On March 20, 2012, the U.S. Supreme Court announced a highly anticipated ruling and rejected the patents associated with Prometheus Laboratories (Prometheus) GI in-vitro diagnostic (IVD) test.  The patents concern the monitoring of thiopurine therapy for autoimmune diseases; the court declared that the Prometheus process is not patent eligible. On March 26th the Supreme Court next ordered the U.S. Court of Appeals for the Federal Circuit (CAFC) to revisit whether human genes are patent eligible and to reconsider its earlier decision to hold valid patents for Myriad's BRCA1 and BRCA2, which are two-specific gene mutations linked to breast cancer.

These two rulings were made at the same time that the Supreme Court was preparing to hold hearings on the legality of the new healthcare reform law in the United States. Broadening access to healthcare, paying for it, and making healthcare more affordable are key tenets of the healthcare reform law. The proliferation of expensive biomarker tests and targeted therapies are just some of the factors that are driving up healthcare costs. In the following sections we discuss the two cases involved and the likely outcome of the Court's decisions. Though there is no direct correlation between these two cases and the oral arguments before the Supreme Court involving the healthcare reform law, the Court's timing is certainly intriguing.

Prometheus and Myriad Patent Cases

In 2004, Mayo Collaborative Services (Mayo) announced its intent to develop, market and sell its own, somewhat different, GI diagnostic test after having previously purchased and used a test that was developed by Prometheus. Prometheus in return filed suit against Mayo claiming patent infringement. The lawsuit was rejected by the District Court, stating that the processes claimed by the patents effectively claim natural laws or natural phenomena namely, the correlations between thiopurine metabolite levels and the toxicity and efficacy of thiopurine drugs and therefore are not patentable. The ruling was overturned by the CAFC, which led to a Supreme Court hearing in December 2011. Finally, in mid March 2012, the Supreme Court announced its final decision, declared the patents invalid, and voiced the concern: Monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it.

Following this announcement, the diagnostic industry is waiting to hear the conclusion and final rulings on the related Myriad patent investigation, which has been pending since at least 2009. In that case, the District Court ruled that all claims-in-suit from Myriad's BRCA1 and BRCA2 patents were invalid. Claims directed to isolated DNAs are not markedly different from native DNAs and that claims directed to diagnostic and screening methods involve no more than mental processes.  Myriad appealed the District Court's decision to the CAFC; a hearing followed in April 2011. The CAFC found Myriad's patents valid in July 2011, claiming that isolated DNA molecules are patent-eligible subject matter under 35. U.S.C. §101.

The Supreme Court delayed its ruling in the Myriad case until after it decided the Prometheus case. In light of its March 20th Prometheus ruling, on March 26th the Supreme Court ordered the CAFC to revisit whether human genes are patent eligible and to reconsider its earlier decision to hold the Myriad patents valid.

The Prometheus case ruling and the final ruling in the Myriad case will have a significant impact on future investments made by industry in the development of innovative diagnostic tests. On the one hand, restricting process claims in this arena will prevent monopolies, broaden patient access to new tests, and not implement physicians in patent infringement actions. On the other, the diagnostic industry's struggle with increasingly challenging business models and financial hurdles will intensify and the threat of more competition from copycat lab-developed tests (LDTs) will increase. The fairly limited regulatory oversight that exists over LDTs will lead to varying levels of quality of tests and tests results, which could ultimately increase patient risk and negatively impact treatment decisions. For now, stakeholders continue to struggle with uncertainty.

Implications of the Supreme Court ruling on the diagnostics and personalized medicine industries

The Supreme Court decision introduces a level of uncertainty in the burgeoning field of personalized medicine and companion diagnostics that is unfortunate. It will likely impact investment decisions as well as partnering/business development decisions and diagnostic technology valuations. It will also further aggravate discussions about the relative value of a companion diagnostic in comparison to the value of a drug therapy that diagnostic and therapeutic companies must negotitate when entering into personalized medicine partnership agreements.

Some experts may argue that the Supreme Court ruling will be limited in scope due to the extensive prior art in the Prometheus case covering thiopurine therapy, known issues of metabolite toxicity, and the highly general language of the method claims. However, in its ruling the Court was also quite adamant that patent law not inhibit further discovery by improperly typing up the future use of laws of nature. The Court views laws of nature as the basic tools of scientific and technological work and is against creating monopolies that unduly monopolize their use in the field of medicine.

As the field of using diagnostic tests to inform targeted therapy continues to develop, the patent claims most likely to be at risk from the Prometheus ruling are process claims that cover the use of a diagnostic marker or test to inform a therapy. Patents that claim the mechanical steps of performing a diagnostic test will likely fare better but those that claim methods to determine treatment choice have likely been dealt a severe blow.

This decision could be the tip of the iceberg in terms of invalidating claims that use "commonly-known" markers to monitor a patient who is then treated differently based on the marker analysis. The obvious result will be greater difficulty for diagnostic companies to obtain the value they desire from the personalized tests they develop. Many diagnostic companies have eagerly anticipated growth from the development of biomarker tests that can be used to identify the correct drug or dose for a particular patient.

A disturbing amount of uncertainty arises from the Court's ruling over the patentability of methods of use for "new" and novel biomarkers to inform therapy. Compositions of matter claims for new biomarkers and diagnostic tests are less likely to be impacted by the Prometheus decision but must now await the outcome of the CAFC's review of its earlier Myriad decision. The Supreme Court noted the many medical experts and trade organizations that argued for and against the granting of patents to cover diagnostic laws of nature. It also noted that Congress if it so desires may need to craft rules as appropriate to protect diagnostic inventions as it has already done for plant patents.

In the meanwhile, the Prometheus ruling has the potential to significantly alter the market dynamics in the diagnostic and clinical testing industries. If the use of a test, whether to diagnose a condition or monitor a therapy, has been significantly weakened by this decision, then diagnostic companies who are developing FDA-approved companion diagnostics to be used to inform targeted therapies will be overrun by non-FDA approved tests developed by CLIA-licensed clinical laboratories that can develop their own slightly different test to diagnose or monitor the condition¬. The already challenging business model for in vitro diagnostic (IVD) companies will be even less sustainable.

A likely result is that more companies will opt out of the development of companion diagnostic IVD kits, which will change how pharmaceutical companies pursue biomarker-based drug development and commercialization strategies. One certainty however, is that patent lawyers will be even more in demand!

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