BIO Comes out Swinging against SACGHS Report - Updated

    By Donald Zuhn --

In a press conference held earlier today, the Biotechnology Industry Organization (BIO) expressed concern about recommendations to be issued on Friday with a report on gene patents.  The report, entitled "Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests," is being issued by the Secretary's Advisory Committee on Genetics, Health and Society (SACGHS), which is charged with advising the Secretary of Health and Human Services on human health and societal issues raised by the development and use of genetic technologies.

BIO did not stand alone in opposing the report's recommendations at the press conference.  Appearing with and in support of BIO President and CEO Jim Greenwood were former Senator Birch Bayh, co-author of the Bayh-Dole Act; Dr. Brian Stanton, a member of the SACGHS Task Force on Intellectual Property and Access to Genetic Testing; Dr. Jim Davis, Executive Vice President, General Counsel and Secretary of Human Genome Sciences, Inc.; and Dr. Jon Soderstrom, the Managing Director of the Office of Cooperative Research at Yale University.

Mr. Greenwood (at left) began by noting that the while the SACGHS report indicates that gene patents and licensing practices have not had an adverse impact on patient access to genetic tests, the Committee will nevertheless be making recommendations that "would undermine the U.S. patent system and the Bayh-Dole technology transfer system that have served our nation so well."  However, despite the success of the U.S. patent system and the Bayh-Dole model, the BIO CEO observed that:

Unfortunately, there are academic and other critics who view the private property rights granted by Bayh-Dole in federally supported research with suspicion, if not outright hostility.  Despite all evidence to the contrary, they persist in believing that the U.S. patent system and the Bayh-Dole Act hamper patient access to the very life-saving therapies and diagnostics that these systems make it possible to develop in the first place.

Mr. Greenwood contended that the Committee's recommendations "would discourage investment in biotech innovation, hobble the transfer of federally-funded research, undermine university research programs, and harm patients who are waiting for life-saving therapies and diagnostics yet to be developed."

Senator Bayh (at right) bemoaned the need to once again respond to "a small number of determined critics who want to send us back to a time when it appeared that American innovation was on its last legs and our economy was in deep distress."  The former Indiana Senator explained that prior to enactment of the Bayh-Dole Act, the federal government owned all of the patents that resulted from federally funded research.  During Senate Judiciary Committee hearings on the legislation, the Committee reported that "it could not find a single instance where the old policies had resulted in even one drug being developed when the government owned the patents."  Moreover, despite investing more than $30 billion in taxpayer dollars, the Committee found that before Bayh-Dole, some 28,000 patents were "gathering dust on the shelves of the Patent and Trademark Office."  After enactment of the Act, however, more than 6,000 new companies were founded on university inventions, more than 4,000 new products came on the market (including 153 new drugs, vaccines, or in vitro devices), at least 279,000 new jobs were created between 1996 and 2007, and over $457 billion was added to the country's gross national product.  Senator Bayh contended that history has shown that the SACGHS recommendations, which he believed would roll back the advances made under Bayh-Dole, "would have a disastrous impact on the American economy."

Dr. Stanton, who served on the SACGHS task force, informed reporters that the Committee's report "has no evidence of harm, and yet it still calls for changes."  Among the changes, the one that has garnered the most attention is a proposal to exempt gene patents from infringement liability.  While Dr. Stanton acknowledged that the task force did identify a few isolated instances of harm that need to be addressed, he noted that the task force also determined that "the court systems and the systems of checks and balances that are built into the fabric of the patent system were more than capable of addressing problems on a case by case basis."  Dr. Stanton also noted that the report contains a letter of dissent from three members of the full Committee, who interestingly, were the only members having direct experience in both business and law as it relates to intellectual property and the private sector development of products and services.

Dr. Davis used HGS' experience with the human gene bliss to illustrate the importance and value of gene patents.  He recalled that when the company first identified the gene, it did not know whether its value would lie in diagnostics, as a target to generate small molecule therapeutics, in its encoded protein, or in antibodies directed to that protein.  However, thirteen years after HGS identified the gene, the company turned this knowledge into a drug for use in the treatment of lupus, which Dr. Davis noted was the first new lupus therapeutic to be developed in the past 50 years.  Over the course of the drug's developmental period, HGS spent some $2 billion on a number of programs, the majority of which failed after reaching the clinic or which never made it out of the lab.  Noting that for every success story, ten to twenty drug candidates "die in the clinic" and another one to two hundred never reach the clinic, Dr. Davis asked where the investment dollars would come from if companies were prevented from securing patents at an early stage as HGS did with bliss.  Declaring that "patents matter," Dr. Davis pointed out that the entire biotech/pharma industry was built on the practice of licensing patents, a system that "provides enough of an incentive for each of us to find our own products in our own way."  Observing that the U.S. has one of the strongest and most well-funded biotech industries in the world, Dr. Davis contended that this was due in no small part to the U.S. patent system.

Dr. Soderstrom (at left) started by pointing out that the Bayh-Dole Act "really transformed the entire way that we, as universities, interact with the commercial sector," and as a result, helped create a whole new industry.  He noted that an annual survey conducted by the Association of University Technology Managers (AUTM) indicated that AUTM members had gone from issuing dozens of licenses more than twenty years ago to issuing over 5,000 licenses in 2009 alone.  Dr. Soderstrom also noted that over the past twenty years, patents licensed by AUTM members led to the development of more than 10,000 new products.  Significantly, Dr. Soderstrom stated that prior to Bayh-Dole, not a single drug had been developed using Yale's own patent technology, and that since the passage of the Act, five drugs based on Yale patents had made it to market and eighteen more are in clinical trials today.  Based on his involvement in the formation of some 35 biotech companies over the last decade, and in the raising of more than $450 million in venture funding, Dr. Solderstrom bluntly declared that:

It's hard, and if people think it's easy, they're fooling themselves. And if they think that companies are investing just out of charity, they're really deluding themselves as well.  What companies demand is the ability to protect their investment.

Returning to the SACGHS recommendations, Dr. Solderstrom admitted that what frightens him is that the recommendations are "essentially a reconstitution of the world as is it existed before 1980."

During the question and answer portion of the press conference, Dr. Davis argued that although the SACGHS report only singles out gene patents, "it's really gene patents that are the foundation of the biotech industry," explaining that gene patents have led to the development of both diagnostic and therapeutic products.  Senator Bayh then asked "if it starts here [with gene patents], where will it go next?"  Dr. Solderstrom observed that while the report presents empirical evidence showing that gene patents have no adverse impact on patient access to genetic testing, "the recommendations would have you believe that there is a problem and they're going to fix it."  He also used a drug initially developed at Wayne State University with federal funds to illustrate the difference between public and private sector funding of drug development, noting that the NIH provided about $150,000 for initial development of the compound and that BMS spent about $350 million to get the drug to market as a part of an HIV cocktail.  Dr. Stanton concluded the press conference by saying that although he was a member of the task force, he "would not take ownership, authorship, or credit for the language, content, or components of this report," and in fact had submitted a dissenting opinion.

BIO has made a podcast of the entire press conference available here.

Image of Senator Bayh courtesy of Indiana University.

Comments

[I Claim:]

So the three members of the SACGHS task force with actual practical experience disagee with its conclusions? Are the other committee members simply telling Sebelius what she wants to hear and to hell with any evidence?

[m]

For those interested in listening to the Podcast, here is a link to the BIO webpage with the podcast MP3 File on it (its at the end of the article)

http://biotech-now.org/efforts-to-restrict-gene-patenting-and-licensing-would-threaten-advances-in-public-health-and-harm-the-national-economy-021866.html

[Mike]

Much of the SACGHS talk was centered around trust and genetic testing. It is strange that those studying genetic testing face unwarrented biases every day, yet don't take the time to research the true meaning and scope of patents. They all cite the Myriad BRAC patent as one that hinders research, yet a new BRAC paper publishes at least every month. Doesn't appear to have been any slow down in BRAC research. They also quote quite frequently that "no one has the right to patent my genome" yet not one valid patent reads on the human as they claim. This is a bunch of arm waving and emotional statements without any factual basis. Not everyone can afford a BRAC test through Myriad genetics (~$2000), but not everyone can afford a full body MRI scan, not everyone can afford AIDS medications, not everyone can afford cancer treatements, ... There are a lot of life saving medications that aren't available to everyone, we should work on that aspect of health care instead of one simple BRAC analysis. There is a lot of evidence that inventions developed in universities would not generate commercial products without small start-up companies. Small start-up companies cannot compete without strong patent protections. If you cut out patent protection, you will reduce the number of marketable products that come out of univerisities and small businesses.

[Gary Johnston]

Mike:

Keep in mind there are two different fronts: 1) composition patents for isolated nucleic acids, and 2) method patents for correlating a disease/condition/trait with the presence/absence of a genetic marker (some people call these diagnostic method patents). Reasonable people can and do disagree over whether composition patents for isolated nucleic acids should be prohibited (I think such patents should not be prohibited). But no reasonable person thinks method patents for generically correlating a disease/condition/trait with the presence/absence of a genetic marker should be permitted. It has to do with promoting the progress of science and the useful arts. The former type of patent accomplishes this to one degree or another, but not the latter. Correlations between disease/conditions/traits and genetic markers will be discovered, and tests based on such correlations will be developed and marketed, regardless of the existence of patents. If anything, patents on these correlation methods interfere with the progress of science and the useful arts. Anyone, and I mean ANYONE, who says otherwise is either intellectually-challenged, or stands to lose financially from the prohibition of such patents. That is all for today.

[Kevin E. Noonan]

Dear Mike:

As you know if you've been following the debate on Patent Docs, people with more than minimal brain function can (and do) disagree with Gary's position. Preventing patenting of diagnostic methods (genetically-based or otherwise) can be expected to have chilling effects on disclosure, either in toto or at least to the extent that a scientific paper is not held to the same disclosure requirements that a patent application is (i.e., best mode). This may be less of the case for "low-hanging fruit" correlations like BRCA1 and BRCA2 with breast and ovarian cancer, but it is certainly the case for more multifactorial/multigenic diseases, like most of the ones that kill most people (colon cancer, heart disease, diabetes, etc.).

Now, it may be the case that physicians need protection from patent infringement liability in this area like they have for practicing surgical methods - 35 U.S.C. 287(c) (I think) is the place in the statute where this protection is granted. But that statute does not protect drug companies and other commercial entities from practicing patented methods, nor should big diagnostic companies be given a free pass on selling diagnostic tests and services because the end-product is human disease. This is true if only because there is no logical reason that such a policy should not extend to all living things, or all things living things depend upon. (You can see how the principle could get out of hand.)

So there is a consistent, logical policy position that diagnostic method claims (which, unlike business method claims are not a recent creature of patent law) have and should be patentable (even if we exempt physicians from infringement liability).

And if patriotism is the last refuge of the scoundrel, alleging financial interest as a motivation for someone disagreeing with you must be the last refuge of anyone without a sound argument to the contrary.

Thanks for the comment

[Gary Johnston]

Kevin:

But you don't have a sound argument. Regarding the disclosure thing, where is the evidence? I mean, what self-respecting journal is going to accept a manuscript disclosing a correlation between a disease/condition/trait, multifactorial or otherwise, and a marker (or panel of markers) which does not disclose the precise basis for the correlation, including the identity of the marker (or panel of markers)?

And to your other point, diagnostic method patents are a relatively recent phenomenon. Perhaps not as recent as business method patents, but pretty recent.

I know that you like to rip on Breyer for his dissent in LabCorp v. Metabolite (and Stevens and Souter for joining) as if it was some kind of wacky liberal, ivory tower-ish position, but have you ever read the Solicitor General's brief in that case? Don't forget that was under a Republican administration...

[Kevin E. Noonan]

Dear Gary:

I'm not suggesting this will be in a journal - I think the big risk is disconnecting the academia - startup - big co-progression that has defined this area for 30 years if there is no protection for the academia - startup piece. Big companies only need patents on what can be reverse engineered, and I think there are ways to skin the diagnostic cat (particularly in genomics) that would be next to impossible to reverse-engineer on the timeframe of patent expiry.

We'll be looking at when diagnostic patent method claims first arose and get back to you.

Finally, as I recall the Solicitor's opinion was that the Court shouldn't take the case, and they did anyway. But regardless of the Solicitor's position on the merits, political parties shouldn't matter - the issue should be what promotes disclosure (and a secondary issue of what protects startups from big companies; remember, IBM and Xerox didn't start the personal computer revolution, and no big pharma was first in biotech - if a small company or sole inventor can't protect their IP, it will hurt the rest of us much more than an improvidently-granted patent will).

Thanks for the comment.

[Gary Johnston]

Kevin:

Yes, the SG urged the Court to not grant the writ, but that is beside the point. The point is that a Republican, pro-business, anti-socialist administration believed the key claim to not be patent-eligible. So it's not just the liberal Breyer, the senile Stevens, and the totally out there Souter that had a problem with the patent. Actually, we know that Scalia had a problem with it too.

[Kevin E. Noonan]

Dear Gary:

And we don't know what Justice Sotomayor or the Chief Justice thinks. As for Justice Scalia, he has shown no indication that his substantial erudition extends to patent law.

Let's see what the Court does with Bilski and Prometheus before we speculate as to whether diagnostic method claims are patent-eligible. Until then, we both have our opinions.

Thanks for the comment.

[Gary Johnston]

Kevin:

Actually, we don't know what Kennedy, Thomas, Ginsburg, or Alito thinks either. I just think that when Breyer and Scalia agree on something, that's a pretty powerful indication of how the Court would rule.

I think we both know that Bilski is going to be decided very narrowly, with the Court rejecting the CAFC's test, but killing the application anyway (a la Rader).

So then it's up to Prometheus v. Mayo. The CAFC panel (which included a District Court) completely botched this case up, and the Court has to fix it.

I know that we fundamentally disagree on the legitimacy of these "determine and infer" patents, but I do appreciate that you post my comments just as if I agreed with every position you took. Keep up the good work.

[Gary Johnston]

Kevin:

Not to suggest that you don't have other things to do, particularly for paying clients, but did you ever look into when diagnostic/biomarker correlation method claims first started appearing? Certainly not an easy job. My guess is that they don't exist much, if at all, before the 90s.

[Kevin E. Noonan]

Dear Gary:

A search of "diagnosing" and "method" in the PTO patent database gets 4,431 hits from 1976 to the present, including:

4,081,334
4,080,265
4,038,145
4,010,738

The earliest use of "biomarkers" in a claim is USP 4,357,420 (1982) and 5,686,237 (1997). Some of this may have to do with nomenclature.

Thanks for provoking me to look.