Kyle Bass Is ‘Frustrated’ by Shire’s Lialda Patent Ruling

  • ‘The system must be fixed,’ hedge fund manager Bass says
  • Bass criticizes drug prices, Shire’s Dublin headquarters

Hedge fund manager Kyle Bass expressed frustration that the U.S. Patent and Trademark Office upheld the only patent covering Shire Plc’s colitis drug Lialda and argued that “the system must be fixed.”

The Patent Trial and Appeal Board within the agency on Wednesday rejected arguments by Bass’s Coalition for Affordable Drugs that the patent never should have been issued. The coalition had argued the patent covered old ideas.

Bass said in a statement he was “frustrated” that the ruling “enables Shire to improperly maintain a government-granted monopoly and to exploit the U.S. health-care system, doubling the price of Lialda since 2007, much like EpiPen,” the allergy shot that U.S. regulators accuse Mylan NV of pricing too high.

Bass, founder of Hayman Capital Management, set up the coalition to file almost three dozen petitions with the patent office last year to challenge the validity of drugs covering things like arthritis, multiple sclerosis and obesity.

Decisions on reviews of a patent covering another Shire drug, Gattex for short-bowel syndrome, and one for Celgene Corp.’s blood cancer drug Revlimid are expected later this month.

‘Dubious Patents’

“We look forward to continuing our work of challenging dubious patents that enshrine monopolies protecting drugs that lack innovation to the detriment of Americans suffering from illness,” Bass said in the statement.

Lialda is used to treat inflammatory bowel diseases like ulcerative colitis and Crohn’s disease. The drug generated $684.4 million in sales last year, almost 11 percent of the Dublin-based company’s revenue. The patent, for a controlled release of the active ingredient, expires in June 2020.

Shire has called the coalition’s arguments “riddled with overly broad and conclusory assertions lacking support.” In a statement issued after Wednesday’s decision, the company said it would “continue to vigorously defend its patents to protect the innovation and value Shire products bring to patients.”

Bass also criticized Shire for its Dublin location, saying the company “has avoided paying its fair share of U.S. taxes on profits by inverting into a tax-advantaged Irish company.”

The patent has been upheld in the courts, which have a more rigorous legal standard than the agency for challenging patents.

While the patent board has been labeled a “death squad” for its high rate of invalidations, drug and medical devices patents have a higher success rate of surviving reviews.
Still, the pharmaceutical industry has been pushing for changes to the review process, and has been lobbying Congress on the issue. The Supreme Court has upheld some of the rules governing the board.

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