- A federal district court judge on Monday invalidated four patents protecting Allergan plc's dry eye drug Restasis, likely clearing the way for earlier entry of generic copies to the blockbuster product.
- The decision, which sent shares in Allergan down by more than 6% at one point Monday afternoon, largely undercuts a controversial attempt by the Ireland-based pharma to shield Restasis from a different type of patent challenge through an unusual deal with the St. Regis Mohawk Tribe.
- Sales of Restasis totaled nearly $1.5 billion last year, second only to Allergan's Botox franchise. While the company emphasized in a statement that no proposed generics have been approved to date, analysts now expect competition as soon as late 2018 or early 2019.
Blowback against Allergan's deal with the Mohawk Tribe has been both swift and fierce. Congressional lawmakers on both sides of the aisle have piled on the company, with some calling for an investigation into the agreement and others demanding more details on the agreement.
Democratic Senator Clair McCaskill of Missouri even introduced legislation that would block companies from attempting to follow in Allergan's footsteps, while writing PhRMA to review whether the deal was consistent with its values.
And since Allergan announced it would transfer its Restasis patents to the Tribe to dodge an upcoming inter partes review, shares in the company have fallen more than 15% in value. While the deal doesn't account for that drop by itself, it has dented the carefully crafted corporate image honed by CEO Brent Saunders.
Yet it looks like generic competitors will soon be inbound to eat away at Restasis sales anyway after Monday's decision by Judge William C. Bryson.
Bryson, presiding over U.S. District Court for the Eastern District of Texas Marshall Division, invalidated the Restasis patents for obviousness — dismissing Allergan's argument that a new formulation was more effective than could have been expected from previously patented inventions.
Bryson ruled in favor of Teva Pharmaceuticals USA Inc., Akorn Inc. and two corporate entities of the Dutch generic drugmaker Mylan N.V., which collectively argued the patents at question were invalid.
Allergan's deal with the Mohawk Tribe, which transferred ownership of the patents to the Tribe, was aimed at defeating a different kind of patent challenge called inter partes review from which Indian tribes have sovereign immunity against.
Established through the 2011 America Invents Act, IPR was set up as a method to challenging a patent's validity through an administrative process run by the U.S. Patent Trial and Appeal Board. While the law was aimed at defeating so-called "patent trolls," Saunders and Allergan argue the IPR process undermines the legitimacy of patents as well as the cornerstone Hatch-Waxman Act.
Judge Bryson's ruling did not directly cover Allergan's deal with the Mohawk Tribe, but the judge issued a separate order criticizing the arrangement as a "ploy."
"What Allergan seeks is the right to continue to enjoy the considerable benefits of the U.S. patent system without accepting the limits that Congress has placed on those benefits," Bryson wrote in the order, according to a report from Reuters.
Allergan said it was disappointed by the decision and that it would consider all options as it reviews the ruling. Shares in the drugmaker closed down 3.5%.