Impact of gene patents on medical genetic testing

20.28 There has been worldwide concern about the possible adverse consequences of existing patent laws and practices for the provision of healthcare. The following section describes concerns about the impact of patent laws and practices on medical genetic testing and asks about the extent to which these concerns apply to the Australian healthcare system. Many of these concerns are traceable to concerns about monopoly control of genetic testing. The section thus begins by discussing monopoly control and then examines the effects of this on: the cost of medical genetic testing; access to public sector testing and related services; access to genetic counselling; the quality of medical genetic testing; the professional relationships between medical practitioners and laboratory scientists; and the further development of medical genetic testing.

Monopoly control and competition

20.29 Where a genetic sequence is contained in patented genetic material, the use of the sequence in genetic testing may constitute an infringement of patent rights, unless a licence is obtained from the patent holder or testing is conducted through another licensee. The patent holder (or an exclusive licensee) may control a particular genetic test by licensing a single service provider or a number of laboratories may perform the test.

20.30 Particular concerns have been expressed about exclusive licensing of gene patents relating to genetic testing.^[44] Exclusive licensing occurs where a patent holder grants exclusive rights to one licensee to exploit the patent. The exclusive licensee may require that all testing, regardless of its geographical origin, be performed at a single laboratory. At least in the United States, exclusive licensing of gene patents for medical genetic testing is common^[45]—the BRCA patents being a notable example, where all testing must be done by Myriad.

20.31 Although a patent grants a patent holder the right to exclude or control the exploitation of a patented invention by others for the term of the patent, patents do not inevitably lessen competition. Patents may promote competition if the goods and services created pursuant to a patent compete with other like goods and services. The relationship between patent and competition law is discussed in Chapter 24.

20.32 Some submissions stated that, even if patent and other intellectual property laws favour the development of monopolies in medical genetic testing, this is not necessarily detrimental to society because of the beneficial effects on investment in research and the development of testing.^[46]

20.33 Patent law is only one of many factors that may contribute to monopolistic behaviour.^[47] The OECD Report noted that licence exclusivity may be necessary to make a genetic testing service economically viable, depending on the market and the rarity of the disease.^[48] In Australia, GTG stated that the size of markets in medical genetic testing will be the most significant factor in determining their structure.^[49]

20.34 One view is that commercial pressures are leading patent holders to develop new strategies and business models for the exploitation of their inventions for the purpose of taking ‘maximum advantage of the very broad claims often included in patents relating to human genes and functional genetic sequences’.^[50]

20.35 Many submissions focused on the possible adverse effects of monopoly genetic testing on healthcare.^[51] The South Australian Government stated that the ‘one-to-one’ relationship between gene patents and disease, which is not the case for other biotechnology patents, poses particular problems:

An in-house test which is an alternative to a patented test can be used legally as it is not subject to licence or royalty fees provided the method used is different from any patented method. However, where a gene is subject to a patent, low cost in-house tests cannot be legally used without compensating the patent holder.^[52]

20.36 The Royal College of Pathologists of Australasia (RCPA) emphasised that the RCPA, the HGSA and the American College of Medical Genetics all recommend that ‘diagnostic genetic tests’ be ‘broadly and non-exclusively’ licensed.^[53] The RCPA submitted that monopolistic genetic testing is ‘fundamentally wrong’ because of its effects on equitable access to healthcare and innovation in testing.^[54]

20.37 Many other submissions expressed concerns about patents promoting medical genetic testing monopolies and the consequences for healthcare.^[55] Specific concerns about the effects of patents on medical genetic testing, including those said to derive from monopoly testing, are discussed in more detail throughout this chapter.

Cost of medical genetic testing

20.38 The cost of medical genetic testing is an important factor affecting access to testing. One consequence of patent rights is that genetic tests may be more expensive. The extent of any increased cost will depend on many factors, including the licensing model used by the patent holder.

20.39 Submissions and consultations reflected concern about the impact of monopoly control on the cost of genetic testing to patients and the healthcare system, and about the effect of cost in limiting access to medical genetic testing.^[56]

20.40 The BRCA patents have often been used to illustrate concerns about the future cost of genetic testing in Australia.^[57] However, as discussed in DP 68,^[58] increases in the cost of BRCA testing attributable to patent rights have not occurred because GTG—the exclusive licensee of the BRCA patents in Australia—has not sought to enforce its patent rights against public sector laboratories. In any case, GTG is able to offer BRCA testing conducted in its Melbourne laboratory for a lower price than that charged by Myriad in the United States, and it anticipates that investment in new robotic technology will reduced future costs further.^[59]

20.41 A number of submissions also expressed concern about increases in the cost of medical genetic testing attributable to future enforcement of GTG’s non-coding patents.^[60] As discussed above, the position with regard to the enforcement of these patents remains uncertain.

Access to public sector testing and related services

20.42 Concerns have also been expressed about the implications of patents for other aspects of access to testing and related healthcare services, such as clinical advice and genetic counselling. In submissions and consultations, access issues were most often raised in relation to the viability of public sector genetic testing and related services.^[61] It was said that monopoly provision of medical genetic testing would have adverse ramifications for the public health system:

by enabling some health providers with sole control over testing for several genetic conditions to dominate the market. Equally it places the public health system at a significant disadvantage in terms of providing genetic testing as part of a subsidised health care system.^[62]

20.43 The Department of Health Western Australia stated that, where genetic testing monopolies exist ‘publicly funded genetic services will still be required to provide other non-patented and thus not commercially attractive tests, as well as counselling and clinical services, compromising their budgetary capacity to maintain viability and expertise’.^[63]

20.44 A specific focus of concern was the possible diversion of expertise from public sector testing facilities.^[64] Access to public sector genetic testing may be affected adversely if private laboratories are able to ‘cherry-pick’ profitable genetic tests or divert professional expertise away from public sector laboratories leaving public laboratories less able to provide a full range of services.^[65]

20.45 It has been stated that exclusive licensing of genetic testing could result in irreplaceable loss from the public sector of a large part of its genetic testing workload and, as a consequence, of its genetic testing skills and molecular genetics expertise.^[66] Further, in the event that an exclusive licensee for a genetic test were to cease operations, Australia could be left without an expert testing service, at least for a time.^[67]

20.46 A different perspective is that, in many other areas of medical and pathology practice, there is a mix of public and private sector provision, and personnel move freely from one sector to another. While the development of new services in the private sector may have short term negative effects, it may ultimately deepen the pool of expertise available to the public system.^[68]

20.47 It is clear that most concern about access is predicated on the existence of private sector monopolies on genetic tests, supported by patent rights. The possibility of an expanded role for private medical genetic testing services did not attract criticism in itself. There is acceptance that some level of private provision is inevitable, and may even be desirable.^[69] In the future, there could be advantages in state clinical genetics services sub-contracting genetic testing to private providers, particularly if there are benefits in cost or speed of reporting.^[70]

20.48 Nor was there any fundamental objection to the idea that individuals who may not qualify for public testing services should be able to seek private testing, if they so wish.^[71] However, private service provision should not be at the expense of accepted standards, especially those relating to the interpretation of test results and the provision of genetic counselling.^[72]

Access to genetic counselling

20.49 State and territory genetics services provide comprehensive services in relation to diagnosis, testing, counselling and the ongoing management of genetic conditions, through medical practitioners, genetic counsellors and social workers. Concerns have been expressed that ‘commercial testing might [dissociate] genetic testing from proper screening and genetic counselling’^[73] and have consequences in relation to access to genetic counselling.^[74] In particular, it has been suggested that exclusive licensing of genetic tests may disrupt publicly funded clinical genetic services—which closely link medical advice, genetic testing and counselling—by requiring that the testing component be performed elsewhere.^[75]

20.50 However, others suggested that private sector testing will not necessarily affect access to related medical and other services.^[76] Rather, this will depend on the model of service delivery—for example, if a private laboratory conducts the genetic testing component of services provided by a public clinical genetics service there is no reason why other elements of healthcare delivery need be affected.

20.51 The ALRC agrees there is no real basis for claims that private genetic testing services will necessarily lead to substandard service delivery. All medical genetic testing, like other forms of health and pathology service, is subject to regulation and standards, including the national laboratory accreditation scheme,^[77] standards and guidelines issued by the National Pathology Accreditation Advisory Council, and ethical and other standards applying to health professionals.^[78] If there are inadequacies in service delivery, mechanisms exist to deal with them.

Quality of testing

20.52 Concerns have also been expressed about the possible impact of patent laws and practices on the quality of genetic testing and associated medical practice,^[79] including in relation to the technical quality and quality assurance of genetic testing.

20.53 It has been claimed that patent laws and practices may prejudice medical practice by preventing the use of a more appropriate test for the same genetic condition.^[80] Laboratories in Australia use a range of methodologies for medical genetic testing.^[81] Submissions suggest that exclusive licensing of medical genetic testing may constrain laboratories from choosing the most clinically appropriate test.^[82] For example, the HGSA contended that medical practice may be adversely affected where patents and licensing operate to limit testing to technologies that detect ‘only a proportion of mutations in a gene’.^[83] The RCPA submitted:

Ultimately, commercial considerations will dictate priorities and products, not the public need. Patents grant companies the ability to dictate what kind of test may be done (eg sequencing instead of less sensitive but substantially less costly screening methods such as dHPLC or protein truncation tests) or limit the condition in which testing may be done (eg refusing to perform prenatal testing for late-onset diseases).^[84]

20.54 Submissions also noted quality assurance as a concern.^[85] External quality assessment schemes allow participating laboratories to test the reliability and accuracy of their testing methods by testing, on a scheduled basis, material of known or agreed composition.^[86] Such programs may be difficult to establish where only one or a small number of laboratories perform genetic testing.

20.55 The HGSA submitted that restricted licensing can ‘make independent assessment of quality assurance more difficult, by reducing relevant independent expertise’.^[87] Dr Suthers stated that testing monopolies can result in the loss of quality assurance programs because a key component of the quality assurance program in any laboratory is comparison of test results between laboratories.^[88]

Professional relationships

20.56 Another issue, which is related to genetic test quality, is the relationship between medical practitioners and laboratory scientists. It has been claimed that monopoly control of genetic testing may have adverse effects on medical practice by changing the interface between medical practitioners, who order genetic testing for their patients, and those who conduct the tests.^[89] The HGSA has stated that genetic testing monopolies:

will disrupt the professional relationships that exist within regional genetic services between laboratory scientists, medical consumers of testing services and clinicians whose expertise covers both areas and, by doing so, reduce the quality of medical services.^[90]

20.57 Communication between practitioners and scientists develops mutual expertise, particularly in interpreting scientific information, and this is important in providing best practice care.^[91] For example, clinicians often provide relevant patient history and results from earlier investigations to the testing laboratory, in many cases directly to the scientists performing the testing.^[92] The interpretation of results may ‘suffer from lack of discussion regarding abnormalities in testing the accuracy of the test results’.^[93] The RCPA submitted that genetic testing should be performed by ‘laboratories with close links to clinical genetics services’.^[94]

20.58 However, there may be no reason why good communication cannot be developed between medical practitioners and private laboratories operating under an exclusive licence to use a particular genetic testing technology. GlaxoSmithKline noted that ‘public laboratories do not have a monopoly on good customer service’.^[95]

Further development of medical genetic testing

20.59 It has been suggested that where patents contain claims to all or most conceivable diagnostic tests related to a particular gene, there might be less incentive to develop new or improved tests.^[96] Innovation in medical genetic testing at the clinical and laboratory level may be hindered.^[97]

20.60 Concerns about the development of new tests were highlighted in the OECD Report: ‘When clinical testing centres are also research laboratories investigating the genetic basis of a disease, the inability to obtain a licence impedes research and can mean that higher-quality tests may not emerge’.^[98]

20.61 One reason for this is that genetic sequences covered by gene patents are typically the single most prevalent sequence carried by healthy individuals. Medical genetic testing is directed at identifying mutations in this sequence that are associated with disease. Medical practitioners with access to family pedigrees discover many such mutations over time. It this way, medical genetic testing is routinely subject to incremental improvement as more is learned about the genetics of a disease.^[99] It has been suggested that ‘limiting the number of laboratories permitted to do the testing could slow this incremental process of discovery’.^[100]

20.62 A recent study of clinical laboratories in the United States, based on published data about disease-gene associations and information sharing between laboratories, concluded that gene patents and licences have inhibited the development of new genetic tests for clinical use.^[101]

20.63 Submissions expressed negative views about the impact of gene patents on the development of new or improved genetic tests.^[102] In particular, submissions and consultations highlighted constraints on the conduct of clinical research where a patent holder has exclusive rights to test for a genetic disease.^[103] Dr Suthers expressed concern about patent holders or exclusive licensees maintaining private holdings of population genetic data compiled from test results. This, it was claimed, may constrain the further development of tests on the gene, resulting in genetic tests of limited utility and efficiency, and lack of data about genetic variants in populations.^[104] Similarly, the HGSA stated that gene patents and restricted licensing may:

• enable the licence holder to control details of the variations detected in a given gene, enhancing the monopoly by controlling the means of interpreting test results;

• slow the accumulation of information about variations in genes and the relationship of the variations to the disorder in question, by reducing the number of laboratories providing testing; and

• restrict rapid publication of information about variations in the gene and their relationship to the disorder in question.^[105]

20.64 Particular concerns were expressed about the barriers gene patents may pose for the development of new forms of comprehensive genetic testing using DNA microarrays, which are capable of testing thousands of genes at one time. The Medical Genetics Elective Group of the University of Newcastle stated that such testing will be a viable diagnostic tool in the near future but the need for multiple licences may make this development economically impractical.^[106]

20.65 Other submissions contested the idea that gene patents adversely affect the development of new or improved tests^[107] and noted that concerns were ‘founded on the assumption that the existence of the patent necessarily limits the numbers of users’—which was not necessarily the case.^[108] More recognition, it was said, should be given to the likelihood that gene patenting might ‘improve medical practice by encouraging the investment needed to develop improved medical genetic tests’.^[109] Those expressing concern about patents hindering innovation in genetic testing sometimes disregard the incentive that patents provide to develop new tests. The likelihood that any single gene patent could be enforced over all conceivable testing methodologies relating to a gene may also be overstated.