What The Supremes Really Said About Genes

Since the Association for Molecular Pathology v. Myriad Genetics case was argued before the Supreme Court in April, all eyes in the pharmaceutical and biological world have waiting for the Court’s decision. It came down yesterday, and on the surface appears to hand Myriad a loss. The Court ruled that patents cannot be obtained on naturally occurring human genes.

But as BGov’s senior health care analyst Brian Rye projected and since highlighted, the Court’s decision also comes with a critical caveat, which has not yet received the attention it deserves. The decision allows patents on genetic sequences made or modified in the lab. That exception to the ban is enough to leave companies working in the field of genetics plenty of room for further lucrative research.

The unanimous ruling, delivered by Justice Clarence Thomas, invalidates the specific patents held by Myriad Genetics for its BRACA genetics test, used to detect heightened cancer risks. That test generated more than $400 million in sales during 2012, up 15 percent from 2011.

However, the ruling leaves intact intellectual property protection for the majority of other gene-based products.

Researchers that had been blocked from working with the genes covered by Myriad’s patents will benefit from the court’s decision, as will any company seeking to make a “second-opinion” test for patients originally tested with Myriad’s product.

Furthermore, as Rye notes, Myriad and other biotech companies are breathing a sigh of relief that the Court chose not to go a step further in its decision and ban patents on all genetic sequences. This is important because most companies have shifted their research focus toward the synthetic DNA that remains patent-eligible. A study published in Nature Biotechnology, for example, noted that patents on human genes already had declined to 19 percent of all genetic patents in 2010 from 58 percent a decade earlier.

Drugmakers had feared that a more draconian court decision blocking patents on both naturally occurring and synthetic DNA would make it harder for them to identify diagnostics companies willing to make companion genetic tests for their new drugs. Those tests identify patients most likely to benefit from treatment and thus help justify premium prices for these new drugs.

Rye also has written that makers of genetically modified agricultural and animal-health products were paying close attention to the outcome of the case. While the Court’s ban on naturally occurring genes isn’t confined to humans, the fact that synthetic DNA will continue to be patent-eligible is a plus for those industries, too.

The bottom line: sometimes you can lose the litigation battle, but win the commercial war. Such was the outcome for Myriad in this case.

For more about BGov, see www.BGov.com and follow us on Twitter at @Bov.

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