Opponents of the new measure say that it will effectively allow companies to "patent life", and warn that it will lead to an explosion in healthcare costs.
They claim private companies which have patented tests for naturally- occurring gene sequences - such as genes linked with breast cancer - could charge huge royalties from medical researchers or companies making diagnostic kits.
Plant and animal breeders may also have to pay royalties to the patent owners, as the directive covers all life forms that include genetic modifications.
But in last-minute concessions won from ministers, the MEPs ensured that the Europe-wide legislation outlaws cloning and patenting of human embryos, therapies that would transmit genetic changes to a person's descendants, and prevents patenting where modification of genetic make-up would cause suffering without any "substantial" benefit to man or animal, such as an animal genetically engineered to develop cancer.
Drugs companies insisted that patent protection for their work is essential to allow them to recoup research and development costs - which can run into tens of millions of pounds even for unsuccessful drugs - and that the new Directive On The Patenting Of Biotechnological Inventions will speed up the search for cures for cancer and genetic diseases such as cystic fibrosis and muscular dystrophy by creating uniformity in patent rules across Europe.
"After 10 years of debate Europe can look forward to increased investment and renewed hope for patients," said a spokesman for the European Federation of Pharmaceutical Industries and Associations.
"It sends a strong signal that encourages Europe's pharmaceutical industry to invest even more in biotechnology."
But others are less optimistic. Patricia McKenna, a Green MEP, said: "In years to come, when a multinational will own our genes and when genetic resources are being plundered from the Third World we will look back on this disastrous day and apologise to our children and grandchildren."
Hiltrud Breyer, a German ecologist parliamentarian, commented: "The Euro Parliament has made an irresponsible decision, it has given carte blanche to the commercialisation of the human body."
The key to the argument is whether companies can now simply patent a gene - that is, a unique sequence of DNA "base pairs" with a named function. That has been the case in the United States since the 1980s. But in Europe, the rules varied widely. An earlier form of the Directive was thrown out by the Parliament in 1995.
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