BSPP News 31 Autumn 1997 - Online Edition

The Newsletter of the British Society for Plant Pathology
Number 31, Autumn 1997

PCR Licensing

Polymerase chain reaction (PCR) techniques have the potential to revolutionise plant pathology diagnostics. They offer, in theory, in increase in specificity and sensitivity of some orders of magnitude over existing methods such as ELISA. It is not surprising then that many BSPP members are developing assays based on this technique, and my own lab at SASA is no exception. However, having got to the stage of having assays robust enough to be used in routine testing, we ran into a problem - licensing.

Many members will be aware that the patent for PCR is owned by Hoffman la Roche. However, fewer may be aware that the rights for licensing agricultural applications have been sold on to another company, Perkin Elmer (PE). The price that PE put on a license is a $10,000 one-off payment plus a 15% royalty on the cost of all PCR tests. Of particular concern to BSPP members may be the fact that tests which are not charged for, or are provided at cost, are also subject to the royalty charge, on the basis of the market value of the test. The licence is required for all non-research applications of PCR in the agricultural field.

In my view, and those of many colleagues I consulted on the matter, the high cost of PCR licensing will act as a deterrent to its routine use for plant pathology applications. The matter was raised at BSPP council and, as it is obviously of concern to members, it was decided that the BSPP's President, Dr Hardwick, should write to Perkin Elmer (see the first letter reproduced on the following pages).

Perkin Elmer's reply is also copied below (see the second letter reproduced below).. From this you will see that they are proving inflexible on the matter of the cost of the licence. My personal opinion is that their position does not the reflect the reality of plant pathology diagnostics for many BSPP members. The position this leaves us in is quite clear - anyone wishing to use PCR for routine testing will have to pay for the licence. No doubt many organisations will be looking very closely at this option.

However, I will make a further prediction. As all biologists know, where there is pressure in a system, you will find variation arising through natural selection. Similarly, the high cost of PCR imposed by Perkin Elmer will result in an increased interest in alternative nucleic acid amplification methods such as the ligase chain reaction and NASBA. In the longer term, it won't be plant pathologists who will be the losers.

Kevin O'Donnell
SASA


To: Mr J McQuillan, General Manager, Applied Biosystems, Warrington; and

Dr W T Tucker, Licensing Manager, PE Applied Biosystems, Foster City, California, USA

10 May 1997

Dear Mr McQuillan & Dr Tucker

LICENSING OF PCR ASSAYS

The British Society for Plant Pathology is the main professional organisation for plant pathologists in the UK. I am writing to you at the behest of many of the members of the Society who have expressed concerns regarding the conditions required for PCR licences.

Our understanding is that for non-research applications there is a one-off fee of $10,000 plus a royalty component of 15% on each test based on an agreed market value of the test, whether charged or not.

As you are well aware there has been a great deal of effort made by plant pathologists, particularly from the public sector, in the development of PCR-based methods for the detection and identification of plant pathogens over the last few years. Much of this work has involved the purchase of PCR reagents and thermal cyclers supplied by PE.

We are now approaching the stage when plant pathologists are looking beyond the development stage to the practical use of PCR assays as a routine diagnostic tool. Several factors will decide whether PCR methods will replace traditional diagnostic methods, one of the most important ones being cost. This is probably more important in the agricultural than medical sector. If the benefits of a faster, more sensitive assay are outweighed by higher costs then the method will not be used. It is our opinion that the 15% royalty component of your PCR licensing terms will mean that many plant applications of PCR will fall in to this category. This is a particular problem for those laboratories who undertake diagnosis on a non-commercial basis, eg providing advice to government.

The end result, of course, is that not only will PCR assays not be used, but development work will cease. We will be in a lose/lose situation were plant pathologists would be unable to use an important and versatile tool and PE would lose income on PCR reagents.

We would therefore like to ask you to reconsider the terms of your PCR license to our mutual benefit.

I look forward to receiving your response.

Yours sincerely

N V Hardwick,
President


June 24, 1997

Dear Dr. Hardwick:

Thank you for your letter of May 23. I apologize for the delay in responding, but I have been out of the country for several weeks.

PE Applied Biosystems' PCR licensing program has two objectives. The first is to provide researchers with a simple, straight forward way to obtain the rights needed to use the patented PCR process in their research. The other is to enable organizations to establish legitimate commercial ventures to provide PCR-based services to the market.

Our service licensing program licenses the legally responsible entity; for corporations, it is the corporation, for an institution, it is the institution. If a number of scientists in an institution want to provide PCR-based testing services independently, the institution rather than the individuals, can be licensed, provided the institution accepts responsibility for consolidating the royalty reporting and payment.

You expressed concern that a license imposes unreasonable costs that will drive the industry away from the PCR. P-E's service licensing program provides access to this valuable technology for a modest up-front fee, and a royalty based on the fee charged for the PCR-based service (or an agreed to fair market value for services offered gratis or below cost). Relative to the costs of establishing a fully operational PCR-based testing business, our licensing costs are very reasonable. Throughout the world, institutions and corporations have analyzed the implications of our service licensing program to their business plan, and made the decision to enter the field of PCR-based agricultural testing services. In doing so they accepted the terms and conditions in our basic PCR service license.

I understand that academics in all fields are being asked to find alternative sources of funding, and the prospect of running a few tests "on the side" to bring additional revenues to the laboratory is appealing. Having spent many years in ag-biotech research, I know that researchers also want to see their technology applied to benefit the agricultural community. For such scientist, a solution is to transfer their technology to commercial service providers or to manufacturers of licensed PCR kits. In this way, laboratories receive a revenue stream in the form of royalties, without the burden of managing a testing service. They also see their technology applied to benefit the industry. By taking this approach, scientists can focus their efforts on what they are trained to do - research. This research may itself create the next generation of diagnostic tests.

Our intention is not to constrain the use of PCR, but create businesses that utilize the technology to meet customers needs. our program structure allows access to this powerful technology to commercial PCR service providers who are committed to delivering high quality services to the customer at a competitive price. We believe that the customer is best served by such a program.

I thank you for taking the time to express your views. P-E believes our program meets the objectives I set out earlier, and our belief is supported by the worldwide network of service licensees in P-E's fields. If you would like to discuss any aspects of my response, please contact me again. I can be reached by telephone at (415) 638-6071, by fax at (415) 638-5192, or by e-mail at <tuckerwt@perkin-elmer.com>.

Sincerely,

William T. Tucker, Ph.D.
Licensing Manager, PE Applied Biosystems