After being sued by Myriad Genetics for allegedly infringing its patents on BRCA1 and BRCA2 gene mutation testing, Ambry Genetics pushed back this week with its own countersuit accusing Myriad of antitrust violations.
According to Ambry's complaint filed with the US District Court for the District of Utah, Myriad is attempting to wrongfully maintain its nearly two-decade dominance in the BRCA genetic testing market by continuing to enforce patents that are invalid; by keeping a secret database of gene-disease information; and by spreading misinformation about competitors’ tests. As a result of these practices, Ambry believes patients are being forced to pay more for BRCA testing available through a single laboratory, Myriad, than if such testing were available from multiple providers.
"Customers desire and are entitled to alternative sources of genetic testing to identify all mutations in the BRCA1 and BRCA2 gene sequences, through the utilization of amplification, hybridization, and/or gene sequencing, which, but for Myriad’s anticompetitive conduct, could be supplied by Ambry and others," the company states in the complaint.
Ambry's countersuit is in response to a patent infringement case Myriad brought against the company in July. In a complaint filed with the Utah federal district court, Myriad and several other patent holders alleged that four of Ambry's tests – BRCAplus, BreastNext, OvaNext, and CancerNext – that gauge mutations in BRCA1 and BRCA2 genes infringe claims in 10 patents (PGx Reporter 7/10/2013).
In its countersuit, Ambry is seeking a declaratory judgment from the Utah court that the patent claims asserted by Myriad are either invalid or that Ambry is not infringing them, Ardy Arianpour, Ambry's senior VP of business development, told PGx Reporter.
Myriad's patent infringement lawsuit against Ambry and Ambry's countersuit against Myriad alleging anticompetitive practices will be part of the same case. "Typically, the claims and the counterclaims will be decided at a common trial," Arianpour said.
Myriad has asked the court to issue a preliminary injunction against Ambry, barring the company from performing BRCA testing. Ambry is planning to file a motion opposing Myriad's motion for a preliminary injunction on August 14. Myriad is slated to reply by August 28, and the Utah court is scheduled to hear the case on Sept. 11 and 12 and subsequently issue a decision with regard to the preliminary injunction.
"Ambry … believes that Myriad filed this baseless lawsuit and application to keep all competitors – not just Ambry – from the market," the company said in its countersuit. In its complaint, Ambry included a photo of a Myriad document informing healthcare providers that only Myriad's laboratory can perform BRCA testing.
BRACAnalysis accounts for more than 80 percent of Myriad's revenues. In its countersuit, Ambry estimates that Myriad controls more than 90 percent market share for genetic testing that analyzes patients' full BRCA1 and BRCA2 gene sequences.
Soon after the Supreme Court decided on June 13 that Myriad's patent claims on isolated BRCA sequences were invalid, many diagnostics providers felt the ruling opened the way for them to launch competing tests. Ambry moved first to end Myriad's longstanding monopoly over the market by launching commercial BRCA testing. Around the same time, Gene by Gene also began selling BRCA testing, and several other labs, including Pathway Genomics, GeneDx, Quest, and Mary-Claire King's lab at the University of Washington, announced that they too would offer testing services.
Myriad filed a patent infringement case against Ambry first, then against Gene by Gene – less than a month after their announcing the launch of competing BRCA testing services. In both cases, Myriad and other patent holders have requested a preliminary injunction to stop Ambry and Gene by Gene from performing BRCA testing, and are asking the defendants to pay for lost damages.
The ensuing legal tussle between Myriad, Ambry, and Gene by Gene, may give other companies contemplating entering the BRCA testing market reason to delay plans. Ambry said that as a result of this lawsuit, Prevention Genetics has stopped offering BRCA testing and Pathway Genomics has delayed plans to perform testing.
Meanwhile, GeneDx was slated to launch BRCA testing on August 1. When asked if the company had changed its plans, Managing Director Sherri Bale said, "We stand by our previous comments," but did not elaborate.
Ambry, meanwhile, is "actively" receiving patient samples and performing BRCA testing, Arianpour said. "We have had an overwhelming response from clients," he added.
In its countersuit, Ambry claims that Myriad employees have been telling genetic counselors that its tests infringe Myriad’s patents. These statements are false, in Ambry's view, given the Supreme Court's decisions in two recent cases: Association for Molecular Pathology et al. v. Myriad and Mayo v. Prometheus.
Ambry's countersuit against Myriad is the latest twist in the seemingly never ending legal kerfuffle surrounding genetic testing for hereditary breast and ovarian cancer risk. Earlier this summer, the Supreme Court decided in AMP v. Myriad that a number of Myriad's patent claims on isolated BRCA sequences underlying its BRACAnalysis test were invalid. The court, however, upheld several of Myriad's claims on synthetic DNA, or cDNA, used as probes and primers in diagnostic processes and generally expressed support for patenting novel methods applying the knowledge about gene-disease associations.
While this left the door open, some legal experts believe, for Myriad to continue to thwart competition for its flagship BRACAnalysis test by asserting its remaining patent claims, this decision and other recent cases have also created much confusion in the life sciences industry about the specific types of diagnostic method patents that are currently valid.
"Remember that the whole point of granting a patent is to give the patent holder a type of legal monopoly for a limited time," Dan Burk, a law professor at the University of California, Irvine, and an expert in biotechnology and patent law, told PGx Reporter. "So it is very, very difficult to show that enforcement of a patent is illegal monopolization."
As AMP v. Myriad was winding through lower courts, the Court of Appeals for the Federal Circuit held invalid several of Myriad's broad method claims directed at "comparing" and "analyzing" DNA sequences (PGx Reporter 8/3/2011). And well before deciding on Myriad's BRCA patents, the Supreme Court raised the bar for diagnostic method patents in Mayo v. Prometheus. In that case, the court stated that in order to patent an application of a law of nature, the applicant "must do more than simply state the law of nature while adding the words 'apply it'” (PGx Reporter 3/21/2012).
"Ambry has a plausible argument that some of Myriad's method claims may prove to be invalid under the Mayo v. Prometheus opinion," Burk noted. "The Federal Circuit did find some of Myriad's other method claims to be invalid under that standard. But we won't know about the remaining claims until a judge looks at them. This case will put them to the test – but Myriad has a right to put them to that test if it chooses."
Burk believes Ambry has its work cut out in proving that Myriad violated antitrust laws. Ambry will have to show in its countersuit that Myriad is engaged in a "sham litigation," by intentionally trying to assert patents that can't plausibly be valid. "That is extremely difficult to show," Burk said. "Enforcing a patent that some people believe may be invalid, or that may in fact turn out to be invalid, isn't sham litigation."
Ambry alleges that the patent claims Myriad says it is infringing by performing BRCA testing don't pass muster under US patent law, specifically 35 USC section 102, which requires that a claimed invention must be "novel" and not described by "prior art," and section 103, which states that a claimed invention must be "non-obvious" to a "person having ordinary skill in the art."
Ambry also cites the Supreme Court's decision in Mayo v. Prometheus and the Federal Circuit's invalidation of several of Myriad's method claims to challenge the validity of the company's remaining IP around BRCA testing.
For example, Ambry cites claim 8 of Myriad's patent no. 5,753,441 as an example of how the asserted IP is no longer valid in the context of recent legal decisions. Claim 8 describes a method of amplifying all or part of the BRCA gene from a patient's tissue sample, using primers to produce amplified nucleic acids, and then sequencing the nucleic acids. However, the two described biochemical processes in the patent – amplification and sequencing – are well known in the art, Ambry points out.
"These method claims are not patent eligible under Prometheus," the company said in its complaint. "Myriad did not invent sequencing or gene amplification, nor does its asserted method claims add any new 'inventive concepts' to the application of the natural and unpatentable phenomena."
Ambry also takes issue with claims 16 and 17 in the asserted patent no. 5,747,282, which describes using single-stranded DNA primers to determine the nucleotide sequence of a BRCA1 gene by PCR analysis. According to Ambry, these cDNA claims aren't patent eligible since the described sequence of the synthetic DNA strand is the same as naturally occurring DNA. The Supreme Court in its decision in AMP v. USPTO found cDNA to be patentable except when a short synthesized strand is "indistinguishable" from the isolated genomic DNA.
In order to perform BRCA testing, Myriad uses PCR methods to amplify the DNA and then Sanger sequencing to gauge the genomic alterations. Ambry also directly analyzes the BRCA sequences, as well as deletions and duplications, in genomic DNA, using Illumina's next-generation sequencing platforms, the HiSeq or the MiSeq. The company uses the RainDance platform to amplify the DNA for sequencing, and other enrichment methods.
In its complaint, Ambry believes that although Myriad currently doesn't use RainDance's PCR methods as part of its BRACAnalysis test, the company is suing Ambry to try to gain a long-term business advantage. Myriad is a strategic equity investor in RainDance and signed a multi-year supply agreement with the company to use its PCR technology as part of a next-generation sequencing hereditary cancer panel.
In the next 24 months, Myriad is planning to retire BRACAnalysis and phase out its other hereditary cancer tests by the summer of 2015. In place of these tests, Myriad will launch a 25-gene, next-generation sequencing-based hereditary cancer panel, called myRisk Hereditary Cancer. Slated for launch by the end of this year, the myRisk test will analyze 25 genes, many of the hereditary risk markers currently assessed by Myriad's existing tests. Myriad CEO Peter Meldrum has previously highlighted that the company has strong method patent protection around at least eight of these genes, including BRCA1, BRCA2, BART, RAD51C, PALB2, PTEN, MYH, and P16.
With regard to its BRACAnalysis test, after the Supreme Court's ruling invalidating its patent claims on isolated gene sequences, Myriad has insisted that it still has 500 valid and enforceable claims in 24 patents underlying that product.
Myriad spokesman Ron Rogers told PGx Reporter that Ambry is infringing 10 patents covering synthetic primers, probes and arrays, as well as methods of testing, related to the BRCA1 and BRCA2 genes. "We believe we have a strong case based on the evidence and that Ambry's counter claims are without merit," Rogers said. "These claims at issue in this case are not the same as those in the Supreme Court case, which was a separate matter."
In the countersuit, Ambry accuses Myriad employees of telling genetic counselors that between 10 percent and 30 percent of the time Ambry's BRCA testing finds a variant of unknown significance. A so-called VUS is a gene abnormality that researchers and healthcare providers aren't sure is linked to cancer based on available evidence.
"Ambry is informed and believes that Myriad’s employees are aware that this representation is patently false," the company wrote in the complaint. Ambry claims its VUS rate is 5 percent.
Myriad, meanwhile, has highlighted that with the help of its proprietary database, containing information on 14,000 variants, its VUS rate for BRACAnalysis is less than 3 percent. At the European Human Genetics Conference in Nuremberg, Germany, last year, Myriad reported that its VUS rate had declined from 12.8 percent a decade ago to 2.9 percent as of 2012. Rogers noted that the company determines its VUS rate by dividing the number of VUS by the total number of BRCA tests.
Myriad has submitted for publication two papers that will describe how the company determines its method for determining the VUS rate. According to Rogers, Myriad has determined that all other competing labs have a VUS rate between 20 percent and 30 percent based on publicly available data.
"The distribution of mutations is widespread and the frequency of most mutations is very low. Only when Myriad had tested hundreds of thousands of patients were we able to make major progress in bringing down our VUS rate," Rogers said. "Consequently, since no other lab has tested anywhere near this number, we think it is unlikely they would have a similar VUS rate."
European labs PGx Reporter has spoken to have challenged Myriad's estimates of its competitors' VUS rates, and have maintained that in reality, their rates are much lower than Myriad is presenting, around 10 percent (PGx Reporter 4/17/2013).
The company until 2004 contributed variant data to public databases, but has publicly said that it decided to store variant information in a proprietary database as a competitive advantage. Myriad has tested around one million people on BRACanalysis and its decision to keep this vast amount of data as a trade secret has been a thorn in the side of many researchers, healthcare providers, and patient advocates, who would rather not see Myriad continue to dominate the BRCA testing market beyond the scope of its patents.
University of California's Robert Nussbaum and other volunteers have launched an effort to gather BRCA variant information in a public resource, called Sharing Clinical Reports. Patient groups are urging members to gain access to their own reports and submit the data to the project (PGx Reporter 6/19/2013). Industry insiders estimate that it will take several years before such a public database is able to rival the amount of information in Myriad's repository.
Ambry believes that one of the reasons it has faced litigation form Myriad is because it has agreed to deposit BRCA1 and BRCA2 sequence information to public databases, which would "further enable competition in the BRCA1 and BRCA2 sequencing markets."
In Burk's view, it will be particularly challenging for Ambry to use Myriad's proprietary database to demonstrate a pattern of "bad faith" or to prove sham patent enforcement. "It is even harder to base antitrust claims on trade secrets because trade secrets confer very little ability to monopolize," he said. "Unlike a patent, it is legal to independently recreate or reverse engineer trade secrets. The trade secret holder has no ability to stop anyone who wants to do that."
Ultimately, as with everything, it comes down to price.
Specifically, Ambry has accused Myriad of misrepresenting its financial policies for BRCA testing to customers. Ambry's list price of gauging BRCA1/2 gene sequences and conducting deletion and duplication analysis is around $2,200. Ambry said in its complaint that Myriad officials have been discouraging genetic counselors from using Ambry's testing service, saying that the company will charge patients the difference between the list price and what the insurer covers.
"Ambry has never balance billed," the company stated in its complaint and countered that Myriad is using its monopoly to increase the cost of BRACAnalysis. Three years ago, Myriad raised the list price of all its tests by an average of 7 percent (PGx Reporter 5/5/2010).
The $3,340 Comprehensive BRACAnalysis test includes complete sequencing of the BRCA1 and BRCA2 genes and detects five common large rearrangements in the BRCA1 gene. Myriad also offers the BRACAnalysis Large Rearrangement Test, or BART, which gauges additional large rearrangements in the BRCA1 and BRCA2 genes, at a separate list price of $700. On average, private insurers pay $3,100 for Comprehensive BRACAnalysis and $580 for BART.
Myriad's Rogers didn't address Ambry's specific charges, but maintained simply that Ambry's counterclaims lacked merit. Rogers took issue, however, with the claim that Myriad is raising the price of testing for patients.
While the $4,000 list price for Myriad's BRACAnalysis test is double the price tag of what Ambry charges for such testing, Myriad's test has been on the market for longer and the company has coverage agreements with most major payors. Myriad estimates that for those who meet treatment guidelines and insurance plans' criteria, the average out-of-pocket cost for BRACAnalysis testing is less than $100.
Myriad also recently expanded its financial assistance program, through which patients who qualify under the income requirements and meet the guidelines for testing will have to pay no more than $375 for its tests in out-of-pocket costs.
In court documents, Myriad acknowledged that additional competition will likely put pressure on the company to lower the price of its BRCA test, but it isn't ready for such competition. "Myriad is well aware that its patents will eventually expire, and has begun to formulate a marketing strategy to advise the public of the superiority of its BRACAnalysis test," the company said in its motion for a preliminary injunction against Ambry. The first patents underlying the test are slated to expire in August next year.
"Myriad relied on the premise that it still had the benefit of a few years of patent exclusivity to finalize this strategy," the company said. "It is not prepared to implement those plans immediately, which it would need to do in order to combat the effect of Ambry’s testing."
Myriad said it has spent $500 million to develop BRACAnalysis, educate healthcare providers, convince payors to cover BRCA testing, and build a variant database. The company is asking the Utah court for a preliminary injunction against Ambry to stop the company from "piggy-back[ing] off of Myriad's efforts."