[Ip-health] How to Protect a Drug Patent? Sell it to a Native American Tribe

Ruth Lopert ruth.lopert at gmail.com
Sat Sep 9 03:00:56 PDT 2017


How to Protect a Drug Patent? Sell it to a Native American Tribe
By Katie Thomas|Sep. 9th, 2017

- Copied as Fair Use -

The 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
United States Patent and Trademark Office. The tribe will lease the patents
back to Allergan, and will receive $15 million in annual royalties as long
as the patents remain valid.

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

For the Mohawk tribe, a community of 13,000 who live in a rural region on
the border of New York State and Canada, the deal offers the promise of a
new revenue stream that would bring in income beyond that of a casino the
tribe runs near the reservation.

“The tribe has many unmet needs,” Dale White, the tribe’s general counsel,
said in an interview. “We want to be self-reliant.”

Mr. White said the tribe was approached in April by a Dallas law firm,
Shore Chan DePumpo, which proposed the idea. The tribe has already taken
ownership of patents owned by a technology company that Mr. White declined
to name, but said the Allergan arrangement is the tribe’s first
pharmaceutical deal.

Tubes of Restasis, a prescription treatment for acute dry eyes, which had
$336 million in sales in the second quarter of this year. Martin

The payments from Allergan — not to mention potential deals with other
companies, he said — will give a much-needed boost to the tribe’s
approximately $50 million annual budget.

Denise Bradley, a spokeswoman for Teva Pharmceuticals, 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.” She added that Teva “will be
interested to see what comments are made about this tactic by regulatory

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
already challenged in the federal courts. The Supreme Court will take up
the issue next year in the case Oil States vs. Greene’s Energy Group.

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. The deal announced with the Mohawk
tribe will not have any bearing on the federal court case. If the company
loses that case, its patents would be invalidated regardless of the deal
with the tribe.

Brent Saunders, the chief executive of Allergan, said in an interview
Friday that the company made the move to avoid what he described as the
“double jeopardy” of having the same issue heard in two venues. “We did
this to really make sure that we can defend these patents in only one
forum,” he said.

A. Robert D. Bailey, the chief legal officer at Allergan, said that though
the Supreme Court may ultimately invalidate the review process, the company
couldn’t risk losing its patent on Restasis, which brought in $336.4
million in revenues in the second quarter of 2017, its second-biggest
selling product behind the wrinkle treatment Botox. “It’s one of our most
valuable products, so we can’t wait,” he said.

Mr. Bailey and others said the legal theory behind the Mohawk deal stemmed
from a decision by the patent-review panel earlier this year involving the
University of Florida, which owned a patent being challenged by the
medical-device maker Covidien. The university, which was also represented
by the Shore Chan DePumpo firm, successfully argued that the challenges
should be dismissed because, as an arm of the state of Florida, the
university should be granted sovereign immunity.

Mr. White said the tribe has entered into an agreement with Shore Chan
DePumpo, which will vet companies and their patents before referring them
to the Saint Regis tribe. “Indian tribes have sovereignty that is stronger
than states,” Mr. White said, pointing to recent Supreme Court cases that
have ruled in favor of tribes. “We feel that we have an extremely strong

Michael Carrier, a professor at Rutgers Law School who studies patent law,
called the announcement Friday a “concerning” development, in part because
the Mohawk tribe played no role in developing the drug. And he said the
administrative-review panel served a worthy purpose. “Challenges at the
patent office play a crucial role in overturning invalid patents, and that
role could be undermined by agreements like this,” Mr. Carrier said.

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