Allergan CEO Saunders defends Restasis deal by calling for review of patent challenge process

One day after Allergan's tribal licensing deal on Restasis drew attention from a powerful senator, the drugmaker sought to further justify its agreement by attacking the patent review system. In a Tuesday letter to leadership of the Senate Judiciary Committee, Allergan CEO Brent Saunders took a chance to respond to widespread criticism.

In his letter (PDF) to Sens. Chuck Grassley and Dianne Feinstein, Saunders laid out a case that the inter partes review (IPR) system is gravely in need of changes. He called on lawmakers to "rectify its infirmities and protect the innovation that is the lifeblood of the biopharmaceutical industry and the U.S. economy." He said the pharmaceutical industry has for years pushed for an overhaul of the controversial patent review system, and that Allergan is far from alone with its complaints.

But Saunders' letter came as a fifth senator came out against the deal, challenging industry group PhRMA over the tactic and calling on the broader industry to separate itself from making similar moves. 

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Allergan entered its licensing agreement with the Saint Regis Mohawk Tribe last 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 deal, while some industry watchers thought it was genius. Saint Regis has filed a motion to dismiss the patent review. Some critics have called the deal "sleazy" and said it'll be pharma's next "black eye" after a relatively quiet period, while four Senators called for a Congressional probe last week.

In defense of his company and in criticism of the review process, Saunders says there are three key problems with the IPR setup. One, he says, is that it "undermines the delicate balance of the 33-year-old Hatch-Waxman statutory regime." Further, the helmsman says, the reviews are imbalanced toward invalidating patents and create an "an unnecessary and unfair burden on innovators of branded medicines by opening up patents to parallel and often inconsistently adjudicated challenges before both federal courts and the Patent Trial and Appeal Board."

The company's patent deal has no effect on a just-finished patent trial in Texas, he added. A decision on that case could end up bringing early Restasis generics.

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

Saunders' letter followed a Monday correspondence from Sen. Claire McCaskill, who put industry trade group PhRMA on the spot by asking it to publicly say whether the deal meets the smell test of its new guidelines of how its members should behave. Sen. Claire McCaskill reached out to Steve Ubl, president and CEO of PhRMA, urging his group to review whether Allergan's move to protect Restasis from an inter partes review is "consistent with the mission of your organization."

In her letter (PDF), Sen. McCaskill noted that the group previously tweaked membership policies to boot some members as pharma was defending itself against a pricing firestorm. She added that "strong action" by PhRMA in this case could dissuade similar deals.

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. PhRMA continues to support reforms to the IPR process that better protect the rights of legitimate patent holders and will foster innovation."

In an interview last month, Saunders said Allergan did the deal to avoid a "double jeopardy" of Restasis patent attacks under a "flawed" system. Saunders added that the company's Restasis patents provide 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. 

Adding another wrinkle to the issue is that Saunders is the same pharma CEO who talked up the industry's "social contract" in a blog post committing to limit price increases last year. That decision sparked a wave of commitments from other drugmakers, but more recently critics said the recent Restasis deal doesn't align with that message. Saunders maintained that it does in fact fit with that commitment.