After five senators came out against the company's tribal licensing deal and Allergan CEO Brent Saunders took a chance to respond, the drugmaker's patent defense strategy is drawing even more attention in Congress. Now, lawmakers in the House are kicking off an investigation.
Members of the House Committee on Oversight and Government Reform wrote to Saunders on Tuesday asking for documents relating to the licensing deal by Oct. 16. A spokesperson told FiercePharma that Allergan will comply with the request, adding that the committee should focus on the inter partes review process rather than the company's deal.
Under the agreement with the Saint Regis Mohawk Tribe, Allergan is paying $13.75 million up front and up to $15 million per year to transfer Restasis patents and license them back. The deal is designed to protect against a type of patent challenge called an inter partes review at the U.S. Patent and Trademark Office. Because the tribe is a sovereign nation, it can claim immunity from the challenges and has since filed for a Restasis review to be dismissed.
But the arrangement has sparked widespread concern and criticism, even as some industry watchers thought it was genius. Now, representatives Trey Gowdy, R-S.C., Elijah Cummings, D-Md., Dennis Ross, R-Fla., and Peter Welch, D-Vt., have written to Saunders that they're worried the deal could impact the generic drugs landscape industrywide. The lawmakers requested correspondence between the drugmaker and tribe, market share analyses, Restasis sales figures and more.
In defense of his company, Saunders wrote on Tuesday that the IPR process badly needs changes and that the pharmaceutical industry has asked Congress for years to address its problems. He previously told FiercePharma the company entered the licensing deal to avoid a "double jeopardy" of patent challenges under a "flawed" system.
Allergan just recently wrapped up a separate challenge to its Restasis patents in federal court in Texas, and company officials have stressed that the tribal licensing agreement won't have any effect on that case.
Further, Saunders said, Restasis patents give Allergan the financial ability to conduct future research and deliver on obligations to shareholders, employees, patients and doctors. Restasis generated $1.5 billion in sales last year for the company. In a Wednesday statement, Allergan said it would be happy to sit down with members of Congress and their staffs to discuss the subject.
"This is an important discussion that needs to be had to ensure we are protecting innovation in the United States,” a spokesperson said via email.
Saunders' letter came a day after Sen. Claire McCaskill, D-Mo., became the latest senator to question the deal. The influential senator wrote to Stephen Ubl, head of industry group PhRMA, urging his group to review the deal. She pointed out that the group has previously tweaked its membership policies and said "strong action" in this case could discourage similar deals. Before Sen. McCaskill, four other senators called for a probe.
In response to Sen. McCaskill's concerns, a PhRMA spokesperson told FiercePharma that the threat of IPR reviews, "coupled with having to defend patents in multiple venues under different standards, creates significant business uncertainty for biopharmaceutical companies that rely on the assurance of their patents to justify long-term investments needed to discover new treatments and cures."
The industry group is pushing for "reforms to the IPR process that better protect the rights of legitimate patent holders and will foster innovation," PhRMA's statement continued.
Editor's note: This story was updated with a statement from Allergan.