Hedge Funds Are Destroying the American Dream
A new hedge fund strategy threatens to kill innovation in the biopharmaceutical industry. Pioneered by Kyle Bass, the infamous hedge fund manager who made half a billion dollars betting against the subprime housing market in 2007, this strategy puts America’s biopharmaceutical companies in Bass’s crosshairs, with patients, jobs, and innovation at the top of his hit list.
Why does innovation matter? No self-respecting American would dare to ask such a question. Innovation is as American as apple pie. From Henry Ford and the Wright Brothers to Bill Gates and Steve Jobs, iconic Americans have transformed the world with innovative inventions. Our spirit of innovation extends beyond travel and technology, though. Bio-pharmaceutical companies invent new and advanced lifesaving medicines every year. Innovation in the drug and health care industries led to an 83% drop in the HIV/AIDS death rate, and a rise in the five-year cancer survival rate to 68%. In fact, because of innovative treatments and new medicines, U.S. cancer death rates are down 20% from their peak.
The Greedy Scheme
Bio-pharmaceutical ingenuity saves lives every day, so why are hedge fund managers like Kyle Bass so intent on disrupting this innovation in the biopharmaceutical sector? It’s simply because they can make obscene profits.
Through utilizing outdated patent laws, hedge fund managers challenge drug and prescription medicine patents in court while betting against their shares on the stock market. If the patents are invalidated, the door would be open for generic drugs to enter the market, and the biopharmaceutical companies with legitimate patents would suffer financially.
In 2011, Congress created the Inter Partes Review (IPR) system as a way to protect intellectual property rights from patent trolls and fast track legitimate patent challenges. However, the unexpected consequence is that there’s no way to differentiate legitimate patent challenges from bogus patent challenges.
When hedge fund managers challenge the genuine patents of innovative biopharmaceutical companies, they do so only to manipulate the stock market. Patent invalidation dissuades biopharmaceutical investors from funding future research and development (R&D), and while hedge fund managers profit, American patients suffer.
Profits Are Necessary for Continued Innovation
Biopharmaceutical R&D investment is incredibly important for patients to live longer and happier lives. Since 2000, the biopharmaceutical industry has invested more than $500 billion in R&D, but if these companies are bankrupted by patent challenges, they’ll be forced to put invention and discovery on hold.
The future of medicine is bright, and with a continued focus on R&D, there’s no telling what is possible. Over the past five years, biopharmaceutical companies doubled their R&D investment in personalized medicines – medications and treatment options that are tailor-made for patients, and are already proving to be more effective than traditional alternatives. Researchers predict a 69% increase in the number of personalized medicines that will be in development over the next five years.
But that won’t happen if patent challenges persist. If we want more lifesaving medicines to come to the market, a system of strong patent protection is necessary. The industry needs funding in order to continue researching, developing, and inventing. Through their manipulation of the patent system, hedge fund managers can influence stock prices. Don’t let them gamble away your health.
