Economy

Allergan partners with Indian tribe to protect drug patents

Allergan partners with Indian tribe to protect drug patents”

It said it would vigorously oppose Allergan's attempt to protect a drug from patent challenges by transferring its rights to a Native American tribe.

Allergan has transferred its patent rights for a dry eye treatment to a Native American tribe, in a bid to obtain immunity against an inter partes review (IPR).

Allergan said it had been approached by the tribe with what it called a "sophisticated opportunity to strengthen the defence" of Restasis's patents, which have been challenged under a process called inter partes review, or IPR. The accord will entitle the tribe to a $13.75 million initial payment along with $15 million in annual royalties, beginning in 2018, until the cyclosporine (Restasis) patents either expire or are no longer valid.

The pact, which will entitle the upstate NY tribe to a one-time $13.75m payment and $15m a year in royalties, could open up a new way for drug manufacturers to head off challenges to patents backing billions of dollars a year in sales.

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. For the tribe, it's a new revenue stream that could lead to more down the road. "We want to be self-reliant".

Because make no mistake, what is at stake here is not just the fate of six Allergan patents and some others owned by U.S. universities, but the entire future of the PTAB as a viable tool for defendants to challenge patents asserted against them, or ones that they fear may be asserted in the future.

Bob Bailey, Allergan's chief legal officer, said the tribe approached Allergan about such a deal in early August. "We are impressed with the Tribe's thoughtful and enterprising approach", Bailey said.

A statement from the St. Regis Mohawk Tribal Council noted, "This is a viable and sound opportunity for the St. Regis Mohawk Tribe to enter into the patent, technology and research sector as part of our overall economic diversification strategy".

The tribe runs a large casino to fund its community but said it wants to find other revenues to fund housing, employment, education, healthcare, culture, and language preservation. As part of the deal, the tribe will receive $15 million each year in the future. "They'll have to tread a very careful line with that one", said Brad Wright, a patent lawyer with Banner & Witcoff in Washington, who specialises in cases before the agency. At the same time, attacks on drug patents have been made easier under the patent office's recently created fast-track legal review process. But many patent holders have argued that the process is unfair and unnecessary because patents are challenged in the federal courts.

The company is facing challenges to the Restasis patents in front of that board and in federal court. The deal announced with the Mohawk Tribe will not have any bearing on the federal court case.

By transferring ownership to the tribe, Allergan can try to limit its legal battle to the courts, where it is harder to invalidate patents because of a more stringent legal standard. With the unusual move, the same company that touted pharma's social contract with patients drew some quick and sharp responses, with some calling it innovative and others labeling it 'sleazy'. "We did this to really make sure that we can defend these patents in only one forum", he said. "It's one of our most valuable products, so we can't wait", he said.

The tribe's spokesperson said it has been involved in the patent business since April, and has already drawn up two deals and will be "executing another soon". The university, 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.



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