CHEO reaches ‘groundbreaking’ settlement with gene patent owner

CHEO reaches ‘groundbreaking’ settlement with gene patent owner
Sana Halwani says the intent of a recent pro bono effort was to achieve some certainty on gene patents.

A recent settlement reached in Federal Court means the Children’s Hospital of Eastern Ontario and all public hospitals in Canada can license a genetic test for a potentially deadly heart rhythm condition on a not-for-profit basis.

On March 9, lawyers for CHEO struck a deal with the American owners of gene patents that ensures Canadian public sector hospitals and laboratories the right to test for Long QT syndrome for patients in this country.

CHEO has been granted a licence by the patent owner, Transgenomic, Inc., to use the genes for non-profit diagnostic testing. The patent owners also agreed to grant licences to other non-profits.

“The intent was to get some certainty on gene patents, which we don’t have, but the result I think can be used not just in the Long QT context,” says Sana Halwani, partner with Gilbert’s LLP, who says the settlement is “groundbreaking.”

Halwani worked on the CHEO case pro bono for more than two years along with Nathanial Lipkus, partner with Osler Hoskin & Harcourt LLP, who was also at Gilbert’s until six months ago.

“As far as we know, this type of licence we put together with Trangenomic is the first one of its kind struck between a public entity and private entity in this way,” she says.

In 2014, CHEO launched the Federal Court challenge against the owners of five gene patents related to the potentially deadly Long QT syndrome.

“We thought if we started a case where there was a genuine access barrier, not like the ones in the U.S. and Australia, which were human rights cases, if we brought a case that put access at the forefront, it would help to create a pathway forward,” says Lipkus. “When we learned this Long QT test had been denied because a patent letter had been sent by the patent holder to the Ontario government, that seemed to be a situation that could merit some action.”

Previously, individuals who needed the test at CHEO could get it under limited circumstances if the government approved it on a patient-by-patient basis. Samples were sent to a U.S. lab and it would be done at a cost of about $4,000, paid for by OHIP.

The Long QT test is the third most common genetic test referred to labs outside of Canada. In 2012, there were more than 700 tests sent out of the country.

“When the hospital was running tests where they could have otherwise included the Long QT genes, they were forced to either not sequence them or ignore them or filter out the results associated with Long QT,” says Lipkus. “So if that was the explanation for a patient’s disease, they would not be able to know or advise the patient. From a health care practitioner’s perspective, that was a non-starter.”

It is hoped the CHEO deal also sets a precedent that will address the issue of gene patents more broadly in the Canadian health-care system.

Lipkus says the Ontario government is already taking steps to apply the result in the context of Long QT and taken a “strong interest” in the structure of the agreement and how broadly it can be adapted to other technologies where patents have come into play.

“People we’ve spoken with at Health Canada are delighted because they’re grappling with whole exome/whole genome sequencing where you literally sequence a patient’s genes and even one patent on one mutation could be enough to thwart the power of the test, so they’ve been happy with the result and looking at how it might affect them,” he says.

Halwani says she is hopeful people will see the settlement and if there are other roadblocks in the gene patent world in Canada or abroad, they will look to this licence model.

“The hope here is that we’ve created a moral push to do it in the context of a public health-care system that offers testing on a not-for-profit basis and we hope companies will see the right way forward and the government will step in if more roadblocks are thrown up in the form of gene patents on other tests,” she says.

As CHEO could not authorize spending patient care money on the litigation itself or judicial costs, Halwani says the situation demanded the result be arrived at via settlement as opposed to prolonged litigation.

“That was the line that had to be drawn,” she says. “We’re hopeful this will create a precedent in that way. Would I have liked a decision on the gene patent issue at the core of the case? Of course, that was the intent at the beginning, but from a client perspective and CHEO wanting to bring specific care to its patients, it is a very big win for them and in the broader context we think this type of a licence will create the precedent.”

Halwani and Lipkus also teamed up with Richard Gold, professor and associate dean at McGill University’s Faculty of Law and department of human genetics who provided input on experts and the policy side of the case.

 “The problem in Canada is if you’re a commercial enterprise your normal reaction is to say ‘I don’t think these patents are very valid so I’m going to enter the market and if they sue me then I will defend it,’ but as a public hospital you can’t do that,” he says.

While no Canadian institution was willing to challenge the patent even though most independent observers think these patents are invalid, Gold says it was “important to clear the air.”

“Especially with what’s called next generation sequencing or whole genome sequencing where it’s not just one patent holder you have to deal with there is a real fear Canadian hospitals and researchers will be locked out of this domain and it could hurt us in terms of delivery of the service, health-care costs, and being locked out of innovation — those were the three important things at stake,” says Gold.

Gold applauds CHEO for having the vision to take on the case.

“They were willing to step forward when no one else was,” says Gold. “It’s always easier to say, ‘I think we’re right, but do we want to expose ourselves to the risk that we’re wrong and the legal fees?’ That was the reaction we got everywhere except at CHEO where they said, ‘Let’s do this because it’s important.’”

Despite what is being heralded as a win for patients, the case settled without determination of the subject matter patent-eligibility of genes.

“As far as patent eligibility, it’s still wide open,” says Noel Courage, partner with Bereskin & Parr LLP. “The win is on this specific patent in that they have a licence to use it. What they’ve done, which is innovative, is to get broader access so that other people who want to do non-profit testing can get a licence as well.”

Courage notes that the Canadian Intellectual Property Office is still issuing patents on genes and there was one enforced in Monsanto Canada Inc. v. Schmeiser — in which a party was found guilty of infringement.

“I think patent owners should be reasonable and grant reasonable access and a reasonable fee for the tests,” he says.

Courage says the issue of gene patents is fading somewhat, but there are still many old patents out there and it is important to protect them.

“I think people need to patent these things to protect the invention and get a return on it,” he says. “If you can’t protect these things, people will come on the market and compete who haven’t done the R&D. If you can’t make money doing the R&D and discovering the diagnostic and commercializing it, there won’t be a next diagnostic.”

Courage says because Canada doesn’t have a price control regime on diagnostics, it leaves it up to the patent owner to charge what it wants and grant access to other people as they see fit, subject to limited exceptions to patent infringement.

He says there is short-sightedness in the “militancy” of the opposition to gene patents and it’s a question of finding the right balance.

“To just say no one should have any patents around diagnostics is too extreme,” he says.

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