One of the central policy issues injected into the current case of AMP v. Myriad Genetics is whether the BRCA patents are good for innovation and ultimately for patients. Specifically, ACLU and PubPat allege that the patents have hindered research, blocked innovation, and harmed patient access to BRCA testing. No matter how many times these allegations are repeated, all available evidence shows concerns over research and innovation to be unfounded. More importantly, two natural experiments give us an opportunity to evaluate actual patient access to testing, the ultimate measure of whether the patents are doing their job of incentivizing delivery of new technology to the public. Both of these experiments show that exclusive licensing of strong “gene patents” not only does not harm patient access to quality testing, but is instead vital to it.
In the impassioned words of Linda Bruzzone, a Lynch syndrome mutation carrier and head of Lynch Syndrome International: “Many of us with Lynch Syndrome wish there had been a patent in place for us. It would have protected us and perhaps protected the lives of our loved ones.” L. Bruzzone, Oral Comments at USPTO Public Roundtable on Genetic Diagnostic Testing (January 10, 2013).
If There Really Was a Problem, Shouldn’t We Have Seen Something by Now?
Commentators have expressed concern about so-called “gene patents” from the beginning. Perhaps the most popular theory underlying opposition to gene patents is the “tragedy of the anticommons” proposed by Michael Heller in 1998. The theory essentially goes as follows:
In an anticommons, by my definition, multiple owners are each endowed with the fight to exclude others from a scarce resource, and no one has an effective privilege of use. When there are too many owners holding rights of exclusion, the resource is prone to underuse — a tragedy of the anticommons.
Heller, The Tragedy of the Anticommons: Property in the Transiton from Marx to Markets, 111 Harvard Law Rev. 621 (1998).
Heller and Rebecca Eisenberg attempted to apply this new theory of the anticommons to biomedical research, with particular emphasis on DNA patents. See Heller & Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 Science 698 (1998). This article caused quite a stir in the academic community, with numerous authors parroting the theory and, most problematic, presenting the “tragedy” as specifically applied to gene patents as a fact.
More recently, those studying biomedical innovation have begun to amass an impressive body of research showing there is no anticommons at all. For example, a 2005 study found that researchers rarely worried about patents and patents caused no project abandonments. Walsh et al., View from the Bench: Patents and Material Transfers, 309 Science 2002 (2005) (“[O]f 381 academic scientists, even including the 10% who claimed to be doing drug development or related downstream work, none were stopped by the existence of third-party patents, and even modifications or delays were rare, each affecting around 1% of our sample.”). A 2007 study found “[v]ery little evidence of an ‘anticommons problem.’” Am. Ass’n. for the Advancement of Sci., International Intellectual Property Experiences: A Report of Four Countries 23, at p.12 (2007). The list goes on and the evidence is mounting: “[T]here is at present no strong evidence that the ‘anti-commons’ concern has had a major impact on the research community.” Caulfield, Human Gene Patents: Proof of Problems, 84 Chicago-Kent L. R. 133, 136 (2009).
A careful review of the original Heller & Eisenberg article makes these findings unsurprising. While gene patent opponents co-opted the Heller & Eisenberg paper as the primary theoretical basis for their claims of harm, the paper explicitly contrasted patents directed to fully characterized genes (which would clearly include Myriad’s) against patents to uncharacterized gene fragments (i.e., expressed sequence tags or ESTs). In fact, Heller & Eisenberg appeared to accept as unproblematic “patents on genes generally correspond[ing] closely to foreseeable commercial products, such as therapeutic proteins or diagnostic tests for recognized genetic diseases.” Heller & Eisenberg at 699 (emphasis added). It was the NIH’s practice of patenting numerous ESTs, with no discernible function but which might incidentally cover an unforeseeable product, that for Heller & Eisenberg introduced the possibility of an anticommons. They were essentially worried about an EST thicket (which never materialized).
The recent findings of a lack of any anticommons effect have led some commentators to push back against the impassioned calls for, e.g., bans on gene patents. “Surely, if patents caused a problem warranting immediate policy action, there would be some clear, discernible effect.” Caulfield at 138. As noted by Christopher Holman:
The paucity of documented examples in which the fears surrounding gene patents have manifested themselves is striking, particularly when one considers the high level of public concern and the extraordinary nature of the proposed legislative fix.
Holman, The Impact of Human Gene Patents on Innovation and Access: A Survey of Human Gene Patent Litigation, 76 UKMC L.R. 295, 300 (2006). In other words, if there really was a pernicious problem as ACLU and others claim, shouldn’t we have seen something by now?
Patents Incentivize Investment in and Commitment to Translation From Basic Discovery to Commercial Availability
The absence of any evidence of a systemic problem should be enough to dismiss claims of harm caused by gene patents. But some simply cannot let go of the theory on which they built their ideological case against gene patents. Unfortunately for the misguided attack on gene patents, even the supposed epitome of what is wrong with gene patents turns out to instead be a brilliant example of what is right.
Many gene patent opponents focus on the initial discovery of the BRCA genes and invention of isolated BRCA-related DNA molecules, arguing it would have happened with or without Myriad. But for those who take the long-view and are genuinely concerned about actual patient access to life-saving technologies more than theories, the whole inquiry is irrelevant. The real question is whether, without the patents, the basic science discovery would have been successfully translated into a widely-available, quality product for patients.
First, a quick look at Myriad’s efforts and struggles to deliver the gold standard in genetic sequencing to as many patients as possible. Myriad has invested over $500M in developing and refining its BRACAnalysis® product and, more importantly, in raising physician, patient, medical society, and insurance company awareness of hereditary breast and ovarian cancer (HBOC) syndrome. A recent study found that such investment in public awareness for genetic tests that are non-exclusively licensed does not happen:
In the context of breast cancer testing, Myriad has a strong incentive to “get the word out” about genetic testing for inherited risk of breast cancer. This incentive is stronger for BRCA testing, for which Myriad is sole US provider, than for colon cancer testing, where there are alternative providers. […] The social benefit from this incentive is more public knowledge of test availability.
Cook-Deegan et al., Impact of gene patents and licensing practices on access to genetic testing for inherited susceptibility to cancer: Comparing breast and ovarian cancers with colon cancers, Genet. Med. (2010) 12:S15-38.
It took 17 years before Myriad finally broke even and became a profitable company. Myriad has spent years and millions of dollars collaborating with hundreds of researchers studying the BRCA genes and has performed tens of thousands of free tests to establish the clinical importance of BRCA testing. As result of this investment, numerous medical societies have clear, well-validated guidelines on who should get tested and virtually all major private and public payors reimburse BRACAnalysis® testing (such that the average out of pocket cost to patients is less than $100.). Further, Myriad has generous programs to help uninsured and underinsured patients get affordable access to BRCA testing.
It wasn’t just a monetary investment that the patents spurred; Myriad’s commitment goes much deeper than money. For example, many in the mid- to late-1990s actually opposed widespread clinical testing of the BRCA genes. As reported in a 1999 article in Reason Magazine,
[A] 53-member panel of ethicists and lawyers chaired by Stanford University law professor Henry Greely [declared] “The test for BRCA1 should be confined to the research setting.” […] The ethics panel advised women not to take the commercial test for BRCA1….
Francis Collins, the director of the Human Genome Project, agreed in U.S. Senate testimony in 1996 that the BRCA1 test should not be commercially available to women. According to Collins, the information that a woman might get from such a test is “toxic.”
Bailey, Warning: Bioethics May Be Hazardous to Your Health. Bioethics and the wisdom of giving patients distressing genetic information are still controversial today. But the question of whether the concerns were well-founded is beside the point. It is difficult to imagine any company without a strong, exclusive patent position enduring years of losses to overcome this kind of opposition and deliver life-saving testing to patients.
Patent Exclusivity Increases Access to HBOC Compared to Lynch Testing
Delivering quality testing to as many appropriate patients as possible should be the ultimate goal of the patents and, thus, the ultimate measure of whether the BRCA patents are beneficial. Not how many providers offer the test. Not whether researchers subjectively feel unfettered to tinker with the genes. Not whether integrated or public health systems can maximize workflow efficiency by performing the test in public hospitals. Comparing testing levels of HBOC syndrome versus Lynch syndrome in the United States shows that the BRCA patents have led to wider patient access to higher quality testing.
Background. HBOC syndrome is a disorder caused by a mutation in, e.g., BRCA1 or BRCA2. Lynch syndrome is a disorder caused by a mutation in a mismatch repair genes, which predisposes a person to colorectal, endometrial, and other cancers. HBOC and Lynch share numerous similarities that make for an excellent comparison between exclusivity and non-exclusivity in genetic testing.
- Similar prevalence in overall population …
- HBOC ~ 1/400
- Lynch ~ 1/440
- Similar prevalence in cancer population …
- HBOC ~ 7% of breast cancer
- Lynch ~ 3-5% of colorectal cancer
- Similar prevalence/mortality for breast cancer and colorectal cancer
- Breast cancer à 2nd most commonly diagnosed cancer & 3rd highest in estimated yearly deaths
- Colorectal cancer à 4th most commonly diagnosed cancer & 2nd highest in estimated yearly deaths
- Similarly drastic increases in cancer risk with each syndrome
The patent landscapes for HBOC and Lynch are quite different, however. The patents first disclosing the BRCA genes are exclusively licensed to Myriad, while the patents for the Lynch genes are non-exclusively licensed. As such, NCBI’s Genetic Testing Registry lists only one provider of full-sequence BRCA analysis (Myriad) and 15 providers of Lynch testing.
Myriad itself offers Lynch syndrome testing. Using internal Myriad data based on market analysis and competitive intelligence, the following statistics show that this difference in patent landscape has driven a marked difference in test quality and utilization.
Pricing. One of the most common allegations by gene patent opponents is that gene patents lead to higher prices. This is clearly untrue as to HBOC v. Lynch. As noted by the Duke IGSP: “Prices for BRCA1 and 2 testing do not reflect an obvious price premium attributable to exclusive patent rights compared with [Lynch] testing, and indeed, Myriad’s per unit costs are somewhat lower for BRCA1/2 testing than testing for [Lynch].” Cook-Deegan at S15 (Abstract).
Quality. Some allege that patents lead to patent holder complacency and lower test quality. This is also untrue. One of the best examples is the issue of variants of uncertain significance (“VUS”). A VUS is a change in a patient’s gene where it is currently unclear whether the change leads to increased risk of disease. Myriad has invested $100Ms in reclassifying VUS. As a result, Myriad’s VUS rate is less than 3% for HBOC while the rate of VUS for non-Myriad Lynch providers ranges from 15% to 30% depending on the gene. Similarly, Myriad’s average turn-around time for BRCA testing is less than two weeks, while the average for non-Myriad Lynch providers is around double that.
Access. Finally, far more patients get tested for HBOC than for Lynch. From June 2010 to the present, Myriad tested nearly 340,000 patients for HBOC. Over the same period, just over 70,000 patients received Lynch testing. Thus, a single, incentivized provider performed almost 5X as many HBOC tests (of higher quality at a similar price) as 15 different Lynch providers. Again quoting Linda Bruzzone on the problem of a lack of “ownership” in genetic testing:
It is our belief, had there been a single patent for Lynch syndrome, public awareness would be far more enhanced. More physicians would have knowledge of the condition in order to diagnose affected persons. Tests would be improved and confusion over the testing process would alleviate with one central repository. Many more lives would have been saved. Many of our families wish there would have been one central company, with a patent and believe it could have saved the lives of our families.
L. Bruzzone, Written Comments on Genetic Diagnostic Testing Study, USPTO Public Roundtable on Genetic Diagnostic Testing (January 10, 2013).
It Is the Same Story When BRCA Testing Is Compared Between US and Europe
Perhaps an even better comparison than HBOC versus Lynch is a comparison within HBOC: USA versus Europe. While nominal differences between HBOC and Lynch are very unlikely to account for the marked difference in quality and utilization, comparing US BRCA and European BRCA excludes even these differences as possible causes.
For this analysis, data was compiled from data that Myriad separately commissioned from a third-party consultant to analyze the HBOC testing market in five key European countries: Germany (DE), France (FR), Switzerland (CH), Italy (IT), and Spain (ESP). Considering these countries as a group, which I will call simply “Europe” for the purposes of this article, they are roughly comparable to the US in both population and per capita GDP (Europe is roughly 75% of US in both measures).
The patent landscapes for BRCA in the US and Europe are quite different. While Myriad has exclusive license to BRCA patents in Europe, the attitude in Europe toward the patents is very different from the US. N. Hawkins, The Impact of Human Gene Patents on Genetic Testing in the UK, 13 Genet. Med. 320 (2011) (“[G]ene patents are essentially ignored.”). As such, NCBI’s Genetic Testing Registry lists only one provider of full-sequence BRCA analysis in the US (Myriad) and 25 providers in Europe. This difference in provider exclusivity has driven a striking difference in test quality and utilization despite similar or better prices at Myriad.
Average Turn-Around Time (in weeks)
Access. What about actual patient testing, our “ultimate measure” of the value of the patents? Far more patients get tested for HBOC in the US than in Europe. Adjusting for population differences, none of the countries in this sample reaches even 40% of the proportional utilization of HBOC testing in the US:
What Can We Learn From This?
Many gene patent opponents attack the patents on innovation grounds (“They stifle innovation”). All available evidence shows this to be false. Some attempt to link gene patents to harms in patient welfare (“The patents lead to more expensive, lower quality tests”). Myriad’s experience shows there to be no link.
An endpoint analysis of how many patients get what quality of testing at what price under the exclusive provider and non-exclusive provider models shows that the incentives found only in an exclusive provider model result in better, faster, reasonably-priced tests delivered to vastly more patients. The data presented here suggest a significant positive effect of gene patents on patient access and explain the yearning amongst many patients for an incentivized standard-bearer in genetic testing. When coupled with the complete lack of data suggesting any negative effect, these data strongly warn against the drastic “solutions” to a non-existent problem offered by gene patent opponents (e.g., invalidating in the Myriad case 30+ years of patents on which the biotech industry is built).
About the Author
Benjamin Jackson is Senior Director, Legal Affairs, at Myriad Genetics.
Join the Discussion
15 comments so far.
Robert Cook-DeeganMay 29, 2013 02:22 pm
Thank you for posting this. Very helpful, and this does directly respond to my concern noted (far) above. Great that you put it (again) on the record. Sorry I missed it in the court documents.
Ben JacksonMay 29, 2013 01:35 pm
On the question of what the $500M applies to, it is for BRCA testing development, marketing, research, etc. Nothing from drug development or any other activity. Including those (especially the drug efforts) would presumably make the number much higher.
Of note, this number is from court filings and public statements made near the beginning of the litigation (~2009). Current numbers would be higher.
Robert Cook-DeeganMay 23, 2013 02:22 pm
I’m aware you and several other highly experienced patent attorneys know what “isolated” means. Problem is no case law to settle the matter on the issue of diagnostics. Bryson notes it’s never been directly addressed.
At a meeting a year ago, we displayed some actual claims on a screen, in a room filled with 20 or so extremely experienced patent attorneys, some of whom wrote the original “isolated” claims language into first-generation gene patents (for their clients). Wouldn’t characterize them as “dabblers,” and I doubt you would either. We got very strong opinions; problem was they were different, incompatible, and untested under case law. Or at least that was the conclusion we came to. Another observation was they probably *don’t* have to overrule Chakrabarty in order to interpret what “markedly different” means and how it maps to “isolated.” Let’s hope the Supreme Court clarifies it one way or another.
Gene QuinnMay 23, 2013 02:01 pm
There is wide difference of opinion about the interpretation of “isolation” among non-patent attorneys and others who are dabbling in this case. Those largely masquerading as experts on the topic don’t understand what it means and have done their level best to thoroughly confuse the issues, the public and the media. The legal community, however, is in near complete unanimity with respect to what “isolated” means and what is required for patent eligibility. For the Supreme Court to rule against the understanding of the legal community they will either need to expressly or implicitly overrule Chakrabarty.
Robert Cook-DeeganMay 23, 2013 12:28 pm
More detail in the brief noted above (my previous post).
But briefly, yes to cDNAs (patent-eligible). Re “isolated” DNAs, depends what the word means (and the definition in the patent does not help). It’s readily apparent there’s wide difference of interpretation in how the claims should be read. That’s something the S Ct may well comment on, although “isolated” (surprisingly) only got obliquely addressed in oral arguments.
Gene QuinnMay 23, 2013 10:54 am
You say: “I think I made pretty clear I’m no longer obsessing over R&D costs.”
The problem so frequently with you is that you just don’t debate fairly and honestly. You also seem to forget that those who are interested can go back and read what you have written in this chain. You are the one who brought up R&D costs, and you have done it repeatedly despite it being wholly irrelevant to the issues. In fact, two comments ago you said:
“I hope Mr. Jackson will share what he learns about the R&D figures, as it will allay my concerns…”
By any fair interpretation of what you have said you are indeed obsessed with R&D costs and for reasons that are a mystery think that Myriad ought to lay open their books to allay your concerns.
Seriously, Robert, why all the focus on the irrelevant? It almost seems as if you have to dwell in the irrelevant in order to muddy the waters and confuse those who are not knowledgeable about the issues and the debate.
When talking about the composition of matter claims you say: “Whatever S Ct says will bear on those claims.”
Again, you are making a blanket statement that you don’t know to be correct, but which is portrayed as absolute. Is it possible the Supreme Court will address the claims? Yes. But excuse me for paying attention to the issue the Supreme Court actually granted, which is the broad and open ended question about whether human genes are patent eligible. The Supreme Court could well say that human genes are not patent eligible. That, of course, will not answer the claims in the Myriad case since they do not claim human genes but alterations that do not exist in nature.
I’d still love for you to address cDNA and the consensus cDNA that is incorporated into the claims. It seems clear that all those claims are and should be patent eligible.
Robert Cook-DeeganMay 23, 2013 10:25 am
I think I made pretty clear I’m no longer obsessing over R&D costs. I asked for clarification and Mr. Jackson provided some.
We’ll learn soon enough what the S Ct says about composition of matter claims on isolated DNA. They didn’t remand Prometheus, but perhaps they will this time. Or perhaps not. CAFC’s already had two cracks, although never did en banc. We’ll find out in the next month or so. No need to speculate. But to be more precise, “Are human gene patentable?” does center on the 2-1 split in CAFC over the 9 composition of matter claims. Whatever S Ct says will bear on those claims.
Re positions, the first thing to say is mine does not matter. It’s the courts that matter. But my preference? Initially I thought this case should not be decided on 101 grounds at all, as the broadest claims are vulnerable via 102, 103 and 112. And I’m not convinced there is a coherent theory for interpreting 101 patentable subject matter. The narrower claims leave room to innovate around. But I liked the Solicitor General’s line of argument as soon as I read it, and wished I had been as smart as Mark Freeman when Chris Holman and I wrote our first brief. So I’m pretty close to where the Solicitor General and Judge Bryson come out.
A more precise and longer answer is in our most recent brief, with Richard Gold, Dianne Nicol. Tania Bubela, Jim Evans, and Julian Kinderlerer, posted here: http://www.genome.duke.edu/centers/cpg/BRCA-resources/documents/Goldetal12-398SCOTUSbriefacademicslawmedpolicyclingenet30Jan2013.pdf.
Gene QuinnMay 23, 2013 09:47 am
Why are you so fixated on R&D figures. You are aware that they are completely irrelevant to the legal and scientific issues in the case, correct? So why obfuscate the real issues with red herrings?
I’m glad to hear you say that you understand the patent incentive. Hopefully you can recall that when you are on panels and giving speeches in the future.
You say: “The fate of the broadest composition claims is now in the hands of the Supreme Court…”
Actually, that is affirmatively false. In a surprise to everyone the Supreme Court actually did not take any issues that relate to the specific claims. They took a single question about whether human genes are patent eligible. Of course, Myriad did not claim human genes, but rather something that is created by man and does not occur naturally.
It really does a disservice to erroneously say that the Supreme Court took Myriad’s claims, and statements like that are why so many question you and the opposition more broadly. It is provably false, yet you say it as if it were true; as if saying it enough times changes the reality of the situation.
Simply stated, the Supreme Court doesn’t have to address any of the Myriad claims. I think the most likely outcome is some broad guidance that lays down principles and then remands to the Federal Circuit to decide.
You say: ” My position is not that these inventors don’t deserve a patent at all; but their claims reached too far.”
So what is your position on isolated DNA and whether it occurs naturally in its isolated form?
What is your position on cDNA?
What is your position on the specific Myriad claims that refer to the consensus cDNA created from hundreds of individuals. Clearly a consensus cDNA put together from hundreds of individuals can’t occur naturally and is specifically incorporated into claims.
Robert Cook-DeeganMay 22, 2013 05:44 pm
Actually, Benjamin Jackson did tell me a bit about the R&D figures he gathered, but did so offline. He says he thinks they really are attributable to BRACAnalysis and BART, and he’s going to check. I hope Mr. Jackson will share what he learns about the R&D figures, as it will allay my concerns, as well as others. I actually agree with you that whether the R&D number attributable to BRACAnalysis and BART is $10 M or $500 M is not decisive. I also know that what I said–that there is a lot of skepticism–is true. I should have made clearer that the number is not important for policy, only for credibility (although I thought I had made it fairly clear already). If Mr. Jackson or someone else from Myriad says they actually did pull together numbers specific to BRACAnalysis/BART, it would go a good ways to addressing that. He’s done that for me, and I hope he will do that for your readers (or perhaps he already has).
I don’t believe most of the things you read into my comments, Gene, since I do think patents do confer innovation incentives. The genes for hemochromatosis (HFE) and the BRCA1 gene were discovered first by companies because they had the prospect of patents. I’ve said so repeatedly and very publicly. I share the Supreme Court Justice’s repeated concerns about removing patent incentives from the portfolio, and I hope they circumscribe their decision in accord with their concerns.
I think Mr. Jackson’s analysis is quite useful, and I’m really glad he did it. I agree with him that the main problem with colorectal cancer genetic testing is underuse among those who could benefit; where I think we differ is in whether exclusivity would solve the problem. That’s for further discussion. What I’m interested in is what would be different if there were exclusivity.
Finally, I agree with all three CAFC judges that the Utah-Myriad-NIEHS team came up with something patentable. My position is not that these inventors don’t deserve a patent at all; but their claims reached too far. The CAFC invalidated the broadest claims of all–the 5 method claims. The fate of the broadest composition claims is now in the hands of the Supreme Court, and their decision matters a good deal more than your or my opinion.
Gene QuinnMay 22, 2013 02:15 pm
So I guess there is an impasse. Myriad provides the numbers and you don’t believe them. Like it or not Myriad has laid out their case so that means the burden has to shift to you and others to disprove. Merely saying that it is unbelievable is hardly evidence. The dismissive nature of the opposition is unfortunately so typical.
Also typical are gross misrepresentations by the opposition. If anything shouldn’t be believed it is the egregious and scientifically inaccurate arguments made by the opposition, which really must call into question everything offered by the opposition. If you are so right then why do you and those who share your views have to intentionally mislead? Fear mongering and scare tactics have lead the public to believe things that are scientifically false and legally untrue. That type of manipulation of those who face the reality of cancer is unconscionable. Using cancer patients, survivors and families like pawns in this battle is unforgivable in my opinion.
Of course, whether it cost $500 million or $100 million or $50 million or $10 million is completely irrelevant. First, no one who is at all familiar with innovation could ever seriously entertain the thought that innovating comes without any cost. Second, the amount of cost isn’t a factor in the patent eligibility equation. Third, no one could seriously argue that developing this test to the point where it is so accurate didn’t take enormous amounts of time and energy. Your focus on one thing you don’t want to believe seems calculated to further mislead and cloud the real issues.
Myriad came up with an important innovation that no one else came up with. The Myriad innovation allows patients and families to make proactive treatment decisions in ways never before possible. To even consider such a breakthrough patent ineligible is mind-boggling and extraordinarily arrogant. It suggests fundamental misunderstanding of innovation and the goals of the patent system since formed in the U.S. in 1790.
Myriad patented it and disclosed it to the public. Many years later the industry wants to say that it is obvious, but refuses to engage in the proper obviousness analysis required by law. The question is whether it is obvious years after Myriad discloses, but rather was it obvious at the time of invention. The factual details do matter in this debate despite all the lies coming from the patent haters who want to pretend that the claims cover something that naturally occurs and give Myriad ownership in an individual.
Finally, it is my understanding that Myriad has never refused any women the test even if the woman cannot afford the test. So this case isn’t about a company denying access to a medical diagnosis as portrayed in the media. This case is about a lot of other companies that want to make money offering the test. So you and the others in opposition are not at all altruistic. You simply want to shift the economic benefit away from the innovator to those who wish to copy.
Robert Cook-DeeganMay 21, 2013 09:28 pm
My comment about the $500M R&D attributable to developing BRACAnalysis (or BRACAnalysis and BART, or BRACAnalaysis and BART and the forthcoming myRisk)is very much the conventional wisdom among those in this line of business. Without a breakdown, it is simply not believed. I admit to skepticism, having been “spun” by Myriad when reporting on access to mutation data. Umpteen drafts of our case studies were shared with Myriad staff saying it shared its data, indeed had contributed more to public databases than any other source. Those statements were drawn from Myriad public statements and were never corrected in draft. I only learned that Myriad *stopped* sharing data by reading Judge Sweet’s ruling in March 2010. When we checked with the databases (BIC and HGMD), it turned out Myriad stopped sharing data in 2004, and the most recent publications referred to data only into 2006. It became obvious I had failed to ask appropriately probing questions and had been naive, hence spun by Myriad’s public statements. I have not talked publicly about this, but it is directly pertinent to this exchange.
Given that for many years, before it spun its pharma arm out after failure of the Alzheimer’s drug in clinical trials, most of Myriad’s R&D was devoted to drug development, the lingering question is how R&D costs are being claimed, and whether they are attributable to BRCA testing as Capone’s and Meldrum’s public statements claim (and now the claim in this blog and many news stories in the wake of the Angelina Jolie, and the “by the numbers” page on Myriad’s website).
Let me be clear, doing drug discovery with revenues from genetic testing was Myriad’s plan from its founding and is perfectly legit. But it is not R&D to improve BRCA testing. My question is whether the $500M R&D costs are total Myriad R&D costs, or those actually attributable to BRCA testing. And if to BRCA testing, how in the world was so much money spent? My suspicion is R&D for drug discovery and development has been bundled with BRCA, but is now being reported as attributable to BRCA testing. I’m happy to be corrected, with some credible year-by-year accounting of R&D attributable to BRCA testing specifically. I have not added up the year-by-year R&D totals reported on 10-K’s, but we could do so. But Myriad is reporting $500M, so someone added up some numbers. I’m asking for details about what into that total, and reporting that the main response among those in the business is that they are inflated.
Gene QuinnMay 16, 2013 08:16 pm
I don’t think you misread the article. Myriad invested many hundreds of millions of dollars. To think that they or anyone else would invest that kind of money without the ability to have an exclusive right is naive to the extreme. Those who think innovation just happen regardless of how many hundreds of millions or billions need to be spent are either intellectually challenged or simply don’t understand finances.
Roy ZMay 16, 2013 04:11 pm
I am confused by your comment Dr. Cook-Deegan when you state “The $500 M in R&D costs attributed to BRACAnalysis are also widely regarded as inflated.” Then you go on to state the costs of setting up a lab and getting CLIA certified coming from the estimation of a laboratory director.
What confuses me is that the article above actually states “Myriad has invested over $500M in developing and refining its BRACAnalysis® product and, more importantly, in raising physician, patient, medical society, and insurance company awareness of hereditary breast and ovarian cancer (HBOC) syndrome.”
I think Myriad is saying that the $500 million covers more than just setting up the lab. I read the article as saying they spent more than $500 million on creating the product and the infrastructure, improving the product, paying to generate the data necessary to prove value to insurance companies, educating doctors and patients on how to use the results of the test in relation to other cancer risk factors, etc.
It would follow then that exclusive patent rights would be required to ensure that Myriad’s efforts are not undermined by free-riders resulting in the disparities seen between the HBOC and Lynch Syndrome tests.
Happy to be corrected if I misread the article.
Robert Cook-DeeganMay 16, 2013 11:04 am
This is a really interesting analysis. There are a few specific numbers cited here that have attracted considerable skepticism because they are not publicly verifiable. First are the reports of VUS rates in Europe. When we have quoted Myriad’s pubic statements (from Meldrum, Capone, etc.) about VUS rates of other labs, European genetics and laboratory experts have shown us much lower rates than the 30 or even 20 percent rates in the proprietary report prepared for Myriad and not shared (so no one can judge the veracity of the figures).
Many do agree Myriad’s turnaround times are excellent, accuracy is excellent, prices are in range, third-party coverage is excellent, and Michael Hopkins and others have lamented that genetic testing in Europe would benefit from more commercial incentives. But don’t take your argument to extremes. The problem with Lynch syndrome testing is not absence of a monopolist. General awareness is far lower, constituencies are far less organized and vocal, physician and consumer education lags, and yes, the patents are fragmented. In MPEG-LA’s patent application (Larry Horn, inventor), they note the disaggregated nature of patent holdings on Lynch syndrome genes. But the problem is not absence of patents, apparently. And what exactly is the argument that the situation would be better if Myriad didn’t just have rights but had exclusive rights? What would it do differently? Be more profitable, surely. But what exactly is the argument here? What exactly is it that an exclusive right to test and not just a right to test and compete would give Myriad that it needs to make testing more consumer-friendly?
The $500 M in R&D costs attributed to BRACAnalysis are also widely regarded as inflated. One laboratory director estimated it costs $25,000 to 50,000 to set up an 80+-amplicon two-gene sequencing test, and ~$2M to set up a CLIA-certified laboratory from scratch. Myriad has indeed done what few if any other companies do to track families with VUS and offer free testing for them; very much to their credit. It is no doubt costly to track the families, maintain the database, and monitor new technologies. But absent a break-down of the $500M estimate, the figures, and specifically attributing all the R&D to BRACAnalysis, will continue to mainly generate disbelief.
So for both the claims about R&D and the claims about VUS call rates, show us the data.
Norman I. JacksonMay 10, 2013 09:24 pm
Insightful and thorough. Thank you