The United States should create broad exemptions from liability for infringement of patent claims on genes for the sale of tests used for patient care or the use of patent-protected genes in research, according to a final draft report from an advisory committee to the U.S. Department of Health and Human Services Secretary Kathleen Sebelius. The committee warned that current law that allows for patenting genes threatens medical progress and could drive valuable genetic research to other countries with friendlier legal environments. Industry groups, however, warned that following the committee’s recommendations would do more harm than good.

The report comes as a number of legal cases have courts trying to sort out when and if patents on genes are enforceable. The U.S. Department of Health and Human Services Secretary’s Advisory Committee on Genetics, Health, and Society said in its revised draft report issue February 5 that it found “a near perfect storm is developing at the confluence of clinical practice and patent law.” It notes that the cost of genetic analysis is falling dramatically and there is now substantial potential to improve health using new technologies. But it says patent law appears to pose serious obstacles to “the promise of these developments.”

“Patenting has moved upstream; instead of covering only commercial products, patents can now control foundational research discoveries, claiming the purified form of genes. Fragmented ownership of these patents on genes by multiple competing entities substantially threatens clinical and research use,” the report says. “While new technologies enable simultaneous evaluation of multiple genes through multiplex testing, parallel sequencing, and whole-genome sequencing, fragmented ownership may create a host of problems such as patent thickets, blocking patents, high transaction costs, royalty stacking, and holdouts.”

The report says already some labs using multiplex testing have chosen not to report to patients or clinicians the results for certain patent-protected genes for fear of being sued saying that evidence indicates patents have already limited the potential of these tests.

The committee says the United States has decreasing capacity to mitigate the problem. The country does not have compulsory licensing rules and it characterized the nation’s research exemption as “nominal.” But the committee rejected banning patents on genes of associations. It also said that the government’s march-in rights under the Bayh-Dole Act – rights that allows it to require a patent holder to grant non-exclusive licenses on patents that resulted from government funded research – are too inefficient and complex to be a viable option for correcting the problem.

The report also recommended the establishment of guidelines that promote non-exclusive licensing for diagnostic genetic and genomic technologies, greater transparency in licensing, and establishment of an advisory body on the health impact of gene patenting and licensing practices.

A letter from the Biotechnology Industry Organization, the Association of University Technology Managers, and several biotech and diagnostics executives urged Secretary Sebelius to reject the report’s recommendations. “We believe that the recommendations, if implemented, would unravel two sets of laws that are the foundation of life science innovation in this country – the patent system and the Bayh-Dole Act,” they said. “This would do more harm to patients than good, by impairing the research, development and commercialization of the medicines and diagnostic tests of tomorrow.”