Allergan, the multinational pharmaceutical company, has recently come under fire for the sale of some of their patents. The company, best known for the cosmetic treatment, Botox, and the chronic dry eye medication, Restasis, has partnered with the Saint Regis Mohawk Tribe, a sovereign Indian nation that borders New York and Canada. This partnership involved the transfer of six patents that cover the company’s top-selling drug Restasis.
It is not uncommon for large pharmaceutical companies to have multiple patents that cover the formulas and technologies of one drug. Rival companies wait until these patents expire so they can release a “generic” or lower-cost version of the same drug. Alternatively, a competing company may challenge the validity of the patents in court to show the patents should not have been granted in the first place. The venue of choice for instituting a validity challenge is the Patent Trial and Appeal Board (PTAB). The PTAB is an administrative board and is faster and less costly than federal courts. Critics of the PTAB feel it should be eliminated as venue is redundant and invalidity cases should be challenged solely in federal court; an issue the Supreme Court will hear next year (Oil States vs. Greene’s Energy Group).
On September 8, 2017, Allergan transferred six patents to the Saint Regis Mohawk Tribe. The Tribe will license the patents back to Allergan in exchange for continuous payments of up to $15 million annually from the sale of Restasis. In addition to the annual royalties, the Tribe was also given an upfront sum of $13.75 million.
This unprecedented move by Allergan could potentially allow them to avoid Inter Partes Review (IPR) proceedings in the PTAB due to the Saint Regis Mohawk Tribe’s sovereign immunity status. In an interview, Brett Saunders, chief executive of Allergan stated the reason they made this deal was to “really make sure that we can defend these patents in only one forum.” When asked if he opened the gate for others to follow, he said, “[y]eah, there are some folks [in the pharma industry] who may pursue this but they’ll also have to find the right partners.”
Of course, some feel that the move by Allergan is inappropriate and threatens the pharmaceutical industry. U.S. Senator Sherrod Brown stated this deal “rips off consumers” and cannot “become the new normal.” Richard Torczon, counsel representing Mylan Pharmaceuticals, called the sale of the patents a “sham transaction.”
The Saint Regis Mohawk Tribe is familiar with this process as they currently hold patents for a technology company they would not name. The 13,000-person community has an annual budget of $50 million and in a press-release, the Tribe stated how this money will greatly benefit them.
“This is a viable and sound opportunity for the Saint Regis Mohawk Tribe to enter into the patent, technology, and research sector as part of our overall economic diversification strategy,” the statement read. “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.”
It is worth noting that if Allergan loses in federal court the deal between Allergan and the Saint Regis Mohawk Tribe comes with an important catch; it may become null and void if Allergan loses the current federal case regarding Restasis. The six aforementioned patents will expire in 2024.
Suiter Swantz IP is a full-service intellectual property law firm, based in Omaha, NE, serving all of Nebraska, Iowa and South Dakota. If you have any intellectual property questions or need assistance with any patent, trademark, or copyright matters and would like to speak to one of our patent attorneys please contact us.