruction.“

On the other hand, based on past experience it seems unlikely that the US regulatory bureaucracy — or the rest of the healthcare payment or delivery system — are ready to be disrupted. As Advisory Council member Weaver Gaines put it, it takes 20 years for a new medical approach to be adopted — or even a generation for the old guard to die off.

Bob Curry was a little more optimistic about FDA cooperation due to the pressure it will face from regulatory arbitrage: if the US won’t approve new approaches, then other countries — like Denmark or Switzerland — will.

However, adoption of a new paradigm also requires acceptance by healthcare providers and also healthcare payers. Both Teagarden and Curry noted the delays (and often unrealistic evidentiary expectations) required to get payers to agree to reimburse for diagnostics. The panel agreed that adoption will increasingly require that new approaches not only save lives, but also save money.

The panel also discussed the challenge of getting new practice accurately explained and adopted by frontline health providers. Curry pointed to the ongoing trend for doctors to leave their individual practices and affiliate with regional hospital groups, which he predicted would make it easier both to reach and to incentivize these M.Ds. to adopt the new scientific paradigm.

Photo credit: “The Doctor” (1891) by Sir Luke Fildes, courtesy of Wikimedia Commons.