Native American patent dispute sets poor pharmaceutical precedent
The drug maker Allergan, which markets the dry-eye drug “Restasis,” recently transferred the patent to a Native American tribe because they can claim sovereign immunity to circumvent patent disputes from the U.S. Patent and Trademark Office. This is a deplorable move by Allergan.
Sovereign immunity, or tribal immunity, in the United States generally implies that Native American tribes have the authority to handle matters within the borders of the tribe’s land.
Under the arrangement, Allergan will grant licenses to upstate New York’s Saint Regis Mohawk tribe for the patent, as well as $13.75 million with the potential to receive $15 million in yearly royalties in the future.
The company’s social responsibility page reads like satire in light of the recent move: “Focused on corporate citizenship, leveraging our science and innovation to make a positive impact.”
If there were any previous ties between Restasis and the Saint Regis Mohawk tribe, this situation could be viewed as something more than the exploitative, anti-competitive scramble for a legal shield that it is.
In the pharmaceutical industry, drugs usually enjoy a period of protection from other companies infringing on a company’s patent. Companies with patents are protected for 20 years from copycat drugs starting on the date that the application was filed so that a company can make back the investment that was required to develop the drug.
If the drug is approved, the company also enjoys an exclusivity period on the market that can be effective for up to 7 years.
The Restasis patent was set to expire in 2014.
When Allergan began feeling pressure from competitors, the company filed patents with specifications of ingredient concentrations (active and inactive), which has extended protection up until this point. Allergan is the plaintiff in a patent infringement case that the company brought against would-be competitors.
One of the major challenges Allergan is facing concerns an inter partes review of those ad hoc patents. An inter partes review from the PTAB determines the “patentability” of claims made about patents, but can hypothetically be rebuked under the sovereign immunity doctrine.
If nothing changes, the patents will be valid until 2024.
Exploiting a tribe’s sovereign immunity designation is in no way socially responsible. Restasis generated $354 million in sales during the second quarter of this year, which is the equivalent to about 26 and a half years of annual royalties under the proposed agreement.
Recently four senators have criticized the move, and asked the Senate Judiciary Committee to investigate the matter. This is not a completely new phenomenon, but it is a recent one. For example, the University of Florida avoided an IPR under the doctrine earlier this year. The current procedure for an inter partes review is only about 5 years-old itself, and while there are a lot of kinks to be worked out, its intentions are good.
That being said, not only is this a bad move on Allergan’s part, but it would set a precedent for the pharmaceutical industry to protect themselves in this manner as well. While it doesn’t seem as though a case concerning eye drops is that important, it could open up the door for companies to do the same thing with more serious products, like chemotherapy drugs.
Opinion columnist Nicholas Bell is an MBA graduate student and can be reached at [email protected]