The Plot Thickens as Feds Get Involved In Allergan Mohawk Patent Battle

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Reported by Annette Kreuger, Industrial Info Resources, Incorporated (Sugar Land, Texas)--The fall season's best new show just might not be found on television. Who needs fictional drama when we have the high stakes Pharmaceutical Industry to keep us entertained? A recent move by Allergan has elevated the art of patent protection to new heights.

The cast of characters includes two multi-national drug companies, a Native American tribe and the United States government. Surround them with a plotline filled with billion-dollar profits, corporate greed, our health and prescription drugs ...now, that's entertainment.

One of the major profit killers for a drug company is the dreaded patent expiration of a top-selling product. Generic manufacturers wait in the wings, ready to snatch the market share with their cheaper, albeit generally effective, knockoffs. When a drug generates nearly $2 billion in annual sales, it becomes a case of "any means necessary" to try to protect those dollars.

Enter Allergan plc (NYSE:AGN), which is facing serious patent challenges over its dry-eye medicine Restasis, by generic heavyweight Mylan NV (NYSE:MYL). Allergan and its legal team came up with one for the books on patent battles. On September 8, the drugmaker transferred Retasis patents to the Saint Regis Mohawk tribe. Which, in turn, licensed them right back to Allergan.

Click on the image at right for a graph detailing operational plants from Allergan and Mylan, by country.

The novel deal to stave off Mylan was created from a system introduced in 2012 and known as inter partes review (IPR).

The IPR system affords both Native American tribes and state universities sovereign immunity from patent challenges.

The Saint Regis Mohawk reservation, also known by its Mohawk name Akwesasne, is located in Franklin County, New York. Under the Allergan agreement, the tribe will receive a one-time payment of $13.75 million and annual royalties of about $15 million.

On September 11, to no one's surprise, Mylan fired back in a court hearing that the company would vigorously oppose Allergan's efforts, calling the deal with the tribe a "sham transaction."

Subsequently, the Mohawks filed a motion with the U.S. Patent Trial and Appeal Board, asking that Mylan's case seeking to invalidate Allergan's Restasis patents be thrown out. The tribe stated that it is "...a sovereign government that cannot face litigation in an administrative court, unless it expressly waives its immunity or the U.S. Congress abrogates immunity. Neither of these exceptions apply here."

Amid mounting criticism on both ethical and legal points, a bipartisan group of members of the House Committee on Oversight and Government Reform are setting up a formal probe of the deal. They want to review all agreements and contracts regarding the transaction. Allergan has been given a deadline of October 16 to comply.

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