STATS ARTICLES 2012
Activists Challenge Incentives to Develop New and Better Drugs
Randall Mayes, March 13, 2012
The Supreme Court will be forced to decide whether the inventors get to own one of the few successes in personalized medicine
The Supreme Court is currently deciding on whether or not it should take on the legality and constitutionality of gene patents. The court is considering the issue because in Association of Molecular Pathology, et al. v. US Patent and Trademark Office, the Court of Appeals in the Federal District Court of New York reversed a decision by the lower court.
Although roughly 20 percent of the approximately 24,000 human genes have patent protection, a petition by the American Civil Liberties Union and the Public Patent Foundation representing a number of plaintiffs specifically targets Myriad Genetics and the U.S. Patent and Trademark Organization (USPTO). Myriad discovered two genes linked to breast and ovarian cancer and also developed a $3,000 diagnostic test that screens for mutations on these genes.
When scientists sequenced the human genome, their major goal was to better understand common diseases by discovering gene variants that predispose people to common diseases, develop personalized drugs, and detect patterns of adverse drug reactions. Despite investing billions of private sector and taxpayer’s dollars on personalized medicine, Myriad’s screening test provides one of the few successes.
At the heart of the controversy are different perspectives on what a gene patent means and what is actually patented. In March 2010, New York Federal Circuit Judge Sweet ruled that products of nature do not constitute patentable subject matter. Therefore, he ruled an incorrect earlier ruling led to the granting of Myriad’s BRCA1 and BRCA2 gene patents. In 1911, Parke-Davis received patent protection on synthetic adrenaline, which set a precedent that gave pharmaceutical companies an incentive to develop other synthetic forms of naturally occurring molecules. As a result, drug companies developed the lifesaving drugs such as interferon, insulin, and EPO.
In July 2011, the New York Court of Appeals decided that the plaintiff’s claims were not very convincing as three judges ruled 2-1 in favor of upholding Myriad‘s patents. Gene patents cover a three dimensional molecule, not the genetic code that forms proteins. After nearly a year of deliberations and piles of amicus curiae briefs, the decision came down to the determination that isolated gene molecules, are different than naturally occurring genes due to differences in bonding.
The plaintiffs claim the ownership of genes is immoral and that genes are a discovery not an invention. However, in patent law gene patents do not convey ownership of a gene; rather, they are a property right guaranteed by the Constitution, which temporarily excludes others from receiving financial rewards without a licensing agreement. Furthermore, the Thirteenth Amendment, which abolished slavery, prohibits owning human genes.
The plaintiffs also claim that gene patents are a civil liberties issue because they undermine the free exchange of information that could prevent or delay other potential medical discoveries. Several studies, including two by the National Academy of Sciences, have not supported the claim that gene patents deter innovation. Besides, if the claims were true it would diminish the practicality of whole genome sequencing because of patent infringement. In contrast, genome sequencing is proliferating.
Myriad’s gene patents also provide temporary exclusive rights on the screening test, which excludes competition that could potentially lead to better service and lower pricing. Although health insurance covers the screening test, the plaintiffs further claim that many women at risk do not receive testing because they are uninsured or cannot afford the test. In order to prevent the unwanted effects of a monopoly, a federal agency, under the Bayh-Dole Act, has the right to march-in and force a recipient of a federal grant to non-exclusively license patented technology allowing market mechanisms to work. However, in this case the government has chosen not to exercise this right.
In the absence of patents, one alternative scenario is trade secrets. Louis Pasteur was unable to obtain patents on his vaccines, so by maintaining secrecy he kept the monopoly indefinitely. The Pasteur Institute was under no obligation to reveal its vaccine to the public after a stated period of time. A patent is a trade-off assuring the public receives the benefits in exchange for the temporary exclusive rights.
Another scenario that can occur is that researchers do not pursue medical applications because of the lack of incentives. In 1928, Alexander Fleming accidentally discovered penicillin, but did not file for a patent or pursue drug development. The antibacterial properties produced by molds in penicillin did not become commercially available until 1941 after the U.S. government sponsored research for mass production to treat infections on wounded soldiers during World War II.
In the New York Appeals Court decision, the judges imparted bits of wisdom regarding the future this case. Judge Lourie noted in his decision, “The Supreme Court has repeatedly stated that changes to longstanding practice should come from Congress, not the courts.” Through patent reform, Congress and the USPTO have already addressed the major issue of overly broad patents that discourage innovation.
Judge Moore noted in her decision, “The Supreme Court has warned that courts should remain cautious before adopting changes that disrupt the settled expectations of the inventing community.” Historically, waffling on incentives in the biotech industry has had a negative effect on biotech stocks and the recruitment of potential investors.
Currently, the Japanese, European, and American patent offices provide the most patent protection for innovators who also produce a majority of life saving drugs, cars, electronics, etc. As the field of personalized medicine is currently experiencing a genomic bubble, a Supreme Court ruling against gene patents could stifle further drug development in the United States.
Randall Mayes is a senior fellow with STATS at George Mason University. His books include The Cybernetics of Kenyan Running and Revolutions: Paving the Way for the Bioeconomy.