Aust firm slaps $10m bill on NZ's use of patented DNA test methods

By MARTIN JOHNSTON health reporter

An Australian company is demanding $10 million from New Zealand hospitals and other state institutions for use of methods vital to all genetic testing.

The techniques involve mis-named "junk DNA" and are crucial in tests including those for the presence of the gene that predisposes some women to breast cancer.

The Melbourne-based company, Genetic Technologies (GTG), wrote to the Auckland District Health Board in May about enforcing its patents over methods used by the Auckland Hospital genetic testing service.

GTG proposed granting a national licence for use of its patents for methods to test junk DNA in human diagnostic testing at public institutions.

"We propose the fee for signing and waiving of past infringement be NZ$10 million, and the ongoing annuity be $2 million per year," the letter said.

An alternative, it said, would be for each genetic testing laboratory to pay $2 million up front plus $200,000 a year.

The Weekend Herald revealed in May that the company had come to New Zealand over its claims.

Last night, Australian current affairs programme Four Corners broadcast details of the demands, including excerpts of the letter, and said more than 20 New Zealand biotech companies and taxpayer-funded institutes had been targeted.

In the past 14 months, the programme said, six prominent biotechnology companies in America and Europe had bought licences to GTG's patents.

Doctors look for patterns in the non-genetic, or junk, sequences of DNA for clues to help them identify inherited disorders.

There is debate over whether the patented techniques are novel.

Auckland health board chief medical officer Dr David Sage confirmed the sums sought by GTG.

"This extends far beyond medicine to agricultural research and the non-human laboratory use of gene technologies.

"It's such a wide-ranging patent [that] it can be applied, in the view of the company, to virtually any genetic testing.

"The New Zealand district health boards are seeking advice in conjunction with the Ministry of Health to understand what their liability might be."

It was too soon to say whether the board would pay or contest the company's claims.

GTG executive chairman Mervyn Jacobson has said the company wanted to help, not hinder, research, but organisations using patented methods should expect to pay - token fees as little as $1000 for researchers, but other rates for commercial use.

The patents result from work by New Zealand immunologist Malcolm Simons, a co-founder of the company.