Allergan CEO Brent Saunders $AGN vehemently defended his move to try and shield the company’s Restasis franchise by handing its patents over to a Mohawk Indian tribe as a strike against the inter partes review process, which the company felt was an inherently unfair threat to its blockbuster drug.
What the company accomplished, though, was to stir up a hornet’s nest of angry lawmakers who condemned the move as a sham. And a bipartisan group of lawmakers heavily represented by Republicans retaliated this week with a new bill that would prevent anyone from trying this again.
The patent moves rely on the tribe’s claim of sovereign immunity. If they held the patents, then the IPR process could not be used to wrestle away their protections. The fact that Allergan paid them for the patent deal, then leased back the patents, didn’t sit well with critics.
The Preserving Access to Cost Effective Drugs (PACED) Act, a title that underscores the lawmakers’ belief that the only thing Allergan had in mind was protecting its second biggest drug franchise, would kill that maneuver.
“We watched a company brazenly try to exploit a potential legal loophole to game the system in an effort to protect their bottom line-and keep Missourians from access to cheaper generic drug options in the process. That should be illegal, and our bipartisan bill would make it so by ending this astounding assertion of sovereign immunity to avoid patent review, before any other companies follow suit,” said Senator Claire McCaskill, a Democrat from Missouri.
The Republicans were just as harsh in condemning it.
Senator Pat Toomey, a Republican from Pennsylvania: “Sham transactions involving the transfer of patent ownership from a pharmaceutical company to a tribe for the sole purpose of shielding the patent from challenges are a clear abuse of our patent system and set a dangerous precedent for other consumer products.”
Senator David Perdue, Republican from Georgia: ”Gaming the patent system is not good for consumers or businesses. I’m disappointed this legislation even has to be offered due to a few bad actors trying to do an end run around the U.S. Patent and Trademark Office.”
Senator Joni Ernst, Republican from Iowa: “Congress cannot look the other way as some pharmaceutical companies attempt to stifle competition and prevent Americans from accessing affordable generic drugs.”
Allergan’s decision to try the Mohawk solution to their troubles has already been dissed by the courts as well as the Patent Trial and Appeal Board. The senators’ statement also listed their supporters, including some prominent players in the health insurance field. This is all leaning heavily in one direction.
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