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This article examines the intersection of patent law, FDA regulation, and Medicare coverage in a particularly promising field of biomedical innovation: genetic diagnostic testing. First, I will discuss current clinical uses of genetic testing and directions for further research, with a focus on cancer, the field in which genetic testing has had the greatest impact to date. Second, I will turn to patent law and address two recent Supreme Court decisions that called into question the patentability of many of the most important advances in genetic testing. Third, I will step outside patent law to take a broader view of the legal environment for new developments in genetic testing, with a focus on two federal regulatory agencies: the Food & Drug Administration (FDA), which regulates new drugs and medical devices under statutory standards for safety and effectiveness; and the Centers for Medicare and Medicaid Services (CMS),which sets reimbursement policies for Medicare under statutory standards that limit coverage to technologies that are reasonable and necessary. Last, with this background, I will explain a recent surprising development: developers of next generation sequencing (NGS) diagnostic tests for tumor DNA have begun seeking FDA approval or clearance for tests they are at liberty to provide, and in fact have already begun to provide, without asking FDA for permission. The answer lies in understanding the rules and practices that govern health insurance coverage and the important role of FDA in assessment of new technologies. This episode sheds an interesting light on the roles and interactions of different sources of legal regulation in supporting innovation outside the patent system.