How natural is DNA? Lawyers are arguing about that in a courtroom, in New York, today, trying to convince a judge that DNA sequence can or cannot be patented.
Because natural substances can't be patented, plaintiffs, including the American Civil Liberties Union, medical researchers, and doctors associations, argue that two genes patented by the University of Utah Research Foundation, which cause susceptibility to breast cancer, can't be patented. Myriad Genetics
Semantics? Maybe, but it's clear the ramifications of a decision that goes against Myriad will extend well beyond the company's fortunes. If companies can't patent genes, the entire biotech industry will be turned upside down.
The first to feel the effect would be companies like Myriad, which is the exclusive provider of a test to determine breast cancer susceptibility. Without a patent, competitors could develop tests that take its market share and force Myriad to lower the cost of its own test. Good for consumers -- in the short run -- but Myriad's revenue would certainly be hurt.
In the long run, patents might be the best for consumers. Sure they lead to high prices, but they also give companies incentive to take the risk and develop new drugs.
The future of medicine is a personalized approach based on the patient's genetic makeup. If drug companies aren't allowed to patent genes, it'll be harder for drug companies to set up partnerships like the one between Abbott Labs
Even without companion diagnostic tests, some gene patents protect the targets that drugs go after in the body to exert their effect. Those patents give companies added time to develop drugs without having to worry about how close "me-too" drugs are to hitting the market. The effect may delay the entrance of better drugs -- Pfizer's
I'm sure this legal debate is far from over no matter which side wins today's proceedings. Investors should keep a keen eye on the debate, though; losing the right to patent genes could result in a dramatic shift in how drugs are developed.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a Motley Fool Inside Value pick. The Fool owns shares of GlaxoSmithKline. The Fool has a disclosure policy.