As fifth U.S. senator and four Congressmen piled on criticism of Allergan’s patent deal with Native American Tribe, the drugmaker responded by urging the Senate Judiciary Committee to review the patent challenge system it’s been accused of thwarting.  Moreover, Allergan frowned previous month when it said that it had transferred the patent for its blockbuster drug for eye Restasis to the Saint Regis Mohawk Tribe in a deal designed to dismiss a certain brand of the patent challenge from generic drug makers.

  • Allergan is urging the Senate Judiciary Committee to review the patent challenge system it’s been accused of thwarting.
  • Allergan stuck a deal with the Saint Regis Mohawk Tribe aimed at protecting patent for its Restasis eye drug in September

What Analyst has to say about the deal?

The analyst said the deal could be emulated by other pharmaceutical companies if it is successful. But Allergan’s move initially heralded as creative and buoying the 69$ billion drugmaker stock price, has since drawn intense scrutiny and shined a light on the dual system of patent challenges in U.S. Allergan’s stock is down by 6% since the announcement. Now it’s responding to what it calls by four Senator in a letter they wrote to the Senate Judiciary Committee last week, requesting it open an investigation into the deal.

CEO Brent Saunders wrote in a letter that there has been an attempt to shield the Restasis Patent form review. The four Senators called Allergan’s arrangement with the Saint Regis Mohawk Tribe a “blatantly anti-competitive attempt to shield its patent from review and keep drug prices high.

Brazen Loophole

The arrangement is a Brazen Loophole, that was illegal, as was told by the Senator. Government reform committee wrote an open letter to Saunders suggesting the patent transfer may impair competition across the pharmaceutical industry and ultimately dissuade companies from pursuing less-costly generic alternatives to the brand drug. Here how’s the agreement came about:

Allergan transferred the right to Restasis to the Saint Regis Mohawk Tribe, which licensed them back to Allergan. The Tribe then sought to dismiss the IPR challenges. In return, Allergan is paying the Tribe $13.75 million in additional potential annual royalties. The group of four Senators wrote that it appears that the Allergan’s deal with the Tribe exploits the law to thwart review of the Restasis patents, protecting Allergan’s market monopoly and its profits at the expense of patients who need the drug. But Saunders argues that the allegation is still facing challenges for Restasis, pointing out it just completed a trial over the drug’s patent in Federal District Court in Texas.

If Allergan loses that case and Food and Drug Administration approves a generic version of Restasis, the product could enter the market and many years in advance of the listed patent expiry date. Allergan’s recent agreement with Saint Regasis Mohawk Tribe has no impact on the case.


Allergan argued with the IPR system, created through the America Invent Act 2011 which, creates an unnecessary and unfair burden on innovators of branded medicines by opening up patents to parallel and often inconsistently adjudicated challenges before both federal courts and the Patent Trial and Appeal Board a double jeopardy Saunders said last month that Allergan was seeking to avoid.

In its response to the letter from the House Oversight Committee, Allergan doubled down on its insistence that the IPR process, not its deal with the tribe, should be in the government’s crosshairs.

Allergan spokesman said in a statement that, while we fully recognize their need for information, the Committee’s focus should not be on Allergan, the Saint Regis Mohawk Tribe and our agreement which does not shield Restasis patents currently being litigated in federal district court and the focus should be on the IPR process and its negative impact on life science innovation.”