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Allergan's Responce to Criticism Of Their Mohawk Patent Deal

The drugmaker Allergan had announced last month that it would transfer the rights to the dry-eye drug Restasis,, a blockbuster treatment for chronic dry eye that had $1.49 billion in sales last year, to the Saint Regis Mohawk Tribe..

Under the deal, which involved Allergan would pay the tribe $13.75 million. In exchange, the tribe will claim sovereign immunity as grounds to dismiss a patent challenge through a unit of the United States Patent and Trademark Office. The unusual agreement could allow the drugmaker to use the tribe’s status as a sovereign nation to shield its Restasis patents from attack by rival drugmakers.The tribe will lease the patents back to Allergan, and will receive $15 million in annual royalties as long as the patents remain valid.

The surprising legal move rippled quickly through the pharmaceutical world , setting off speculation about whether other drug companies would soon follow suit in order to protect their patents from challenges through a patent-review process that the industry despises.

For the Mohawk tribe, a community of 13,000 who live in a rural region on the border of New York State and Canada, the deal offers the promise of a new revenue stream that would bring in income beyond that of a casino the tribe runs near the reservation.

Now, a fifth U.S. senator and four congressmen piled on criticisms of Allergan’s patent deal with a Native American tribe, the drugmaker responded by urging the Senate Judiciary Committee to review the patent challenge system it’s been accused of thwarting. Analysts said the deal could be emulated by other pharmaceutical companies if it’s successful. But Allergan’s move, initially heralded as creative and buoying the $69 billion drugmaker’s stock price, has since drawn intense scrutiny and shined a light on a dual system of patent challenges in the U.S. Allergan’s stock is down 6 percent since the announcement.

Now it’s responding to what it calls misperceptions by four senators in a letter they wrote to the Senate Judiciary Committee last week, requesting it open an investigation into the deal.

“It appears that 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,” wrote the group of four senators, which also included Sherrod Brown, D-Ohio; Bob Casey, D-Pa.; and Richard Blumenthal, D-Conn.

In the case of Restasis, the validity of the drug’s six patents — which the company says expire in 2024 — are being heard by the review panel, even as a similar battle is also moving through the federal courts. A trial over the issue recently concluded in U.S. District Court in Texas and a decision in that case has not yet been reached. The deal announced with the Mohawk tribe will not have any bearing on the federal court case. If the company loses that case, its patents would be invalidated regardless of the deal with the tribe.

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