By Kevin E. Noonan --
More than three years after the June 15, 2012 deadline for providing it, the U.S. Patent and Trademark Office has issued its report on so-called "second opinion" genetic diagnostic testing, mandated by Section 27 of the Leahy-Smith America Invents Act. With (evidently in the eyes of Patent Office officials) the level of pressure and scrutiny that could be occasioned by the Report diminished by recent case law regarding generic testing, the political winds were blowing in the right direction for the Office to finally release the Report.
The Executive Summary notes that it elicited testimony and written comments from fifty organizations and individuals (some of whose comments carried greater weight with the Office, as evidenced by the citations throughout). As has been the case in other contexts (most notable the SAGHHAS Report, see below), the Office concludes that "the evidence is unsatisfactory in providing clear findings to Congress" (mostly because the prejudices inherent in asking the questions and they way they were asked, which presumed that a negative effect would be found, were not borne out). The evidence regarding genetic diagnostic testing (GDTs) is characterized as "sparse" and that on confirmatory testing (or the need therefor) is "even more so."
According to the summary, only 1-5% of the individuals receiving a GDT need a confirmatory test and such a confirmatory test is "often available from the primary testing provider itself if not from alternative providers." Regarding quality, the summary asserts that the effect of exclusivity on quality is "mixed": aggregated data in one provider can result in more reliable results, but exclusivity raises questions (stated without any evidentiary basis) regarding incentives to improve test quality (which ignores the threat of false negative or positives on liability of exclusive test providers). The summary also characterizes as "unclear" whether exclusive rights in GDTs "impede follow-on innovation, including university research that is academic in nature versus commercial" (although it is clear that those parties accused of infringing Myriad's patents, for example, were performing pay-for-services testing regardless of whether the data generated could be used for academic pursuits).
The summary goes on to assert that "creating a mechanism that would allow independent providers to perform confirmatory tests would likely have little negative effect on the exclusive providers of the initial test," although the report recognizes "one potentially important exception," i.e. the temptation for providers authorized to provide confirmatory tests to instead provide initial GDTs "in order to recoup the investments necessary to enter the market at all." The likelihood of this happening would "impose on primary testing providers the cost and burden of monitoring the confirmatory testing practices of others" (although at least Myriad was happy to do so in practice).
While not providing any answers the summary also sets out the question of what effect patents have on medical practice per se in view of the positive role of patenting in incentivizing both innovation and public disclosure. The summary seems to suggest that robust defense of patent rights is at least in part responsible for the low (1-5%) incidence of confirmatory testing, but states that "it is difficult to draw conclusions about the perceived medical need for confirmatory tests" under these circumstances.
There is likewise no solid evidence in the Report on whether exclusive rights to GDTs increases test costs but the Report does recognize that the availability of insurance is an important determinant of whether testing is performed at all, and notes that neither government nor private insurance generally covers confirmatory testing. (The Report could have stopped there, having identified the real issue regarding such tests.) The dearth of evidence is further emphasized when the summary states that "[i]t is possible but unknown if individuals who may seek confirmation of a specific test result forgo it due to cost, even if it is available from multiple independent providers."
In the face of this lack of affirmative evidence, the summary takes solace in recent Supreme Court decisions, principally AMP v. Myriad Genetics and Mayo v. Prometheus for the proposition that "it [is] unlikely that exclusive provision of a diagnostic test, whether for an original diagnosis or to confirm the original result, will be possible based on patenting and licensing behavior" in future. Accordingly, the summary states that "much of the USPTO's factual findings may now be superseded by intervening judicial decisions" and thus the USPTO's recommendations to Congress are limited in scope.
Those recommendations are three-fold. First, the Report recommends that Congress "proceed cautiously" and "monitor changes in the actual availability of [GDTs] from multiple providers." Second, the Report recommends that Congress "consider creating mechanisms to facilitate sharing data on diagnostic correlations in order to build robust databases of the relationships between genetic mutations and the presence, absence, or likelihood of acquiring the relevant medical condition" (presumably wherein said mechanisms were neither compulsory nor would constitute a constitutional taking of the proprietary information in such a database). Third (although arguably first in rank with regard to having an actual impact on availability of GDTs), the Report recommends that Congress "consider the role of cost and insurance," while immediately disclaiming that "because the USPTO does not have the institutional expertise to make specific recommendations regarding insurance coverage for gene-related diagnostic tests, this report can only emphasize that insurance coverage does appear to play significant a role in access to testing and should be taken into consideration when issues of access are examined."
The Report itself consists of an Introduction, Background on the issues, a Discussion of the "prior literature and evidence" related to the question of confirmatory GDTs and a statistical consideration regarding the value of preventative screening for disease, and Conclusions containing the Report's recommendations.
The Introduction locates the motivation for Congress's interest in the question of confirmatory GDTs "primarily (but not solely)" in Myriad's commercial behavior and exclusive provider position regarding GDTs for ovarian and breast cancer propensity based on mutations in the BRCA1 and BRCA2 genes. This "created a high level of public interest and discussion" (fueled but unmentioned by the ACLU's lawsuit against Myriad). This section of the Report goes on to note that "there are currently no fewer than 5,800 genetic diseases for which diagnostic tests have been developed," and that they are being performed at "hundreds of laboratories." The Report mentions in this regard that there are many different arrangements of licensing and business models as well as "significant variation in the manner that testing results are ultimately made available to both patients and caregivers." The Report is limited by its terms to those situations where the tests are patented and available from only a single provider (i.e., the Myriad case). While the Report contends that there have been "several important studies and reports" in recent years related to GDTs, it notes that the subject of independent, "second opinion," confirmatory testing has not been expressly or sufficiently studied. Despite this lack of focus on the question at hand, the Report states that these studies "can meaningfully inform the current debate about how genetic diagnostic testing is made available to patients by physicians and insurers, and the role that patenting may play in the availability, affordability and reliability of these tests" (which, while being something of a non-sequitur does inform the inherent biases behind the Report).
This introductory section ends with a discussion of what Congress charged the Office to do, i.e., to study:
(1) The impact that the current lack of independent second opinion testing has had on the ability to provide the highest level of medical care to patients and recipients of genetic diagnostic testing, and on inhibiting innovation to existing testing and diagnoses.
(2) The effect that providing independent second opinion genetic diagnostic testing would have on the existing patent and license holders of an exclusive genetic test.
(3) The impact that current exclusive licensing and patents on genetic testing activity has on the practice of medicine, including but not limited to: the interpretation of testing results and performance of testing procedures.
(4) The role that cost and insurance coverage have on access to and provision of genetic diagnostic tests.
For the purposes of these studies the Report states it is "concerned mainly with independent confirmatory testing to include either (1) an independent provider's re-administration of the primary test using the same methods that were used for the primary testing or (2) an independent provider's administration of a different procedure designed to detect the same genetic alteration that was detected by the original test."
The next section of the Report defines how the Office performed these studies, including publishing a Notice in the Federal Register calling for comments and holding two public hearings on the subject matter, as well as performing "a thorough review of the academic and scientific literature" and taking "notice of several published reports." In the wake of the Mayo decision and the decision by the Court to vacate the first Myriad decision for rehearing by the Federal Circuit, the Office took advantage of the delay to solicit the views of "approximately a dozen physicians, clinicians, and scientists working in the genetics and genomics field" at the annual meeting of the American College of Medical Genetics and Genomics (hardly a disinterested group and one with an economic interest in unfettered use of patented GDTs; notably, this is the only portion of the evidence for which there is no public record, these meetings being termed "informal"). As a result, the Office notified Congress "that the complexity and diversity of the collected opinions, comments and suggestions warranted further review, discussion, and analysis" that would delay the Report past the time when the statute mandated it. Thereafter, the Office hosted a roundtable to obtain still more views.
The Report then discusses the sea change that has occurred in patent law relevant to this question, specifically as a result of the Mayo and Myriad decisions. In the Office's view, the Myriad Court's parsing of DNA into ineligible genomic DNA and eligible cDNA "lifted a potential obstacle to confirmatory genetic diagnostic testing" and was a "significant change," notwithstanding the fact that GDTs are not performed on either isolated genomic DNA or cDNA as those terms have been used by the Office for more than a quarter century. The Report then recounts how the Federal Circuit has applied the Mayo and Myriad decisions to claims for genetic diagnostic tests, including PerkinElmer, Inc. v. Intema Ltd., Ariosa Diagnostics, Inc. v. Sequenom, Inc., and University of Utah Research Foundation v. Ambry Genetics Corp. As a consequence, the Office concludes that "[t]aken together, these cases dramatically affect the landscape of diagnostic testing, whether gene-based or not," and that "it is difficult to conceive of a gene-based diagnostic correlation that could be exclusively protected by a patented means of determining the correlation owned by single provider" (sadly, the Office is probably correct in this assessment).
With this as background the Office then discusses its findings, going through the prior literature and the specific questions posed by Congress, paradoxically noting that "the results of this review were unsatisfactory in terms of discovering clear responses to these items." With regard to the first question posed by Congress, the Office framed the issue as the concern physicians had about being unable to obtain confirmatory testing when they believed it was warranted. The evidence that this was in fact the case was "sparse," according to the Report and even when available, such evidence was "not of the magnitude, quality, or rigor that scientists generally consider reliable in drawing conclusions," was anecdotal or even contradictory. Even the evidence of clinical utility for confirmatory testing was lacking and there the "medical or scientific consensus on the value of confirmatory testing is unsettled."
In this regard the Office recognized the equivocal nature of the most well known of such studies, the 2010 report of the Secretary's Advisory Committee on Genetics, Health and Society (commonly termed "the SACGHS Report"). The consensus according to the Office was that this study showed "no convincing evidence that patents either facilitate or accelerate the development and accessibility of such tests but also 'some, albeit limited, evidence that patents had a negative effect on clinical research and on the accessibility of genetic tests by patients." With regard to this limited evidence, the Office noted that the studies drawn upon by the Committee were "case studies and not primarily studies of large, randomly-drawn samples." And the Report questions whether a "market" for such confirmatory studies even exists based on the available evidence: even Myriad testified that it had licensed its testing patents to "at least three university labs" and even a commercial competitor (LabCorp) purportedly for confirmatory testing. There was also mixed evidence of any positive effect of the existence of competitive tests on GDT quality, based on the one hand on the benefits of database aggregation and on the other on whether incentives for improving testing will be the same in the absence of competition (a view voiced by Wendy Chung, one of the Myriad plaintiffs), despite contrary evidence "that exclusive providers tend to decrease error rates over time in response to monitoring in the research environment and marketplace." After discussing other reports in the literature, the Office concluded that "[i]n all, it is unclear that competition in this space would necessarily induce higher quality."
With regard to "follow-on" innovation (which one might think would motivate "designing around" efforts), the evidence was mixed (and some of it was 10-15 years out-of-date), with 49% of respondents stating that patents had led them to decide not to develop or perform a genetic test while 46% said that patents made no difference in making these decisions. The situation is nicely and succinctly stated, that "[n]ot surprisingly, while evidence suggesting that patents impede biomedical research generally is sparse, some evidence does suggest that patents have inhibited research laboratories that are engaged in commercial activity" (i.e., patents inhibit infringement but not scientific research). With regard to the actual incidence of patent ligation related to GDTs, the Report cited Chris Holman's research showing that "gene patents have a relatively small impact because they are so rarely litigated" (0.4% of gene patents versus 1-2% of all patents and 4% of pharmaceutical patents). But the Report suggests that the threat of litigation may be enough to inhibit second opinion GDTs, albeit with the disclaimer that "evidence on these impacts is limited and mixed."
Turning to the second question, the Report studied the effects second opinion testing would have on existing patent rights holders; as with the other portions of the Report, the Office was forced to reach its conclusions (that the effect would be minimal) with little and conflicting data. Logically, the Report concludes that, provided that the exclusive rights holder must perform the primary GDT to raise the need for a confirmatory test, she will have received her profit from the patented testing so that secondary tests would not negatively affect her. However, the Report does acknowledge that "cheaters," laboratories purportedly performing confirmatory testing but in reality also offering the primary GDT, would have a negative effect on current rights holders by profiting from their infringement without recompense to the patentee.
The third question, whether exclusivity for GDTs impacts the practice of medicine, was also the subject of "little evidence," and the Report noted that "the most important element of interpretation that may lead to a need for confirmatory genetic testing is when a negative test result is obtained and the doctor has reason to believe that the primary test results showing no anomalies may be in error due to other patient characteristics, including other genetic factors that may be available from more comprehensive, independent tests." With regard to the frequency with which rights holders "interfered" with diagnostic testing labs, the Report states that only 12 of 461 tests had any "patent enforcement activity" and that "all twelve [of these] tests were offered by eleven or more laboratories." And the Report states that it is "unclear" how these situations would relate to confirmatory testing scenarios.
Finally, in this section the Report looks into "the role of cost and insurance in genetic diagnostic testing." Here the Report buries the lede, stating what should be self-evident: that the cost of confirmatory GDTs is "generally not covered" by public and private insurance. This includes Medicare, as well as the private insurers Aetna, WellCare, and Capital Blue Cross. The Report found "little evidence  that prices for exclusively-licensed genetic tests are significantly inflated relative to what they would be if they did not hold an exclusive position in the marketplace" (citing, inter alia, the SACGHS Report). Insurance, not patents, are the major determinant on whether a GDT is performed in the first place, according to the Report. This portion of the Report concludes:
Insurance coverage plays a central role in making primary genetic tests accessible to patients. Because insurance coverage policies, both governmental and private, do not generally cover confirmatory genetic testing, a significant number of individuals who may seek confirmation of a specific test result will likely forgo it due to cost, even if it is available from independent providers. Accordingly, while the USPTO does not find sufficient evidence to recommend specific changes to insurance coverage for gene-related diagnostic tests, such coverage should be considered in any discussion of access to confirmatory genetic diagnostic testing.
Which should, in a rational world, end the discussion of whether patent law needs to be changed to provide greater access to GDTs.
The final section of the Report's Discussion considers the hypothetical case where there is mass screening for a genetic marker, instead of targeted screening for those patients at risk for a particular disease. Under those circumstances the Report posits an increased need to secondary GDTs because the recognized risk in a particular population for a particular disease makes detecting false negatives more likely. But the Report recognizes that this is merely a hypothetical situation.
In light of these studies the Report makes several recommendations. The Office makes its recommendations expressly in light of the Mayo and Myriad decisions, which "have made it very unlikely that new patents will be issued or that existing patents will be sustained by the courts if they claim naturally occurring products or methods using a natural phenomenon broadly enough to preclude all ways of carrying out a diagnostic test for the condition related to the particular product or natural phenomenon." Under these circumstances, the Office recommends that Congress:
• Continue to monitor the situation to detect any barriers to access;
• Consider a mechanism to facilitate sharing test results; and
• Consider the importance of cost and insurance coverage in any policy discussions.
Once again the Report puts the most important finding last. In explicating the role of insurance, the Report described how the Centers for Medicare and Medicaid Services (CMS) determine whether a test is to be covered, applying a "reasonable and necessary" standard. Confirmatory tests, "especially for germline gene mutations," are considered to comprise "duplicate testing" and hence are not covered, a policy that the Report states "appears to hold true for the insurance industry as a whole." Thus, almost all patients who want to have a confirmatory GDT will need to pay the cost out of pocket, and the results discussed in other sections of the Report show that this reduces the likelihood of such testing being done (in some cases by about 5.5-fold). But ultimately the Office states that:
The USPTO has neither the authority nor the expertise to assess whether it would be appropriate for broader scale confirmatory testing to become more common for screening purposes in the future or to recommend specific actions that Congress may wish to consider should that occur. Therefore, this report can only emphasize that insurance coverage does appear to play significant a role in access to testing and should be taken into consideration should such a potential issue be examined.
And the Report concludes with what can best be described as admirable understatement:
The findings presented in this report demonstrate foremost that much of the debate surrounding the role and impact of patents and exclusivity in genetic diagnostic testing has taken place in the absence of hard data and rigorous analysis, with little empirical support for the often far-reaching changes proposed in legal, economic, or regulatory policy.
As well as the recognition that the nirvana of widespread genetic testing being offered by university and other small labs may not be as beneficial as advertised:
It is also worth noting that the changing legal landscape will provide an opportunity for many potential providers, including many relatively small university-based molecular pathology laboratories, to enter the business of providing gene-based tests. A possible consequence of this entry may be that larger-scale commercial entities will not develop and market tests because of the risk that they cannot recoup their investments. The availability of tests on a small-scale or even local basis by a number of providers may have several potentially negative consequences. First, the quality of these "home-grown" tests may be highly variable, with some labs providing high-quality tests and others developing and providing lower quality tests. Second, results may be shared only as individual laboratories see fit to publish them in journals, and the rapidity of bringing results to publication may vary significantly from one laboratory to another. Third, the availability of tests in a fragmented market may be limited even when there are good mechanisms for publicizing what tests are being done and by whom. While many tests are offered now on a national basis, by virtue of being licensed to national providers, university-based molecular pathology laboratories may not have the resources or desire to cater to a broad, or nationwide patient population. As Congress considers the many issues surrounding diagnostic testing in general, including quality and regulation, it should keep these considerations in mind.