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BLOG: Pharma patent wars: Brilliant tactics; terrible optics
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Whether or not you know it, or care to acknowledge it, a global war between the makers of branded drugs and generics has been going on for decades. In return for the expense of development, drug makers are granted patents that allow them exclusive rights to sell their products. They do whatever it takes to “protect” a branded medication from the price competition that comes from the introduction of a generic.
As medical practitioners, we are conflicted. On the one hand, we wish the best for the development companies. More profit from a branded medication has traditionally meant new products for treating our patients. However, the longer a branded medicine is immune from generic competition, the greater is the financial burden our patients bear.
These patent battles occur in federal court and before the Patent Trial and Appeal Board. In fact, until Friday afternoon, Allergan had action in both venues. Allergan filed suit in federal court in Texas seeking to have its patents for Restasis upheld, thereby forbidding its adversaries from selling a competing product. In response, companies such as Mylan and Teva sought administrative action in the patent office that would have nullified the 2013 Restasis patents.
Then Allergan pulled off a brilliant, subtle and sophisticated legal move that has stymied that action.
An enterprising law firm in Texas helped the University of Florida avoid a patent issue by enlisting the Saint Regis Mohawk Tribe to accept ownership of the UF patents for a fee. As a sovereign nation, the Saint Regis tribe is immune from actions brought in the Patent Office. Shore Chan DePumpo identified Allergan as a company with an “acute need” regarding its patents. Allergan Chairman and CEO Brent Saunders then solved what he has called Allergan’s “double jeopardy” patent issue by paying the Saint Regis tribe $13.5 million to assume ownership of the Restasis patents as well as $15 million in annual royalty payments (Allergan’s lawsuit in Texas federal court continues).
By and large, Wall Street is applauding the maneuver. Allergan has turned the patent troll strategy on its head. Not surprising in the least, advocacy groups for patients and the insurance industry are panning the move. My take is this: Frontline DED docs have been practicing under the assumption that there will be a protected Restasis brand until 2024. So have all the insurance companies. Allergan’s only real threat would come from Sun and its soon-to-come micelle-encapsulated cyclosporine A. If the gambit works, nothing changes for my patients or me.
However, the optics of this deal are terrible. Everything about it is just a bit too clever. As a keen observer of the business side of our world, I tip my cap to Mr. Saunders and Allergan chief counsel A. Robert D. Bailey for their legal legerdemain. I like Allergan and Allergan’s people, I really do. It’s just that this deal is going to work way better than it’s gonna look. Great tactics, less great PR.
I’m sitting here with a big old bucket of popcorn, and I just can’t get comfortable.
Disclosures: White reports he is a consultant to Shire, Allergan, TearLab, Rendia, TearScience, Omeros and Sun, and is a speaker for Shire, Allergan, Omeros and Sun.