Allergan Partners With Indian Tribe to Protect Drug Patents -- Update
08 September 2017 - 9:31PM
Dow Jones News
By Jonathan D. Rockoff
Allergan PLC has taken a novel step to protect a top-selling
drug from generic competition: the company has sold the drug's
patents to an Indian tribe in upstate New York to block rivals from
challenging the patents at the U.S. Patent and Trademark
Office.
The St. Regis Mohawk Tribe, which operates a casino on its
reservation near the Canadian border, asked the patent office on
Friday to drop patent challenges filed by Akorn Inc., Mylan NV and
Teva Pharmaceutical Industries Ltd. due to the tribe's special
legal status as a sovereign government, which the tribe says gives
it immunity from patent-office review.
If its moves succeed, Allergan will be able to avoid a pending
hearing before a patent-office panel on the patents for its
Restasis dry-eye drug, a key product for the company. A separate
review of the Restasis patents, by a federal court in Texas, will
continue.
"We are completely open to having these patents adjudicated in
the federal courts. But we don't think, going through that, we
should be subject to a second review" at the patent office,
Allergan CEO Brent Saunders said in an interview.
Akorn, Mylan and Teva didn't immediately respond to requests for
comment.
The agreement entitles the tribe to a $13.75 million initial
payment and $15 million in annual royalties, starting next year,
until the Restasis patents expire or are no longer valid. Allergan
retains the rest of the revenue from Restasis, Allergan's
second-biggest seller after Botox with $1.4 billion in sales last
year.
Dale White, general counsel for the 13,000-member tribe, said it
would use the proceeds to diversify revenues beyond its casino and
address "unmet needs" in areas such as housing, health care and
education.
"Even though the casino has been good for us, we can't rely on
it long term. We have to diversify," he said.
The legal maneuvering is a new twist on drug companies' longtime
fight to protect their lucrative products from lower-priced
generics, whose introduction usually cuts into and then largely
eliminates sales of the brand-name drug within months.
Allergan has been trying to shield the drug from competition on
many fronts, including from a new dry-eye drug, called Xiidra, from
rival Shire PLC. Allergan is also fending off lower-price generics,
suing potential manufacturers in federal court in Texas for patent
infringement.
The federal court in Texas held a trial on the claims last week,
and Allergan expects a decision within the next few months,
according to Bob Bailey, the company's chief legal officer.
Allergan took out the Restasis patents in 2013 as the company
began facing generic threats. The company says the Restasis patents
don't expire until 2024, while generic rivals argue the patents
shouldn't have been granted in the first place and should be ruled
invalid.
To invalidate the patents, Akorn, Mylan and Teva asked the U.S.
Patent and Trademark Office under a process known as inter partes
review.
The process was established six years ago to reduce the burden
of challenging patents in federal courts, but critics, including
drug companies, say it has been exploited by so-called patent
trolls, hedge funds and others.
The Supreme Court is weighing the constitutionality of the
patent-office challenge process.
Patent-law experts say Allergan, while still facing a potential
loss in federal court, seems to have found a way under a web of
court and patent-office decisions insulating Indian tribes from
intellectual-property challenges to avoid the risk of setback at
the patent office.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
September 08, 2017 15:16 ET (19:16 GMT)
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