NEW YORK (Reuters) - Prominent hedge fund manager Kyle Bass’s campaign to wipe out certain drug patents hit a roadblock on Monday when the U.S. Patent and Trademark Office declined to formally review two patents on Acorda Therapeutics Inc’s flagship multiple sclerosis drug, Ampyra.
The decision to reject a review of the patents’ validity comes as the pharmaceutical industry raises concerns about hedge fund challenges to drug patents intended to make money by driving stock prices downward.
In February, Bass began to file reviews to eliminate drug patents through his Coalition for Affordable Drugs, using a procedure called inter partes review.
After a review of the first Ampyra patent was filed on Feb. 10, Acorda’s stock price dropped 10 percent.
Acorda’s lawyer Gerald Flattmann of the law firm Paul Hastings said he was “extremely gratified” by the decision to deny a trial on the two patents. He said it “further validates the strength of (Acorda’s) patent portfolio protecting Ampyra.” Neither Bass nor a representative for his Dallas-based Hayman Capital Management could be reached.
Bass has said big companies were improperly extending patent protection in questionable ways, such as changing dosage or packaging, to keep drug prices high.
On Monday, the patent office disagreed with Bass that the Ampyra patents were not new or were obvious when compared with previously known ones, and therefore should never have been granted in the first place.
The decision means the patents will not be further scrutinized, which could have led to cancellation.
The reviews began in 2012 as part of the America Invents Act, as a faster and easier way to eliminate poor quality patents. Drug firms have recently lobbied Congress to prevent hedge funds from launching the reviews.
Last month another target of Bass’s campaign, Celgene Corp, asked the patent agency to sanction Bass and the coalition for “abuse” of the review process in attempting to profit from them by short-selling when the stock prices fall.
Bass replied saying that he can still do good for society by lowering drug prices, while at the same time making money.
The agency has yet to decide on the sanctions request, which could impact not only individual challenges but Bass’s entire strategy.
Reporting by Andrew Chung; Editing by Chris Reese, Bernard Orr