HEARING ON GENE PATENTS

AND OTHER GENOMIC INVENTIONS

HOUSE JUDICIARY SUBCOMMITTEE ON COURTS AND

INTELLECTUAL PROPERTY

JULY 13, 2000

TESTIMONY BY HAROLD VARMUS, M.D.

PRESIDENT

MEMORIAL SLOAN-KETTERING CANCER CENTER

Mr. Chairman and Members of the Subcommittee:

I am Harold Varmus, the President of Memorial Sloan-Kettering Cancer Center in New York City. From 1993 to the end of 1999, I served as Director of the National Institutes of Health (NIH). Before that, I was a member of the medical school faculty at the University of California, San Francisco for over two decades. Throughout these three phases of my career, I have been actively involved in experimental studies of the molecular basis of cancer and the growth cycle of retroviruses.

I appear here today as a member of the biomedical scientific community with a long-standing interest in the ways in which we distribute, use, and place value on the ideas and materials that are produced by publicly and privately funded research. I have great respect for the system of intellectual property protection that has allowed American industry to prosper in so many fields, including several areas of science and medicine. I also have significant concerns about whether this system is being used optimally to realize the opportunities offered by modern molecular genetics to improve the health of the public. In particular, I am troubled by widespread tendencies to seek protection of intellectual property increasingly early in the process that ultimately leads to products of obvious commercial value, because such practices can have detrimental effects on science and its delivery of health benefits.

Today's hearing and much of the current debate about patenting and use of biological materials were triggered by the recent acceleration of the sequencing of the human genome and the public discussions of human genes as intellectual property. But the issues extend well beyond DNA and genes and antedate the Human Genome Project by several years.

The Bayh-Dole Act and the transformation of biology

In 1980, Congress passed the Bayh-Dole Act, which was designed (as other witnesses will no doubt review in greater detail) to allow institutions to pursue and possess patent protection for discoveries made with funds provided through grants from Federal agencies, such as the NIH, thereby enhancing the transformation of biological discoveries into medically useful products. At about the same time, new methods in molecular biology and genetics were stimulating the growth of a young biotechnology industry and reducing the distance between fundamental discoveries in biology and potentially profitable applications to medical practice.

In this more complicated and energized atmosphere for biological work, patents were issued on many things---such as methods for introducing DNA into cells, genetically altered experimental animals, and sequences of cloned pieces of DNA---for which intellectual property protection might not have previously been sought. (It is customary to refer to such things as "research tools" since they are useful for the conduct of research and the development of scientific advances into health consumer products, but are not themselves such products.)

This new environment has brought with it many benefits, most obviously a vigorous biotechnology industry that has produced novel and powerful methods for diagnosing and treating disease. But it has also changed the conduct of biomedical research in some ways that are not always consistent with the best interests of science. It has promoted the creation of sometimes aggressive and usually expensive offices at many academic institutions to protect intellectual property and to regulate the exchange of biological materials that would at one time have been freely shared among academic colleagues. It has encouraged some companies to make protected materials and methods available to investigators under terms that seem unduly onerous. In a few well-publicized cases, and likely in many more undocumented ones, it has fostered policies that have inhibited the use of new scientific findings, even in the not-for-profit sector, and has reduced open exchange of ideas and materials among academic scientists.

Gene patents

Efforts to seek intellectual property protection for cloned genes, gene variants, portions of genes, DNA copies of messenger RNA, and the proteins encoded by genetic information have presented an especially perplexing problem because the traditional standards for patenting, especially non-obviousness and utility, have been difficult to define fairly in this context. As a result, some of the gene patents issued to date do not display the traditional balance between the exclusionary right granted by the patent to the inventor and the disclosure to the public of a new, useful, and non-obvious invention that might otherwise have been maintained as a secret. Such patents appear to reward excessively the preliminary and frankly obvious work of determining DNA sequence, and to diminish the prospect of financial return from the innovative scientific work required to determine gene function and utility.

Some of the first patents to be issued on human genes produced little controversy because the genes were clearly implicated in the causation or treatment of disease, and the genetic information was immediately applicable to the design of diagnostic tests or therapies. However, with the expansion of efforts to clone and sequence human DNA, many more patents were applied for and issued on much less substantial grounds. To meet a utility standard, the Patent and Trademark Office (PTO) required no more than that the DNA in question serve as a molecular probe, a property that would be attributable to the majority of pieces of human DNA.

Furthermore, some of the issued patents have seemed very broad in their claims. For example, some grant rights to many other functionally related genes, solely on the basis that their sequences resemble the submitted one; such apparently extensive rights might well discourage others from studying members of such gene families to achieve practical goals. Other issued patents appear to cover many possible gene functions that were only speculative at the time of submission, thereby allowing the patent holder to claim title to applications that became known only after extensive additional studies by others. Moreover, patenting of incomplete genes and of gene variations implies that multiple parties may hold title to part or all of the same gene; this feature can greatly complicate licensing genetic components for new technologies.

Recently, to the relief of many of us, the PTO has considered raising the bar to gene patenting, especially for the utility standard. Although the new proposal is an improvement and the final position of the PTO has not yet been announced, I believe that the bar may still not be raised high enough. Under the new proposal, a patent could be issued for a gene or a portion of a gene based on still quite superficial and potentially misleading information about the properties of the gene or about how it might be used to diagnose, prevent, or treat disease. Such information may be dependent only on the similarity between the new gene and others previously described. Establishing the legitimacy of such claims, even if the predictions were confirmed experimentally, would doubtless require legal proceedings, such as those that follow accusations of infringement.

Licensing practices

One of the goals of U.S. patent policy is to encourage development of useful products by inventors and those to whom inventions are licensed. However, some of the recent developments described above have created a situation in which pursuit of the protected information and materials by both the for-profit and not-for-profit sector may be restricted, rather than promoted, as intended historically. Sub-optimal use is likely to result when the patent appears to others to over-value the invention and when the terms of use---that is, the licensing policies---are unduly restrictive. For example, potential licensees are frequently confronted with so-called "reach-through" provisions that would provide royalties from any downstream commercial products to those who own property that may now be of uncertain value and vague utility. This situation does not encourage vigorous development of the protected discoveries. Likewise, an inappropriate insistence on exclusive, rather than non-exclusive, licensing of genetic sequences for diagnostic tests could slow the development of this important application of genetic tools.

Some recommendations

What can be done to minimize the difficulties of overly protecting research tools, including DNA sequences, without damaging the metabolism of an obviously vital scientific and industrial enterprise? Some steps have already been taken. The NIH has attempted to increase awareness of these problems by endorsing a study panel's recommendations for promoting fair exchange of materials and debate of unresolved issues. Many institutions have agreed to simplify the exchange of biological materials among investigators by supporting the use of a Uniform Biological Materials Transfer Agreement. Some organizations have been loath to accept the terms of onerous licensing agreements, such as those with inappropriate "reach-through" provisions, even though such principled resistance may deprive their investigators of desired materials. Occasionally, industries or others holding patents or exclusive licenses to important materials (such as genetically altered mice) or methods (such as techniques for altering genes in cells) have agreed to make the protected items freely available to the not-for-profit sector. Members of Congress have, from time to time, considered research exemptions that would allow academic scientists unfettered access to certain types of protected materials and methods. And, as described earlier, the PTO has been contemplating changes in the criteria by which certain research tools, especially gene sequences, are granted patent protection.

Public disclosure of an invention, by individuals or by groups acting in joint self-interest, can prevent others from seeking patent protection for the same thing, thereby preserving easy access to research tools. For example, in 1996, the international human genome sequencing consortium adopted a policy that all human sequence data would be placed immediately in the public domain. As another illustration, in 1998, a group of pharmaceutical companies and a private philanthropy pooled resources to identify and disseminate markers of human genetic variation (single nucleotide polymorphisms, or SNPs). This coalition, known as The SNPs Consortium, argued it was in the best interests of its members to place such information in the public domain, without restriction, to optimize the chances that further work would be done to determine the significance of the markers.

Summary

Contemporary biologists are privileged to work at a time of unprecedented excitement. But overly enthusiastic protection of intellectual property, too early in the process of product development, can impede the delivery of public health benefits from discoveries in many important fields, including genomics. There are several potential remedies, but they should be approached cautiously to avoid jeopardizing the highly productive scientific atmosphere that the United States currently enjoys.

Thank you for holding this important hearing. I will be pleased to answer any questions that you or your colleagues may have.