California Licenses 2 Companies to Offer Gene Services

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California Licenses 2 Companies to Offer Gene Services

http://www.nytimes.com/2008/08/20/business/20gene.html?

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By ANDREW POLLACK

Two closely watched companies that offer consumers information about

their genes have received licenses that will allow them to continue

to do business in California, a state official said Tuesday.

The licenses, granted to Navigenics and 23andMe, should help defuse a

controversy that began in June when the California Department of

Public Health sent " cease and desist " letters to the two companies

and 11 others that offer genetic testing directly to consumers.

The letters said that companies could not solicit customers from

California without receiving a license from the state to operate as a

laboratory. And they said that doctors had to be involved in ordering

genetic tests.

The letters were the most recent sign of concern that regulators at

both the state and federal level are becoming increasingly concerned

about the accuracy and validity of tests being sold through the

Internet.

But the state's action also sparked concern that overregulation could

stifle a promising new industry. The media coverage of the action

seemed to catch the state off-guard. Both sides appeared eager to

resolve the issue.

" I think we're very satisfied that they have met the California

requirements for licensure, " Kathleen J. Billingsley, a senior

official in the California public health department, said in an

interview Tuesday.

Navigenics and 23andMe attracted the most focus of the companies

receiving the letters. Both are based in California's Silicon Valley

and both offer services, costing from $1,000 to $2,500, that scan a

person's whole genome, providing a variety of information about the

risk of various diseases. Google is a backer of 23andMe, and one of

the company's founders, Anne Wojcicki, is married to a Google co-

founder, Sergey Brin.

The companies had argued that they were not offering medical testing

but rather personal genetic information services, and that consumers

had a right to information from their own DNA. The companies also

said they did not need a license because the actual testing of the

DNA samples was being done by outside laboratories that did have

licenses.

But the two companies do their own interpretation of the raw genetic

data. Now, after reviewing the procedures used by the companies, the

state is satisfied that the companies' interpretation is based on the

scientific literature, Ms. Billingsley said.

Ms. Billingsley said the companies also satisfied the requirement for

a doctor to be involved. Navigenics already was paying a physician to

review customer orders and now it appears that 23andMe might be doing

something similar.

Avey, a founder of 23andMe, declined to say on Tuesday what the

company was doing regarding doctors. She said the company wanted to

assure customers first that their privacy was being protected.

Mari Baker, chief executive of Navigenics, said she was satisfied

with the outcome.

" It's a situation that in the end everyone wins, " she said. " In the

end the state moved really quickly through this process. They were

incredibly responsive. "

DeCode Genetics, an Iceland-based company that offers a similar gene-

scanning service to consumers, has also applied for a license, and

the state has asked it for more information, Ms. Billingsley said.

She said four of the companies that received the letters in June had

agreed not to solicit California customers, and the rest were either

applying for licenses or talking to the state agency.

Both sides agreed that regulations would continue to be reviewed. " We

wanted to try to work within the existing regulations but we think

there will be an ongoing discussion of regulations in this new

space, " Ms. Avey of 23andMe said.

Ms. Billingsley, who is deputy director of the state's Center for

Health Care Quality, said the department would continue to review its

approach " to make sure that the state's requirements and our

standards keep up with changing technology. "

New York State also has taken action against at least 31 genetic

testing companies, saying they cannot solicit business from New York

residents.

Ms. Baker of Navigenics said a resolution with New York did not seem

imminent. " We do think in the end this needs to be regulated at the

federal level rather than as a patchwork of state regulations, " she

said.