Senators jump on Allergan's 'blatantly anti-competitive' Restasis licensing deal

Sen. Maggie Hassan and three other senators are calling for a probe into Allergan's patent deal on Restasis. (Tim Pierce)

It didn't take long for Congress to push back at Allergan's first-of-a-kind patent deal with the Saint Regis Mohawk Tribe. Four senators are demanding an investigation, alleging the move to protect Restasis is another example of pharma "putting profits before patients." 

In a letter to Senate Judiciary Committee Chairman Sen. Chuck Grassley, R-Iowa, and Ranking Member Sen. Dianne Feinstein, D-Calif., Democratic Sens. Maggie Hassan of New Hampshire, Bob Casey of Pennsylvania, Sherrod Brown of Ohio and Richard Blumenthal of Connecticut called Allergan's deal "blatantly anti-competitive." They're urging the committee leaders to probe the deal's implications for competition and drug costs. 

Allergan signed its licensing agreement with the Saint Regis Mohawk Tribe earlier this month, agreeing to transfer Restasis patents to the tribe and license them back for $13.75 million up front and up to $15 million per year. Because the tribe is a sovereign nation, it can claim immunity from a type of patent challenge called an inter partes review. Critics blasted the arrangement, while some industry watchers thought it was genius. Saint Regis has since filed a motion to dismiss the patent review.

In a statement, an Allergan representative said the senators should focus on the inter partes review process "and its negative impact on life science innovation" rather than the deal. The company said it welcomes the chance to sit down and go over the issues with the senators and their staffs. 

"As the Senators are well aware, experts across the legal, biopharmaceutical and business communities have called on Congress to fix the issues inherent within IPR," an Allergan spokesperson said via email. "Congress has failed to act to protect innovation, and the matter is now before the United States Supreme Court." 

Shortly after signing the deal, Allergan CEO Brent Saunders told FiercePharma the company executed the license so it can focus on a separate Restasis patent dispute in federal court. He likened the current patent challenge landscape to "double jeopardy" under a "flawed" system. 

Further, Saunders said, Restasis patents that stretch into 2024 provide Allergan the financial ability to conduct future research and deliver on obligations to shareholders, employees, patients and doctors. Restasis generated $1.6 billion in sales last year for Allergan. 

But Saunders is the same CEO who talked up the concept of pharma's "social contract" a year ago when he pledged to limit price increases. Despite what critics have said about the tribal deal, he maintains the arrangement fits into that social contract. 

Generics maker Mylan, which filed the IPR challenge, hit back at the deal in a legal filing, calling the strategy “desperate” and a “last minute attempt to shield the patents-in-suit from inevitable cancellation.” Critics swarmed on social media, and many industry watchers felt the deal was troubling. 

Bloomberg View writer Joe Nocera called the setup “sleazy,” “sneaky, unscrupulous and just plain wrong.” David Mitchell, founder of Patients for Affordable Drugs, urged industry groups PhRMA and BIO to disavow the "legal dodge." Many in the industry thought it might become the next pharma controversy after a relatively quiet period. 

Despite the inevitable challenges, Allergan Chief Legal Officer Bob Bailey said earlier this month he believes his company will prevail. 

The call for an investigation follows a likely plot for pharma controversies that generally fizzle out after some time. For price hikes and other actions, Mylan, Valeant, Turing and more have been called to answer to lawmakers in recent years. But on pricing, Congress seems to have quieted lately despite their at times heavy criticism of the drug industry.