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Federal Circuit Court of Appeals Upholds Biotech Gene Patent

Written By Brian Hicks

Posted August 20, 2012

Myriad Genetics Inc. (NASDAQ: MYGN) received a major boost when a 2-1 panel of the U.S. Federal Circuit Court of Appeals in D.C. reaffirmed the company’s right to patent the BRCA1 and BRCA2 genes, which are linked to hereditary breast and ovarian cancer.

Myriad’s gene test, BRACAnalysis, has proven quite successful; women testing positive have demonstrated an estimated 82 percent higher lifetime risk of breast cancer and 44 percent higher risk of ovarian cancer.

All the same, the biotech firm was rejected in its bid to patent methods for comparative DNA sequence analysis.

According to the lawsuit – brought by the American Civil Liberties Union against Myriad and the University of Utah Research Foundation jointly – Myriad’s patenting is illegal and curbed the progress of medical research in the area, while also restricting patients’ access to critical care. And, of course, it violated the First Amendment.

From Reuters:

But Circuit Judge Alan Lourie, writing for the court majority, said, “Everything and everyone comes from nature, following its laws, but the compositions here are not natural products. They are the products of man, albeit following, as all materials do, laws of nature.”

This has been a controversial case, and the decision on Thursday arrived five months after the Supreme Court had earlier ruled (regarding a blood test created by Prometheus Laboratories Inc.) that private companies cannot patent observations concerning natural processes. Subject to this ruling, the Supreme Court reversed an earlier Federal Court decision that supported Myriad and insisted upon a review.

Myriad’s patents have received a fair bit of flack from various high-profile groups like the American Medical Association, the American Society for Human Genetics, and the Association for Molecular Pathology. In fact, Dr. James Watson – of the double-helix DNA structure discovery – has argued that the court’s decision failed to fully comprehend the stakes.

Dr. Watson told Reuters:

“It is a chemical entity, but DNA’s importance flows from its ability to encode and transmit the instructions for creating humans. Life’s instructions ought not be controlled by legal monopolies created at the whim of Congress or the courts.”

Myriad’s counter-argument is that once the genes in question are removed, the process alters their fundamental chemical structure. It is this altered chemical form that Myriad is focused on, rather than its raw state within the human body. The key issue appears to be the isolation process, which renders the BRCA1 and BRCA2 genes in isolation outside of the human body.

The biotech industry cheered the decision, pointing out that much of DNA research is based on the premise that innovative claims in the DNA research sector are, indeed, patentable.

Myriad’s test identifies the subject’s genetic risk for breast and ovarian cancer, and costs $3,000. However, the test does not look for significant rearrangement on genes—something that the National Comprehensive Cancer Network has recommended be included in testing—and so doctors often need to prescribe a second test. This test, running around $700, is not always covered by insurance.

Myriad shares traded at $24.86 on Thursday afternoon, showing a drop of 13 cents. They were up 2.05% to $25.90 on Monday morning.