Court rejects Allergan's tribal licensing strategy, striking another blow to its Restasis generics defense

Gavel court room lawsuit judge
A federal appeals court rejected Allergan's attempt to apply sovereign immunity to patent reviews. (Pixabay)

Allergan faced intense criticism over its attempt to protect Restasis patents through sovereign immunity, and now an appeals court has ruled the strategy won't fly.

The U.S. Court of Appeals for the Federal Circuit decided that inter partes reviews at the U.S. Patent and Trademark office—which Allergan tried to sidestep with its controversial licensing deal—are "more like a agency enforcement action than a civil suit brought by a private party, and we conclude that tribal immunity is not implicated."

A representative for Allergan declined to comment. A spokesman for the Saint Regis Mohawk Tribe said the tribe is "very disappointed in the ruling" and that it "fundamentally" disagrees with that stance. The tribe is reviewing the decision and consulting with its attorneys, he said.

Mylan hit back at the approach in court, and after the ruling, CEO Heather Bresch said in a statement the decision is a "victory in our ongoing efforts to stop patent abuses by brand companies and to help drive access to more affordable medicine."  

Already in the Restasis saga, a federal court has struck down the drug's patents in a case brought by Mylan and other drugmakers. More recently, the Patent Trial and Appeals Board ruled that it could proceed with its inter partes reviews despite the licensing deal. The appeals court in March put that process on hold while it could review the case. 

In a Monday note, Bernstein analyst Ronny Gal said the decision is "another nail in the Restasis IP coffin." He said a generic launch is possible this week or next. Restasis generated $1.41 billion last year in the U.S. 

Allergan entered its Restasis tribal licensing deal in September 2017, seeking to apply sovereign immunity to shield the profitable eye drug from reviews at the U.S. Patent Trial and Appeal Board. The strategy generated instant criticism from industry watchers and members of Congress.

Part of the reason Allergan executives said they entered the deal was a "flawed" patent review system that forces drugmakers to defend their intellectual property at the PTAB and in federal courts. Allergan CEO Brent Saunders called the system a "double jeopardy." Branded drugmakers have voiced concerns about the IPR process for years, but the Supreme Court ruled in April that the reviews are constitutional. 

Allergan executives have previously predicted Restasis will face generic competition between April this year and July.  

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