Gene Patents Play Dominant Role in Healthcare Inflation

The challenge between rising technology and healthcare inflation represents the battle of the ages

November 3, 2010 -- The U.S. Department of Justice just issued a friend of the court brief regarding gene patents. If it sticks, it will have a huge impact on medical technology, and its related cost to the U.S. economy.

As you have heard me paraphrase from the Kaiser Family Foundation's ongoing study, new medical treatments and technology are the primary drivers of long- term healthcare inflation. Right near the top of that list is gene therapy.

The decision to go against the longstanding policy of the patent office (to allow these patents) appears to have been the result of discussions among various government agencies. Also it’s uncertain if the patent office will agree.

Wow. You have the patent office (USPTO) that makes billions in surplus fees every year from companies seeking and getting patents. Now the USPTO may ignore the Department of Justice (DOJ) that is saying these patents should not be allowed under the law. But the DOJ has allowed this for decades. So why is it that now they are finally taking the opposite stand?

My bet is that all of those other agencies of the government that are complaining to the DOJ, are being hurt by the cost of gene testing and the treatments that are being developed, like Provenge.

Could it be that the Obama Administration gets it? Did they encourage the DOJ to go after the USPTO, and try to force them to undo all of these gene patents in an effort to put a serious dent in healthcare inflation?

If so, and if they are successful, it would be a brilliant political maneuver that will have a lasting effect on controlling healthcare inflation, without having to risk accusations of rationing.

Right now there are labs all over the world isolating genes for all kinds of diseases. The genes in question are for breast cancer and also ovarian cancer. The genes are called BRCA1 and BRCA2. The current testing for these genes is controlled by privately-held patents and also partly by the University of Utah. The testing for this costs about $3,000 -- very profitable and very inflationary.

Many other such tests are in the pipeline, and are certainly expected to be just as expensive and inflationary. Isolation of such disease genes is the future of healthcare in America, particularly for our most expensive disease: cancer.

Current patent guidelines (controlled by Congress) say that you cannot get a patent on "nature’ or a natural process. The companies that stand to profit from this will argue that the genes are natural, but the identification of them is not, and therefore patentable. I'm pretty sure this will go to the Supreme Court eventually.

Although esoteric for the average person, nothing short of our national economy hinges on this kind of decision. That is not hyperbole. If genes cannot be patented, then gene research slows to a crawl because there is no financial incentive to identify new disease genes.

If the disease genes are not identified, then targeted treatments cannot be developed.  Such treatments are ridiculously expensive. The $93,000 prostate vaccine Provenge is a good example of that. From there you can extrapolate and see that the ultimate downstream effect will be that the pipeline for expensive new treatments starts to run dry.  Old treatments that were expensive, and inflationary, ultimately see their patent protection run out, and they become much cheaper. As a result of this, medical inflation will fall back to the general rate of inflation.

Take the company Genentech. It is practically a household word. That biotech giant has a name that says it all. They are all about gene technology. Take away their gene patents, and they have a much more limited ability to develop blockbuster drugs. Those are the drugs that drive healthcare inflation.

So it comes to this.  Don't allow gene patents, and see technology slow to a crawl. Allow them, and continue to see runaway healthcare inflation that is sucking the life out of our economy, and destroying our children’s and grandchildren's future. Again we are in a battle of the ages. Do we think about the future, or do we sacrifice them for our present and near-term benefit? Stay tuned.

Dr. Benton is an ENT, head and neck surgeon whose been practicing full time in Corvallis, Oregon for the past 18 years. He also holds two U.S. patents.

For Dr. Benton's previous commentaries click here.

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I'm not sure I agree with your comment about Genentech loosing its ability to develop blockbuster drugs. It is not necessarily gene patents that protect their work, but mostly patents on the agents and the processes they employ to isolate/manufacture these drugs. None of these areas are being discussed in this brief. I also don't agree that the biotech industry will be hurt much if the USPTO decides to throw out the gene patent claims. 1) This is only a fraction of existing patents in the industry. 2) In cases like Myriad's BRCA1/2 tests, such a move will allow other diagnostic companies and clinical laboratories to develop and offer equivalent tests, adding to the competition, improving the outcome of such tests, and ultimately lowering the cost (which you must agree would be better for everyone). 3) It would also allow researchers to freely investigate the genes, which could lead to better understanding of their functions. As far as I can see, this is a win-win situation for all.

Again, I don't agree with the notion that development of new treatments will be affected by any means if gene patents are thrown out. Big pharma doesn't use gene patents to protect its pipeline. They patent the chemicals, the manufacturing processes, etc, NOT genes. Gene patents are generally held by universities and/or diagnostic test developers. They will be affected, but as you said in your comment, it will add to the competition. I don't think test development will be hindered by this at all. If anything, tests should become better, cheaper, and more accessible to the patients as any device manufacturer can freely develop the tests on their own platforms.