Supreme Court Ruling on Human Gene Patenting

Author: Brad Korten, Legislative Assistant, Drinker Biddle & Reath

On Thursday, June 13th, the Supreme Court unanimously ruled that isolated and naturally occurring human genes cannot be patented. This case was brought to them by the American Civil Liberties Union (ACLU) who challenged Myriad Genetic, a molecular diagnostic company, over the right to patent BRCA1 and BRCA2 genes, which are used to test for breast and ovarian cancer. The test, though expensive, has been very successful in determining gene mutations that can lead to and cause these types of cancers.

In the majority opinion of the Court, Justice Clarence Thomas wrote: “Myriad found the location of the BRCA1 and BRCA2 genes. But that discovery, by itself, does not render the BRCA genes patent eligible.” The reasoning behind their ruling is that since Myriad only discovered the location of the gene, but did not create it, there is no basis for the company to claim ownership rights to something that already exists naturally. It would be like Polar Spring trying to patent spring water for their bottles— they might have found the springs but they did not make them. With this ruling, other human genes that are being researched, such as those that are linked to Alzheimer’s or other cancers, will not be allowed to be patented.1 The positive impact of this ruling is that it now opens up more companies, research facilities, and even universities to undertake their own testing with these and other genes. As more and more groups start testing diagnosis and treatments based on formally patented genes, it will not only increase the amount of research and discovery that can be done but, with an open market, it will cut down the cost for testing and treatment discovered with these genes.

The ruling was not all that bad for firms who want to patent genes. The Supreme Court stated in their ruling that though human and natural genes cannot be patented, synthetically created genetic material, or cDNA, can be. cDNA is more commonly used for the creation of protein-based drugs to fight these diseases.2 As time moves on, cDNA will become even more important for biotech firms for it will allow them to patent genes that they create which can be used to create drugs that will hopefully stop cancer. Though it will be some time before we can mass produce synthetic genes, for now the Supreme Court’s ruling stands and human genes are owned by no one.

1, 2: Than, Ker. National Geographic , “7 Takeaways From Supreme Court’s Gene Patent Decision.”

Drinker Biddle Webinar Recording Available Online

On July 12th, a panel of lawyers, health policy experts, and political analysts dissected the Court’s decision and discuss its political and policy ramifications, including:

  • Congressional Repeal and Defunding Efforts
  • Potential Impact of 2012 Election
  • State Efforts and Outlook

If you missed the webinar, you can now view the slides online, as well as listen to an audio recording. Click here to access the webinar materials.

Drinker Biddle Issues Client Alert on SCOTUS Ruling

Drinker BiddleHealth Care Client Alert | June 28, 2012

U.S. Supreme Court Upholds Affordable Care Act

The U.S. Supreme Court has released its much-anticipated decision on the constitutionality of various provisions of the Patient Protection and Affordable Care Act (ACA).

In the two major issues before the Court, it upheld the so-called individual mandate as a legitimate constitutional exercise of Congress’ taxing authority. The Court also upheld the ACA’s requirement for states to expand eligibility under their Medicaid programs, but struck down the provision that could have required non-complying states to forfeit 100 percent of the their Medicaid funding. The text of the Supreme Court’s decision, released June 28, is available here.

Click here to read more.

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Severability…What Severability?

For months we heard that health reform could collapse in one piece if the individual mandate was found to be unconstitutional as Congress—by accident or intent—did not include a severability clause in the final version of the Affordable Care Act (ACA).

So what happened? Why isn’t anyone focused on severability now?

Well… as you now know, the individual mandate was upheld as a tax rather than under the Commerce Clause so severability became irrelevant for the mandate. Where severability could have been necessary is in the courts ruling of the Medicaid expansion.  However, Chief Justice Roberts officially took the issue out of play in the Majority Opinion stating that due to the severability clause in the underlying Medicaid law rendered the issue null and void.

That fully remedies the constitutional violation we have identified. The chapter of the United States Code that contains §1396c includes a severability clause confirming that we need go no further. That clause specifies that “[i]f any provision of this chapter, or the application thereof to any person or circumstance, is held invalid, the remainder of the chapter, and the application of such provision to other persons or circumstances shall not be affected thereby.”§1303.

Of course, this did not stop Justices Scalia, Kennedy, Thomas, and Alito from elaborating their own view in the Dissent that the law did not include a severability clause and therefore absolutely should fall as one piece. Not only did they discount the Majority’s rationale regarding the Medicaid statute, they took one step further in a separate “Severability” section of the Dissent making it very clear that if they had been in the majority and ruled that the individual mandate and/or Medicaid provisions should fall that the entire law would come down.

So, the bottom line is that while the severability issue was essentially moot in the courts decision, it could have been a game changer had Roberts sided with the minority and the court ruled 5-4 against the mandate.  Given the minority opinion on severability, there is little doubt the entire law would have been thrown out completely.

Written by Rebecca McGrath and Erin Will Morton

The Supreme Court’s Decision on Medicaid Expansion – Leave the Carrot, Take Away the Stick…

Although the Supreme Court upheld the Affordable Care Act (ACA), it did limit one portion of the law – the Medicaid expansion.  In the ACA, Congress expanded Medicaid to nearly all people under the age of 65 whose household income is at or below 133% of poverty. Currently, the Medicaid program, funded jointly by the states and the federal government, primarily covers pregnant woman, needy families, and the disabled.  Each state operates its own Medicaid program within federal guidelines. Because the federal guidelines are broad, states have a great deal of flexibility in designing and administering their programs. Under the law if a state refused to comply with the new coverage requirements, it may lose funding for not only the expansion population but all of its Medicaid federal funds.

The Court ruled that the expansion can stand and that the provision is constitutional as long as states would only lose new funds if they didn’t comply with the new requirements, rather than all of their funding.  In real world terms, that means that states may now choose whether or not to participate in the expansion without risk of losing other Medicaid funding.

…Does the Decision Create a New “Donut-Hole” Population

What is not known is how many states will choose to participate in the expansion. If a state does not participate in the expansion where does that leave the population of people that are not covered under a state’s existing Medicaid program who would have been covered under expansion.   The law’s provision of subsidies to purchase health insurance on the health insurance exchanges doesn’t kick in until 133% of the federal poverty level.  This means those not covered by expansion won’t be eligible for subsidies to help them purchase insurance but may be required to hold insurance since the Court upheld the individual mandate.

And although some states may not want to participate in the expansion, the incentives are high, at least in the near term – the ACA provides that the federal government will pay 100 percent of the costs of covering the newly eligible individual through 2015 with the amount decreasing to a minimum of 90% in the following years.  In addition, if these individuals are not covered then a major portion of those people who currently receive uncompensated care from hospitals and health care provides will continue to receive care and those providing the care will continue to be uncompensated.  The carrot of having more insured individuals is one of the reasons providers and hospitals agreed to receive less payment as part of the ACA, particularly for uncompensated care.  The states will have to make political, fiscal, and policy calculations of whether or not expansion makes sense for the state. The politics and policy implications of this will unfold in the months to come.  The expansions don’t kick in until 2014 leaving lots of time for debate around this issue.

Supreme Court Upholds ACA

This morning the Supreme Court upheld the Affordable Care Act (ACA).  A copy of the opinion is available here.  Chief Justice Roberts joined with Justices Ginsburg, Breyer, Sotomayor, and Kagan in delivering the Court’s opinion.

The Court held Congress had the authority under the Taxing Clause of the Constitution to require virtually all Americans to obtain health insurance coverage (e.g., the individual mandate requirement).  With regards to the Medicaid challenges – which many believed was the sleeper issue – the Court limited Congress’ power to compel states to comply with all the ACA requirements.

We are continuing to digest the Court’s opinion and will be releasing additional information throughout the day on our blog and Twitter feed.

REMINDER:  Members of the Drinker Biddle Lobbying & Advocacy and Health Law teams are hosting a webinar on July 12th from 12:00 – 1:30 pm eastern to discuss what the Supreme Court’s decision means for health care stakeholders. Click here to register.

Got questions? No need to wait until July 12th to get your questions answers! Email or call your regular Drinker Biddle contact any time. In addition to the July 12th webinar, subscribe to the Lobbying & Advocacy blog – Capitol Health Record – and follow us on Twitter to stay on top of our analysis of the Supreme Court decision.


Drinker Biddle
Health Care Reform & the Supreme Court Decision:
What the Court’s Decision Means for Health Care Stakeholders

Thursday, July 12, 2012
12-1:30 pm ET (11 am-12:30 pm CT)

Good afternoon,

Please join us for a briefing following the Supreme Court’s ruling on the constitutionality of the Patient Protection and Affordable Care Act. Our panel of lawyers, health policy experts, and political analysts will dissect the Court’s decision and discuss its political and policy ramifications. The presentation with be hosted on Thursday, July 12 via webinar and in-person for lunch in our Washington, DC and Chicago offices.

For more information, please click here.

To register, please click here.

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Illuminating the “Invisible Branch”

While Congress’ deliberations over policy dominate the news, the Supreme Court often flies under the radar of the American people, unless there is a major case before it. Many Americans are not well-versed in the Supreme Court’s dealings; in fact, a Pew Research Center political knowledge survey found that in July 2010 only 28% of Americans polled could correctly identify John Roberts as the Chief Justice of the Court. As much of the health policy world’s attention is focused on the Supreme Court due to the Affordable Care Act case (Department of Health and Human Services, et al. v. Florida, et al.), below is a refresher on Supreme Court procedure and why there will be months of silence from the Court between the oral arguments and the announcement of the Court’s decision.

First, a few Supreme Court basics. The Supreme Court’s term begins on the first Monday in October and lasts for a year. The Court is typically in recess from late June or early July until the end of the term in October. The current term began on Monday, October 3, 2011, and will be wrapping up business for this term over the next two months. The next term will begin on Monday, October 1, 2012.

Each week when the Court is in session, the Justices hold a conference. Only the Justices are allowed in the room, and as a testament to the collegiality of the Court, each conference begins with each Justice shaking hands with every other Justice. During conferences, the Justices review petitions for certiorari or, in other words, decide which cases the Court will hear. The Justices then review the cases heard previously that week. Each Justice, beginning with the Chief Justice and going in order of seniority (who has been on the court the longest), is given time to state his or her views and raise any questions without interruption. Each Justice, in seniority order, then casts a preliminary vote on the case. In the case of the health reform arguments, which were heard March 26-28, the Justices met in conference to discuss the case and cast their votes on Friday, March 30.

So, if the votes have been cast and an outcome decided, why has there been no announcement of a decision yet? What has been going on since March 30?

After the votes are cast, the Court must then produce documents that state the Court’s reasoning for deciding a certain way. If the Chief Justice is in the majority (generally an opinion five or more Justices join), he or she assigns who will write the opinion. If the Chief Justice dissents from the majority opinion, the senior-most associate Justice in the majority assigns the opinion. The Chief Justice or most senior Justice may choose to write the opinion him or her self. Likewise, the most senior Justice in the minority assigns who will write the dissenting opinion. Dissenting opinions carry no legal weight or precedent, but might lay groundwork for future cases. Additionally, any Justice may write a concurring opinion, and anyone can write a separate dissenting opinion should they agree with the ruling but for a different rationale. In the case of a tie vote, which might happen if there is a vacant seat or if a Justice recuses themselves from the case, the decision of the lower court stands. In this situation, the case is not considered to be binding precedent.

Once the opinions have been drafted, they are circulated to all the other Justices for comments and recommended changes. If a Justice in the majority agrees with the outcome expressed but disagrees with the argument in the drafted opinion, they may write their own concurring opinion or, at anytime before the Court’s opinion is handed down, they may switch their vote. In some controversial cases, the outcome of the case has actually reversed from what the original outcome would have been, due to Justices flipping their vote. Then once the draft has been revised, the opinion is signed by the author. Other Justices who are in agreement then “sign on” to the opinion, and the verdict is subsequently made public.

In regard to the timing of decision announcements, there are no rules other than it must be released by the last day of term (before the Court goes into recess in June or July). Unanimous or less contentious decisions generally take less time than cases on more controversial subjects. Given the weight and attention given to the health reform cases, a decision is not expected until late in the term, with most people predicting an announcement coming June 21st, 25th or 28th.

Register for DBR’s Health Care Reform & Supreme Court Review Webinar

By the end of June, it is expected the Supreme Court will rule on the constitutionality of the Patient Protection and Affordable Care Act. Join us to gain a better understanding of the four questions before the Court and the political, legislative and regulatory implications of the Court’s pending decisions. Our panel also will discuss the different possible outcomes of the Court’s deliberations and their respective political and policy ramifications. Regardless of where you work or who you represent, this presentation will provide important insight and analysis to help inform your business, association, legislative and/or regulatory planning.

Register now to participate in this webinar, featuring the DBR Health Government Relations team!

Blog News & Notes – 5/15/12

 – The CMS final rule on Medical Loss Ratio requirements under the Affordable Care Act will be published in tomorrow’s Federal Register.  Insurers will be required to inform all consumers whether they comply with MLR standards, not just those receiving rebates.  As noted yesterday, consumers are due to receive about $1.3 billion in refunds this year under the MLR provision.  The final rule will take effect June 15th.

– A Bloomberg Government study finds that insurers could lose $1 trillion over the next eight years if health care reform is overturned by the Supreme Court.

The Washington Post takes a look at the expected “chaos” of the upcoming lame-duck session, where Congress will face deadlines on major program rescissions and tax increases.


Blog News & Notes – 5/11/12

The Hill’s Sam Baker notes that despite earlier indications that they would have replacement legislation lined up in the event the Supreme Court strikes down the Affordable Care Act, “Republicans might not offer a comprehensive plan” if the law is ruled unconstitutional.

Donald Marron blogs for the Christian Science Monitor about a new study that finds “peculiar Medicare budgeting practices” in the ACA, including double-counting of spending cuts and revenue increases.

– Health insurers are choosing to publicly justify premium hikes tagged as “unreasonable” by HHS rather than limit increases, writes Jason Millman in Politico.

– The CMS Innovation Center unveiled the first round of awardees under the Health Care Innovation Awards created under the Affordable Care Act.