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Supreme Court Knocks Back Myriad Genetics, Inc. (MYGN) Patents

3/28/2012 11:22:03 AM

LONDON, UK (GlobalData), 28 March 2012 - On Monday, March 26, the US Supreme Court sent the much-discussed Myriad Genetics patent case back to the Federal Circuit Court of Appeals, instructing the lower court to reconsider its decision from July 2011 that upheld the company’s patents. This unsurprising decision comes on the heels of a decision last week that Prometheus Laboratories, a small diagnostics company, could not patent the relationship between drug metabolites in a person’s blood and the optimum dosage of the drug. In a strongly worded opinion, the Supreme Court unanimously concluded, “that the patent claims at issue here effectively claim the underlying laws of nature themselves. The claims are consequently invalid.” The Supreme Court clearly wants the Appeals Court to reconsider its earlier Myriad decision in light of this new precedent.

At the center of the case is Myriad’s licensing of two patents regarding genes BRAC1 and BRAC2. Patients with inherited mutations in these genes have an increased likelihood of developing breast cancer or ovarian cancer as compared to the general population. Myriad developed a genetic test called the BRACAnalysis test which allowed physicians to identify patients at the highest risk of developing cancer. Patients testing positive could then be monitored or undergo preventive medical treatment to minimize their risk.

Myriad has stated that the genetic tests related to the disputed patents are covered by 23 issued patents with almost 500 claims, and that only 15 of the claims are disputed in the lawsuit. The true importance of this case lies more with its implications for biotechnology research, and less on the impact to Myriad’s bottom line. The company and its supporters argue that the ability to patent genes is integral to innovation in biotechnology.

It is still too early to tell what the impact of the Prometheus decision and a potential denial of Myriad’s patents will have on biotechnology innovation. Industry insiders who argue that these decisions will throw cold water on innovation may be correct. It is reasonable to think that patent protection is a necessary incentive to encourage new technologies. On the other hand, if investigators do not have to worry about violating patents in their research, there could be more activity. Researchers have previously been unable or unwilling to explore certain genes due to a fear of being sued. For example, the Alzheimer’s Institute of America (AIA) has been accused of slowing research by filing patents against the use of a genetic marker known as the ‘Swedish mutation’ that is correlated with early-onset Alzheimer’s. Intellectual property disputes surrounding this mutation have hampered Alzheimer’s research since the early 1990s.

It is also worth mentioning that the patents in dispute in the Myriad case were not originally filed by the company. Instead, like many such patents, they were discovered at universities and licensed to the company for commercialization. The Myriad patents were primarily licensed to the company by the University of Utah Research Foundation. This distorts the issue, because academic researchers, while certainly aware of commercial possibilities for their discoveries, have traditionally been driven by science rather than profit. Rather than halting progress, the denial of patents for genes should spur these researchers to dig deeper into understanding the genetic basis of disease. So, while these decisions may have a chilling effect on biotech companies, innovative research will likely continue.

The market for genetic testing has experienced double-digit year-on-year growth in recent years, and is expected to continue to grow at a CAGR of 10.3% through the end of this decade. The market for these tests, worth only $426 million in 2004, is expected to approach $2 billion by 2018. One thing that we do expect to result from these patent decisions is the shifting of diagnostic revenue from small biotech companies to larger, more established diagnostic players. Large companies possessing platform technologies will be able to devise their own tests, without the fear of patent infringement, to compete with more expensive proprietary tests. These companies can then offer their customers more comprehensive testing at a lower price at the expense of smaller companies who may have initially developed the tests with the promise of patent protection.

Supreme Court Knocks Back Myriad Genetics Patents

This expert insight was written by GlobalData's Head of Medical Devices, Derek Archila, and Head of the Healthcare Industry Dynamics team, Dr. Jerry Isaacson. If you would like an analyst comment or to arrange an interview, please contact us on the details below.


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