Al­ler­gan shows how you can de­stroy your rep and get mobbed by law­mak­ers in 4 easy steps

Bioreg­num
The view from End­points
John Car­roll, Ed­i­tor

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

Fangliang Zhang (Imaginechina via AP Images)

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