Myriad Genetics (NASDAQ: MYGN) Could Get Crushed

Written By Brian Hicks

Posted April 15, 2013

The biotech industry has seen quite a bit of progress in recent years, with advancements occurring at what seems to be an exponential rate. With a monumental Supreme Court decision on the horizon, however, things could be due for a change of pace. 

Myriad GeneticsAccording to Bloomberg, this week the Supreme Court will provide an oral hearing to decide whether or not the gene patents should be allowed. This is based on a challenge of Myriad Genetics Inc. (NASDAQ: MYGN), which currently holds patents on a variety of genes linked primarily to ovarian and breast cancer.

The Supreme Court will hear a host of arguments in the coming week, including those from doctors, cancer survivors, patients, and scientists, all of whom feel as if genes should not be allowed to be patented by corporations. A decision in the case is expected to be completed by June 2013.

A Moral Argument 

At face value, it may not be easy to understand just how weighty an argument this is. The issue is centered around the fact that many believe Myriad has a monopoly on the research and development of potential treatments for breast and ovarian cancer.

Currently, the company produces a test that looks for gene mutations, which one could argue has had a positive impact on the medical community as a whole. What this doesn’t highlight, however, is the fact that Myriad’s patents allows it to be the gatekeeper of mutation testing regarding these particular genes.

For women trying to determine their genetic risk for certain types of cancer, this can make things exceedingly difficult. The Myriad test is not only expensive, but it isn’t covered by all insurance companies and fails to cover every potential aspect of hereditary breast cancer.

It’s also the only one of its kind, which means other laboratories cannot perform mutation tests on this specific set of genes or produce testing kits to contribute to the industry. 

While many feel as if Myriad’s efforts to hold onto its patents is doing nothing more than holding back potential research and development in how to treat and identify breast and ovarian cancer, the company claims that further research on its end would be impossible to carry out otherwise.

Myriad’s patents help to fund its operation and ultimately lead to the development of future products. The question, though, is whether or not the company should even be able to hold onto its patents from a legal standpoint.

Legal principles state that a person or company cannot file for patents that cover “laws of nature” in any way. Since genes inherently fall into this category, the question of whether or not a corporation should be able to hold patents on what is essentially a part of the human body is more omnipresent now than ever in the past, thanks in large part to the fact that the biotech industry has seen such a boom in recent years.

Wide-Reaching Effect

Regardless of the decision the Supreme Court makes regarding this matter, it’s safe to say that it could have a rather broad effect.

A decision to remove Myriad’s patents will not only have an obvious effect on that particular company, but will also mean other biotech companies will have to stray away from the concept of utilizing patents.

According to the Guardian, close to 20% of the human genome is patented; so it should come as no surprise that this decision will have a major effect either way.

The medical industry is not the only one to be affected by this decision, either. Take a quick look at Monsanto Co. (NYSE: MON), an agricultural company that specializes in genetically engineered seeds.

Without the ability to hold patents on genes, the company would likely go through a variety of changes in terms of the products it offers.

It’s clear there are solid arguments on both ends of this decision, and it will not be an easy one for the Supreme Court to make. After all, the heavier an argument gets, the more weighty the decision becomes. 

Nevertheless, those who feel as if they’re being violated by companies who have the ability to patent genes are sure to speak passionately about their feelings, which could add even more emotion to the scenario.


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