Generics makers, PBMs and other influential healthcare groups target Allergan patent deal

Ten healthcare groups came out against Allergan's Restasis deal in a letter to lawmakers on Tuesday.

Allergan is facing more heat on its tribal patent deal to protect blockbuster eye med Restasis. On Tuesday, influential groups representing generics makers, PBMs, payers, hospitals, and others wrote to lawmakers to castigate the setup and call for relief. 

In a letter to Republican and Democrat leaders in the House and Senate, the 10 organizations said that if transactions like the one devised by Allergan continue unchecked, "brand name drug prices are sure to rise to the detriment of patients.

"And generic drug companies will be squeezed from the market, keeping affordable medicines from patients," the groups wrote in their letter. "Congress cannot allow this to stand."

The letter was signed by groups that represent top pharmacy benefit managers, payers, the generic drug industry and other segments of healthcare. Signatories were:  

  • Alliance of Community Health Plans;

  • America’s Health Insurance Plans;

  • American Academy of Family Physicians;

  • American College of Physicians;

  • American Hospital Association;

  • Association for Accessible Medicines;

  • BlueCross BlueShield Association;

  • Federation of American Hospitals;

  • Pharmaceutical Care Management Association; and

  • Public Sector HealthCare Roundtable.

In its controversial deal announced last month, Allergan said it would transfer Restasis patents to the Saint Regis Mohawk Tribe and license them back to defend against a type of patent challenge called an inter partes review (IPR) at the U.S. Patent and Trademark Office. Since the tribe is a sovereign nation, it can claim immunity from the reviews and has since filed for a Restasis challenge to be dropped. 

As part of the deal, Allergan agreed to pay the tribe $13.75 million up front and up to $15 million per year, small change compared to Restasis' $1.5 billion in sales last year. But the powerful healthcare organizations that came out against the deal on Tuesday see plenty wrong with the arrangement. 

Allergan's deal has been the subject of widespread criticism since it was announced, with senators calling for a probe, and House lawmakers actually starting one. Sen. Claire McCaskill, D-Mo., introduced a bill last week aimed at stopping the strategy, prompting a quick backlash from the tribe. 

In a statement to FiercePharma, a Saint Regis Mohawk Tribe spokesperson said the tribe is "outraged" at Sen. McCaskill's bill that "specifically targets Indian tribes, yet exempts state universities and other sovereign governments engaged in the very same IPR process."

Allergan has its own set of arguments relating to the situation. CEO Brent Saunders recently penned a Wall Street Journal op-ed outlining his perspective and wrote to lawmakers last week that they should focus on the IPR process. 

Saunders contends the current process "undermines the delicate balance of the 33-year-old Hatch-Waxman statutory regime" and that the reviews are imbalanced toward invalidating patents. Allergan and other pharma companies have pleaded with Congress to address their concerns for years, he said. In his op-ed, Saunders said "reverse patent trolls" are exploiting the system.

After Allergan announced the deal, Saunders told FiercePharma that the licensing strategy helps avoid a "double jeopardy" of patent challenges under a "flawed" system. Company officials have reiterated on several occasions that the deal won't affect a patent case awaiting a decision in Texas. Further, Saunders has said, Restasis patents allow the company to conduct future research and deliver on obligations to shareholders, employees, patients and doctors. 

But those arguments haven't won over the company's critics, who have used words such as "sleazy" to describe the deal. Some industry watchers believe it'll become the next large pharma controversy after a relatively quiet period for drugmakers.