Kyle Bass Challenges ‘Zombie Drug' Patents That Won't Die

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By John T. Aquino

Dec. 1 — Hedge fund manager Kyle Bass filed in late November challenges to patents for an anesthetic formula and for a weight loss tablet as part of his campaign against what he called “zombie” drugs whose patent protection won't die.

The Coalition for Affordable Drugs (CAD), which Bass formed with attorney Erich Spangenberg, has through November challenged 33 drug patents through the Patent Trial and Appeal Board's inter partes review (IPR) process, which was created by the America Invents Act. Biopharma companies and the nonprofits that represent them have argued that Bass and Spangenberg are abusing the IPR system by using the process for their own financial gain.

But this time Bass and Spangenberg filed in their own names a petition on Nov. 25 challenging the validity of Fresenius Kabi USA LLC's patent related to the Diprivan anesthetic and a petition on Nov. 24 challenging Alpex Pharma's patent covering Citius Pharmaceuticals' weight loss drug Suprenza. They argued that the Fresenius patent only covers a commonly-used rubber stopper and the one owned by Alpex just the speckled appearance of a weight loss tablet.

The petitions were filed two months after the PTAB denied Celgene's motion for sanctions and to dismiss the CAD's challenges of Celgene's patents covering its drug multiple myeloma treatment Revlimid, saying that Bass's motive for filing the challenge was irrelevant (13 PLIR 1412, 10/2/15).

Patent Office ‘Dark Underside.'

In a Dec. 1 e-mail to Bloomberg BNA, Bass and Spangenberg said the petitions were filed “at our own expense” because the patent claims at issue “embody the absurdity of the current patent system that continues to allow zombie drugs to live on almost endlessly regardless of genuine innovation.”

According to Bass and Spangenberg, “With these filings, we aim to shed a bright light onto the dark underside of the U.S. Patent Office and to show the causal link between bad patents, the U.S. Patent Office and lobbying from drug companies” that results in high prices “for the same old drugs.”

Geoffrey D. Fenton, Fresenius's senior vice president for communications in North America, told Bloomberg BNA in a Dec. 1 e-mail that he hadn't seen the petition and doesn't comment on legal proceedings.

“We will review the submission and respond accordingly,” Fenton said. “Even though we are predominately a generic injectable company, we vigorously defend our intellectual property to the fullest extent allowed by law. And because the vast majority of the medicines in our portfolio are in fact generic, we understand the vital importance of drug availability and affordability.”

Rubber Stopper Only Impediment

The Spangenberg and Bass petition filed against Fresenius challenges claims of U.S. Patent No. 8,476,010 (“Propofol formulations with non-reactive container closures,” issued 7/02/13), which won't expire until 2025. 

The ‘010 patent covers a formulation of Diprivan (propofol), an intravenous anesthetic agent that is “stored in containers having non-reactive, or inert closures.” Non-reactive closures, such as siliconized butyl-rubber stoppers, have been known since 1950 to have significant advantages over unsiliconized stoppers, exhibiting characteristics such as lubricity, the petition said.

“Such design advantages provided ample motivation to modify prior art to replace unsiliconized stoppers with siliconized stoppers,” Bass and Spangenberg wrote. “This minor and routine substitution would have been readily obvious to a person of ordinary skill in the art and not at all outside the realm of routine experimentation or design optimization. There would have been a reasonable expectation of being able to use such closures successfully in a propofol container system without extraordinary testing and research.”

Consequently, the petition argued, the ‘010 patent is invalid as obvious under 35 U.S.C. §102 as a result of prior publications, including the 1997 Physicians' Desk Reference, and patents that were published before the ‘010 patent was issued.

In their e-mail to Bloomberg BNA, Bass and Spangenberg wrote, “A rubber stopper is the only thing standing between today's high price for Propofol and its generic's 90% discounted price.” They added that this is “an insult to common sense and an affront to needy patients everywhere.”

Speckled Pills

The second petition challenges claims of Alpex's U.S. Patent No. 8,440,170 (“Orally disintegrating tablets with speckled appearance,” issued 5/14/13), which expires in March 2029. 

The “colored granules of a water-soluble sugar” in the ‘170 patent's claims were well known in the industry and were obvious and therefore unpatentable under 35 U.S.C. §102 as a result of the orally disintegrating tablets of the acid reflux treatment Prevacid and patents published before the ‘170 patent was issued, the petition said.

Bass and Spangenberg said in the e-mail to Bloomberg BNA, “We wonder if anyone in the U.S. Patent office has ever chewed Tutti-Frutti gum? It seems to have a ‘speckled appearance’ and was first invented back in the year 1888.”

Enshrining Monopolies

The petitioners told Bloomberg BNA, “On these two patent challenges, we are looking for nothing in return except to call attention to the gross abuses that have become part of the corrupt and ineffective Federal oversight of drug pricing in America.” They added that they don't have any financial interest in either Alpex, Citius or Fresenius.

Bass and Spangenberg concluded, “Some of the patents, and extensions to patents, represent an unreasonable use of government regulation to enshrine monopoly power to the detriment of the public at large. This system of thoughtless patent ever-greening is both broken and rigged. It must be fixed or we will continue to pay more and more for the same old drugs we have been buying for decades.”

Fresenius and Alpex will be able to respond to the petitions, and then the PTAB will conduct a preliminary review to see if the challenges are likely to succeed on their merits.

The review process can take as long as six months. If the PTAB grants Bass's and Spangenberg's petitions, decisions will come within 12 months.

Both petitions were filed by Gregory J. Gonsalves of Falls Church, Va., and Christopher Casieri of McNeely, Hare & War LLP, Princeton, N.J.

To contact the reporter on this story: John T. Aquino in Washington at

To contact the editor responsible for this story: Randy Kubetin at

For More Information 
The petition against Fresenius is at
The petition against Alpex is at


Request Health Care on Bloomberg Law