A Myriad of Problems for Myriad: No Patents for Genes, Major Insurer Cuts Back on Genetic Testing

By Layne Feldman

Over the past year, two developments—one legal, and one economic—have hit Myriad Genetics, Inc. hard. These developments could have significant ramifications on the detection and treatment of cancer.

First, last summer, the Supreme Court ruled that Myriad could not patent the isolated BRCA 1 and BRCA 2 genes that the company used to develop tests to uncover mutations in the two genes. The presence of such mutations dramatically increases a woman’s risk of developing breast or ovarian cancer. In the Myriad case, the Court reversed the Federal Circuit, and held that the genetic sequences in question could not be patented because they were naturally occurring segments. To the Court, Myriad’s principal scientific contribution was identifying the precise location of a naturally occurring genetic sequence. Though the Court conceded this was a significant breakthrough, a gene is not patent eligible solely because of its isolation. The underlying principle is that products of nature are precluded from patent eligibility.

In the time since this holding, Myriad’s monopoly over this type of gene-based testing has diminished, as rivals, like Quest Diagnostics and its BRCAdvantage test, have entered the marketplace.

This Spring, the U.S. District Court for the District of Utah denied an injunction Myriad sought against competitor Ambry Genetics Corporation. Ambry had developed similar products to Myriad’s gene based cancer test. In the case before the Utah court, University of Utah Research Foundation et al. v. Ambry Genetics Corporation, Myriad claimed patent infringement and requested a preliminary injunction to prevent Ambry from selling its tests until the court reached its final determination. On March 10, the court held that Myriad was not entitled to the injunction.

Myriad’s shares fell twelve percent in the wake of the court’s holding.

Cigna’s decision in August 2013 to require genetic counseling before it covers genetic testing, including Myriad’s tests for breast cancer indicators, has only exacerbated these legal setbacks.  Cigna is the first U.S. health insurer to require genetic counseling before it pays for hereditary breast and ovarian cancer tests. Cigna officials expressed hope that the policy would decrease the prevalence of unnecessary tests, as many doctors, fearing suit, accede to patient’s requests for testing. Cigna’s policy, which went into effect on September 15, 2013, requires evaluation by a certified counselor from the American Board of Medical Genetics or the American Board of Genetic Counseling before commencing genetic testing. Medical professionals, however, have criticized the policy, asserting that it could result in patients opting out of beneficial testing due to the need for additional referrals. This could ultimately result in less cancer detections, and less treatment.

Only time will tell if these developments will help or hurt cancer patients.  On one hand, permitting Myriad to patent the ability to isolate and work with BRCA DNA sequences would certainly prevent other bioengineers from manipulating these sequences to reach new breakthroughs in the fight against cancer.  Ambry Chief Executive Officer Charles Dunlop has assumed this stance, stating, in response the Utah court’s decision, that “[c]ompetition stemming from a free market drives all of us to improve and ultimately increases patient access to life-changing information.”

But on the other hand, blocking patents could preclude companies from entering into this sphere altogether as the venture might not be economically viable if competitors can flood the marketplace with similar tests. And if the critics of Cigna’s policy are correct, policies like Cigna’s would only aggravate this problem. As patients opt out of genetic testing because of the need for additional referrals, fewer tests would be conducted, and the financial incentives gained from this market could diminish.

Layne Feldman is a third-year law student at Seton Hall University School of Law who is concentrating in Health Law. We are very pleased to welcome Layne to the blog today.

A Tip of the ‘Cap,’ A Wag of the Finger: Ending the Annual Cap on Rehabilitation Services

By Bryan Tiscia

Frank retired, and he’s spent a large part of his life making sure his family had what they need. Recently he noticed his right knee bothered him. He went to a physical therapist, who explained that his knee problem was caused by degeneration in his spine. The degeneration caused him to lean to the right, and Frank over compensated with his right hip and knee.  The physical therapist started a therapy plan that would start with his knee and work to his spine. After weeks of therapy on his knee, Frank’s physical therapist told him that he reached the limit on his Medicare cap for physical therapy. He was told that he could either appeal for an increase in funds, pay for it out of pocket, or be refused the physical therapy treatment he needed.

Frank is not a real person, but the situation described above illustrates a very real problem in the United States. In 1997, Congress passed the Balanced Budget Act, which included an annual cap on physical therapy, and a separate cap on occupational therapy. The therapy caps were designed to be temporary, but they still remain today. (To learn more about the act click here.) However, many have argued that the cap fails to reflect what patients actually need.

Many organizations believe that the cap is arbitrary, and have fought to repeal it. One such opponent of the cap is the American Physical Therapy Association, or APTA. APTA has argued in position papers that this cap was not based on data, quality-of-care concerns, or clinical judgment, but that its sole purpose for existence was to balance the federal budget. APTA argues that various patients are likely to be impacted by the cap, as they are forced to bear 100% of the cost of care once they exceed it. APTA believes the cap is “arbitrary” and prevents beneficiaries from receiving the care they need when they need it.

Congress recognized the flaws associated with the cap, and has acted several times to prevent the implementation of a hard therapy cap. In 2003, Congress authorized the Government Accountability Office to determine whether progress was being made towards correlating outpatient therapy payments to beneficiary needs. The GAO found that the Department of Health and Human Services should allow for exceptions to the cap.

In 2006, Congress passed legislation allowing for exceptions to be made when  a patient’s condition would require medically necessary and clinically appropriate physical therapy above the financial limitation. In 2013, Congress extended the allowance for exceptions, and created an automatic exception process when patients reach the $1,920 threshold, and a manual medical review process where a patient requires treatment over $3,700 threshold. While organizations like the APTA have applauded these exceptions, the problem related to receiving treatment when it’s needed as the cap approaches still remains.

The solution to the problems created by the cap may be on the horizon. Various members of Congress from around the country have introduced the Medicare Access to Rehabilitation Services Act (HR 713/S 367). The Act would permanently repeal the therapy cap. If the physical therapy cap was never pegged to patient needs, it should be repealed. The story above about Frank may have been fiction, but access to timely and appropriate care patients need and a repeal of the cap may soon be reality.

Bryan Tiscia earned his Juris Doctorate from Seton Hall University School of Law in May 2014. We are very pleased to welcome him to the blog today.

Monday Morning Recap: The Previous Week (7.14.14-7.20.14) in Drug & Device Law & Policy

Here’s this week’s Monday Morning Recap, the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week.  You can see all of our previous Monday Morning Recap posts here.

1.At Fortune, Ben Geier reports that a federal grand jury in San Francisco has indicted FedEx on drug trafficking charges, with prosecutors alleging that the company has “known for a decade that these illegal businesses were using their services to deliver the drugs, going so far as to set up special credit policies to protect FedEx from losing money if the illegal pharmacies were shut down.” Geier writes: “Couriers for FedEx told federal investigators some pretty scary tales of delivering for the illegal pharmacies, including making deliveries to vacant homes where groups of people would be waiting to collect the parcels.”

2. Generic digoxin was in the news the week before last, and it was in the news again this past week. At the San Francisco Business Times, Ron Leuty reports that the drug “is at the center of an investigation by the Connecticut attorney general’s office over a spike in price. The inquiry . . . is focused on two areas. Authorities will probe if the drug’s price was fixed or if the company violated state antitrust laws by dividing customers or territories for digoxin sales[.]“

3. Turning from the high price of generics to the high price of branded drugs, the Business Standard reports that the Supreme Court of India has “upheld the compulsory licence granted to Hyderabad-based Natco Pharma to manufacture an affordable generic version of Nexavar (sorafenib tosylate), a kidney cancer drug patented by German drug major Bayer AG.“

4. At Bloomberg, Richard Rubin reports on a letter sent by Treasury Secretary Jacob Lew calling on Congress to act “to stop U.S. companies from using cross-border mergers to escape the country’s tax system, the latest trend in corporate deal-making.” As Rubin explains, “[t]he mergers used to legally avoid taxes, known as inversion transactions, have become increasingly popular over the past year, particularly in the pharmaceutical industry. Companies including Minneapolis-based Medtronic Inc. (MDT) and Canonsburg, Pennsylvania-based Mylan Inc. (MYL) have announced plans to move their legal addresses outside the U.S. Pfizer Inc., based in New York, attempted to move its tax address to the U.K. by purchasing London-based AstraZeneca Plc. (AZN).”

iRegs

By Matthew Siti

More and more it seems mobile smart technology is becoming a permanent fixture in our daily routine. Need to check bus times? There’s an app for that. Need to pay a bill? There’s an app for that, too. Scanner? GPS? Calendar? Check. Check. Check.

With mobile answers to so many of life’s questions, it’s no surprise that there is a rapidly expanding market for medical applications. The apps in this category range from simple (for example, a body mass index calculator) to complex (for example, a program that turns an iPhone into a sonogram). Though the advent of medical apps undoubtedly represents progress, it isn’t without flaws. Because these apps deal with health and medicine, lives are at stake.

To illustrate, a patient with cardiac disease might rely on an ECG app to monitor his heartbeat for irregularities. If this app delivers faulty information, there is a serious risk the misinformation will be relied on in making critical medical decisions. Perhaps the patient feels mild chest pains, yet his trusty app shows a normal heartbeat. Unbeknownst to him, he is suffering a heart attack, but, because of the app’s reading, decides not to go to the hospital. This type of nightmare scenario has kept compliance officers awake at night because until recently, explicit regulation of medical apps was virtually nonexistent. Without clear guidance, attracting investors becomes difficult and as a consequence, innovation is hindered.

To grease the works, the FDA recently issued Mobile Medical Applications Guidance for Industry and Food and Drug Administration Staff.  The FDA’s authority to recommend medical app guidelines comes from the Food, Drug and Cosmetics Act. The FDCA tasks the FDA with regulating medical devices, giving a broad definition that covers accessories, components and software. Ultimately, whether a specific app falls within this definition depends on the objective intent of the person legally responsible for labeling it. The labeler’s intent is determined through statements, labeling claims and advertisements. If the device is intended for use in “the diagnosis…cure, mitigation, treatment, or prevention of disease” or to “affect the structure or any function of the body of man” the app is a device, subject to FDA regulation.

The new guidelines clarify that entities exclusively distributing apps are not considered ‘labelers’ for these purposes. The owners of the iTunes App Store can breathe easy. For manufacturers whose apps qualify as medical devices, the guidelines divide into two broad categories: apps subject to regulation and apps subject to “enforcement discretion”. Put simply, enforcement discretion means the FDA could regulate the app under the FDCA, but is choosing not to. Under the guidelines, apps subject to enforcement discretion are those that pose little risk of serious harm, even when used improperly. For instance, an app that encourages the user to maintain a healthy weight would be subject to enforcement discretion.

On the other side of the regulatory spectrum are apps subject to FDA regulation. These apps are divided into three subcategories. The first covers apps that are an extension of an existing regulated medical device. For example, an app that creates a remote display for a blood pressure monitor. The second covers attachments that transform a mobile platform into a regulated medical device. An example of this would be an attachment that turns a smart phone into a blood glucose strip reader. The third subcategory embraces apps providing patient specific diagnosis or treatment recommendations. An app using a patient’s information to calculate radiation dosage would fall into this category.

In the health industry, innovation is absolutely paramount. The new Guidelines lend insight and predictably to the regulatory future of medical apps, allowing continued progress. With clear language and numerous examples, they serve as an excellent starting point for attorneys counseling medical app manufacturers.

Matthew Siti earned his Juris Doctorate from Seton Hall University School of Law in May 2014. We are very pleased to welcome him to the blog today.

Photo Credit: Juhan Sonin

Monday Morning Recap: The Previous Week (7.7.14-7.13.14) in Drug & Device Law & Policy

A day late but not a dollar short, here’s this week’s Monday Morning Recap, the post where we call out the drug and device law and policy developments that caught our eye and made us think over the previous week.  You can see all of our previous Monday Morning Recap posts here. Credit for the format goes to Seton Hall Law alum Jordan T. Cohen, who used it to great effect in his series of Reform Rodeo posts.

1. The battle over Zoyhdro (which I blogged about here) continued this past week. After Massachusetts’ ban on prescribing and dispensing the drug was struck down, the state promulgated emergency regulations setting forth a set of conditions that physicians must meet before prescribing the drug and a set of conditions that pharmacists must meet in order to dispense it. Zohydro’s manufacturer, Zogenix, challenged these regulations, arguing that they amounted to a de facto ban and so were preempted for the same reasons that the total ban was. As Kurt Karst explains at FDA Law Blog, Zogenix won in part–the judge preliminarily enjoined the requirement that prescribers prepare a letter of medical necessity in support of each Zohydro prescription–and Massachusetts won in part–the judge denied, for now, Zogenix’ challenge to the regulations governing pharmacists. Per Karst: “So it’s not quite ‘goodbye’ to this controversy, but rather – and quite literally – ‘auf Wiedersehen’ (until we meet again).”

2. In related news, last week, Purdue Pharma announced that the Food & Drug Administration has granted Priority Review designation to a drug the company is developing that has the same active ingredient as Zohydro but which, unlike Zohydro, incorporates  “abuse-deterrent properties designed to make the product more difficult to manipulate for the purpose of misuse or abuse by various routes of administration (e.g., chewing, snorting and intravenous injection).” If Purdue’s product is approved, it may spell the end for Zohydro, at least in its current formulation. In a letter to FDA in April of this year, Senators Richard Blumenthal of Connecticut and Patrick Leahy of Vermont called on the FDA to “act swiftly to remove any older, less safe versions” when “safer, abuse-deterrent opioids are approved[.]”

3. At Reuters, Ronnie Cohen reported on a study in the journal Vaccine that found, disappointingly, that “[m]ost doctors do not recommend flu shots to their pregnant patients, who are more likely to develop serious complications if they do get the flu[.]“  Cohen quotes researcher Marie Tarrant: “‘The research is clear that healthcare providers are not providing advice to pregnant women about the importance and benefits of getting vaccinated . . . In addition, they are not making influenza vaccine available to their pregnant clients. . . . By their silence, they are sending a message that influenza vaccine is actually not that important.‘”

4. Elisabeth Rosenthal had another must-read piece in the New York Times last week, this one about the rising prices of generic drugs. She writes: “Digoxin provides a telling case study. There was no drug shortage, according to the Food and Drug Administration, that might explain the increase. There was no new patent or new formulation. Digoxin is not hard to make. What had changed most were the financial rewards of selling an ancient, lifesaving drug and company strategies intended to reap the benefits.“

Next Page »