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Cashing In On Medical Knowledge

Some doctors have begun patenting not just devices but medical procedures and techniques. Proponents argue that this practice is needed to foster innovation in medical care. Critics claim that it perverts the Hippocratic oath and drives up medical costs.
March 1, 1998

Each year, nearly every pregnant woman in the United States takes a blood test to screen for the possibility that the child she carries will have a birth defect. By measuring the concentration of several substances in the pregnant woman’s blood, the so-called multiple-marker blood screen can warn a woman that her baby likely has a birth defect such as Down’s syndrome, a genetic defect that causes retardation.

One of the substances measured in this way is human chorionic gonadotrophin, or HCG, a hormone that women produce in the days after conception.

Since the mid-1960s, medical researchers have actively studied HCG and its role in building up the placenta. In 1989, a researcher named Mark Bogart was awarded a patent for a method based on an observation he’d made about HCG: that elevated levels of the hormone can signal the presence of Down’s syndrome in a fetus.

Bogart, whose work was done in 1986 at the University of San Diego, didn’t create a new device to obtain his patent. Instead, he observed a connection between the levels of HCG and the likelihood of Down’s syndrome-and recognized the potential use of this correlation in a diagnostic test. Nor did his observation by itself result in the multiple-marker blood screen, since his was only one of three separate observations that make possible today’s most commonly administered test. Nonetheless, combined with measurements of other factors in the blood, Bogart’s research did open the door for the development of a diagnostic test that inexpensively alerts doctors when more accurate and invasive tests on a fetus might be warranted.

Bogart received U.S. Patent No. 4,874,693, affording him monopoly protection over a “method for assessing placental dysfunction.” Now he has made clear his intention to turn his patent into dollars. Bogart claims the patent entitles him to a $3 to $9 royalty every time a lab administers the multiple-marker test. He has made good on his threat to sue labs, doctors’ offices, and health maintenance organizations that refuse to pay.

Many are paying. According to Andrew Dhuey, Bogart’s lawyer, laboratories owned by SmithKline Beecham are now paying Bogart royalties in excess of $1 million per year. Recently, Dhuey says, the Arizona Institute for Genetics and Fetal Medicine agreed to Bogart’s royalty demand covering all future screening tests, as well as paying $90,000 in royalties for tests conducted over the past six years. Given the test’s widespread use, Bogart could earn as much as $100 million in royalties from hospitals, laboratories, and medical research institutions over the patent’s life.

Bogart’s intellectual and financial claims have inspired outrage in some quarters of the medical community. As Arnold Relman, former editor of the New England Journal of Medicine told Technology Review, for Bogart “to claim private ownership rights over natural phenomena, the nature of disease, or human biology is a restriction of intellectual freedom that will stifle medical research.”

Bogart refused to be interviewed for this story, but Dhuey, his lawyer, argues that Bogart is fully justified in law and logic. Dhuey notes that hospitals and labs “pay royalties every day on devices and on drugs that are being used, and it’s unfortunate that they don’t see that there’s no fundamental difference.”

Bogart’s claims are far from unique. He is one of thousands of medical doctors and biomedical researchers who have patented medical observations, surgical techniques, and other procedures, some as common as determining the sex of a fetus from an ultrasound image. These patent holders contend the procedures they develop are no less worthy of patent protection than an improved version of a catheter or x-ray machine.

Supporters of these claims believe that patents of this kind are essential for medical progress. Patricia Granados, a patent lawyer at the Washington, D.C.-based firm of Foley and Lardner who has litigated many related patent infringement cases, warns that without patent protection emerging industries like gene therapy and medical diagnostics will suffer. “It is questionable whether such industries will be able to obtain the investment money needed for research and development,” Granados explains. Corporations aren’t going to invest their money in anything, she adds, “unless they can get a proprietary position.”

Welcome to the field of medical research on the cusp of the millennium. A stark and accelerating clash has emerged between the drive to privately own medical knowledge and techniques, and the tradition of freely sharing them to improve public health-a tradition enshrined in the Hippocratic oath, which mandates that every physician must teach the craft of medicine “without fee or covenant.”

The clash has implications that go far beyond the philosophical underpinnings of the Hippocratic oath. For example, Bogart’s royalty demand is greater in some cases than what an insurance company will reimburse labs for conducting the test. Already some labs have threatened to drop the blood screen, and public health officials worry that fewer health plans will offer it.

“If the patent is enforced, it will have serious consequences to the health care of women in this country,” Mark Evans, professor of obstetrics and gynecology at Hutzel Hospital in Detroit told ABC News. “I believe in capitalism and rewarding discoveries, but there has to be a point where social responsibility takes precedence over greed.”

“A Reward at the End”

Patent infringement cases are very expensive in the U.S. legal system. They routinely cost litigants more than a million dollars. And their outcomes are notoriously unpredictable. So, though many doctors, hospitals, and patent experts scoff at Bogart’s claim, some of the nation’s most venerable hospitals, medical firms, and testing laboratories have followed their lawyers’ advice and reluctantly paid Bogart’s royalty.

Oakland, California-based Kaiser Permanente, the country’s largest non-profit hospital chain and health maintenance organization, is an exception. It has not agreed to pay. Instead, it has challenged Bogart in court.

Mitchell Sugarman, Kaiser’s director of technology assessment, says the HMO has contested the claim because of what it implies for its patients and the broader medical community. Kaiser expects to spend well over $1 million to litigate this case, more than it would have paid in royalties. But Sugarman contends there is a “moral argument” to be won.

Joining Kaiser is a consortium of medical professional groups, including the American College of Medical Genetics, the American Medical Association, and the American College of Obstetrics and Gynecology. The group has offered Kaiser financial aid and free expert assistance. The organizations formed the consortium because in their view the Bogart case represents “a dangerous attack on the availability of an important diagnostic test for pregnant women and on public health policy in this country,” says Michael Watson, the consortium’s leader and vice president of the American College of Medical Genetics.

On the other side of the issue, the Biotech Industry Association is watching the Bogart case closely. David Schmickel, the association’s legal counsel, argues that “medical professionals often ignore the fact that it costs tens of millions of dollars to bring a diagnostic test to market. This kind of research will not be done and those tests will certainly not reach the public unless there is a reward for the inventors at the end.”

The issues raised by Bogart’s patent are dramatic and humbling in their complexity. They are also new. Until the mid-1950s, the U.S. Patent Office did not issue patents on observations or procedures. Patent directives and patent-law precedents drew a hard line between devices, like catheters and x-ray machines, and procedures, like blood transfusions or cardiopulmonary resuscitation (CPR). Devices could be patented, but procedures could not. The longstanding view was highlighted over a century ago in the landmark 1862 case Morton v. New York Eye Infirmary, in which an inventor tried to claim ownership of the burgeoning medical practice of using ether as an anesthetic for surgery. The court invalidated the patent, dismissing it as nothing more than the “naked discovery of a new effect, resulting from a well-known agent, working by a well-known process.”

Before the advent of the knowledge-based economy, the rationale for drawing a distinction between procedures and devices seemed clear and easy to accept. Developing a medical machine or instrument often requires the inventor to invest significant capital. By granting a patent, the government allows the inventor the opportunity to recoup the cost-thereby encouraging the continued development of medical innovations. The refinement of new treatments, or biomedical insights, on the other hand, rarely entailed such costs, and rarely involved just one inventor or company. Instead, most of the advances came from researchers and practicing doctors sharing knowledge and further developing each other’s insights.

The consensus was so strong that the idea of patenting medical knowledge could seem absurd. For example, in 1954, when Jonas Salk developed a polio vaccine, his funder, the March of Dimes, prohibited patenting or receipt of royalties on the results of its research projects. The notion of Salk individually owning rights to the discovery never entered the picture. When Edward R. Murrow, the renowned TV commentator of the day, asked, “Who will control the new pharmaceutical?” Salk scoffed in reply that the discovery belonged to the public. “There is no patent,” he said. “Could you patent the sun?”

Yet ironically, even as Salk was asking his audacious rhetorical question, the Patent Office’s distinction between devices and procedures was beginning to erode, in concert with an expansion of the accepted notion of intellectual property in many disparate high-tech fields. Beginning with a fateful 1954 patent on a technique to treat hemorrhoids, the Patent Office became increasingly indifferent to the distinction between devices and procedures.

By the early 1990s, many doctors and medical researchers had seen the potential financial benefits of seeking patents on procedures, techniques, and observations, and were petitioning for patents in record numbers. In 1996, Medical Economics claimed that the Patent Office was issuing patents on medical procedures at a rate of 100 per month, double the rate of a decade before. Other estimates put the number far higher.

Unfortunately, developing more precise estimates of how many such patents there are is difficult. Patents in the medical field frequently involve both devices and methods in their claims. The category covering surgery does have a subclass explicitly devoted to surgical methods, and it catalogs 485 patents. However, one law firm’s search estimated that as many as 134,000 other surgery-related patents likely contain ownership claims on techniques or methods in conjunction with the use of an instrument or device.

“That’s an Invention?”

All these patents confront medical specialists with a profusion of private claims on methods, observations, and other knowledge that in the past doctors freely used and shared. Specialists from urologists to eye surgeons have received patent infringement threats.

In one of the best-known cases, several years ago radiologists around the country received letters attempting to exact royalties on a patent covering a technique for determining the sex of a fetus at 12 to 14 weeks with ultrasound. The patent-still valid-boils down to visually distinguishing fetal male genitalia from female. Many in the field derided the claim. As Chris Merritt, a radiologist at the Ochsner Clinic in New Orleans, puts it: “It’s like saying you have a secret method for distinguishing the gender of patients when they take their clothes off for a physical. That’s an invention?”

This claim, however, never reached the stage of litigation. The American College of Radiology publicly condemned the claim. Later the patent holder, obstetrics and gynecology specialist John D. Stephens of San Jose, California, withdrew his royalty demands.

The inherent complexities of the biomedical knowledge economy are probably not going to be resolved by the patent examiners alone. Patent examiners are seldom medical practitioners, and they typically base their decisions on searches of published work aimed at finding whether anyone has previously reported a procedure or treatment. But published works are often a poor reflection of the unfolding state of medical knowledge; as a result, the examiners grant patents for many procedures that are not novel or even noteworthy. Many ownership claims cover skills most hospitals expect doctors to learn during their medical residencies, skills one generation of doctors has traditionally passed to the next.

For instance, almost all surgical residents are taught how to suture the stomach to the intestines (to treat bleeding ulcers or stomach cancer); a physician owns a patent on a technique for this procedure. Similarly, cosmetic surgeons around the world know how to make slits in a skin graft to expand it; another physician holds a patent covering a technique for this procedure. Still another doctor owns the simple procedure of treating iron deficiency by administering iron under the tongue.

Given the thousands of procedures doctors perform every day, “the proliferation of patents on medical and surgical procedures becomes a frightening prospect,” says Robert Portman, a patent lawyer at the Washington, D.C. firm Jenner & Block. It could “wreak havoc on the delivery of medical services.”

Portman litigated one of the most publicized of the recent medical patent cases. The case generated widespread attention to the issue when it came to trial in 1995-and it helped inspire congressional legislation in 1996. In 1992 Arizona eye surgeon Samuel Pallin received a patent on a type of incision, used in cataract operations, that required no stitches to heal. Once Pallin received the patent, he demanded royalties from fellow eye surgeon Jack Singer, who also used the procedure and had written about it in medical journals. Pallin threatened to force Singer to stop using the technique unless Singer paid.

To Pallin, the patent reflected his rightful intellectual property. “We don’t think of it as greedy when a scientist gets a royalty for coming up with a new [drug] compound. It is ridiculous to say that this is any different,” he retorted to the Wall Street Journal after medical professional societies criticized him for his private ownership claim.

But to Singer, the patent was an affront. An eye surgeon at the Hitchcock Leahy Clinic at Dartmouth Medical College in New Hampshire, Singer had already perfected the procedure in his own practice. He did not patent it. In fact, he taught it to his students and shared it at symposia with other doctors from around the world. Singer maintains that he and many other eye surgeons had developed this type of stitchless incision simultaneously.

Pallin’s claim ran counter to everything Singer believes about his profession, Singer explains. “It would have been much easier to purchase Pallin’s license and let others worry about the problem,” he says. “But from the beginning, I knew I had to fight this as a matter of principle.”

Three years and more than half a million dollars later, Singer won a legal victory. But the victory did not help Singer establish the principle that medical knowledge cannot be patented. Singer won simply because he could document that he had performed the incision for one month prior to Pallin’s patent claim.

Singer’s assertion that medical procedures must be shared among practitioners did find a broader following, however-in Congress. Rep. Greg Ganske, R-Iowa, a plastic surgeon by training, sponsored a bill to ban patents on medical procedures, a policy followed by some 80 other industrialized nations. Ganske warned that if Congress didn’t act, people would one day hesitate to perform the Heimlich maneuver on a choking diner for fear someone might sue them for violating a patent.

But other than banning private patents on nuclear-weapons-related inventions during the Cold War, Congress has been loath to set limits on the robust U.S. patent system. During the 1996 congressional hearings, lawyers from the American Intellectual Property Law Association, the Intellectual Property Section of the American Bar Association, and the Biotechnology Industry Organization argued that the United States risks a “domino effect” that would squelch technological progress if it systematically excludes certain types of patents on policy grounds.

These parties argued that Rep. Ganske’s proposed bill would invite other countries to weaken their patent laws at a time when the United States is pushing these countries to toughen them. The move could embarrass the United States internationally or, worse, even put the nation out of compliance with the intellectual property treaty arrangements of the General Agreement on Tariffs and Trade (GATT) negotiations- arrangements the United States was working to bolster in the international community.

The final legislation, signed by President Clinton in the fall of 1996, sought a middle ground between the two arguments. It specified that doctors and researchers can receive patents on medical procedures, but they cannot sue to recover royalties from other medical practitioners who use the procedures. In other words, Pallin could seek a patent today, but could not sue Singer. And if Pallin won a patent today, the law would make it effectively worthless, little more than an empty professional accolade. Yet, the U.S. government still preserves Pallin’s right to claim ownership over his discovery.

The congressional compromise reflects a deep-seated national conflict on this issue. The medical-procedure patent law will curb some of the worst incursions of private ownership claims into the shared terrain of medical education. But increasingly, as bitter intellectual property fights like the Bogart-Kaiser case spread throughout the biomedical field, Congress’ actions may prove inadequate to address the emerging clash between private profit and the shared “infostructure” of medical education. The legislation will not stop all legal battles. For example, it does not apply retroactively to existing patent claims, which leaves thousands of actionable medical-procedure patents on the books.

More important, the law does little to address similar problems arising in high-tech biomedical research. The legislation focuses on medical procedures, so it does not explicitly cover the vast number of claims like Bogart’s that involve insights about the body’s functions that researchers and companies can use to create diagnostic tests or novel treatment approaches.

Indeed, just months before President Clinton signed the congressional law to limit the value of patent claims among medical practitioners, he signed legislation that actually expanded patent rights in biomedicine. That law gives explicit backing to what may be the broadest patent in medical history: on ex vivo human gene therapy.

In 1990, a team of researchers at the National Institutes of Health (NIH) made medical history when they employed a new technique called ex vivo human gene therapy to successfully treat two girls with a rare genetic disorder. In this type of gene therapy, doctors remove the cells from the patient and alter them in a lab, outside of the body. The medical team took the girls’ white blood cells, inserted an altered virus that would correct their genetic disorder, and reintroduced the corrected white blood cells into the girls’ bloodstreams.

With strong legal advice, three members of the team managed to parlay the experiment into a patent on all ex vivo human gene therapy. The claim is so broad that doctors around the country were shocked when the team won the patent. “Deep disbelief, I’d say that’s what most people feel about the breadth of the patent,” Joseph Glorioso, head of the department of molecular genetics and biochemistry at the University of Pittsburgh told the journal Nature. “This is analogous to giving someone a patent for heart transplants.”

Dusty Miller, a key member of the original human gene therapy team-who was not on the patent and who is now a researcher at the Fred Hutchinson Cancer Center in Seattle- says such a patent shouldn’t exist, or, at the very least, should be defined far more narrowly. As he put it, the patent amounts to “another big step toward the bizarre world where people stake claims to the natural processes of the human body.”

Complaints like Miller’s grew louder when the team sold the exclusive rights to this entire new and promising field of medicine to the highest bidder. Ultimately, after various corporate mergers and acquisitions, those rights landed in the patent portfolio of Swiss pharmaceutical giant Novartis. The patent, and Novartis’ control of it, has far-reaching effects. Novartis can exact royalties from anyone seeking to use the technology and, because of this, those treatments that come to market will likely cost more.

Another set of problems posed by such patents is typified by a bitter, ongoing case involving Baxter International. Baxter, a large pharmaceutical and health care firm, claims to own a broad license on the technology related to a particular antibody that can be used in bone-marrow transplants for patients with breast cancer and lymphoma, among other diseases. Even though no comparable Baxter product is yet on the market, the company has legally blocked a small competitor-a Bothell, Washington-based firm called CellPro-from marketing its own similar treatment while Baxter tries bringing its own version through the lengthy Food and Drug Administration (FDA) development and approval process. The problem is that Baxter’s action could deny cancer patients around the country a promising FDA-approved treatment.

Andrew Yeager, director of bone-marrow transplant programs at Emory University, where physicians have been using the CellPro treatment with some success as a last-ditch effort to save lives of children suffering from acute leukemia, lamented to the Seattle Times: “It’s unfortunate that these sorts of things in corporate America can threaten therapeutic clinical trials and potentially life-saving therapies.”

More than three dozen members of Congress, the American Cancer Society, several patient advocacy groups, former U.S. Senator Birch Bayh, Jr., and former Carter White House Counsel Lloyd Cutler made an appeal on CellPro’s behalf to Department of Health and Human Services chief Donna Shalala. They asked her to exercise the government’s right to intervene in patent disputes that stem from publicly funded research in “extraordinary cases” where the dispute threatens public health. “CellPro’s request is simple. While the court case is allowed to run its course, an FDA-approved product must remain on the market, available to any and all cancer patients who need it,” Bayh and Cutler wrote Shalala.

The government denied the request. NIH Director Harold Varmus, who made the ruling, said he was convinced the courts would insure no one was denied treatment. Varmus was undoubtedly swayed by the many equally influential voices arrayed against such action, such as Stanford University President Gerhard Casper. Casper wrote to Varmus that to intervene would set a precedent that “would pose a grave threat to university-industry partnerships” and even “put into jeopardy the kind of investments needed today to take medical discoveries through the lengthy processes necessary to bring them to the public.”

A Lottery System

The intent of the patent system is, as Abraham Lincoln once put it, to add the fuel of interest to the fire of genius by granting inventors financial rewards. In the knowledge-based economy, however, the researchers who obtain the patent on a biological process are frequently not the ones who do the work to bring a product to market. Even Forbes magazine, the self-described capitalist tool, complained about this aspect of the patent system. Forbes’ editors wrote in 1994 that the U.S. patent process has too often “become a lottery in which one lucky inventor gets sweeping rights to a whole class of inventions, and stymies development by others.”

Forbes was not speaking specifically about the biomedical field, but the observation seems prescient as the Bogart/Kaiser case heads to court in California. But is this kind of a lottery just? Should anyone be allowed to patent a function of the human body, or a medical method or procedure? As in most patent infringement cases, the court will likely not tackle those broader questions. Instead the case will probably focus on narrow legal questions. Much of Kaiser’s case, for example, will center on the argument that the modern-day multiple-marker prenatal test is only distantly related to the original research Bogart patented.

Bogart noted a correlation between Down’s syndrome and high levels of the hormone HCG. But, in as many as 30 percent of cases, the elevated HCG levels do not correspond to the presence of the birth defect. To make a more reliable test, researchers developed a technique that drew upon other insights similar to Bogart’s to screen the blood for the levels of two chemicals aside from HCG. The combined indicators considerably enhance the efficacy of the test not only for Down’s syndrome but for other birth defects as well.
Mike Jacobs, an attorney at Morrison & Foerster representing Kaiser Permanente in the case, notes that articles in the medical literature, including a letter in the prestigious British medical journal Lancet, on the correlation between HCG and fetal abnormalities actually predate Bogart’s observation. Jacobs hopes that fact may ultimately invalidate Bogart’s claim. Even if Bogart does deserve credit for discovering-or at least sharpening-our realization of the correlation between HCG and the probability of Down’s syndrome, says Kaiser’s Sugarman, “his financially motivated claim does nothing to benefit medical science.”

With the courts focusing on narrow issues, and the executive branch declining to intervene, only Congress is left to stem the inroads of private ownership into the shared pool of advancing medical knowledge. The Bogart case may inspire that. It has undergone close scrutiny by Greg Ganske, the Iowa Republican largely responsible for the 1996 congressional bill’s passage. “Maybe with examples like this,” Ganske says, “we will need to go back at this issue again.”

For his part, Jack Singer, who persevered-and prevailed- in the cataract-surgery case, says he is “deeply troubled” by the Bogart case. Only patent owners and their lawyers benefit from carving up medical knowledge into privately held parcels, Singer argues. “Patients, the medical profession, and society all benefit from the long-standing culture of free exchange of medical knowledge.”

But as the knowledge-based economy evolves, such arguments must be balanced against the claims of technological progress. If anything is clear in this increasingly tangled field, it is that there will not be simple answers anytime soon.

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