The Patenting of Human Genes Goes to U.S. Supreme Court
by Mike Kapsch, Investment U Research
Wednesday, January 4, 2011
By the year 2000, it took the U.S. government 10 years and $3 billion in taxpayer money to fully map out the first human genome…
Today, companies are racing to manufacture gene sequencer machines that can decipher your entire DNA in just two hours, and for roughly $1,000 per test. While it’s great news that decoding your genes can give doctors the ability to detect and treat diseases, such as breast or prostate cancer, before they even become problematic, “60 Minutes reports,” “There is a catch…”
“Strange as it seems, [your genes could be] the property of a biotech company that has taken a patent out on it.”
Are Our Genes for Sale?
As of today, nearly 40,000 patents are held on roughly 20% of all human genes. One company, Myriad Genetics (Nasdaq: MYGN), holds patents on two breast cancer genes – BRCA1 and BRCA2. And now the legality over these patents has become a centerpiece of debate across the country…
In 1994, Myriad was the first company able to isolate the breast cancer gene found in human DNA. Today, by holding the patents to these genes, it alone controls all testing that may take place regarding them.
This “gene monopoly” helps Myriad rake in over $400 million a year in revenue. Not to mention, the company also has zero debt on its balance sheet. And earnings are growing comfortably at 11%. But it also recently landed them in hot water as part of a pivotal case with the U.S. Supreme Court over the legality of patenting human genes.
Investors will want to pay close attention to the final decision from this case, which is expected sometime next June. Because this ruling will likely not only have adverse effects on Myriad’s bottom line… it’s set to have a big impact on the entire biotech industry across the United States.
The Case for Patenting Human Genes
Advocates for patenting human genes say most people have it all wrong…
Kevin Noonan, a patent attorney, states that biotech companies like Myriad Genetics aren’t actually patenting the gene itself at all… Instead, they’re patenting its isolated clone. And since these clones don’t exist in nature, they should be patent-eligible.
He also argues, “The U.S. leads the world in biotechnology and… one important reason [for this] is because companies that have developed those tests could get the economic support needed… because of patent protection.”
By making these patents illegal, you make it much riskier for investors to put money in biotech firms trying to discover what these isolated genes are. So without these patents, Noonan says, this progress would drop off significantly.
Yet, while gene patents may play a key part in promoting biotechnological innovation, it’s also unknown whether the patent system is the best way to achieve such advancements…
The Case Against Patenting Human Genes
That’s why the American Civil Liberties Union and the Public Patent Foundation petitioned the U.S. Supreme Court to look at Myriad Genetics case very closely.
The ACLU and the PPF argue that human genes are products of nature. Biotech companies are simply discovering a link between a gene and some various diseases and therefore shouldn’t be allowed to hold a patent on the isolated gene.
From a research standpoint, they also claim that human gene patents hinder scientific progress because everyone must get permission from the patent holder to do anything at all with the gene. This can only raise costs over the long term.
The Road Ahead
After a federal ruling in March that human gene patents were indeed unconstitutional, and then a reversal in July, the U.S. Supreme Court will now have the final say over the future of patenting human genes.
The next six months will be critical for Myriad Genetics and the biotech industry. And depending on whatever the U.S. Supreme Court decides, Myriad’s shares may either sink or skyrocket.
Good Investing,
Mike Kapsch
Article by Investment U
