Patent Docs

A Perspective on the Cost of the Myriad BRCA Gene Test

By Kevin E. Noonan --

One of the most compelling arguments in the gene patenting debate with the public has been the cost of the Myriad BRCA gene test:  $3,000 per test, a price that many without insurance coverage cannot afford.  The argument rarely is embedded within a comparison with other tests, and is presented as an absolute indication of Myriad's greed and the putative pernicious effects of permitting patents on such testing.  But an article in the New York Times published last Saturday sheds some light on the question in a way that might surprise anti-gene patenting partisans.

The article, "Variations on a Gene, and Tools to Find Them," by Anne Eisenberg, is concerned with gene testing of patient tumor samples to improve diagnosis and treatment.  It begins by noting the sea change that cancer genomics has effected on diagnostic criteria:  while in the past, cancers were characterized by tissue type and morphology, in recent years ("in the age of genetically informed medicine"), the identities of mutated or disordered genes provides more specific information that can be used to craft treatment strategies.  An example noted in the article is BRAF V600E (a mutation in the B-raf gene than changes a valine to an glutamic acid residue at amino acid 600 in the protein's amino acid sequence) in melanoma.  But the article also recognizes the complexities that this information creates, quoting Vanderbilt University oncologist Dr. William Pao that "[t]here are so many genes and so many mutations . . . .  The human brain can't memorize all those permutations."

Dr. Pao is highlighted in the article for his work in creating an online database, My Cancer Genome, which lists mutations found to be associated with different cancer types and therapies (experimental and FDA-approved) that can be used against these specific tumor types.  The article notes that the site "is maintained by 51 contributors from 20 institutions" and that users (physicians) are not charged for the service, the site being "supported almost entirely by [Vanderbilt U]niversity and by philanthropy."  This is not the whole story, of course, because (as stated in the article) "[b]efore doctors go to My Cancer Genome or a similar site, their patients must have a diagnostic test to find relevant mutations."  The advent of commercial genome sequencing services has made this testing "available to neighborhood doctors" after years when such tests were available "mainly to patients at large university cancer centers, and were often hard to interpret," according to Dr. Fadi Braiteh, an oncologist at Comprehensive Cancer Centers of Nevada in Las Vegas.

This is the point in the article that begins to have specific relevance to the issue of Myriad's BRCA testing costs.  Dr. Braiteh is quoted in the article as using a test, FoundationOne, from Foundation Medicine in Cambridge, Mass.  The cost:  $5,800.  Another example cited in the article is Genomic Health, which provides a test for determining the best chemotherapeutic options for patients with breast cancer.  The cost:  $4,290.  These costs are justified in the article by the successes they have enabled:  while admitting that the information doesn't help every patient, doctors are quoted as advocating the use of these tests, for example, because in one patient the doctors "were able to give a drug [] never used before for this mutation" that was effective in treating the patient's otherwise therapy-resistant cancer.

There are a few things that need to be considered from this information about these tests, not only that they are even more costly than the Myriad BRCA gene test.  First, these tests are given to individuals already diagnosed with cancer, and are used to direct treatment decisions.  Thus, there is little to no need to provide genetic counseling to the patients, or to convince insurers of the benefits of the testing -- these patients are already recognized as being sick, and any treatment that is effective will almost assuredly reduce the costs the insurers will need (or be required) to pay.  Also, the testing is being performed in 2013, 16 years after the BRCA gene patents were granted and Myriad began to develop genetic testing for the BRCA genes.  This type of genetic testing is now both widespread and accepted both by doctors and insurers (to some extent at least), public and private.  It must be remembered that in 1997 genetic testing was in its infancy, and companies like Myriad were under the burden to convince payors that the tests did the one thing that all insurers, public or private, require of such tests:  save them money in the long run, by identifying patients with a high probability of becoming ill and costing the insurers much more for treatment than the costs of prophylaxis.  Moreover, Myriad and like companies needed to convince doctors that the testing was worthwhile, and to establish a network of genetic counselors who could explain to healthy women that they were at much greater risk of developing breast or ovarian cancer than normal, under circumstances that resulted in empowerment from the information and not abject fear.  And in 1997, genetic sequencing technology was not as developed as it is now, and the mechanisms and techniques needed to minimize or eliminate the occurrence of false positives or negatives had not been conclusively established.

The question of whether $3,000 a test is what is required to provide an appropriate return on investment to Myriad's investors is beyond our scope, and the extent to which what Myriad, Foundation Medicine or Genome Health charge for its tests is an indictment of the U.S. healthcare system cannot be definitively determined here.  But it is clear that Myriad's costs are in line with what other genetic diagnostic test providers charge for their tests, and that the efforts to demonize Myriad for these costs is at best uninformed.  It remains to be seen whether the touted "$100 BRCA test" will be provided by those who perform this testing when Myriad's patents expire in the next few years (whether or not the ACLU prevails in its attempt to have the Supreme Court ban gene patenting).  The information in Ms. Eisenberg's article indicates that such an outcome is unlikely.

Myriad Genetic Database Under Siege

By Kevin E. Noonan --

With the U.S. Supreme Court set to consider the patent-eligibility of claims to isolated human DNA in AMP v. Myriad Genetics this morning, another aspect of Myriad’s control over BRCA testing technology is being contested.  As reported on Friday by Gina Kolata in the New York Times ("DNA Project Aims to Make Public a Company's Data in Cancer Genes"), a group headed by Dr. Robert Nussbaum, Chief of the Division of Genomic Medicine, University of California at San Francisco has started an effort to "recreate" Myriad’s database of mutations (in addition to those disclosed in its patents) that are predictive for increased risk of breast or ovarian cancer.

The genesis of this effort, termed Sharing Clinical Reports, stems from Myriad’s decision in 2004 to keep such information proprietary.  Myriad says its decision was based on misuse of the information in its database, which was intended for research use but was being used for patient diagnostics, a particularly sensitive area where such uncertainties can exist.  As a consequence of its patents restricting BRCA gene testing, Myriad has developed a proprietary database of such "new" mutations, including ones of "unknown significance" (i.e., that have not been associated with risk prognosis) as well as mutations having predictive capability.  (The Times article reports that the frequency of such "unknown significance" mutations was 40% in 1996, 20% in 2004 and 3% today, without attributing these figures.)  While there have been more than ten thousand basic research reports published in academic and medical journals since the time Myriad’s patents were granted, it is undoubtedly the case that there are undisclosed mutations known only to Myriad.

As reported in the Times, proponents of the effort are contacting physicians having patients who have received the Myriad test and thus have received a Myriad test report.  The requests are initially for the information to be donated, but the effort is sufficiently well funded that offers of thirty-three cents per report are being made.  (While that doesn’t sound like much, it might prove expensive if hundreds of thousands or millions of test reports were involved, as the article suggests.)  Reflecting the present informal nature of the effort, the article reports that the work of transmitting the patient test results is done by students "who need extra money" and that physicians who provide a minimum of 200 variants are rewarded with an Apple iPad mini.  Present funding is provided by Dr. Peter Kolchinsky, managing director of RA Capital Management in Boston (which should raise its own set of motivational questions in Ms. Kolata’s readers).

The article is, de riguer, replete with assertions that genetic researchers are "furious," and that Myriad is preventing second opinion testing (ironically, by the managing director of GeneDX, "a gene testing company working with Dr. Nussbaum").  [H]aving one company control the data for genes is contrary to the way medicine is developing," according to Heidi Rehm, a Harvard geneticist, who is reportedly also working with Dr. Nussbaum.  As detailed in the article, Dr. Rehm is apparently referring to "whole genome sequencing," which creates a situation where there are "22,000 genes" and "50 million variants" (which, even if true, is irrelevant to the subject under discussion, the two human BRCA genes and their mutations and variants).  And as might have been expected, the group is requesting the National Institutes of Health start a publicly funded database of all variants of all human genes studied.

Nonetheless, the group raises an important issue.  As has been reported here previously, one aspect of the gene patenting debate routinely ignored is that the genetic information is not patented.  Accordingly, the Sharing Clinical Reports effort is in no sense "illegal" (provided that the provisions of the Health Insurance Portability and Accountability Act, HIPAA, regarding patient confidentiality are not transgressed) nor should it raise patent infringement liability for the group.  If Myriad had amassed its database using proprietary means, or if trade secret misappropriation were involved, the company might have a way of preventing any effort to obtain the genetic data produced by such proprietary means.

Here, Myriad elected to enjoy the benefits of patent protection, wherein it could prevent anyone else from making, using, selling, offering to sell or importing its inventions.  In return, Myriad was required to disclose those inventions pursuant to the provisions of patent law that require a written description of the invention that enables a person of skill in the art to practice the invention after the patent(s) expire throughout the full scope of the claims, and to disclose the best mode of practicing the invention (the latter requirement having been significantly blunted by the Leahy-Smith America Invents Act).  And there is no allegation that Myriad did not properly satisfy these requirements, at least with regard to the mutations it had identified when it filed the applications that were eventually granted as its patents.

These disclosure requirements do not apply with regard to any "new" mutations contained in Myriad’s database, for the simple reason that they were unknown at the time these applications were filed.  Indeed, there is no requirement in patent law to supplement a patent specification unless new inventions are claimed.  But the advantages Myriad enjoys (and that "infuriate" the geneticists so) were procured based on the exclusivity provided by the patents, and these advantages will persist after the patents expire.  These facts raise the question of whether there is any aspect of this situation that would constitute "patent misuse," a concept used as a defense to a charge of patent infringement that involves (relevant to this discussion) extending patent exclusivity after the expiration of the patent term.  While the situation typically arises in patent licensing, it is reasonable to ask whether the policy drivers behind the defense have any relevance to the situation here, which can be expected to arise for any genetic diagnostic patents (exclusively or non-exclusively licensed), provided there is no obligation to make public or at least share new genetic information generated during the patent exclusivity period.

The answer is not to ban patents on isolated DNA (which are not infringed by genetic diagnostic methods in any event) or genetic diagnostic methods per se.  This is because the policy-based obligation, if any, arises from the patent grant itself and the quid pro quo of disclosure in exchange for such exclusivity.  Abolishing the exclusivity would abolish the obligation, and would provide incentives for companies to disclose as little information as possible.  Instead of identifying the mutations now sought by Dr. Nussbaum and his colleagues, for example, future (unpatented) genetic diagnostic methods could come merely with the information that a patient has a genetic mutation associated with an increased risk of a particular disease, with statistics on survival and treatment options and their success rates but no information on which mutation(s) were involved.  While this outcome would be even more inconsistent with the way genetic diagnostics is and has been developing than Myriad’s behavior bemoaned by Dr. Rehm in the article, what patients and their doctors want most are reliable diagnostic results, and a company offering such advanced diagnostics would be in a position to adopt a "take it or leave it" attitude regarding disclosure.  This possibility is even more likely for the majority of diseases that, unlike breast cancer and BRCA are multivariate and less readily reverse engineered.

These considerations are not amenable to judicial intervention (despite rumors that at least one of the legal proponents of the Myriad case is planning to file such a lawsuit).  Congress could intervene, but any bill would need to provide the right balance between return on investment (said to be more than $500 million by Myriad) and public access to information during and after the relevant patent term.  Any such attempt to legislate will also require less rhetoric and more problem solving than has been evident in the gene patenting debate, which in large part involves physicians demanding the right to freely infringe genetic patents in the name of patient rights.  Of course, none of these physicians is proposing to perform these tests for free, and that of course is one of the distinctions between these physicians and the researchers behind the 10,000 scientific research papers on the BRCA genes.  Regardless of the outcome of the Myriad case before the Supreme Court (which, no matter how it turns out, will have little to no effect on availability of genetic diagnostic testing for the BRCA genes), addressing the policy considerations involving human genetic diagnostics is something that will remain.  While the politics of confrontation generates headlines and contributions to those who paint themselves as patient champions, it has done and will do little to resolve these important issues.

(Once Again) It Ain't Necessarily So

By Kevin E. Noonan --

A large part of the debate on patenting genetic diagnostic method and isolated genes has revolved around the effects of such patents on what is loosely termed "personalized medicine."  Personalized medicine can be summarized as a dream/holy grail/GATTACA future of universal genetic information -- every infant having her genomic DNA sequence determined at birth and contained on a medical identity card, to determine what diseases she may get, what drugs she should not and even who she should or should not marry (or at least mate with).  It is the most recent of the promises of the biotechnology or genetic revolution, made possible (in theory) by the fruits of the Human Genome Project; advances in genomic sequencing technology (as described in The $1,000 Genome and elsewhere) have quickened the expectations surrounding the technology.  But many have begun to wonder why this genetic fruit is taking so long to ripen (see, for example, "How Bright Promise of Genetic Testing Fell Apart"), and a recent study published in Science Translational Medicine may provide some clues.

The article, entitled "The Predictive Capacity of Personal Genomic Sequencing," was published on April 2, 2012 by Nicholas Roberts, Kenneth Kinzler, Bert Vogelstein, and Victor Velculescu from the Howard Hughes Medical Institute at Johns Hopkins University Kimmel Cancer Center; Joshua Vogelstein from the Department of Neuroscience, Johns Hopkins University; and Giovanni Parmigiani from the Department of Biostatistics and Computational Biology, Dana Farber Cancer Center and the Department of Biostatistics, Harvard School of Public Health.  The paper presents the results of a bioinformatics study on monozygotic twin pairs, using whole genome sequencing (WGS) that was interrogated for 24 different diseases.  For 23 of the 24 diseases tested, the results were negative, i.e., uninformative results for 19 of the 24, with risk of 50-80% for disease as compared with the general population.  However, 90% of the tested individuals were alerted to "a clinically significant predisposition" to at least one disease thus reflecting a silver lining if not a rainbow from the data.

The paper notes that there is an estimate of three million sequence variants per person (K. A. Frazer et al.,  2009, "Human genetic variation and its contribution to complex traits," Nat. Rev. Genet. 10: 241-51); of these, thousands of genetic variants have been associated with human disease, including Mendelian traits (e.g., sickle cell anemia), SNPs (e.g., Huntington's s disease), or by genome-wide association studies (GWAS) (examples include familial pancreatic cancer and Miller syndrome).

The paper addresses the question of what the benefit of such information would be, defining "benefit" as "receiving information indicating that the risk of disease is increased or decreased to a degree that would alter an individual's lifestyle or medical management."  The authors recognize that it is impossible to assess these benefits generally, but monozygotic twins present the possibility to make this assessment:  as they have in many other instances, the identity of genetic information make it possible that diseases and other traits with a large genetic component should be experienced in common between twins:  "If one twin of the pair has a disease, then the probability of the other twin developing that disease is dependent on the genome whenever that disease has some genetic component."  However, the paper also notes that "[t]he general public does not appear to be aware that, despite their very similar height and appearance, monozygotic twins in general do not always develop or die from the same
maladies," citing Wong et al., 2005, "Phenotypic differences in genetically identical organisms: The epigenetic perspective," Hum. Mol. Genet. 14 Spec No 1, R11-R18, and "Identical Twins Not As Identical As Believed," ScienceDaily, reflecting a limitation in the predictive power of genetic disease assessment even between individuals having almost identical genetic complements.  (Interestingly, even monozygotic twins are not necessarily identical genetic copies of one another, there being copy number variants between them; Bruder et al., 2008, "Phenotypically concordant and discordant monozygotic twins display different DNA copy-number variation profiles," Am. J. Hum. Genet. 82: 763-71.)  The twin populations were selected from "the Swedish Twin Registry, Danish Twin Registry, Finnish Twin Cohort, Norwegian National Birth Registry and the National Academy of Science – National Research World War II Veteran Twins Registry."

The authors also define "heritability" as the difference between the incidence of disease in monozygotic twins compared with dizygotic twins, "reflect[ing] the average genetic contribution to disease" in the population of twins studied.  Averages not as informative as distributions in this regard, since a given average incidence of disease could reflect either "a small fraction of twin-pairs with genometypes [(i.e., a complete genomic DNA sequence from an individual)] conferring high genetic risk or a larger fraction of twin-pairs with genometypes conferring a moderate genetic risk."  This challenge is illustrated by an example:

Suppose a woman receives a whole-genome test result indicating that she has a 90% lifetime risk (the total risk over her entire life) of developing breast cancer.  She may decide to have a prophylactic double mastectomy to prevent this outcome.  Similarly, if the test indicated an 80% or even a 50% lifetime risk of developing breast cancer, she may consider mastectomy.  On the other hand, if the test indicated only a 14% risk of developing breast cancer, then mastectomies would be considered by very few women, given that most women today do not opt for prophylactic mastectomies even though the lifetime risk of developing breast cancer in the general population is 12%.

The authors adopt the threshold of a "positive predictive value" of 10%, meaning that 10% of patients with a "positive" test result are expected to develop a disease, according to Clarke-Pearson, 2009, "Clinical practice. Screening for ovarian cancer," N. Engl. J. Med. 361: 170-77.  However, for several diseases, including chronic fatigue syndrome, gastro-esophageal reflux disorder, coronary heart disease-related death and general dystocia, this threshold is inappropriate due in part to the prevalence of these diseases in the population; for these diseases the threshold is a two-fold higher risk of disease compared with the general population.  In addition to these diseases, the study assessed the risk for coronary artery disease, stroke, cancer (bladder, breast, colorectal, lung, leukemia, ovarian, pancreatic, prostate and stomach), thyroid autoimmunity, diabetes (types 1 and 2), Alzheimer's disease, dementia, Parkinson's disease, irritable bowel syndrome, pelvic organ prolapse, and stress urinary incontinence.

The bulk of paper set forth a mathematical treatment of these biostatistics that is beyond the scope of the discussion here; the results, on the other hand, are informative.  These include:

•  "The fraction of patients that would receive a positive test varies widely from disease to disease."
•  "The majority of patients (>50%) who would ultimately develop 13 of the 27 disease categories would not test positive, even in the best-case scenario."
•  "There were four disease categories -- thyroid autoimmunity, type I diabetes, Alzheimer's disease, and coronary heart disease-related deaths in males -- for which genetic tests might identify more than 75% of the patients who ultimately develop the disease."
•  "The fraction of individuals in the population who would receive positive test results for each disease is small."
•  For 22 of the 27 disease categories studied, "a negative test would not indicate a risk that is less than half that in the general population, even in the best-case scenario" (which is probably not sufficient to warrant changes in behavior, lifestyle, or preventative medical practices).
•  An exception is Alzheimer's disease, where a negative test "could indicate as little as a ~12% relative risk of disease compared to the entire twin cohort . . . .  Knowledge of such a reduced risk might be comforting and relieve anxiety, particularly to those with a family history of Alzheimer's disease."
•  ">95% of men and >90% of women could receive at least one positive test result."
•  Many of these results represent the best-case scenarios and thus the true benefits of genetic disease testing may be overestimated.

The authors' conclusions are a dose of cold water on the hopes and expectations of many in the field (and even more laypersons outside the field, including policymakers, judges, and even Supreme Court justices):

[O]ur results suggest that genetic testing, at its best, will not be the dominant determinant of patient care and will not be a substitute for preventative medicine strategies incorporating routine checkups and risk management based on the history, physical status and life style of the patient.

The authors best state the significance of an accurate assessment of the likelihood of predictive genetic testing:  "Recognition of these merits and limits [for genetic diagnostic testing] can be useful to consumers, researchers, and industry, as they can minimize unrealistic expectations and foster fruitful investigations."  These are words policymakers should no doubt heed when considering changes to established patent and other policies based on perhaps unrealistic prospects for a brighter genetic future.

Forbes Calculates Average Drug Development Cost at $4-$11 Billion

By Donald Zuhn --

Last week, Forbes reported that the development costs for an average drug (produced by a major pharmaceutical company) are at least $4 billion, and as much as $11 billion ("The Truly Staggering Cost Of Inventing New Drugs").  The article, by Forbes science and medicine writer Matthew Herper, notes that the drug industry pegs average drug development costs at $1 billion, and that Bernard Munos of the InnoThink Center for Research In Biomedical Innovation, adjusting for current failure rates, arrives at an estimate of $4 billion.  Seeking a more rigorous estimate, Mr. Herper and Forbes writer Scott DeCarlo combined Mr. Munos’ drug approval counts with the research and development spending for a dozen major pharmaceutical companies, as reported in annual earnings filings over the past fifteen years (pulled from a Thomson Reuters database using FactSet), and adjusted the resulting figures for inflation.  Their calculations showed that of the twelve pharma companies, AstraZeneca spent the most R&D money per approved drug (nearly $11.8 billion) and Amgen spent the least (almost $3.7 billion).  The other companies on Forbes' list were Novartis, Bristol-Myers Squibb, Merck, Abbott Laboratories, Eli Lilly, Johnson & Johnson, Pfizer, Roche, Sanofi, and GlaxoSmithKline.  The number of drug approvals, R&D spending per drug approval, and total R&D spending for each of the above companies can be found in the Forbes article.

Pfizer's Lipitor: A New Model for Delaying the Effects of Patent Expiration

By James DeGiulio --

Pfizer's exclusive right to sell atorvastatin, the active pharmaceutical ingredient in the blockbuster cholesterol drug Lipitor, ended yesterday, November 30, the day generic competitors are licensed to enter the market as agreed upon during settlement of past patent litigations.  It was a day the pharma giant has been dreading for quite some time.  This dread is well founded:  on average, once a drug goes off patent, the patent holder's market share typically falls by a staggering 89% in the first 6 months.  However, thanks to several innovative strategies, Pfizer's Lipitor, which has enjoyed a commanding 40% share in the cholesterol drug market, stands a good chance of being the exception to this trend, according to a recent article in The New York Times ("Facing Generic Lipitor Rivals, Pfizer Battles to Protect Its Cash Cow").  The sector outlook appears to be optimistic -- investor studies have upgraded Pfizer's rating, and expect the company to retain much of its market share even now that the patent has expired.  The strategies implemented by Pfizer, assuming they survive governmental scrutiny, may provide a model for brand companies facing blockbuster drugs going off-patent.

Pfizer has employed a multi-pronged approach to retain its position in the cholesterol market for these next critical 180 days.  First, Pfizer has several authorized generics deals in place.  For example, an authorized generic from Watson Pharmaceuticals went on sale yesterday.  However, Watson's drug is manufactured by Pfizer, and Watson has to give about 70 percent of its profits to Pfizer.

Perhaps more importantly, Pfizer has dropped the price of Lipitor considerably, and continues to aggressively discount the drug to match any price and maintain brand loyalty.  Pfizer's prices are currently undercutting most of the imminent generic competition on price.  Pfizer has also made it known that its new discounts can easily be adjusted to beat any responsive reduction in the expected generic pricing.  Pfizer has a huge margin because of the relatively low cost of materials for Lipitor.  And with their manufacturing and volume advantage over generic competitors who are just getting off the ground, Pfizer can afford to drop the price considerably and continue to profit off of Lipitor.

Pfizer is also providing incentives to customers to stay on the brand drug.  They have offered a reduced co-payment of $4 a month versus the $10 customers would pay for many generic prescriptions.  Pfizer's program, called "Lipitor for You," offers a $4 co-payment card and direct delivery of Lipitor.  The program is limited to privately insured customers.  However, the discounts can also be applied to many Medicare prescription drug plans, which have agreed to dispense Lipitor even if patients ask for generics.  Pharmacy benefit management company CVS/Caremark has notified pharmacies that the generic form of Lipitor would not be covered for 29 prescription drug plans it manages for Medicare Part D.  Instead, brand Lipitor will be filled, but only a generic co-pay will be applied.  Any prescription claims for generic atorvastatin will be rejected.  Pfizer, the benefit managers and some insurers insist all of the new discount will be passed along to consumers, companies and other payers.  While this remains to be seen, CVS/Caremark has already lowered its premiums for the government and Lipitor users.

Pfizer's tactics to protect its market share have naturally drawn scrutiny.  Many of these strategies may call into question the incentive system created to foster the development of generic drugs, as they arguably extend Pfizer's patent monopoly beyond its expiration.  The Federal Trade Commission and several Senators are investigating Pfizer's agreements with pharmaceutical benefit manager and generics companies.  Senators Max Baucus (D-MT), Chuck Grassley (R-IA) and Herb Kohl (D-WI) have written letters to Pfizer and those who have aligned with Pfizer, asking for information about agreements aimed at limiting the sale of generic atorvastatin.  According to these letters, the Senators believe that "just about everyone wins except consumers and taxpayers."

Not all companies have aligned with Pfizer -- some companies have rejected their advances.  Express Scripts and Medco Health Solutions, both large pharmacy benefit managers, are recommending that its clients not accept Pfizer's deals under the reasoning that it could cost them more in the long run.  However, these companies will still use Lipitor as a "house generic" because Pfizer has guaranteed to match the price and assured a supply.

Late yesterday, Ranbaxy Laboratories, the first filer against several patents covering Lipitor, was granted FDA approval for its avorstatin calcium, despite a federal investigation into falsifying records resulting in the production and sale of medications that failed to meet FDA standards.  Ranbaxy has a deal with Teva Pharmaceuticals, which already sells a generic Lipitor in Canada, to help supply the drug.  Once Ranbaxy's 180-day initial generic exclusivity has expired and all generics can produce avorstatin calcium, it may be inevitable that Pfizer finally loses its considerable market share.  Pfizer expects up to eight generics to compete for market share after the 180-day exclusivity period expires.

WFU Law Professor Says Federal Circuit Failed as "Keeper of the Constitution" in AMP v. USPTO

By Donald Zuhn --

In an article published in The Huffington Post on Sunday, Wake Forest University Law Professor Simone Rose accuses the Federal Circuit of failing in its duty as "keeper of the Constitution" with respect to the Court's July 29 decision in Association for Molecular Pathology v. U.S. Patent and Trademark Office.  Noting her background as a former registered patent attorney, Professor Rose writes that one question came to mind as she read the majority and concurring opinions, namely "[h]ow can the court allow chemical differences to supersede biological equivalence when the specific utility of the invention, namely detecting mutations linked to breast and ovarian cancer, depends on biological identity?"  She argues that "[c]hemically modifying an isolated gene [i.e., "breaking . . . chemical bonds during the isolation process"] does not alter its biological heart (nucleotide sequence)," and that "[a]ccurately detecting BRCA mutations would be impossible without this biological identity."

As for the focus by the majority and concurring opinions on long-standing USPTO practice in issuing gene patents and on the impact an affirmance would have had on the biotech industry, Professor Rose (at left) contends that while "promoting innovation is a laudable goal, the Federal Circuit's broadening of what constitutes patent-eligible subject matter missed the bigger Constitutional target."  According to the Professor, the Constitution's Patent Clause requires that the granting of exclusive rights under the patent system be balanced against providing access to basic knowledge.  She therefore concludes that "[p]atenting products of nature such as isolated genes and gene sequences prevents access to these basic research tools during the term of the patent," and "[t]his impedes rather than promotes progress and is therefore in direct violation of the IP clause."

Professor Rose argues that federal courts have an obligation, as "keepers of the Constitution," to ensure that their analysis of 35 U.S.C. § 101 and controlling case law is "in harmony with the Constitutional mandate to promote progress of the useful arts."  She contends that in AMP v. USPTO, "[t]he Federal Circuit should have taken this role seriously and upheld the lower court's invalidation of the BRCA isolated genes and gene sequence patents as patent-ineligible subject matter."

Interestingly, for Professor Rose, the end result of the invalidation of Myriad's patents would be Congress weighing in on the issue of gene patenting.  Unlike the majority and concurring opinions, which state that if the law is to be changed, it is up to Congress and not the courts to change it, Professor Rose believes that a finding by the Federal Circuit of invalidity would have permitted (or encouraged) Congress to step in and "legislate a new 'Constitutional' framework of exclusive rights for this subject matter."  Looking forward, the Professor says that she remains "hopeful" that the Federal Circuit sitting en banc or the Supreme Court "will be mindful of its role as the keeper of the Constitution and interpret the Patent Act's subject matter limitation to exclude the BRCA genes as patent-ineligible products of nature."  She argues that an "appropriate legislative dialogue" on a solution that balances access and innovation can only begin after the courts determine that gene patents should be excluded as patent-eligible subject matter.

Securing Customer Loyalty Recommended to Avoid Patent Cliff

By James DeGiulio --

Brand pharmaceutical companies are expecting a serious financial fallout sometime over the next few years, when several blockbuster drugs lose patent protection, commonly known as a "patent cliff."  The loss in revenue could be substantial.  From 2010 to 2013, brand pharmaceutical companies are projected to lose a total of $137 billion to patent expiration and generic competition.  Brand pharmaceuticals are bracing for decreased profits, and always working toward preventing patent cliffs from occurring again in the future.  While patent expiration is of course a primary cause, it is not the only cause, at least according to a recent Bloomberg Businessweek article ("Pharma Needs an Innovation Intervention").  Brand pharmaceutical companies can also place blame on not developing a customer loyalty base and not fully addressing customer needs.

In the article by G. Michael Maddock and Raphael Louis Vitón, the authors recommend that brand pharma revise its current business model to mitigate the dramatic financial effects of patent expiration.  The authors note that it takes around 8 years to get regulatory approval for a new drug, and the patent covering the drug lasts only 17 years at maximum, resulting in only 9 years of exclusivity.  While these 9 years can be extremely profitable, once the drug goes off patent, the patent holder's market share typically falls by a staggering 89 percent in the first 6 months.  The authors point to the well-publicized situation with Lipitor, an $11 billion-a-year cholesterol drug over which Pfizer will lose patent protection early next year.  It remains extremely difficult to make the research and development process move much faster, so limited patent protection and patent expiration will always be problematic.  Indeed, despite having spent a total of $64 billion in 2010, the industry received approval to market only 21 new drugs.

To try and mitigate the loss in market share to generic versions of the brand drugs, the authors suggest that the pharmaceutical industry take a new approach that shifts focus away from viewing its customers as mere "druggable targets."  Instead, there should be more emphasis placed on better understanding customers' needs, locating target insights, and building brand loyalty.  In the article, the industry is accused of merely "inventing" thus far, when it really needs to be innovating.  Consumer-driven companies like Starbucks, Apple, and Southwest Airlines are presented as examples of what pharma companies should strive to be, pointing out that none of these companies truly sell a superior product over its competitors.  Instead, these companies focus on understanding their customers and their needs better than their competitors, and thus enjoy the maintenance of market share in the absence of a substantially better product.

For brand pharmaceuticals, if customer loyalty could be cultivated to the level of Starbucks and Apple, the expiration of a patent would not be the inevitable end of profitability it is to most brand drugs.  Admittedly, it is impossible not to lose some market share to generics once brand drug patents expire, particularly due to the involvement of third-party insurance restrictions.  However, the authors note that the loss of 89 percent of the market share is far too large to sustain pharma's current business model.  The authors propose that if Pfizer could keep even 50 percent of the revenue that Lipitor currently generates by establishing some level of customer loyalty, the upcoming patent cliff would not loom nearly as large.

Since customer loyalty may not be readily obtained for pharmaceutical companies, partnerships with companies that already have a strong customer base may help facilitate its building.  The authors present a hypothetical example of a "Readi-Clinic at Wal-Mart, Powered by Pfizer," where Pfizer would provide the drugs that the patients at the Wal-Mart clinic would be prescribed.  In addition, Pfizer also could devise a service model that would help customers change their behavior and habits with the goal of achieving better health results than could be obtained by relying only on pills.  In this hypothetical example, Pfizer and Wal-Mart could brand the combined service and product offering, which would maintain value even after the patent on a drug expires and the generic comes to market.  Thus, the value of the drug would not depend completely on patent exclusivity for value, as nearly all of the brand drugs do under the current system.  There is no doubting the maximum value that patent protection provides brand drugs, and patent protection will always be a key component of drug discovery and commercialization.  But as long as brand pharmaceutical companies depend wholly on patent protection for drug value, there will always be the threat of patent cliffs in the future.

The More the Merrier: The Journal Joins the Times in Complaining about Patents

By Kevin E. Noonan --

The anti-patent virus seems to have moved across town in Manhattan, from the 8th Avenue editorial offices of The New York Times to 6th Avenue, from the aristocratic edifice ruled by the Sulzberger family to the business environs of the hardscrabble upstart Aussie, Rupert Murdoch at The Wall Street Journal.  The theme (and even some of the rhetoric) are the same, but instead of an erudite academic, we have Peter Huber (below), senior partner of Kellogg, Huber, Hansen, Todd, Evans & Figel and fellow of the Manhattan Institute, giving us his views on what is wrong with the U.S. patent system.

The piece, entitled "Digital Innovators vs. Patent Trolls" and published on Monday, concerns the Supreme Court's consideration of the Microsoft v. i4i appeal, and as has been done elsewhere, attempts to create a dichotomy between productive, innovative companies and non-practicing entities, using the pejorative term "patent troll" to describe them.  The dichotomy is false as a general rule (although there are certainly NPEs that aggregate patents from failed companies and assert them; what the piece does not address is the reluctance of some established companies to honor patent rights and license innovation rather than expropriating it, and the extent to which this behavior contributes to the difficulties that cause innovative companies to fail).

Mr. Huber finds significance in the Supreme Court's interest over the past ten years in patent law, after a hiatus that permitted the Court of Appeals for the Federal Circuit (created by Congress to harmonize U.S. patent law) to get its institutional legs under it.  What is unmentioned and perhaps forgotten is the motivation for the creation of the Federal Circuit:  the difficulties U.S. inventors and companies had at a time when foreign competition was threatening the U.S. economy and preeminence in the world.  While one of the two cases Mr. Huber mentions (KSR Int'l Co. v. Teleflex Inc.) involved a perception (created by the lawyers who crafted the certiorari petition) that patents on "obvious" inventions were being improvidently granted, most of the cases under Supreme Court review have involved harmonizing Federal Circuit precedent with other regional courts of appeal on standards for declaratory judgment actions (MedImmune, Inc. v. Genentech, Inc.) and injunctions (eBay Inc. v. MercExchange, L.L.C.), as well as the scope of the appellate court's supervisory role over the U.S. Patent and Trademark Office (Dickenson v. Zurko), and in patent matters having little to do with patent quality, such as the extraterritorial extent of U.S. patents (Microsoft Corp. v. AT&T Corp.), patent exhaustion (Quanta Computer, Inc. v. LG Electronics, Inc.) and how far the statutory safe harbor for preclinical activities protect potential infringers (Merck KGaA v. Integra Lifesciences I, Inc.).  Indeed, two cases most clearly exemplifying the differences between the Supreme Court and the Federal Circuit (Warner-Jenkinson Co. v. Hilton Davis Chemical Co. and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.) had to do with the doctrine of equivalents, which actually extends the scope of the patent right beyond the literal meaning of the claims and in which, surprise!, the Supreme Court reversed efforts by the Federal Circuit to limit application of the doctrine in favor of narrower patents.

So while there is the perception that "poor quality" patents are being granted, fueled in large part by big companies who would rather not be bothered respecting the patent rights of small ones, Supreme Court decisions are not the cause of it.  Indeed (although Mr. Huber could not have anticipated it), the Supreme Court appeared unimpressed by the idea, advanced by Microsoft, that lay juries should be permitted to overrule the considered opinion of the Patent Office using a preponderance of the evidence standard for invalidity.  Although the Court seemed more receptive to the idea in cases where the Office did not consider the art, the Justices also seemed less concerned than Microsoft that juries could understand that the quantum of evidence needed to constitute "clear and convincing" evidence could be less for invalidity arguments based on such unconsidered art.

In places Mr. Huber sings from the same hymnbook used across town at the Times, that examiners are overwhelmed and cannot properly do their jobs, and that it is only in the fire of litigation that the validity of patents can be properly assessed.  The force of this argument is blunted, however, by the fact that "only 2% of patents end up in court," and while some of this is due to licensing and settlement rather than litigation, the statistic certainly implies that patents are not clogging court calendars.  Mr. Huber seems to think that patent examiners are less skeptical of patentability than judges or juries; in reality, examiners in the Office operate under no presumption of validity, and construe claims as broadly as they can reasonably be construed, which tends to expand the scope of relevant prior art and make it less likely that a patent will be granted.

Ironically, in view of recent charges of ad homimen argument raised by a suggestion that actual experience could be useful in making and assessing arguments about patent quality, Mr. Huber's article advances the argument that one reason patent quality is stifling innovation is that the percentage of patent cases being heard by juries has increased from one in seven in the 1980's to seven in ten today, and in particular that many of those juries sit in the Eastern District of Texas (where "[a] patent is property, good Texans believe in property rights, and that pretty much settles it").  "Masterminds" behind these lawsuits hire lawyers who are "happy to switch from PI to IP," these attorneys being "local" counsel who "supply the neighborly face in the courtroom."  Ad hominem, indeed.

Mr. Huber also believes that the fact that the Office is issuing 4,000 patents a week is another indication of poor quality.  An alternative explanation is that we live in the most technological age since the Industrial Revolution, that emerging economies in China and India are beginning to seek U.S. patent protection for their inventions, that the Office has hired almost 6,000 examiners in the past 5 years and that the Office spent about 4 years denying patents (the allowance rate shrank from about 60% to about 42%), and that those applicants who weathered that storm are now getting patents allowed; the "bubble" is much more likely to be the result of these forces than that the entire examining corps has decided to "allow, allow, allow" instead of performing their duties substantially as they always have.

The end of Mr. Huber's piece invokes the specter of contingency fee cases, which are relatively rare in patent infringement litigation, and chides "members of the business community" who support patents and has even harsher words for "some conservative pundits [who] applaud the trolls, believing that this is how the market moves private property into the hands of the people who value it the most."  The piece ends predictably:

The issue isn't whether intellectual property rights should be enforced, it's whether we have a reliable process for working out who really supplied the intellect.  We don't.  A system that issues and upholds junk patents will devalue intellectual property much faster than one that scrutinizes patents more carefully and enforces only the good ones.

But the issue is precisely whether intellectual property rights should be enforced or ignored, because there will always be a sector of the business community (although recently it always seems to be the same sector) that will believe (and try to get others to believe) that they are the only repositories of "innovation" and that anyone (especially anyone without their economic resources) who asserts rights in their own inventions is a troll.  Once again, it ain't necessarily so.

More Patent Nonsense from the New York Times

By Kevin E. Noonan --

The New York Times is at it again, proselytizing on its OpEd page about patents and how bad they are.  This time the topic is the Supreme Court's upcoming argument in the Microsoft v. i4i case, involving the standard for determining whether the U.S. Patent and Trademark Office should be second-guessed by a lay jury.

Under current law, the standard for assessing whether the USPTO has improvidently granted a patent is by "clear and convincing evidence," which is higher than the "preponderance of the evidence" standard typically employed in civil trials.  The rationale for the higher standard is that the USPTO is entitled to deference in its area of expertise.  The question in the i4i case is whether that deference is appropriate under circumstances where the Patent Office has not considered art raised by a defendant in asserting invalidity.  It is a provocative argument, and one that the Supreme Court has indicated an inclination to approve, for example in KSR Int'l Co. v. Teleflex Inc.

In the article, entitled "Patently Obvious" the author, Professor Douglas Lichtman (at left) from the UCLA Law School, evinces no appreciation for the subtleties of the issues, involving as it must patent law, administrative law, and the burdens on a private defendant in establishing that an executive agency has erred in the performance of its duties.  All of these issues and others will no doubt inform the Court's opinion, but Prof. Lichtman would have us believe this is just another example of defects in a U.S. patent system that routinely grants "bad patents."  In his analysis, juries are "discouraged" from questioning a patent's validity, meaning that "all too often . . . dubious patents are nevertheless enforced."  This, of course, "inhibits innovation," he says, neglecting to mention that frequently it is the accused infringer who "inhibits innovation" by attempting to expropriate truly innovative technology from those who actually invent it.

Keeping with the theme of "bad patents," Prof. Lichtman asserts that the USPTO cannot possibly perform its duties, due to the number of new patent filings each year and the lack to time patent examiners have to perform their duties.  The cogency of the first argument is diminished by the fact that the same argument has been made for at least ten years, well before the recent backlog of pending applications became an administrative nightmare.  The second argument has more heft, but Prof. Lichtman operates under the mistaken impression that patent examiners have a total of 17 hours to perform their examination, "typically spread over two or three years . . . interspersed with work on hundreds of other open files."  The 17-hour figure is accurate, but only for shorter and less complex applications.  So while it is true that more examiners are needed to devote sufficient time to the examination process (a fact well-appreciated by the Office, which has hired thousands of new examiners over the past six years), the idea that the Office is a "rubber stamp" for patent applicants is ludicrous.  "[I]n practice, even the best examiners are so overwhelmed and so poorly informed that the benefits of their expertise are fully dissipated," according to Prof. Lichtman.  But in situations when that is the case, examiners refuse to grant patents, because the burden is always on the applicant to convince the examiner that her patent application should be granted under the appropriate statutory requirements.

This is something Prof. Lichtman might appreciate if he had any experience with the patent system outside opining on it from academe.  According to his biography, he graduated from Yale Law School in 1997, spent 10 years at the University of Chicago Law School, and since 2007 has been at UCLA.  No matter how intelligent Prof. Lichtman may be, there are some things that require actual experience to understand, and on that score the Professor is woefully lacking.

This is further illustrated by allegations in the piece regarding the ex parte nature of patent examination.  "The only parties" involved in prosecution are "the patent applicant and the applicant's lawyers," Prof. Lichtman notes, contrasting the situation with litigation where a patentee is faced with a motivated adversary.  What he neglects to mention in the equation are examiners on the one hand, who do not want to grant patents improperly, and the strictures of the rules of practice before the Office on the other hand, which require good faith and candor in an applicant's dealings with the Office, with the threat of an inequitable conduct finding if such candor is not maintained (a finding that renders the entire patent unenforceable against any infringer should it be made).

The philosophical basis of Prof. Lichtman's views are set forth in his penultimate paragraph:

If the current approach were abandoned and juries were instead given real freedom to review patent validity, not much would change at the Patent Office.  Examiners would still evaluate the validity of patent applications and document their views.  And, in the event of litigation, those views would still be admissible in court.  The key difference would be that the examiner's view would then rise or fall on the merits, rather than enjoying substantial deference from the jury.

Actually, in that event, real chaos would ensue, as we effectively substituted a layman's views for expert ones, and the value of patents and innovation would suffer.  That would be good for companies who could benefit from the inventions of others without having to compensate them.  (Similar arguments are raised by those who would rather exploit university research without the bother of complying with the Bayh-Dole Act.)  But it would not be good for "genuine innovation," which Prof. Lichtman professes to value.

In the i4i case, the Supreme Court may very well decide that patentees and the Patent Office do not deserve the higher level of deference for art not considered by the Office during patent examination.  Or it may recognize that such a decision would implicate all other administrative agencies, and permit disgruntled citizens to challenge every agency action based on "evidence" not considered during agency review (and the costs that may ensue in encouraging manipulation of when such "evidence" is or is not presented during initial agency review).  In any case, Prof. Lichtman's article becomes just another example of how certain academics and their industry supporters are ready, willing, and able to take any opportunity to tell the public that the American patent system is broken.  It ain't necessarily so.

George Will on Innovation

By Kevin E. Noonan --

George Will, conservative icon, wrote an Op-Ed piece in The Washington Post last week extolling the virtues (and the necessities) of innovation and government support for it ("Rev the scientific engine").

He takes issue with some of his conservative brethren that, in view of what he terms the "excesses" of the various economic stimulus packages of the past few years, now oppose government expenditures that would support "innovation."  What America needs is "internal improvements," he says, in the form of support for scientific and engineering research and education.  He notes the decline in such support in the form of declining federal government support for research in engineering and the physical sciences, which dropped by more than 50% between 1970-1995 (which he characterizes as "America has been consuming its seed corn") and state support for science education, which was at its lowest levels since before Ronald Reagan was President before the economic meltdown at the end of the Bush administration.  (Curiously he fails to mention that the American technological Renaissance occurred during the Clinton administration.)  He also notes that countries like South Korea (38%) and China (47%) award a far higher percentage of their undergraduate degrees in science than does the U.S. (16%).

He argues that "[t]he prerequisites for economic dynamism are ideas" in this century, as much as roads and canals were necessities earlier in our history.  However, he sees a risk in an era of ("curdled") populism, that there will be political resistance to supporting the "elites" (at least scientific ones) that are responsible for the breakthrough discoveries that must be made for research to translate to economic benefits.  This is because "[n]inety-nine percent of the discoveries are made by 1 percent of the scientists," he says, citing Nobel Laureate Julius Axelrod.  As a consequence, as part of making intelligent, pro-prosperity choices, Mr. Will argues that Congressional Republicans should be "defending research spending that sustains collaboration among complex institutions -- corporations' research entities and research universities."  This is because "[r]esearch, including in the biological sciences, that yields epoch-making advances requires time horizons that often are impossible for businesses, with their inescapable attention to quarterly results."

Along the way he cites Margaret Thatcher and Abraham Lincoln (who was, after all, a Republican), but most tellingly he cites Richard Levin from Yale for an important economic point:  "Would Japan's growth have lagged since 1990 'if Microsoft, Netscape, Apple and Google had been Japanese companies'"?  Culturally, the last twenty years have seen the world change from one in which everyone had a Walkman® to one where everyone has an iPod®, and where Amgen, Genentech, Biogen-Idec, and dozens of other U.S. companies drove the biotechnology revolution.  Mr. Will credits investment for driving this prosperity, and in citing Lincoln he acknowledges (however tacitly) the importance of patents in supporting such investment.  His point is not to defend the patent system but to support government support for research; unstated but nonetheless true is that one cannot thrive without the other.

The Financial Times' Take on Gene Patenting

By Kevin E. Noonan --

The staid Financial Times (London) has an article today on the gene patenting debate, and while there are things to criticize in it, the article (perhaps predictably) takes a carefully measured, dispassionate (and welcome) tone ("Who steals the gene from off the common"; free registration required).

The paper's conservative bona fides are established on its website:

First published in 1888 as a four-page newspaper, the Financial Times' initial readership was the financial community of the City of London.  The Financial Times soon established itself as the sober but reliable "stockbroker's Bible", with its only rival being the slightly older and more daring Financial News.  In 1893, the FT turned salmon pink -- a masterstroke that made it immediately distinguishable from its competitor.  From their initial rivalry, the two papers merged in 1945 to form a single six-page newspaper.  The Financial Times brought with it a higher circulation, while the Financial News provided enormous editorial talent.

And it is with a "sober" voice that the article by James Boyle, William Neal Reynolds Professor at Law, Duke Law School addresses a frequently emotional subject.  He cites critics of gene patenting as describing a "'genetic land grab' that promised to privatize the common heritage of mankind," and characterizes their arguments as "frankly moral, protesting the hubris and in some eyes, heresy, of claiming to own the human genome."  He contrasts this with arguments that "patents over genes [are] necessary to spur investment and jump start biotech innovation."  And he includes the third part of the debate, whether gene patents "spur innovation" or slow it, by "introducing a tangle of property rights into the most fundamental building blocks of research science."

Although evenhanded, the piece suffers from the common misconception that genetic information is patented (Judge Sweet's view), rather than isolated nucleic acids themselves as chemical compounds (which, despite Judge Dyks' recent pronouncements, has been the Federal Circuit's view).  This deficiency also informs the article's discussion of what the author calls a "new consensus," patterned on the recent publicity regarding the Alzheimer's Disease Initiative.  As previously reported in The New York Times, this is an effort by the National Institutes of Health joined with academic and "commercial" researchers "to unlock the secrets of that debilitating disease."  The key development, cited in this article as well as the original Times piece, was that the data from the collaboration would be made public "immediately," and that "no one would own the data" (and no one would file any patent applications, although "private companies would ultimately profit from any drugs or imaging tests developed as a result of the effort").  Professor Boyle hails this development as one where "all parties . . . are better off."  He attributes (without attribution) to private companies "who had watched their drug pipelines dry up" the fear that "the old model of in-house development and jealous guarding of data" would not be able to "unlock such complex biological mysteries" as the motivation for joining the initiative.

Perhaps.  It is also good to remember that a great deal of the initial research from the Initiative (like much initial research) was unlikely to lead to any patentable subject matter in the first place.  Patents protect inventions, not data.  As the Federal Circuit said in Ariad v. Eli Lilly:

Ariad complains that the doctrine disadvantages universities to the extent that basic research cannot be patented.  But the patent law has always been directed to the "useful Arts," U.S. Const. art. I, § 8, cl. 8, meaning inventions with a practical use, see Brenner v. Manson, 383 U.S. 519, 532-36 (1966).  Much university research relates to basic research, including research into scientific principles and mechanisms of action, see, e.g., Rochester, 358 F.3d 916, and universities may not have the resources or inclination to work out the practical implications of all such research, i.e., finding and identifying compounds able to affect the mechanism discovered.  That is no failure of the law's interpretation, but its intention.  Patents are not awarded for academic theories, no matter how groundbreaking or necessary to the later patentable inventions of others.  "[A] patent is not a hunting license.  It is not a reward for the search, but compensation for its successful conclusion."  Id. at 930 n.10 (quoting Brenner, 383 U.S. at 536).  Requiring a written description of the invention limits patent protection to those who actually perform the difficult work of "invention" -- that is, conceive of the complete and final invention with all its claimed limitations -- and disclose the fruits of that effort to the public.

That research hypotheses do not qualify for patent protection possibly results in some loss of incentive, although Ariad presents no evidence of any discernable impact on the pace of innovation or the number of patents obtained by universities.  But claims to research plans also impose costs on downstream research, discouraging later invention.  The goal is to get the right balance, and the written description doctrine does so by giving the incentive to actual invention and not "attempt[s] to preempt the future before it has arrived."  Fiers, 984 F.2d at 1171.  As this court has repeatedly stated, the purpose of the written description requirement is to "ensure that the scope of the right to exclude, as set forth in the claims, does not overreach the scope of the inventor's contribution to the field of art as described in the patent specification."  Rochester, 358 F.3d at 920 (quoting Reiffin v. Microsoft Corp., 214 F.3d 1342, 1345 (Fed. Cir. 2000)).  It is part of the quid pro quo of the patent grant and ensures that the public receives a meaningful disclosure in exchange for being excluded from practicing an invention for a period of time.  Enzo, 323 F.3d at 970.

And it is also well to remember that the reason for the extensive collaboration between scientists (who heretofore guarded their pre-publication Alzheimer's disease research results just as jealously as any commercial enterprise) is precisely because Alzheimer's disease has proven so intractable.  In today's New York Times is an article bemoaning the lack of progress at developing an effective treatment for the disease, in the face of 30 years effort (and 10 years of that same Alzheimer's Disease Initiative so praised by Professor Boyle).  So while it is evident that at least some of the participants were happy (and self-satisfied) to paraphrase Quincy Jones by proclaiming that they "left their intellectual property at the door," it is less evident that anything of commercial value (or any intellectual property) was put at risk by what was publicly disclosed by the Initiative.  (Recognition of this reality explains as well as the Professor's speculation does why commercial entities were willing to participate in the Initiative.)

Being the Financial Times, the article is quick to point out that "[t]he idea is not to give up property rights," because "these will be essential in the development of therapies down the line."  Rather, Professor Boyle contends that "science -- and commerce -- will benefit from the establishment of a pre-competitive commons, a pool of information from which all can draw," using the NIH as an "honest broker."  As evidence of a trend, he cites the Bermuda Accords guiding the public prong of the Human Genome Project, the Sage Bionetworks project, as well as the Science Commons (which organization had Professor Boyle as one of its founders).  He suggests that the economic tools exist to ascertain the best ways to "jump-start commercial innovation" while at the same time recognizing that the task of deciding where sharing should end and privatization and property rights begin is complex.  Refreshingly, he says that this enterprise "is not an ideological war but a pragmatic process of design."

The article charmingly analogizes the gene patenting debate to enclosure of the English commons over 500 years ago, and in doing so returns the analogy from the "anticommons" rhetoric that usually accompanies discussions of this debate.  The article begins and ends with part of a poem regarding this ancient argument:

The law locks up the man or woman
Who steals the goose from off the common
But leaves the greater villain loose
Who steals the common from off the goose
And geese will still a common lack,
Til' they go and steal it back.

However the gene patenting debate is resolved, it would be well if the same benefits garnered from enclosing the common -- providing the greatest benefits to the greatest number -- are the result.

National Law Journal Editorial Questions USPTO Three-Track Examination Proposal

By James DeGiulio --

Earlier this summer, U.S. Patent and Trademark Office Director David Kappos announced a proposal for a three-tiered patent prosecution regime that could be instituted in the Office (see "USPTO Director Announces New Examination Options").  The new regime will provide for an accelerated examination track, a standard (status quo) track, and a delayed examination track.  Of course, there will be appropriate fees depending on the examination track selected.  For more information on the three-track proposal, see "USPTO Publishes Notice Regarding Enhanced Examination Timing Control Initiative."

The three-tiered examination proposal is intended to address the application backlog at the USPTO and its alleged negative impact on innovation.  However, according to an August 16 editorial published in the National Law Journal ("New patent regime won't help"), this proposal is vastly insufficient to remedy the application backlog and will merely let richer customers get faster patent reviews by paying more for the privilege.

The editorial, written by David Feigenbaum (at left), a principal at Fish & Richardson in Boston, vigorously rejects the proposal as any type of solution to the USPTO's application backlog.  Mr. Feigenbaum argues that while the three-track proposal may result in greater fee collections from some applicants, a complete overhaul of the patent system from Congress is the only way to truly address the backlog.  The source of the backlog, according to the author, is the interaction with patent examiners under the current system, calling the exchange "overly iterative, done on paper, gated by arcane time periods for action and delayed by almost endless deadline extensions."

Mr. Feigenbaum places the responsibility for reform squarely on Congress, charging them with the task of changing a system that is "tailored to be unresponsive to modern technology and work styles."  None of the current proposals go nearly far enough, according to the author of the op-ed piece.  The three-tiered proposal, as well as other so-called patent reform proposals, are described as merely "tinkering with where money and rights will land post-issuance and in litigation," accusing Congress of refusing to legislate at the USPTO, where it is most needed.  Mr. Feigenbaum challenges Congress to write into the law proper funding for the Patent Office, combined with "clear instructions to dump the 19th century nonsense (quaint though it may be) and operate like a 21st century business."  His suggestions include increasing phone interviews, encouraging interaction with applicants over very short periods of prosecution, and yielding quicker decisions.

James DeGiulio has a doctorate in molecular biology and genetics from Northwestern University and is a graduate of Northwestern University School of Law.  Dr. DeGiulio is a member of MBHB's 2010 associate class and he can be contacted at [email protected].

Facts, Perhaps the Antidote to the Anti-gene Patenting Plague

    By Kevin E. Noonan --

It is apparent that the facts are often at risk or ignored by opponents of gene patenting.  Indeed, the various forms of fact-twisting or outright falsehood ("corporations own your genes") suggests that it isn't facts that are at issue but opinions, and how the public's opinion on gene patenting is to be best manipulated to oppose the practice.

One example (of the very many) of this phenomenon came to us in a reader comment to our post, "Huffington Post Provides Latest Ant-gene Patenting Soapbox" last week.  Our commenter writes:

While the errors throughout her "editorial" are too numerous to recount, her discussion of African sleeping sickness deserves special recognition.  She writes "In 1990 Sanofi-Aventis developed the drug Ornidyl (eflornithine) which is safe and effective against trypanosomiasis but it was withdrawn from the market in 1995 because few poor subSaharan sufferers could afford it.  Ornidyl can no longer be bought for love or money but Aventis, and later, Bristol-Myers Squibb, began to market eflornithine to the West as Vaniqa, a prescription-only facial depilatory."

First, Orindyl for sleeping sickness she mentions above is eflornithine via intravenous injection, while the eflornithine currently marketed as Vaniqua is formulated as a topical creme.  This is a major difference she conveniently overlooks.  And much more importantly, her claim that the drug is unavailable is completely false.  "In 2001, Aventis (now Sanofi-Aventis) and the WHO formed a five-year partnership, during which more than 320,000 vials of pentamidine, over 420,000 vials of melarsoprol, and over 200,000 bottles of eflornithine were produced by Sanofi-Aventis, to be given to the WHO and distributed by the association Médecins sans Frontières (also known as Doctors Without Borders) in countries where the sleeping sickness is endemic ... From 2001 (when production was restarted) through 2006, 14 million diagnoses were made.  This greatly contributed to stemming the spread of sleeping sickness, and to saving nearly 110,000 lives.  This changed the epidemiological profile of the disease, meaning that eliminating it altogether can now be envisaged.[9]  . . .  The positive results of the 2001-2006 partnership between Sanofi-Aventis and the WHO in the fight against sleeping sickness motivated and justified the decision taken by the Sanofi-Aventis Group's senior management to continue supporting the WHO at the same level for another five years, 2006-2011," citing "IFPMA Health Initiatives: Sleeping Sickness."

I guess I must concede that Ms. Washington's point may actually have been accurate, as eflornithine really is not avialable for "love or money" since Sanofi, WHO and MSF have collaborated to make it available for free.  All this information is available at Wikipedia or the Sanofi website http://en.sanofi-aventis.com/binaries/brochure_aam_en_tcm28-18133.pdf.

(Quoted citations from Wikipedia, see, http://en.wikipedia.org/wiki/Eflornithine).

In addition, our commenter states Ms. Washington "is wrong that there is only [one] drug for HCV, with a 20% cure rate (she is off on both points)."  Again quoting from Wikipedia (with references to supporting scientific journal articles; http://en.wikipedia.org/wiki/Hepatitis_C#Treatment):

Current treatment is a combination of Pegylated interferon-alpha-2a or Pegylated interferon-alpha-2b (brand names Pegasys or PEG-Intron) and the antiviral drug ribavirin for a period of 24 or 48 weeks, depending on hepatitis C virus genotype.

Pegylated interferon-alpha-2a plus ribavirin may increase sustained virological response among patients with chronic hepatitis C as compared to pegylated interferon-alpha-2b plus ribavirin according to a systematic review of randomized controlled trials.  (Awad et al., (2009). "Peginterferon alpha-2a is associated with higher sustained virological response than peginterferon alfa-2b in chronic hepatitis C: Systematic review of randomized trials.".  Hepatology (Baltimore, Md.) 51 (4): 1176–84. doi:20187106. PMID 20187106).  The relative benefit increase was 14.6%.  For patients at similar risk to those in this study (41.0% had sustained virological response when not treated with pegylated interferon alpha 2a plus ribavirin), this leads to an absolute benefit increase of 6%. 16.7 patients must be treated for one to benefit ( number needed to treat = 16.7. click here to adjust these results for patients at higher or lower risk of sustained virological response).  However, this study's results may be biased due to uncertain temporality of association, selective dose response.

Treatment is generally recommended for patients with proven hepatitis C virus infection and persistently abnormal liver function tests.

Treatment during the acute infection phase has much higher success rates (greater than 90%) with a shorter duration of treatment; however, this must be balanced against the 15-40% chance of spontaneous clearance without treatment (see Acute Hepatitis C section above).

Those with low initial viral loads respond much better to treatment than those with higher viral loads (greater than 400,000 IU/mL).  Current combination therapy is usually supervised by physicians in the fields of gastroenterology, hepatology or infectious disease.

The treatment may be physically demanding, particularly for those with a prior history of drug or alcohol abuse.  It can qualify for temporary disability in some cases.  A substantial proportion of patients will experience a panoply of side effects ranging from a 'flu-like' syndrome (the most common, experienced for a few days after the weekly injection of interferon) to severe adverse events including anemia, cardiovascular events and psychiatric problems such as suicide or suicidal ideation.  The latter are exacerbated by the general physiological stress experienced by the patient.

Responses can vary by genotype.  (Approximately 80% of hepatitis C patients in the United States have genotype 1.  Genotype 4 is more common in the Middle East and Africa.)

Early virological response is typically not tested in non-genotype 1 patients, as the chances of attaining it are greater than 90%.  The mechanism of cure is not entirely clear, because even patients who appear to have a sustained virological response still have actively replicating virus in their liver and peripheral blood mononuclear cells.  (Castillo et al., (2006). "Hepatitis C virus replicates in the liver of patients who have a sustained response to antiviral treatment". Clin Infect Dis 43 (10): 1277–83. doi:10.1086/508198. PMID 17051492)

In the face of such consistent disinformation, it can be difficult to decide the most effective course for combating it.  However, some suggestions come to mine:

First, don't challenge the morality issue component, since it is generally hard if not impossible to change deeply-held moral beliefs (no matter how out of touch with reality).

Second, however, do challenge the flawed logic.  For example, using claims made in Ms. Washington's article, just because the National Health Service in Britain or a private insurance company in the U.S. won't pay for a test or a treatment doesn't mean the test is too expensive.  It means the payor has decided it can wait until the cost of the test goes down when the patent expires, and the patients denied the test be damned -- the bottom line is more important.

Third, while not necessarily convincing those whose minds are closed to information (aka, the facts), it is also good to use actual data, such as the limited numbers of patents granted to U.S. universities before enactment of the Bayh-Dole Act and the veritable flood of university patents thereafter.  The point is that the amount of basic research isn't what's different (after all, President Nixon started the "War on Cancer" in 1971 with increased funding for the NIH and NCI), but that universities now have ways to prevent predation from private businesses that would otherwise turn publicly-funded research into private investment without many of the advantages of the Bayh-Dole Act, including preference for U.S.-based licensees (i.e., jobs); royalty revenue to the universities to be used for teaching and further research; "march-in" rights in a case of a private licensee enacting a public harm by failing to commercialize an important invention (such as a cure or treatment of a disease, something that has never happened in the 30 years since the Act was passed); and the many milestones and other positive incentives on the patent right incorporated into licenses from universities because of the university's unique public service mission.  These facts turn the anti-corporate argument on its head, since by being able to protect its intellectual property, universities have real leverage for deciding how and by whom their technology is commercialize.  Coupled with the fact that, prior to Bayh-Dole, many of the predating companies were overseas or large international conglomerates, and that such technology piracy cost American jobs, there is a good argument that university patenting is good for society.

Finally, it is good to paint the picture of what would happen if these inventions could not be protected.  As has been argued here in the past, the patent system promotes disclosure and the advancement of the useful arts, i.e., technology.  Patents require disclosure to a degree not required by scientific journal articles and other sources, with "a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention."  35 U.S.C. §112, first paragraph.  Since patents expire, this information can be used by anyone thereafter, and importantly, can be used as information even during the lifetime of the patent.  Thus, arguments that basic (as opposed to clinical for profit) genetic research is impeded by patenting is wrong, since the information (whether of a genetic sequence or the existence of a mutation) is not patented.  The public availability of this information, and the requirements as to its completeness, fulfill the Constitutional mandate that patenting "promote the progress" of the useful arts.

The alternative would be the antithesis of this reality, where there would be significant incentive not to disclose genetic and other information.  In situations where an invention is easy to "reverse engineer" (as for many mechanical inventions), this would not be a fruitful path to protect intellectual property.  For something as complicated as human genetics, the possibilities for being able to "hide" basic discoveries are greater and the consequences much more dire.  Ironically, universities would be the victims of this alternative, since the university's mission would not permit it to use trade secrets and other forms of undisclosed intellectual property protection.  The predictable result of this alternative would be to inhibit if not destroy the university-company partnership that has promoted the biotechnology industry for a generation, to society's benefit.  Perhaps new diagnostics and treatments would arise "eventually" under such an alternative reality, but not as rapidly as in the past.  Thus, the counter-argument for the "anti" groups is that they are (in philosophy or as a consequence of their vision of morality) anti-science, anti-progress, anti-better diagnostics, and anti-treatment.  If this argument is effectively made, it's hard to see how the public would prefer the "eventually" world their position would produce.

Huffington Post Provides Latest Anti-gene Patenting Soapbox

    By Kevin E. Noonan --

The Internet over the past decade has given rise to a wide variety of "alternative media" outlets, including for example Slate, The Drudge Report, The Huffington Post, and arguably blogs like this one.  Even conventional news outlets like The New York Times, The Washington Post, and The Wall Street Journal have exclusively on-line content.  Despite the differences between these disparate sources, including writing by some non-traditional "journalists," news outlets of all stripes have many things in common.  Unfortunately one of these is an uninformed antipathy to biotechnology, particularly with regard to gene patenting.

This similarity is evidenced most recently in The Huffington Post, in a piece entitled "Gene Patenting Produces Profits, Not Cures."  The author, Harriet A. Washington (who also authored Deadly Monopolies; more on that later) writes that Myriad Genetics "predictably" appealed Judge Robert Sweet's decision invalidating fifteen claims in seven patents challenged by several breast cancer patients, medical associations, and researchers (and supported by the ACLU and the Public Patent Foundation).  The piece is replete with misstatements concerning the scope of rights conferred by gene patents, such as that Biogen controls "your kidney's essential KIM gene" as well as a list of other genes patented by the University of California and other patent holders.  Ms. Washington boldly asserts that the "coalition" challenging gene patents in the Myriad case may have too narrow an agenda, and proposes (conveniently, since her argument provides a précis of her "forthcoming book") that all "life patents" should be banned.  These include "the more than 500,000 genes that control the most basic processes of human life," a stunning statement in view of the reality that there are only about 30,000-40,000 genes in the human genome.  Setting her sights even higher than genes, she believes that patents on "bacteria, viruses, biologicals such as 'artificial blood', cell lines, tissues, pharmaceuticals, and even on medically important plants and animals such as Harvard's patented cancer-prone 'oncomouse'" should be banned.  Why?  Because "[t]he $60 billion pharmaceutical industry became the most profitable industry on the planet by exploiting its plethora of patents."

She sets forth a generally correct history of the development of the biotechnology industry.  She mentions the Diamond v. Chakrabarty decision, and passage of the Bayh-Dole Act that encouraged universities to protect their inventions (instead of letting them fall into the public domain where they could be exploited by corporations, including foreign corporations, with no compensation to the university or its researchers).  She also discusses the rise in university patenting, from about 260 patents/year prior to Bayh-Dole to more than 3,000 patents/year today.  She also notes that "by 1991 [universities] had gleaned $218 million in royalties" (an amount certainly much higher today).

Where she begins to show her naïveté about how technology its transferred between academia and pharmaceutical companies is when she says that "corporations receive valuable, ready-made patents on medications, biologicals, genes, devices, plants and animal hybrids," which suggests that the technology transferred is ready to be commercially exploited solely as the result of federal grant support and "university brainpower."  While necessary, these factors are woefully insufficient, at least because the FDA requires extensive safety and efficacy studies before any pharmaceutical comes on the market (protection it is unlikely Ms. Washington opposes).

Her argument seems to be that with all the patents and all the research, the public has received less than they were promised.  She cites in support of this proposition that "[b]y 2003, North American university researchers had started 374 companies and academic institutions had completed 4,516 licensing arrangements earning them more than $1.3 billion" and that "[b]y 2006, university technology transfer offices had generated at least $45 billion, largely from licensing fees."  The result, she maintains, is that universities have become research "satellites" rather than independent entities.  This charge is, ironically, belied by the statistics on licensing, which illustrate how universities, due to their patent rights, are in the position to grant licenses to those companies committed to commercializing their inventions.  Indeed, most such licenses have commercialization milestones and other provisions that, for example, change an exclusive license to a non-exclusive one (that can be licensed to another company) should the performance milestones not be met.

She repeats some oft-told tales, such as the purported pernicious effects of Chiron's hepatitis C virus test, and the company's failure to produce better treatment despite patents on isolated viral genes.  She uses Chiron's lawsuit against a commercial infringer to allege that there was a "chilling effect on researchers who wish to work on better HCV treatments," but provides no evidence that Chiron has sued any basic (non-commercial) researcher working on HCV biology.  This is similar to allegations in the Myriad suit that the company was inhibiting basic research, despite the >8,000 basic research papers easily found in PubMed and other databases.

Ms. Washington raises some real limitations to the Western medical research model, including that diseases prevalent in the undeveloped world (such as trypanosmiasis) have not been adequately addressed, and the inefficiencies in business models that require "blockbuster" drug status to support the incredible costs ($800 million - $1.2 billion) of bringing a drug to market.  And she mentions John Moore's hairy cell leukemia, Henrietta Lack's vulval adenocarcinoma (HeLa) cells, and Canavan's disease patient samples as examples of corporate exploitation.  On the contrary, all of these incidents occurred in a university setting, and the HeLa example occurred in the same time period that saw Jonas Salk perform experiments on his polio vaccine with retarded children from a nearby sanitorium, with precious little informed (or parental) consent.

What Ms. Washington refuses to acknowledge (because it doesn't support her argument) is the real benefits (or "cures") that biotechnology has provided over the past 30 years.  Nowhere in her piece is there anything about the thousands (millions?) of heart attack patients whose lives have been saved by recombinant tPA (Genentech), or the thousands (millions?) of kidney disease patients leading relatively normal lives due to recombinant EPO (Amgen), or the thousands (millions?) of breast cancer patients treated with Herceptin® (Genentech), or colon cancer patients treated with Avastin® (Genentech) or macular degeneration patients whose eyesight has improved using Lucentis® (Genentech), not to mention the hundreds of other biotechnological drugs on the market or in development.  No, these triumphs don't exist in the world Ms. Washington describes, which must make it easier for her to say:

Some argue that gene patents are necessary to generate the profits essential to funding the medical cures.  But as the cases of breast cancer, hepatitis C and hemochromatosis illustrate, genes are more commonly used for faster, easier routes to profit, such as marketing tests, selling licenses and suing those patent-infringers who step on the corporation's biomedical toes.

The biotechnology industry is not without its inefficiencies, but failing to acknowledge the benefits along with the deficiencies makes it easier to set forth the portrayal contained in Ms. Washington's article.  But doing so fails to describe "the rest of the story," and does a disservice to anyone wanting to understand the role of both universities and patenting in the biotechnology industry.