So, I was reading some article on the Pfizer inversion:
and I came across this sentence…
The White House has begun building a political case for reining in drug costs, and the administration recently agreed in the Trans-Pacific Partnership trade accord to intellectual property protections for advanced pharmaceuticals that was about half of what the industry demanded and United States law provides. Worse, a 2011 patent law has resulted in a wave of lawsuits funded by hedge funds against the industry’s most valuable property — drug patents.
Intrigued, I searched onwards, and found this article in Bloomberg…
Activist investor Kyle Bass sent a shudder through the drug industry earlier this year by embarking on a patent-challenging strategy. Now a New York hedge fund, Ferrum Ferro Capital LLC, has made an even more brazen move by seeking to invalidate an Allergan Inc. patent that has already been upheld in court. Neither investment firm has said whether it’s betting against specific stocks.
The Allergan case has become a rallying cry for companies calling on Congress to alter rules that make it easier to get patents tossed by the U.S. Patent and Trademark Office than in the courts.
“When we developed these proceedings, we never thought people would use them this way, in an effort to move stock or as an investment vehicle,” said Bernard Knight, the former general counsel for the patent office, who was there when new rules for challenging patents were written.
A patent office review costs $23,000 to file, and the whole process is a fraction of the millions of dollars in legal fees a challenger would spend in a civil suit. Congress created the process in 2012 as part of a sweeping overhaul of the U.S. patent system, designed to counteract what was seen as an overabundance of patents being awarded.
The legislation had an unexpected consequence: Hedge funds, which didn’t have the right to challenge patents in court, now had a venue to bring such cases.
Drugmakers only have anecdotal reports of third parties asking for money to drop a patent challenge. In other industries, the practice has led to at least one lawsuit. Chinook Licensing LLC said in a lawsuit it was threatened with a patent challenge by Iron Dome LLC unless it gave the company three transferable licenses. A judge dismissed the suit after Iron Dome argued that it had the right to make a settlement offer and that a demand letter can’t be “a crime of extortion.”
Ferrum Ferro’s 33-year-old founder Kevin Barnes won’t say how his firm will profit from challenging Allergan’s patent for glaucoma drug Combigan. He only said that he sees “multiple pathways to monetization.”
so there are ways to punish drug manufacturers. You just have to have a shitload of money and a lack of scruples.