The patent system has been seen as a critical factor driving innovation in clinical medicine, particularly in medical devices and diagnostic assays. The licence terms and business model proposed by Myriad Genetics Inc. for testing the hereditary breast cancer susceptibility genes BRCA1 and BRCA2 could stifle innovation (particularly if other companies adopt similar business models), and are likely to limit the ability to provide high quality public genetic testing services in Australia. Under the Myriad model, testing for the BRCA1 gene would be undertaken by an organisation removed from the integrated public healthcare system. Based on overseas experience, Australia can expect a 2-3-fold increase in the cost of this testing, which will provide only partial information on the hereditary breast cancer status of the patient. Commercial exploitation of gene patents needs to be regulated to balance the patent holders' right to profit from their inventions (necessary to drive further innovation) and the public policy objective of high quality, equitable healthcare.