Outrage Leads Senator to Draft Bill in Response to Allergan's 'Should-be-Illegal' Patent Maneuver

Published: Oct 06, 2017

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WASHINGTON – Allergan continues to raise the ire of Washington lawmakers following its attempts to circumvent patent laws by selling some of the patents of the blockbuster drug Restasis to the Saint Regis Mohawk Tribe in New York.

The company made the move in September as part of an attempt to take advantage of the Mohawk tribe having been recognized as a sovereign government. As part of the deal, Allergan agreed to lease the drug back in exchange for royalty payments to the Native American council. Allergan hoped the tribe’s sovereign immunity would shield the drug from Inter Partes Review (IPR) challenges to its patents on the blockbuster eye drug Restasis. Under the agreement, Allergan agreed to pay the Mohawk tribe $13.75 million and lease the drug back for $15 million annually. Restasis netted Allergan more than $1.5 billion last year.

By transferring the patents to the Mohawk tribe, Allergan hoped to block other companies that hoped to create generic versions of Restasis when its patents expire.

The maneuver raised the ire of many, including U.S. Sen. Claire McCaskill, a Missouri Democrat, who filed legislation that would oppose the idea that the Mohawk sovereignty would protect the patents.

In a letter to the powerful trade group Pharmaceutical Research and Manufacturers of America (PhRMA), McCaskill blasted Allergan’s attempt. She said the loophole that Allergan was attempting to use should be illegal. McCaskill called on PhRMA to condemn Allergan and called on the trade association to live up to its comments regarding corporate responsibility. She also said that Allergan’s maneuver did not line up with PhRMA’s efforts to “promote innovation and discourage predatory pricing practices and anticompetitive conduct.”

“Any thinking person would look at what this company did and say, ‘That should be illegal.’ Well, I agree,” McCaskill said in a statement provided to Reuters. “Congress never imagined tribes would allow themselves to be used by pharmaceutical companies to avoid challenges to patents, and this bill will shut the practice down before others follow suit.”

Although Allergan has yet to respond to the legislation, McCaskill intends to use to block the “loophole” the company has defended its actions. When the deal with the Mohawk tribe was announced, Bob Bailey, Allergan’s chief legal counsel, called the plan a “sophisticated opportunity to strengthen the defense” of the company’s intellectual property for a coming IPR review. Additionally, the company has claimed that the patent maneuver is only “aimed at removing administrative patent challenges through inter partes review by the U.S. Patent Trial and Appeal Board, and not challenges in federal court,” Reuters reported.

The Mohawk tribe has condemned McCaskill’s bill. In a statement issued by the tribal council, the Mohawk leaders said the proposed legislation “specifically targets Indian tribes, yet exempts state universities and other sovereign governments engaged in the very same IPR (inter partes review) process,” Reuters noted.

When Allergan and the Mohawk tribe struck the deal, the Native American nation said it was looking at similar opportunities from other pharma companies.

“We realize that we cannot depend solely on casino revenues and, in order for us to be self-reliant, we must enter into diverse business sectors to address the chronically unmet needs of the Akwesasne community; such as housing, employment, education, healthcare, cultural and language preservation,” the tribe said in a statement.

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