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May 2008 . Vol. 10 . NO.5- Gene patenting and licensing: the role of academic researchers and advocacy groups David H. Ledbetter, phD

The subject of human gene patenting has received a great deal of media attention, and many individuals and

professional societies (including the American College of Medical Genetics) have voiced strong opinions against

the patenting of human genes. A particular concern of the medical genetics community is the impact of gene

patenting on accessibility to high-quality genetic testing. There has been significantly less media attention and

public discussion of licensing practices (e.g., exclusive versus nonexclusive) and their role in promoting or limiting

access to genetic testing. Current US government policy strongly encourages universities to commercialize

inventions funded by federal grants (Bayh-Dole Act, 1980). Best Practice models for technology licensing have

recently been developed by the National Institutes of Health and by the Association of University Technology

Managers, and strongly encourage nonexclusive licensing strategies except in cases where this model will not lead

to successful commercialization. In the case of genetic testing, nonexclusive licensing strategies (e.g., CF gene)

have the significant advantages of encouraging multiple laboratories to make the test readily available, encour­

aging test improvement, and creating cost-eompetition. Individual investigators involved in gene discovery, and

patient advocacy groups collaborating with academic investigators, have the opportunity to influence the acces­

sibility of diagnostic testing by strongly encouraging their institutions to follow the National Institutes of Health and

Association of University Technology Managers Best Practice models of nonexclusive licensing for diagnostic rights

to human gene patents. Genet Med 2008:10(5):314-319.

Key Words: genetic testing, Bayh-Dole Act, gene patents, licensing models

A major issue to be considered in the development and ac­ cessibility of quality clinical testing for all genetic diseases is that ofgene patenting and subsequent licensing strategies. The ethical and legal issues of gene patenting have been quite con­ troversial, and the American College of Medical Genetics has an official position statement against gene patenting (www.acmg. net). In 2006, the popular author Michael Crichton weighed in on this topic in his book Next,l voicing strong opposition to virtually all commercialization of scientific discovery but spe­ cifically targeting gene patents and the Bayh-Dole Act of 1980 (discussed below). Breast cancer genetic testing involving the BRCAI and BRCA2 genes, whose US diagnostic rights were licensed exclusively to Myriad Genetics, has received substan­ tial negative media coverage2 and scientific criticism.3 It has b.een ar?ued t~at a genetic testing monopoly restricted to a ~lI1g1e diagnostIC laboratory, results in no ability to obtain an lI1dependent confirmation of a test result (i.e., a "second opin­

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ion") and provides little incentive for test improvement or price competition.4•5

There are many recent publications and publicly accessible position articles addressing issues in human gene patenting and licensing. Many of these focus on the potential impact of gene patents as obstacles to further human genetics research, most concluding that there is little evidence for significant neg­ ative impact.6 However, in the area of clinical genetics testing, there are a number of case studies and surveys indicating that clinical genetics testing laboratories have dropped tests from their menus or chosen not to set up particular genetic tests because of gene patent issues"

In this article, I will briefly review government and univer­ sity policies regarding commercialization of inventions, and the relative impact ofgene patenting versus licensing strategies in limiting access to genetic testing. Individual investigators. along with patient advocacy groups collaborating with aca­ demic investigators, can and should participate in the com­ mercialization of their inventions (e.g.• gene discovery) to help ensure the greatest access to diagnostic testing resulting from their invention. There are now several Best Practice models for licensing relevant to human gene patents and genetic testing available for investigators and advocacy groups to use to sup­ port their arguments in favor ofnonexclusive licensing strate­ gies.

Genetics IN Medicine 314

US GOVERNMENT POLICY ON COMMERCIALIZATION OF INVENTIONS AT UNIVERSmES: BAYH-DOLE ACT 11980)

Among genetics researchers and clinicians, there is often a lack of understanding ofthe US governmen t's att itud~s to~~rd patent policy and technology transfer involving UI1IVerslt~es. The major funding source for biomedical research, mcludlng human genetics, is the National Institutes ofHealth (NIH). It is sometimes argued that because many human gene discoveries are publicly funded by taxpayers through the NIH, it is .inap­ propriate for academic institutions or private compames to profit from these discoveries th rough gene pa ten ts and licens­ ing of this technology. However, the US government has passed legislation intended to strongly encourage universities to commercialize their research discoveries as a method to stimulate economic development within the United States and to serve the public good. This legislation, the Bayh-Dole Act, was enacted in 1980 and gave universities the option to own, manage, and profit from inventions made using federal fund­ ing (Fig. 1). The US government retains no ownership and receives no direct financial compensation for their investment in the research, but benefits indirectly through increased taxes paid by the private businesses involved in the con1.mercializa­ tion of new technology and services. The 0 nly restrictions placed on universities were that they must show preference to commercialization partnerships with US based companies and especially small businesses.

Each university receiving federal research funding must comply with the Bayh-Dole Act, and all major n1.edical schools and universities have developed Technology Transfer Offices since the enactment of Bayh-Dole. At many un iversities, indi­ vidual faculty members may not have discretion over whether or not to file a patent on an invention (such as a gene discov­ ery), but are required by university policy to report any inven­ tion that has potential commercial value. The university usu­ ally owns all rights to inventions by full-time faculty members, but most universities now have specific policies for sharing royalty income with faculty and staff inventors.

Key Features and results of Bayh-Dole Act (1980)

1. Gave universities the option to own intellectual property funded by federal govemment, with encourage~entto commercialize discoveries for public good and economic growth.

2. Universities created Technology Transfer offices to commercialize discoveries.

3. Universities developed Intellectual Property UP) Policies which generally state:

• University owns alilP developed by faculty.

• Faculty are required to promptly djsc~ose to university any inventions which may have commercial value. and for some, the decision to file a patent on a gene may not be the Investigator's.

Flg.1.. Key features of the Bayh-Dole Act (19S0).and ~njvcrsity r~sponses (0 this legislation as it relates to gene patenting and commccc1alJ7..atlon.

May 2008 . Vol. 10 . No.5

Gene patenting and licensing

The intent of Bayh-Dole was that discoveries made by uni­ versities using federal funding would benefit the general public in terms ofnew products and services. For most genetic testing, this "commerciali7-ation" process does not require gene pat­ ents and licensing to ensure that new clinical testing services become widely available and may often have the opposite effect ofgreatly limi ting access when exclusive licensing strategies are followed (see below).

IMPACT OF COMMERCIALIZATION IN GENETIC TESTING

The commercial manufacturing sector has been critically important to the development and manufacture of essential instrumentation, reagents, and kits for genetics testing labora­ tories. Major contributions include the invention and/or com­ mercialization ofpolymerase chain reaction, DNA sequencing, tluorescence in situ hybridization, and microarray technolo­ gies, to name just a few. The successful commercialization of these technologies has made major contributions to the rapid growth and availability of many new genetic tests in the last 20 years.

In the diagnostic laboratory service sector, genetic testing has become a large and highly competitive business in the last two decades, including large national referral laboratory com­ panies and numerous small genetics testing start-ups. A signif­ icant contributor to the growth of national reference laborato­ ries was the widespread availability of overnight courier service, which obviated the need for most genetic testing to be performed within local hospital or medical school laborato­ ries.

A positive outcome of the increased availability and compe­ tition lor many genetic tests has been the improvement in some areas of customer service, e.g., laboratory turnaround times. In cytogenetics, routine prenatal chromosome analysis used to have average turnaround times of 3-4 weeks, but im­ proved to 7-10 days after this standard was introduced by pri­ vate genetics testing companies. This significant improvement did not require any major technology innovations, but simply a cultural change forced on academic laboratories by compe­ tition from the private sector.

A major concern regarding private sector involvement in genetic testing is the development of a monopoly, in which a single, for-profit laboratory is the only source ofgenetic testing for a given genetic disease. The most publicized example of this has been the case of BRCAl and BRCA2 testing by Myriad Genetics in the United States.2 Concerns expressed regarding genetic testing monopolies include (1) potentially limited ac­ cess, (2) no opportunity for independent confirmation ofa test result (i.e., "second opinion"), (3) no price competition, and (4) less incentive to improve the genetic test. This latter con­ cern was highlighted by a comprehensive molecular study of women at high risk for breast cancer who had normal genetic testing results through Myriad Genetics. Of 300 probands an­ alyzed, 17% showed previously undetected mutations in

315

Ledbetter

BRCA1, BRCA2 or other genes known to be associated with breast cancer. 3

Although a patent on a human disease gene is a necessary condition for a diagnostic monopoly to occur, it is not sl~ffi­ cient in and of itself. The licensing terms are often more im­ portant influences on accessibility of diagnostic testing than the existence of a patent. Investigators at academ ic ins t i tutlons who discover a new gene and file a patent have the option to pursue nonexclusive licensing strategies which alloV'v" multiple clinical laboratories to offer genetic testing. This provides roy­ alty income to the institution, but preserves the availability of independent confirmation of test results and the incentiyes for test improvements and cost-competitiveness. One of the best examples ofsuccessful nonexclusive licensing strategies for hu­ man gene patents is the CF gene (see below).

STA1'US OF HUMAN GENE PATENTS IN THE UNITED STATES

A detailed discussion of US Patent law and issues related to human gene patenting is beyond the scope of th is article. A number of recent reviews and commentaries about the poten­ tial impact of human gene patenting on research6 and on ge­ netic testing'1.5 are available. One of the most cOlTl.prehensive discussions, including a series ofcase studies in cl in ical genetic testing for different patented human genes, is included in a draft statement by the Patenting and Licensing COTTunittee of the European Society of Human Genetics (www.eshg.org).

The American College of Medical Genetics has also previ­ ously published a "Patent Primer" (www.acmg.org).Briefly. the US Patent and Trademark Office issues patents to individ­ uals for inventions that represent a new and useful "process, machine, manufacture, or composition of matter" that meet standards for utility, novelty, and nonobviousness. By granting a patent, the government is giving the right to the inventor to exclude others from practicing the invention for a defined and limited time (currently 20 years from the date of filing). The inventor can grant permission to others to practice the inven­ tion via licensing, which can be done on an exclusive or non­ exclusive basis.

Current US Patent law allows the patenting of h u Ulan genes when the full length complementary DNA sequence is known, and in some cases where only partial sequence is known but information on biological function (e.g., disease association) is known such as expressed sequence tags or single nUcleotide polymorph isms. Proposed legislation to rescind the patent­ ability of human genes has been introduced in Congress but has so far not been successful.

Over 4000 human genes have now been patented in the United States, representing approximately 20% of the total predicted number of genes in the human genome. 7 However, because of the public availability of the human genome se­ quence through the efforts ofthe Human Genome Project, the rate of fr.lings and approvals for human gene patents has dropped.8 The requirements f~r patentmg of a human gene have increased, even more so In the European Pa tent Office

and the Japanese Patent Office than in the US Patent and Trademark Office.

It is of interest to note that the top two DNA patent holders in the United States are not commercial companies but an academic institution (the University ofCalifornia system) and the US government.9 Among the top 30 US holders of DNA­ based patents are 14 academic institutions or government agencies. This reflects the fact that a large proportion of bio­ medical research and gene discovery takes place within univer­ sities (funded by federal grants). Relevant to genetic testing issues, it is interesting to note that none of the major genetics diagnostic service companies (e.g., Genzyme Genetics, Lab­ Corp, Quest, Athena Diagnostics) in the United States are among the top 30 DNA patent holders. Instead, these compa­ nies must obtain the diagnostic rights to human gene patents through licensing from academic institutions, emphasizing the importance of individual investigators, academic institutions, and patient ad vocacy groups in controlling the licensing strat­ egy for their human gene patents (discussed further below).

EXEMPTIONS

There is a relatively cornman misconception that research uses of a patented invention, including laboratory techniques or human genes, are exempt from the requirement to obtain a license from the patent holder. Although this is true in the European patent process, it is not formally true in the United States. No research exemption exists in the US Patent act, but a very narrow legal allowance for research use was defined in a court case in 2002 (Madey versus Duke University). In prac­ tice, companies rarely sue universities over research usage of patented technologies, giving rise to the common misconcep­ tion that a broad exemption exists. In the past 10 years, the NIH have published several guidelines regarding broad sharing ofdata from publicly funded research, further guiding univer­ sities to allow their inventions to be used freely by other uni­ versity researchers.9 To formalize these research exemptions, both the NIHIO and the Association of University Technology Managers (AUTM) (www.autm.net) in their proposed Best Practices for licensing strategies (described below), strongly encourage universities to prospectively include a research ex­ emption to all nonprofit institutions.

An exemption from gene patents for clinical genetic testing has been suggested by some authors. 11 •12 They argue that exist­ ing laws in the United States (Ganske-FristAct, (996) and Eu­ rope (Article 52(4)) which exempt physicians from the medical use of patented medical information when treating or diagnos­ ing patients should apply to genetic testing. This argument has not been successfully used to date, and legislative attempts in the United States to extend Ganske-Frist to specifically include genetic testing have so far not succeeded.

Given the difficult and uncertain task of modifying patent law, it may be more practical to focus efforts on supporting the recent NIH and AUTM Best Practice models for research ex­ emptions and nonexclusive licensing whenever possible.

Genetics IN Medicine 316

LICENSING STRATEGIES: CFTR VERSUS BRCA MODELS

The inventor/patent holder has the opportunity to grant li­ censes to others to practice their invention in return for up­ front payments and/or ongoing royalty payn1.entS. These li­ censes may be broad or narrow in terms of fields of use (e.g., diagnostic versus therapeutic products or services), and may be exclusive or nonexclusive. In the majority of cases, a for­ profit company prefers to obtain an exclusive license to an invention to provide the 1110st protection for their investment in the development of new drugs or diagnostic tests. In the case of drug development, the granting of an exclusive license may be necessary and appropriate as no company would be willing to invest the large sums of money necessary to develop a new drug without protection from competitors. However, for diag­ nostic testing for most human diseases, the requi red up-front investment is modest and it is hard to justify an argument for an exclusive licensing arrangement.

An interesting aspect of the Bayh-Dole Act is that it gave universities a great deal offreedom in determi n ing the best way to commercialize their inven tions. Most relevant to this dis­ cussion, there were no guidelines or Best Practice recommen­ dations for licensing of their inventions. For diagnostic testing rights for human gene patents, one can compare the impact of a nonexclusive versus exclusive licensing strategy.

The gene for cystic fibrosis, CFTR, was identitled in 1989 by a collaborative group of academic investigators, and a patent was filed and issued to the Hospital for Sick Children (To­ ronto) and the University of Michigan Cfable 1). The choice by the inventors and their institutions to license diagnostic rights on a nonexclusive basis has led to widespread adoption of di­ agnostic testing and carrier screening by a variety of home­ brew and manufactured kit approaches.

In contrast, the diagnostic testing rights to BRCAl and BRCA2 genes were licensed exclusively to Myriad Genetics, Inc., in Salt Lake City, Utah. In this case, scientists working at Myriad were directly involved in the gene discoveries in collab­ oration with university and government collaborators, and Myriad is one of the assignees for the key patents to these two genes. It is understandable that the for-profit COITIpany (Myriad)

Gene patenting and licensing

would seek exclusive diagnostic rights, but more open nonex­ clusive strategies could have been influenced by the academic and government inventors and assignees in these cases.

Several other examples of human gene patents and their licensing strategies are listed in Table I. The mixture of exclu­ sive and nonexclusive licensing strategies for diagnostic testing rights to human genes. even within individual institutions (e.g., Baylor College of Medicine, Houston), supports the no­ tion that individual investigators and perhaps patient advocacy groups can influence licensing strategy.

This is also supported by the un usual and uncertain status of genetic testing for Ret! Syndrome currently in the United States. In 1999, investigators at Baylor College of Medicine and Stanford University identified mutations in the previously known gene MECP2 as the cause of Rett Syndrome. I J A patent was issued to these investigators for a "Method of screening Rett Syndrome by detecting a mutation in MECP2" in 2004. Perhaps in part due to financial support and involvement of the International Rett Syndrome Association and the investi­ gators' commitment to make genetic testing widely available for this disorder, licensing for diagnostic testing was made available on a nonexclusive basis, and a number of academic and commercial laboratories began offering MECP2 mutation analysis by full gene sequencing. In 2004, another group re­ ported a previously unidentified open reading frame for MECP2, referred to as MECP2El, encoding a novel isoform for the protein." Two of the 12 coauthors of this publication have filed US Patent applications (11/352,153) for this new open reading frame and isoform, claiming rights to genetic testing based on this incremental new information regarding a known relationship between a human gene and specitlc disease. These investigators have exclusively licensed the diagnostic rights to a single, for-profit diagnostic company (Athena Diagnostics, Inc.) which is currently notifying other US laboratories of its anticipated exclusive rights to provide genetic testing for Rett Syndrome and other neurodevelopmental disorders using MECP2El. It is unclear whether this limited new information on the Rett gene will be sufficient to be granted a US Patent, but it is clear that the choice to pursue an exclusive licensing agree-

Table 1 Examples of licensing slralegies by academic palent·holders (assignees)

Gene US palenl number Assignees Licensing

CFfR 6,201, 107 Hospilal for Sick Children. University of Michigan Nonexclusive

BRCAl 5.110,001 and others Myriad Genetics. University of Utah. US Department of Exclusive Health and Human Services

BRCA2 5,837.492 and others Myriad Genetics, University of Pennsylvania Exclusive

CMTIA 5,306,616 and others Baylor College of Medicine Exclusive

SCAl, SCAl. SCAB 5.74t.645. 6.280.938. 6,524,791 University of Minnesota. Baylor College of Medicine Exclusive

FMRl 6,107.025 Baylor College of Medicine. Emory University Nonexclusive

MECP2 6.709.817 Baylor College of Medicine, Stanford University Nonexclusive

MECP2El Pending Hospital for Sick Children Exclusive

May 2008 . Vol. 10 . No.5 317

Ledbetter

ment for diagnostics is counter to the intent of the original investigators and patient advocacy groups involved in the main discovery.

BEST PRACTICE MODELS FOR LICENSING HUMAN GENE PATENTS

The NIH initially left universities receiving extramural re­ search funding completely on their own to determine their licensing policies. This created an interesting difference in li­ censing patterns of human genes which were discovered and patented by investigators in the NIH Intramural program, compared with investigators at universities supported by the NIH Extramural program. Approximately 15% of NIH re­ search funds support government scientists in the Intramural research program centered in Bethesda, MD. The NIH Intra­ mural program has had a long-standing policy requiring non­ exclusive licensing on all inventions as the primary method of making inventions available to others. Only in cases where a nonexclusive licensing strategy fails are narrow exclusive li­ censes considered to commercialize an invention.

In 2005, the NIH published a "Best Practices for the Licens­ ing of Genomic Inventions" guideline which encourages, but does not require, the extramurally funded comm unity (all uni­ versities receiving NIH grants) to negotiate nonexclusive li­ censes whenever possible. 'O It also includes provisions to en­ sure that the invention (e.g., gene) is freely available for further research to all.

In 2007, the AUTM issued a White Paper of nine points to consider in licensing technology (www.autm.net). There is sig­ nificant overlap between the principals discussed in this White Paper and the Best Practices for Genomic Inventions pub­ lished by NIH, particularly an emphasis on nonexclusive li­ censing wherever possible. This White Paper was endorsed by many of the major universities with significant human gene patent portfolios, and by the American Association of Medical Colleges.

ROLE OF INDIVIDUAL INVESTIGATORS, ACADEMIC INSTITUTIONS, AND PATIENT ADVOCACY GROUPS IN GENEllC TEST ACCESSIBILITY

Many universities have endorsed the AUTM White Paper published last year and should have familiarity with the NIH statement regarding Best Practices for licensing of genomiC inventions. Given this, one can envision an increasing trend toward nonexclusive licensing for human gene patents partic­ ularly for diagnostic usage.

There is an important role for individual human genetics investigators, along with patient advocacy groups, to proac­ tively encourage universities to ensure the broadest access for genetic testing through nonexclusive licensing. Many individ­ ua� faculty members are unfamiliar with the commercializa­ tion process following an invention such as a gene discovery, although most researchers are aware of their university'S re­ quirement to fLle an Invention Disclosure which might lead to

a patent application and subsequent c?mme~cializationof di­ agnostic and therapeutic rights to the I11VentlOn.

Investigators for rare genetic diseases often work very closely with families volunteering for their research and in many cases directly with an organized patient advocacy group for a specific genetic disease. A lack of comnlunication regarding commer­ cialization philosophies and goals between investigators and families or advocacy groups can lead to significant conflicts regarding access to genetic testing, as was the case for Canavan disease. The gene for Canavan was identified in 1994 by inves­ tigators at Miami Children's Hospital Research Institute and a patent was filed and issued without the knowledge or partici­ pation by families who had voluntarily participated in the re­ search. The hospital then chose to retain exclusive rights to diagnostic testing which was provided at prices considered un­ reasonably high by the genetics and patient communities. Sig­ nificant pressure and legal actions were subsequently brought on the hospital to alter the pricing of the test to make it more accessible to the community, an issue which was successfully settled out of court.

A new model for proactive involvement of a patient advo­ cacy group in human gene discovery and patenting is that of PXE International, an organization representing families with pseudoxanthoma elasticum. In this case, members of the ad­ vocacy organization became formal collaborators on the re­ search eHort to identify the responsible gene and are named on the gene patent as inventors. IS The investigators involved in the research assigned the rights to the gene to the foundation, so that it can ensure that the commercialization process for diagnostics and therapeutics is done in the best interests of families with this disease.

Further educational efforts are needed to make investigators and advocacy groups more aware of their opportunity and obligation to participate in the commercialization process re­ lated to human gene discovery. Only this participation can ensure that this process serves the needs and goals of the fam­ ilies and investigators to make q uality genetic testing accessible to all.

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Gene patenting and licensing

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