Rachel Sachs & Becky Eisenberg on Incentives for Diagnostic Tests

I highly recommend two recently posted articles on declining innovation incentives for diagnostic tests, particularly due to changes in patentable subject matter doctrine. In Innovation Law and Policy: Preserving the Future of Personalized Medicine, Rachel Sachs (Petrie-Flom Fellow at Harvard Law) examines the intersection of IP with FDA regulation and health law, joining a growing body of scholarship that seeks to contextualize IP in a broader economic context. Here is the abstract:

Personalized medicine is the future of health care, and as such incentives for innovation in personalized technologies have rightly received attention from judges, policymakers, and legal scholars. Yet their attention too often focuses on only one area of law, to the exclusion of other areas that may have an equal or greater effect on real-world conditions. And because patent law, FDA regulation, and health law work together to affect incentives for innovation, they must be considered jointly. This Article will examine these systems together in the area of diagnostic tests, an aspect of personalized medicine which has seen recent developments in all three systems. Over the last five years, the FDA, Congress, Federal Circuit, and Supreme Court have dealt three separate blows to incentives for innovation in diagnostic tests: they have made it more expensive to develop diagnostics, made it more difficult to obtain and enforce patents on them, and reduced the amount innovators can expect to recoup in the market. Each of these changes may have had a marginal effect on its own, but when considered together, the system has likely gone too far in disincentivizing desperately needed innovation in diagnostic technologies. Fortunately, just as each legal system has contributed to the problem, each system can also be used to solve it. This Article suggests specific legal interventions that can be used to restore an appropriate balance in incentives to innovate in diagnostic technologies.

Diagnostics Need Not Apply is a new essay by Rebecca Eisenberg (UMich Law) that was nicely summed up by Nicholson Price: "let's just admit it - diagnostic tests are unpatentable."

Diagnostic testing helps caregivers and patients understand a patient’s condition, predict future outcomes, select appropriate treatments, and determine whether treatment is working. Improvements in diagnostic testing are essential to bring about the long-heralded promise of personalized medicine. Yet it seems increasingly clear that most important advances in this type of medical technology lie outside the boundaries of patent-eligible subject matter.

The clarity of this conclusion has been obscured by ambiguity in the recent decisions of the Supreme Court concerning patent eligibility. Since its 2010 decision in Bilski v. Kappos, the Court has followed a discipline of limiting judicial exclusions from the statutory categories of patentable subject matter to a finite list repeatedly articulated in the Court’s own prior decisions for “laws of nature, physical phenomena, and abstract ideas,” while declining to embrace other judicial exclusions that were never expressed in Supreme Court opinions. The result has been a series of decisions that, while upending a quarter century of lower court decisions and administrative practice, purport to be a straightforward application of ordinary principles of stare decisis. As the implications of these decisions are worked out, the Court’s robust understanding of the exclusions for laws of nature and abstract ideas seems to leave little room for patent protection for diagnostics.

This essay reviews recent decisions on patent-eligibility from the Supreme Court and the Federal Circuit to demonstrate the obstacles to patenting diagnostic methods under emerging law. Although the courts have used different analytical approaches in recent cases, the bottom line is consistent: diagnostic applications are not patent eligible. I then consider what the absence of patents might mean for the future of innovation in diagnostic testing.

As I have written, I think changes to patentable subject matter doctrine are an important problem for medical innovation, and that policymakers should think seriously about whether additional non-patent innovation incentives are needed in this area.