AMP v Myriad: driving or disrupting innovation?

Create PDF

Dr. Stenzel

The Myriad decision should get some of the blame for that, in his view. Getting Food and Drug Administration approval for a companion diagnostic can cost up to $20 million. Myriad spent millions to produce a companion diagnostic for a patentable drug, yet as a result of the Myriad decision, other companies not connected to the drug can come in and copy that diagnostic with a laboratory-developed test and get the same reimbursement, Dr. Stenzel says.

No other area of medicine allows this degree of unapproved instrumentation or other products, he says, and he is opposed to this sidestepping of the regulatory process. In fact, he left a post at Duke University to work on getting diagnostics through the FDA. “I thought that was what I could do to really help our field. In my lab, except for HPV, there weren’t any approved tests I could offer. I had to do LDTs, which was always a concern because I did not have the funding to do the same level of test development and validation as IVD companies.”

Dr. Stenzel questions the argument that NGS would not have developed at the speed it did without the Myriad ruling. “First, if there were a requirement to take things through the FDA, there wouldn’t be a ton of genes that would get approval because the FDA looks at genes one by one. So any panel cleared would only have specific genes that were FDA cleared.” Other products, such as cell phones and computers, contain multiple patented inventions and could not be produced without licensing deals in which different companies each get a cut of the action. “Other industries have been able to figure this out. Why couldn’t we?”

The Myriad decision “hurt our field,” he contends. “Myriad went against years of precedent. The patent office had determined that gene patents were patentable, many licenses were given out, and many companies spent time and effort based on those patents, and it was like pulling the rug out from under their feet.”

By way of contrast with the U.S., Europe accepts gene patenting, and numerous decisions have defended manufacturers’ exclusive rights. Nucleic acid sequences are patentable, and gDNA and cDNA are patentable, as long as the sequence is isolated. “Europe is totally different,” Dr. Stenzel says. “I think they see the ability to reward innovation as necessary for stimulating development of new products.”

Despite the Myriad decision’s downsides for the diagnostics industry, Dr. Stenzel says, Invivoscribe and Myriad are finding success now with their focus on oncology. Invivoscribe has launched a suite of 11 genetic assay kits, even though it also has CLIA labs offering the testing around the world. The NGS technology employed in these kits is “phenomenal,” he says, and can provide so much more information and benefit to patients and the clinicians taking care of them. “But it is a lot more complicated and costly technology.”

His company also has contracts with pharmaceutical companies Novartis and Astellas to develop companion diagnostics. “Pharma usually pays the bills, because most of the companies developing companion diagnostics don’t do it unless pharma funds the work. We don’t know if a drug is going to get approved, so we would be taking a huge risk spending $10 to $20 million on a drug that failed, while our diagnostic might work just fine.”

Some companies are starting to pressure pharmaceutical companies to share in the upside of the drug development, Dr. Stenzel adds, and most pharma companies so far are refusing. “But I’m hearing that some early-stage pharma companies are opening up to that possibility,” especially in partnering with companies that have a strong track record of developing companion diagnostics.

For its part, Myriad continues to do well with BRCA1 and BRCA2 testing. “They have seen a lot of patients and have built up a knowledge base over time, and can figure out what the mutations mean in a large number of patients.” Most of the new laboratories that have begun BRCA testing haven’t developed the same database and can’t be as helpful to patients, he says; it’s for this reason he advises patients needing BRCA testing to go to Myriad.

But the majority of new companies are struggling, he says. “I would say 90 percent of the startups in the last five years in laboratory services that have focused entirely on molecular diagnostics, if not entirely on NGS, are losing money.” Foundation Medicine, for example, is a company that is growing its revenue, “but if you look at their profitability, they are growing a loss faster than their revenue.”

The complexity of sequencing should not be underestimated, Dr. Stenzel says, nor should the challenges that new laboratories offering BRCA testing, for example, must confront. “How deep is your coverage? What is your error rate, your sensitivity, your limit of detection? We’ve seen the deeper the coverage, the more accurate the testing. But it also costs more to do that. And the larger the gene, the more it costs to sequence it at a deep level. Large deletions or insertions are very challenging for an NGS system to be able to assess.”

He is baffled that some BRCA tests are being offered at $250. “I just don’t understand how you can do quality testing and all the development work and things to ensure patient safety in a way that you can still support a company at $250 a patient,” Dr. Stenzel says. “We all know about Theranos and the lesson that some companies are too good to be true.”

In addition, he notes, “you’re probably relying on bioinformatics to be able to interpret all the data that comes off NGS.” In the past, molecular pathologists could look at sequencing and make visual calls. “With NGS, we’re entirely dependent on medical informatics tools, and some of them are very poor at detecting large deletions.” Invivoscribe uses a minimum of 1,000× coverage (average reads per base pair) for anything it does in NGS, and sometimes the minimum has to be 10,000×. “But there are companies out there doing testing at a much lower level—maybe 30× or lower. So there’s this huge difference in how you do testing, and the price of sequencing reagents for these platforms is dependent on how deep you go. Companies that are trying to cut costs might do lower coverage, and then the accuracy of the test goes down.”

Interpretive challenges must be added to complete the picture. “Since we started discovering genes and mutations, there are certain mutations that are clearly deleterious—mutations that generate a new stop codon, so if it were to make a protein, the protein would be truncated well before the end of the gene. Or with a frameshift mutation, the insertion or deletion is out of frame, then oftentimes leads to a premature stop and starts generating a random protein sequence, not the true protein.”

But other mutations may be benign, he says, and it takes a lot of time and effort, expertise, and building a good database of every base in the genes to figure that out. Determining which genes are deleterious is important. “Variant of unknown significance” is a common test result, even for a company like Myriad in an initial report before an extensive workup is done with the family, Dr. Stenzel notes. On one hand, there is pressure not to leave patients hanging, and on the other, not to invite lawsuits. “The labs that come to this genetic testing new, that haven’t developed the kind of expertise they need, unfortunately cannot serve patients as well.”

He cites BCR-ABL—testing that is important for some chronic myelogenous leukemia patients—as an object lesson in why responsible patent holders with FDA-approved tests are necessary. Imatinib (Gleevec) was approved for CML more than a decade ago, but there was no international harmonization of BCR-ABL testing. As a result, for many years testing was “all over the place.” As CAP proficiency tests have shown, “you cannot compare BCR-ABL testing from site to site.” It was only in 2016 that an FDA-cleared 510(k) product was launched, Dr. Stenzel says.

“If there had been a single responsible patent holder for BCR-ABL testing, it is quite likely this situation would have been rectified long ago—or better yet, addressed from the start.”

Similar concerns apply to PD-L1, which is required for some drugs but not others. “Multiple tests are on the market but do not agree with one another because there is no international harmonization. So laboratories have a huge dilemma as to which approved testing to perform.”

Dr. Klein and Dr. Stenzel agree the data are not all in, and several important legal questions await resolution in the wake of Myriad. Funding has dried up for many new startups, Dr. Stenzel says, because of the uncertainty. “If you file a patent now and it’s unsuccessful, it goes public. And everybody knows the genes you were looking at, without any protection. It’s a real challenge in the U.S. Until we know exactly what we can and cannot do with the patent office or until the pendulum swings back, it will be hard to raise the capital to take new molecular diagnostics all the way to the FDA”—which he says is critical for the field to advance.
[hr]

Anne Paxton is a writer and attorney in Seattle.