How to Protect a Drug Patent? Sell it to a Native American Tribe

click to enlarge Drugmaker Allergan is trying to protect Restasis from a patent dispute.
Drugmaker Allergan is trying to protect Restasis from a patent dispute.

© 2017 New York Times News Service

Drugmaker Allergan announced Friday that it had transferred its patents on a best-selling eye drug to the Saint Regis Mohawk Tribe in upstate New York — an unusual gambit to protect the drug from a patent dispute.

Under the deal, which involves the dry-eye drug Restasis, Allergan will pay the tribe $13.75 million. In exchange, the tribe will claim sovereign immunity as grounds to dismiss a patent challenge through a unit of the U.S. Patent and Trademark Office. The tribe will lease the patents back to Allergan, and will receive $15 million in annual royalties as long as they are valid.

The surprising legal move rippled quickly through the pharmaceutical world Friday, setting off speculation about whether other drug companies would soon follow suit to protect their patents from challenges through a patent-review process the industry despises.

If Allergan succeeds in holding onto its patents, “we will probably see multiple branded companies housing their patents with Indian tribes,” Ronny Gal, an analyst for Bernstein, said in a video message to investors Friday.

Denise Bradley, a spokeswoman for Teva Pharmaceuticals, one of the generic companies that is challenging the Restasis patents, described the deal as “a new and unusual way for a company to try to delay access to high-quality and affordable generic alternatives.”

The announcement Friday is perhaps the most novel attempt to avoid a patent-review process that the brand-name drug industry has railed against in recent years. The process was created in 2011 as a way to streamline patent challenges by allowing them to be decided by an administrative panel, the Patent Trial and Appeal Board. But many patent holders have argued that the process is unfair and unnecessary because patents are challenged in the federal courts.

In the case of Restasis, the validity of the drug’s six patents — which the company says expire in 2024 — are being heard by the review panel, even as a similar battle is also moving through the federal courts. A trial over the issue recently concluded in U.S. District Court in Texas and a decision in that case has not yet been reached. If the company loses that case, its patents would be invalidated regardless of the deal with the tribe.

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