Drugmakers to Congress: You want patent reforms? Stop pharma challenger Bass

Kyle Bass

Drugmakers may be willing to get on board with patent reform, a process they've in the past been blamed for holding up. But first, they have a very clear condition: Congress must help them thwart pharma patent challenger Kyle Bass.

Industry trade groups PhRMA and BIO want changes to a Patent and Trademark Office (PTO) method that's so far allowed Bass' hedge fund, Hayman Capital Management, to go after patents for drugs including Acorda Therapeutics' ($ACOR) Ampyra, Shire's ($SHPG) Lialda and Gattex, and, more recently, Johnson & Johnson ($JNJ) and Pharmacyclics' ($PCYC) Imbruvica--a med industry watchers expect to eventually surpass $10 billion in annual sales.

And if they don't get their wish? "Ultimately, PhRMA would have to oppose patent legislation that does not include changes to more fairly balance post-grant proceedings at the PTO," the group said in a recent statement.

As Bass has said, his moves--made using the PTO's inter partes review system, allowed three years ago as part of the America Invents Act--are meant to stop companies from abusing the patent system through "evergreening," or prolonging their monopolies on their key moneymakers by filing or sustaining a slew of minor patents.

These IP shields "contain no meaningful innovations but serve to maintain their own anticompetitive, high-price monopoly, harming Americans suffering from illnesses," Bass said last month, as quoted by the NationalJournal.

Biopharma, though, isn't buying it. Bass and other like-minded hedge fund managers short the stocks of the companies whose meds they've challenged, betting that drugmakers' shares will sink as a result--all under the "wonderful ruse" of trying to bring down drug prices, PhRMA CEO John Castellani told the Journal.

"What they do is they make money on failure," he said. "This has been wrapped in trying to accelerate bringing more affordable medicines to patients, which is horse hockey. … This is rather akin to the arsonist who all of a sudden goes into the extinguisher business, then claims to be a fire-safety expert."

Call it what you will, but either way, Bass isn't planning on stopping anytime soon--unless Congress intervenes, that is.

"The companies that are expanding patents by simply changing the dosage or the way they are packaging something are going to get kneecapped," Bass told investors during a recent presentation in Oslo, Norway, noting that he's eyeing 15 different inter partes challenges.

- read PhRMA's statement on the patent bill
- get more from NationalJournal

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