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With US Congress Considering Changes to Patent Laws, Dx Stakeholders Offer Differing Views

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This story has been updated to correct David Spetzler's title to president and chief scientific officer of Caris Life Sciences.

NEW YORK (GenomeWeb) – After three days of testimony, the chair of the Senate Judiciary Subcommittee for Intellectual Property suggested he will attempt to narrow a proposed draft bill that could make substantial changes to US patent law — changes that could have broad implications for the in vitro diagnostics industry.

Still, many witnesses urged Congress to write statutes that would broaden patent eligibility, compared to the existing case law created by the Supreme Court. Some — including people not involved in the US diagnostics industry per se — suggested the industry's future depended on such changes, although others strongly disagreed.

At the close of the hearings on June 11, Sen. Thom Tillis (R-N.C.), who presided over the hearings along with the subcommittee's ranking member, Sen. Chris Coons (D-Del.), said their earlier draft bill, released in April, was too broad. "I am now really convinced we need further refinements," Tillis said. "We need to clarify the utility test so that it's very clear that true abstractions, natural laws, and naturally occurring phenomena do not pass the test. We need to further enhance our proposals for Section 112 so that vague business methods and generic computer claims can't pass muster and be weaponized against small businesses, startups, and entrepreneurs."

He added that the bipartisan coalition of Senators and House representatives supporting new patent legislation would consider "a beefed-up experimental use and research exemption so that basic research isn't unduly inhibited by any fix."

While Tillis' closing comments suggested he would consider the concerns of several constituencies who said changes to existing law could be detrimental, the hearings were "definitely weighted in favor of those who want to change the law," said Mark Lemley, a law professor at Stanford University who testified at the hearings on June 4. "In general, there were a broad range of views, but it would have been helpful to have a geneticist there, since my impression is that the scientists in the field (as opposed to the businesspeople) strongly oppose patentability."

While representatives in the biotech and life sciences industry generally echoed support for new laws, Invitae CEO Sean George suggested that there was more opposition to expanding patent eligibility in the genetic testing industry than was apparent from the hearing. George testified June 11 that he didn't believe broader patent eligibility was synonymous with a strong diagnostic testing industry.

"I've talked to CEOs who privately expressed that sentiment," but who have refrained from taking a public position that would place themselves in opposition to pharma companies or trade groups like the Biotechnology Innovation Organization and PhRMA, he told GenomeWeb, including some who cater to pharma customers and others whose firms are working on companion diagnostics. George said he was "convinced there are a lot of people who do not agree with our industry's lobbying stance on this."

The Senate subcommittee had convened the hearings to examine proposed legislation that would overrule judicial caselaw created by several Supreme Court decisions, including Association for Molecular Pathology v. Myriad Genetics, Inc.Mayo Collaborative Services v. Prometheus Laboratories Inc., and Alice Corp. v. CLS Bank International, which have narrowed patent eligibility.

Attention to the medical diagnostics industry was evident from Tillis' opening remarks, where he said, "The current state of patent eligibility is undermining research, development, and innovation across many industries, from medical diagnostics to life sciences and precision medicine, all the way to traditional manufacturing, software development, [and] artificial intelligence."

But that concern for diagnostics, echoed by many witnesses, at times seemed outsized compared to the number of people from the industry. It took until the third day of testimony to hear from individuals primarily involved with companies bringing diagnostic tests to market: George; David Spetzler, president and chief scientific officer of Caris Life Sciences; and Peter O'Neill, executive director of Cleveland Clinic Innovations.

As reported by GenomeWeb, the American Civil Liberties Union and Association for Molecular Pathology led a letter campaign opposing the draft bill and its removal of the products of nature exception, joined by 169 organizations including diagnostics firms Sema4, GeneDx, and Ambry Genetics. On the second day of hearings, ACLU attorney Kate Ruane spoke about the organization's concern that new patent legislation would reduce competition and increase testing prices. Hans Sauer, deputy general counsel for intellectual property at BIO, which represents numerous diagnostics, pharmaceutical, and other biotech companies, spoke in support of reforming patentability with an eye towards removing uncertainty.

To be sure, several witnesses representing the diagnostics industry voiced support for broader patentability, including Spetzler and Sauer. O'Neill and Rick Brandon, associate general counsel at the University of Michigan – speaking on behalf of the Association of American Universities and the Association of University Technology Managers – stated that absent patents, their organizations would not attempt to translate particular research findings to clinical products.

However, George suggested that the industry was doing better than ever, in terms of investment and competition under the current patent regime. "With the clearing out of obvious methods, observation, and association patents, and the gene patent thicket itself, leading companies are launching the great next era of medicine," George said in oral testimony.

"The amount of capital investors are pouring into early-stage precision medicine companies has increased threefold over the last six years. Established companies have accelerated R&D spending over that same period of time," he added. In his written testimony, he provided graphs showing the rise of investment, revenues, and valuations seen in the diagnostics industry since 2013.

This was in contrast to Spetzler, who told the Senators that the murkiness of whether an invention is patentable or not leads to uncertainty, which "deters the substantial investment necessary to develop new healthcare technologies and emboldens competitors — both domestic and foreign — to disregard patents in this space and exploit the hard-earned innovation of others because they know they can challenge the patent's validity with a good chance of succeeding."

"We and others cannot continue to invest such time and resources into advancing personalized medicine, thereby improving patient outcomes and reducing healthcare costs, if we are unable to recoup our investments because others copy our innovations," Spetzler said.

When asked by Sen. Coons to reconcile the differing stances towards the importance of patenting in the diagnostics industry, George suggested it was simply a difference of worldview, but stressed the Mayo, Myriad,and Alice Supreme Court decisions "have led to a dynamism in our industry that we haven't seen before."

He later explained to GenomeWeb that plenty of companies had launched and folded holding the types of patents that the proposed legislation would reintroduce "because it was such a narrow application of a test that it wasn't commercially interesting."

"Yet, here we are with lobbyists and lawyers representing biopharma saying we need to bring back these patents," George said. "Is this really what we believe is right? It just doesn't make sense to us."

In Lemley's testimony, he suggested to Congress that it could pursue a narrow course of action and write new laws specifically targeting patent eligibility as it relates to medical diagnostics. He said he expects the legislators to narrow the bill, but not to the exclusion of other industries. "I think the drafters want a bill that is broader than medical diagnostics, but it isn't clear the rest of the committee will go along." He added that he expects a clarification to make sure human gene sequences remain unpatentable.

Tillis said he plans to introduce a final bill to the Senate Judiciary Committee following the July 4 recess. The bill would have to pass the committee, both houses of Congress, and be signed by the President before becoming law.