Our patent system needs a complete overhaul, and it’s nowhere more urgent than with pharmaceuticals — especially when most of the R&D costs were covered by U.S. taxpayers:
The drugmaker Allergan announced Friday that it had transferred its patents on a best-selling eye drug to the Saint Regis Mohawk Tribe in upstate New York — an unusual gambit to protect the drug from a patent dispute.
Under the deal, which involves the dry-eye drug Restasis, Allergan will pay the tribe $13.75 million. In exchange, the tribe will claim sovereign immunity as grounds to dismiss a patent challenge through a unit of the United States Patent and Trademark Office. The tribe will lease the patents back to Allergan, and will receive $15 million in annual royalties as long as the patents remain valid.
The surprising legal move rippled quickly through the pharmaceutical world on Friday, setting off speculation about whether other drug companies would soon follow suit in order to protect their patents from challenges through a patent-review process that the industry despises.
If Allergan succeeds in holding onto its patents, “we will probably see multiple branded companies housing their patents with Indian tribes,” Ronny Gal, an analyst for Bernstein, said in a video message to investors on Friday.
For the Mohawk tribe, a community of 13,000 who live in a rural region on the border of New York State and Canada, the deal offers the promise of a new revenue stream that would bring in income beyond that of a casino the tribe runs near the reservation.