Only days after Sen. Claire McCaskill, D-Mo., reached out to drug industry leadership with concerns over Allergan's tribal licensing deal, she's moving to shut down the "brazen loophole." The influential senator plans a bill aimed at stopping the practice before it spreads.
Specifically, Sen. McCaskill's bill stipulates that tribal sovereign immunity can't be applied to the inter partes review process at the U.S. Patent Trial and Appeal Board, according to a release from the senator's office. Tribal sovereignty is the exact argument the Saint Regis Mohawk Tribe used as part of its deal with Allergan to protect Restasis from an IPR challenge. Under the deal, Allergan paid $13.75 million up front and up to $15 million per year to transfer its Restasis patents and license them back.
"Any thinking person would look at what this company did and say, ‘That should be illegal,'" Sen. McCaskill said in a statement on Thursday. "Well, I agree. Congress never imagined tribes would allow themselves to be used by pharmaceutical companies to avoid challenges to patents, and this bill will shut the practice down before others follow suit.”
Responding to Thursday's development, 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."
"The double standard that is being introduced by the senator as a solution for a perceived abuse of the IPR proceedings does nothing to solve the underlying problem," SRMT's spokesperson said. "The Tribe's authority is inherent and has been reaffirmed through treaties and legislation from the earliest days of the country."
Allergan announced its licensing deal last month and has been working to defuse widespread negative feedback since. The company has maintained that its deal will have no effect on a separate Restasis patent trial that just wrapped up in Texas. CEO Brent Saunders has said it's a way to avoid a "double jeopardy" of patent attacks under a "flawed" system.
Along with other pharmaceutical companies, Allergan has asked Congress for years to overhaul the IPR process, company representatives have said. In defense of his company this week, Saunders wrote that the IPR process "undermines the delicate balance of the 33-year-old Hatch-Waxman statutory regime" and that the reviews are imbalanced toward invalidating patents.
Further, he argued, IPR reviews create an "an unnecessary and unfair burden on innovators of branded medicines by opening up patents to parallel and often inconsistently adjudicated challenges" at the PTO and in federal courts.
But those arguments haven't won over the company's critics. One writer called the deal "sleazy," and Sen. McCaskill this week urged PhRMA to distance itself from the practice. She noted that the industry group recently kicked out some members as it was fighting pricing scrutiny, adding that "strong action" in this case could discourage similar deals. Four senators called for an investigation and lawmakers in the House opened a probe.
For its part, a PhRMA representative reiterated industry's concerns with the IPR process. She said the current system 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."