Allergan shows how you can destroy your rep and get mobbed by lawmakers in 4 easy steps
The view from Endpoints
First came the onslaught of media reports. Then came the outraged letter from the US Senators followed by the launch of a House probe and a bipartisan demand for documents. Now, a few weeks in, comes the first piece of legislation aimed at killing the source of the outrage.
Allergan’s Mohawk gambit on the patent front is fast becoming a textbook study in how to shoot yourself in the foot while attracting a large and unsympathetic crowd.
Claire McCaskill, the Democratic Senator from Missouri, has followed up a scolding letter to PhRMA chief Stephen Ubl about how Allergan was gaming the system, and her plans for legislation that would ban companies from using tribal immunity laws to protect themselves from inter partes review patent challenges.
Allergan managed to capture everyone’s attention with a nifty lawyer’s trick. They paid the Saint Regis Mohawk Tribe $13.75 million for a deal that transferred its patents for the $1.5 billion drug Restasis to the tribe, then essentially leased them back for royalties. And the tribe virtually hung a big banner saying it was open for business for the rest of the pharma industry and anyone else that would like them to claim immunity against the IPR process and guard against generics.
I’m doubting that any other pharmas will follow, no matter how badly tempted they may feel. This is how you can damage your company’s reputation at considerable expense and antagonize lawmakers without benefiting at all — not an appetizing prospect.
McCaskill’s statement, reported by Reuters, neatly summarizes Allergan’s dilemma.
Any thinking person would look at what this company did and say, ‘That should be illegal.’ Well, I agree. 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.
Allergan CEO Brent Saunders has been trying mightily hard to make this into a controversy over the IPR process, which they say is inherently unfair, forcing them to fight simultaneously on two legal fronts.
He may be right. But no one is paying much attention. He’s given Congress too much to distract them.
The Saint Regis Mohawk Tribe says it’s “outraged” that lawmakers would single out struggling Indian tribes while allowing state universities to retain their own immunity.
The Tribe remains committed to working with all Members of Congress to discuss how its recent economic diversification efforts benefits the Tribe, its members, and the surrounding communities without harming competition among pharmaceutical companies (both private and generic) or artificially inflating drug prices.
The Mohawks already made it clear that their casino isn’t enough. But it’s unlikely that the economic diversification argument will be a big winner in Congress, where high drug prices and access to cheap generics remain a source of considerable public rage.
This doesn’t end well for Allergan. The question is, can they stop digging and climb out of the hole they’re in.
Image: Brent Saunders AP Images