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LabCorp Subsidiary Esoterix Sues Qiagen for Violation of EGFR Testing Licensing Terms

NEW YORK (GenomeWeb) – LabCorp subsidiary Esoterix Genetic Laboratories is suing Qiagen in a US district court alleging that Qiagen breached a licensing agreement between the companies regarding EGFR genetic testing by offering it for commercial research and diagnostic purposes ahead of US Food and Drug Administration Approval of the test.

According to a complaint that EGL filed earlier this month with the US District Court for the District of Massachusetts, Genzyme Corporation and DxS – two companies that were subsequently purchased by LabCorp and Qiagen, respectively – inked a licensing agreement in 2008 enabling DxS to use several of Genzyme's patents to manufacture and sell diagnostic products for detecting EGFR mutations associated with response to certain cancer drugs. Under the terms of the agreement, DxS (and later Qiagen) were required to pay Genzyme royalties.

Since LabCorp bought Genzyme's genetic testing business in 2010 and created EGL as a subsidiary, the patent and license agreement rights were also transferred to EGL. Although Qiagen did pay EGL royalties during the period of their agreement, the plaintiff alleges that ahead of FDA approval of the EGFR test kit, the terms of the deal restricted Qiagen to selling only "licensed research products," namely "analyte specific reagents and/or combinations of chemicals, testing materials, accessories and instructions sold as a single product for non-commercial research uses only."

Qiagen "was expressly prohibited from offering EGFR test kits for commercial research or diagnostic testing purposes," EGL states in its complaint. During this period when Qiagen had rights to sell research products, EGL held the exclusive right "to offer EGFR testing for commercial research and diagnostic testing purposes to determine the effectiveness of an EGFR targeting treatment in a patient."

EGL estimated that based on the royalties Qiagen paid, the firm had performed 22,000 and 38,000 test kits in 2011 and 2012, respectively. However, EGL contends that Qiagen falsely claimed these tests were performed for research. "Upon information and belief, a substantial number of sales for these and other years were not for non-commercial research only purposes but rather were offered by Qiagen for commercial research and diagnostic testing purposes in violation of the license agreement," according to EGL's complaint.

Qiagen first received FDA approval in July 2013 for the Therascreen EGFR test as a companion diagnostic for predicting response to Boehringer Ingelheim's non-small cell lung cancer drug Gilotrif (afatinib). Under the terms of the agreement with EGL, it was with that approval that Qiagen acquired the right to sell "licensed products" related to EGFR testing, as opposed to "licensed research products."

In a statement to GenomeWeb Daily News, a Qiagen spokesperson said, "We have strong confidence in our position, and that our current FDA-approved products are not being disputed."

It is worth noting, that the FDA last December finalized guidance in which it defined research- and investigational-use only diagnostic products as tests, instruments, software, and reagents that are still in the development phase and may be used in studies to advance knowledge about a particular disease, but aren't being commercially marketed for diagnostic use. The FDA issued this guidance because it had grown concerned over recent years that IVD manufacturers were labeling products for research use to avoid regulatory oversight for tests actually intended for clinical use.

Since RUO/IUO products aren't subject to regulatory controls, this practice could lead to unproven tests and endanger patients, the FDA said. The guidance places the onus on manufacturers of RUO/IUO products to ensure that their customers are also using the tests and related components only for research and not for clinical diagnosis.

EGL claims that due to Qiagen's violation of the licensing agreement it has suffered a loss of money in Massachusetts, where "many of Qiagen's sales in violation of the license agreement took place." EGL is seeking compensatory damages from Qiagen exceeding $75,000, double or treble damages, costs, and attorney's fees.

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