HEDGE FUNDING MEDICINE

The Patent Trial and Appeal Board (PTAB) has granted an American Invents Act review of a Cosmo Technologies Ltd. patent for Lialda, a drug used to treat ulcerative colitis. The campaign for review was spearheaded by the Coalition for Affordable Drugs, which is a subsidiary solely owned by Hayman Credes Master Fund LP, a hedge fund managed by Kyle Bass.

Bass started the Coalition to petition the PTAB for inter partes review of a dozen patents. The Coalition argues that Cosmo’s Patent is an extreme illustration of “evergreening.” Evergreening occurs, when a brand name company commandeers an old drug whose patents have expired and makes minor modifications to extend their patent rights to the medicine, without introducing innovative new medicine.

Bass believes that these patents are all part of “pay for delay” agreements that Big Pharma enter into to stop lower cost generic drug manufacturers from entering the market. The small victory with PTAB has come on the heels of many setbacks for the Coalition, having had three drug petitions dismissed before a trial could be convened. This victory will allow the Coalition to go to trial, which is an opportunity only granted by PTAB if "there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition."

The Coalition has an uphill fight against drug companies. Many of whom are fighting back, like the Celgene Corp. who has asked the PTAB to impose sanctions on the Coalition, for abusing the American Invents Act review program due to their many challenges to their patents. However, their request was denied.

The struggle for affordable drugs will continue to rage on, with those like the Coalition on one side and Big Pharma on the other. However, the question remains; is a hedge fund manager really in this fight for the greater good or is it really all business? Bass who has a short position on the drug makers’ stock; which means if the drug companies’ stock falls in value he stands to gain a considerable amount to grow his fund.

This push and pull may ultimately be the only way that the consumer gets the upper hand in the pharmaceutical struggle for affordable medicine. With twelve other challenges before the PTAB the Coalition has a long road ahead. What side are you on?

By: Astrid Johnson – Associate Editor of Business, Technology, and Medicine

Photo credit: lightwise via 123rf.com cc

Sources used:

https://www.law360.com/ip/articles/712592/hedge-fund-group-gets-review-of-bowel-disease-drug-patent/

http://www.businessinsider.com/kyle-bass-gets-institution-for-lialda-ipr-2015-10