Finlay, Anne --- "Gene Patenting: Seeking Benefits for All" [2003] ALRCRefJl 10; (2003) 82 Australian Law Reform Commission Reform Journal 52

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Reform Issue 82 Autumn 2003

This article appeared on pages 52 – 57 of the original journal.

Gene patenting: seeking benefits for all

By Anne Finlay*

In 2001, the Hon Justice Michael Kirby writing in Reform about human genetics and patent law said “the fundamental problem is that of ensuring that the benefits of the completion of the first draft of the human genome sequence should be available to all humanity.”¹

This ‘fundamental problem’ is the subject of the Australian Law Reform Commission’s (ALRC) latest reference: Intellectual Property Rights over Genetic Materials and Genetic and Related Technologies. This new inquiry has a particular focus on human health issues and follows the ALRC’s current inquiry into the Protection of Human Genetic Information. Intellectual Property issues were identified in that inquiry — but its terms of reference did not extend to a full examination of these issues. That inquiry is due to issue its report by the end of March 2003.

The ALRC has been asked by the federal Attorney-General to complete its gene patenting report and recommendations by the end of June 2004. In line with its usual practice, the ALRC will have an extensive public consultation process and plans to release an Issues Paper around mid-2003 and a Discussion Paper early in 2004.

The Terms of Reference require the ALRC to consider the following matters, with a particular focus on human health issues:

(a) the impact of current patenting laws and practices — including licensing — related to genes and genetic and related technologies on:

(i) the conduct of research and its subsequent application and commercialisation;

(ii) the Australian biotechnology sector; and

(iii) the cost-effective provision of health care in Australia;

(b) what changes, if any, may be required to address any problems identified in current laws and practices, with the aim of encouraging the creation and use of intellectual property to further the health and economic benefits of genetic research and genetic and related technologies; and

(c) any other relevant matter.

Background

The sequencing of the human genome, 97% of which was completed by the Human Genome Project consortia by mid-2000, has already led to a number of highly significant medical breakthroughs. The identification of the genes responsible for a range of diseases or increased susceptibility to them has been followed by the development of predictive tests, diagnostic tests and advances in gene therapy and drug therapy.

More than 9,000 patents have been granted internationally on human gene sequences with some 125,000 applications lodged. One writer has suggested that “acquiring proprietary rights in aspects of the human genome and its downstream products promises to be the gold rush of the twenty-first century.”² Patents, by bringing financial rewards to their owners, can stimulate the development of skills, expertise and technological infrastructure and bring about improvements in health care and biomedical research.

But of all the issues raised by advances in genetics, patenting has been among the most controversial. As the quote from Justice Kirby suggests, the commercialisation of medical research has its disadvantages. The rewards for invention are the licence fees and royalties that must be paid to the owners and licensees of patents. For countries that are net importers of biotechnology — and this includes Australia — patents have significant financial implications. For governments who pay a substantial proportion of health care costs, licence fees and royalties impact on budgets and clinical decisions. A report for UNESCO claims that unless the increase in patents in relation to the human genome is curtailed “the cost of future therapies and genetic tests will become prohibitive for most human beings and nations.”³

There are three broad themes: the first is a legal one involving the interpretation of patent law and when patents can be granted over genetic materials and genetic and related technologies. Obligations under international trade law treaties are also relevant as is the interface with competition laws. The second theme involves policy questions about the impact of patent protection on health care costs, on the availability of best practice medicine and on life science research. Finally there are ethical issues. Many commentators argue there is a fundamental question about whether property rights should extend at all to biological and especially human material. Some say the genome should be given special consideration and that its information should be available to all and they express concern that before too long all 35,000 or so human genes could be patented allowing the patent owners to be beneficiaries of the work of later researchers who might discover other uses to which the gene or genetic material could be put.

Patent Law

Patents were developed to encourage research and reward innovation. They grant a patent holder a monopoly to exploit their invention for the period of the patent. The gist of a patent is the right to exclude or control exploitation by others — there is no general requirement that the patent holder make use of their rights. This protection lasts for the term of the patent — 20 years. The benefits that result from patents are twofold: financial reward to a successful exploiter of a patent and benefits to society from the development of products that might not otherwise be developed. As McKeough and Stewart say, “without the assurance of patent protection or some other proprietary right few firms would be willing to spend millions of dollars on research.”⁴

Patent law requires that an invention be a manner of manufacture that is ‘novel’, ‘inventive’ and ‘useful’⁵ and that it has not been secretly used. In Australia — and there are similar restrictions elsewhere — the Patents Act 1990 (Cth) says human beings, and the biological processes for their generation, are not patentable.⁶

Until a decision of the United States Supreme Court in 1980 in Diamond v Chakrabarty,⁷ it was believed that living organisms generally — being part of nature — were not patentable. A majority of the Court held that genetically engineered micro-organisms could be patented. The Court drew a distinction between a ‘product of nature’ which could not be patented and a ‘nonnaturally occurring composition of matter’ which, it said, was patentable.

By the early 1990s, a large number of patent applications were being made for gene sequences. Gene sequences derived from technical means did not breach the requirement that the human body and its elements in a natural state were not patentable. In 1998, the United States Patent Office (USPO) decided that gene fragments were patentable provided the application disclosed a genuine function. The USPO has also determined that an isolated and purified DNA molecule with the same sequence as a naturally occurring one is patentable because an isolated DNA molecule does not occur in nature. The USPO published new guidelines in 2001 requiring that an invention show a specific and substantial utility. These guidelines are said to have made patenting genetic material more difficult.

Australian patent law allows the patenting of genes and gene sequences provided they meet the criteria set out in the Act. Patentable items include DNA, RNA, synthetic genes or gene sequences. The scope and operation of the law will be a central part of the ALRC’s inquiry.

Internationally, there have been complaints that many of the patents that have been granted over genetic material are questionable. As Julia Black has noted “the advent of biotechnology has posed significant challenges for patent law, and many argue that patent law is struggling to meet that challenge.”⁸ One of the key questions concerns the requirement of ‘inventiveness’. There is debate about whether putting living organisms to use in genetic tests or gene therapies is a discovery rather than an invention. Is it an ‘inventive’ step or the use of a naturally occurring phenomenon? Another issue concerns speculative patents: patents granted where the use for the patented material has been unknown at the time.

Some criticisms concern patents over sequences of DNA that are less than a whole gene — ESTs (expressed sequence tags) and SNPs (single nucleotide polymorphisms). Patents over ESTs in some jurisdictions appear to lack specificity in that they fail to disclose the exact location of the original gene or its biological function. Similar issues occur with SNPs which are used as markers to locate disease genes and which are therefore useful in biomedical research and for developing diagnostic tools and pharmaceutical products.

Patents in the international environment

Although each country has its own patent laws, there are a number of international instruments that modify the content of these laws. Broadly the aim of these international treaties and agreements is to promote free trade and competition. However, critics argue that competition can be inhibited by patents and that the more patents there are in an area, the greater the risk of infringement and the greater the possibility of market dominance by those with the financial capacity to control strategic patents.

Signatories to the World Trade Organisation (WTO) — and this includes Australia — are required to adhere to the requirements of the TRIPS Agreement (Trade Related Aspects of Intellectual Property Rights) to provide patent protection for any invention on a non-discriminatory basis. However, TRIPS allows governments to refuse to grant patents to an invention whose commercial exploitation needs to be prevented to protect human, animal or plant life or health⁹ and it allows refusal in the case of diagnostic, therapeutic and surgical methods for treating humans or animals.¹⁰ The degree to which a country can limit patents in the light of this exception is an issue for further inquiry.

TRIPS also allows governments to make limited exceptions to patent rights under certain conditions such as not ‘unreasonably’ affecting the ‘normal’ exploitation of the patent.¹¹ A number of countries have used this provision to allow researchers to use a patented invention on a ‘research-only’ basis.

Additionally TRIPS allows compulsory licensing — permitting someone else to use a patented product or process without permission of the patent owner — under certain conditions. Such conditions could include circumstances where a person applying for a compulsory licence has attempted unsuccessfully to obtain a licence from the patent holder under reasonable commercial terms. Normally a compulsory licence may only be used to supply a domestic market and adequate remuneration must still be paid to the licence holder. A key area for the use of compulsory licensing has been pharmaceuticals. Australian patent law has provision for the grant of compulsory licences.

Ethical and policy questions

While the issue of what is patentable does raise some contentious legal questions, many of the key issues in this area are matters of policy and concern the impact of gene patenting on access to health care and on scientific research.

In particular, there are concerns about the impact of patents on the cost and availability of genetic tests that seek to determine the presence of, or susceptibility to, illness or disease, or the presence of a genetic or chromosomal abnormality. Exclusive licensing is one of the key complaints of the medical profession. Where a patent owner grants an exclusive licence to one company, for example to carry out testing in relation to a patented gene, this can have significant effects on the cost and availability of the test.

Case study: patenting the breast cancer gene

Many of the issues for health care resulting from the grant of patents over DNA, DNA sequences and related diagnostic tests, are illustrated by the patents over BRCA1, a gene whose presence has been shown to increase a woman’s susceptibility to breast cancer. The gene was discovered by a team of researchers at the University of Utah in association with a US company, Myriad Genetics. They obtained patents in America for the BRCA1 gene sequence; a number of its mutations and tests for detecting mutations and for screening samples taken from breast tumours. They also obtained patents in a number of other countries giving them a monopoly in many parts of the world over testing for the BRCA1 gene. A number of genetic organisations filed objections to the European patent, and when Myriad obtained a second European patent for diagnosing susceptibility to breast and ovarian cancer, further objections were lodged. In October 2001, the European Parliament adopted a resolution opposing the patenting of the BRCA1 gene.

Those objecting to the patents say they pose a threat to further research and the development of new diagnostic tests and methods, that they will have a serious impact on access to testing and that granting a monopoly is “antithetical to an approach to public health that is based on a commitment to the comprehensive care of patients at high-risk.”¹²

In Australia, the owner of the patent has licensed an Australian company to carry out the tests although at this stage it has not insisted on having the tests carried out exclusively in the laboratory of the Australian company.¹³ The Australian Health Ministers Advisory Council (AHMAC) has identified six issues stemming from any monopoly over BRCA1 gene testing:

• a 2-3 fold increase in testing costs;

• the impact of these costs on clinical priorities and resource allocation in the context of finite health budgets;

• the potential for testing companies to bypass guidelines for best practice and regulations for gene testing and counselling;

• loss of expertise from publicly funded laboratories;

• the potential for incomplete testing at the same time as others are excluded from providing tests; and

• the potential for the exclusive control to stifle further innovation and research.¹⁴

In Canada, the Ontario government has said it will resist threats of legal action from Myriad which says that all diagnostic testing for BRCA1 shall be carried out in its own laboratories. The Health Minister said he did not accept Myriad’s claim to hold a patent and was disregarding its claim and would be prepared to go to court to fight for fair access.¹⁵ In British Columbia, genetic tests for the BRCA gene, which were suspended in 2001, are to resume using techniques from Europe believed not to infringe the Myriad patent.

Research

In his Reform article cited above, Justice Michael Kirby noted an emerging concern about the change that had occurred since the mid-1980s in the tradition of science, turning it “from a discipline that was open, at least in the field of pure science, to one which is now significantly affected by intellectual property imperatives.”¹⁶ Part of this concern stems from companies using information from publicly funded research that has been placed in the public domain to enhance their own private research. The use of knowledge gained from the Human Genome Project to develop patented products is seen by many to be a prime example of this trend. But others see benefits for researchers in getting access to further funds from private corporations who can see long-term gains from assisting public research in return for a share of the discoveries.

However, there are concerns that, because a patent requires that an invention has been kept secret (the novelty requirement), researchers will be reluctant to share scientific knowledge thereby hindering further research and innovation. There are also specific concerns about the patenting of genetic information because no single organisation has the resources to utilise all the genetic information found in an organism. Concerns here are twofold: either that ‘downstream’ researchers will have to pay royalties to those whose patents were granted first because those patents are broad-based and cover functions unknown at the time of patenting (a ‘reach-through effect’) or that tests that could be improvements on existing ones will not be developed because of existing patents.

One Stanford University researcher has found that 25% of US university and commercial laboratories are refraining from providing genetic tests or continuing with some of their research for fear of breaching patents or because they lack the funds to pay royalties or licence fees.¹⁷

Conclusion

Australia, like many countries, is grappling with the many issues raised by the rapid advances in genetic science and the implications of this for health care. As with the pharmaceutical industry, costs of developing new products derived from the knowledge gained from the Human Genome Project can be tens, even hundreds, of millions of dollars. Patents offer the incentive to corporations to invest in this development. But, as this article has noted, intellectual property rights also have the potential to increase costs and restrict access to new therapies. The ALRC’s new inquiry will seek to examine the operation of Australia’s Patent Act 1990 and related laws to determine whether the balance is right.

* Professor Anne Finlay is one of the ALRC Commissioners working on the inquiry into gene patenting.

Endnotes

1. M Kirby, ‘The human genome and patent law’ (2001) 79 Reform 10, 11.

2. A Haas, ‘The Wellcome Trust’s Disclosures of Gene Sequence Data into the Public Domain & the Potential for Proprietary Rights in the Human Genome’ (2001) 16 Berkeley Tech LJ 145, 145.

3. UNESCO, ‘The Human Genome and the Patent Boom Challenge’, Press Release, 11 September 2001, <http://www.unesco.org/bpi/eng/unescopress/2001/01-97e.shtml> 6 January 2003.

4. J McKeough & A Stewart, Intellectual Property in Australia, (1997) 2nd ed, Butterworths, Sydney, 334.

5. In Australia these requirements are in s 18(1) of the Patents Act 1990 (Cth). The section requires that the invention “is a manner of manufacture within the meaning of s 6 of the Statute of Monopolies” and also “has not been the subject of secret use”.

6. Patents Act 1990 (Cth), s 18(2).

7. [1980] USSC 119; 447 US 303 (1980).

8. J Black, ‘Regulation as Facilitation: Negotiating the Genetic Revolution’ (1998) 61 ModLR 621, 646.

9. Article 27.2.

10. Article 27.3a.

11. Article 30.

12. Nuffield Council on Bioethics, The ethics of patenting DNA — a discussion paper, (2002) London, para 4.6.

13. B Quinlivan, ‘Gene screeners test their patents’, Business Review Weekly, 16-22 January 2003, 38-39.

14. Australian Health Ministers’ Advisory Council Working Group of Human Gene Patents, AHMAC Working Group of Human Gene Patents June-September 2001: Final Draft 2 October 2001 (2001) AHMAC, Canberra, 3.

15. C Perkel, ‘Ontario defying American gene company by using new breast-cancer test’, The Ottawa Citizen, 6 January 2003, <http//:www.Canada.com/health/story.html?id={E8B96533-A668-4024-B770-0528E10B2C62}>.

16. M Kirby, ‘The human genome and patent law’ (2001) 79 Reform 10, 11.

17. M Cho, ‘Ethical and legal issues in the 21st century in preparing for the millennium’, American Association for Clinical Chemistry, 1988, 47-53. Reported in Ontario Report to Provinces and Territories, Genetics, Testing & Gene Patenting: Charting New Territory in Healthcare, January 2002, <http://www.gov.on.ca/MOH/english/pub/ministry/geneticsrep02/report_e.pdf> , 42.