Sixteen months ago the drug company Allergan sold the patent rights for Restasis, its popular prescription eyedrops, to the Saint Regis Mohawk Tribe, so the tribe could fend off challenges by makers of low-cost generic drugs. This month, Allergan doubled down on this strategy of patent abuse, asking the Supreme Court to rule that the tribe's sovereign immunity blocks generic competition.
A little bit of background: in September 2017 Allergan transferred patents for the eye drug to the Saint Regis Mohawk Tribe; they agreed to pay the tribe $13.75 million and an additional $15 million per year in royalties as long as the patents stayed valid. In exchange, the tribe gave Allergan the "sole and exclusive" right to manufacture and market the drug. Restasis is a very profitable drug, with sales of $1.5 billion in 2017, and a month's supply of the drug costs about $657. Allergan claimed it was protecting its patent rights, but in reality the company is trying to maximize its profits and prevent cheaper generic drugs from coming to market.
Consumer advocates, professors, and judges are appalled. Judge William Bryson of the United States Court of Appeals for the Federal Circuit found that four of Restasis's patents were invalid and wrote that Allergan was trying to rent the tribe's sovereign immunity to block competition. The Trump administration opposes this maneuver as well, and Democratic Representative Jerrold Nadler and Republican Senator Tom Cotton both condemned Allergan's tactic. Senator Cotton has even drafted a bill to prevent Native American tribes from using sovereign immunity to block the review of patents.
But Allergan is not backing down, and the Saint Regis Mohawk Tribe has joined them, defending its deal with the company. The patent appeal board and the Court of Appeals for the Federal Circuit both rejected these arguments and ruled that this tactic is a sham effort to preserve patent monopolies and block cheaper generic drugs. Allergan and the tribe are asking the Supreme Court to take the case and rule that the tribe can assert sovereign immunity in its proceedings at the Patent and Trademark Office.
The Supreme Court should not oblige them. This tactic is a transparent attempt to preserve Allegan's patent monopoly and block generic competition. If this behavior is permitted, other brand drug companies will likely follow suit, and many drugs would be 'rented' to Native American tribes in an attempt to thwart generic rivals. The results? Drug prices, already too high, will rise even higher, and the generic drug market (one of the few areas of our drug pricing system that works well) will be harmed. Patients will have to pay higher prices for prescription drugs.
As the Justice Department says, "In no real-world sense do these patents belong to the Saint Regis Mohawk Tribe." The Court should reject this attempt to game the system.