Companies Should Pursue Innovation for Drugs, Not Loopholes

Big Pharma’s creativity is impressive, but unfortunately it often doesn’t help consumers. Sometime big drug companies create helpful new drugs, but their creativity more often take the form of finding new loopholes and legal devices to stifle competition and keep inexpensive generic drugs off the market.

We recently wrote about the drug company Allergan’s latest attempt to block affordable access—transferring the patents for the dry eye medicine Restasis to the St. Regis Mohawk tribe, and paying them $13.75 million in return for the tribe’s claiming sovereign immunity as grounds to dismiss the patent challenge through the Patent and Trademark Office. They will lease the patents back to Allergan, and Allergan will give them $15 million in royalties per year as long as the patents remain valid. It’s an appalling attempt to extend the patents for the drugs beyond the normal time span, to block generic competition, and to ensure the company can continue to reap enormous profits.

Now news comes that the tribe has asked the Patent Trial and Appeal Board to throw out a case seeking to invalidate their patents on the grounds that the Board has no jurisdiction over them. In their filing, the Mohawk tribe argued that since they are a sovereign government, it has immunity from litigation in administrative courts until the tribe specifically waives its immunity or Congress abrogates it.

Occasionally drug companies can be innovative and develop new medicines. But more often they exploit loopholes and twist regulations to keep prices high and stop generic drugs. What Allergan has done is beyond the pale and has no connection to innovation at all. They are attempting to make themselves beyond the patent laws. Companies also copy successful practices, especially ones that are very profitable. If this new practice goes unchallenged, other companies will adopt similar strategies and generic drug access would be greatly stymied.

The Board should not throw out the case against the patents but should allow it to go forward. And courts should not allow these abuses to stand, and recognize that the transfer of Restasis is anticompetitive because it perfects Allergan’s monopoly power. Companies should innovate by developing affordable new drugs, not by developing new means of evasion so they can engage in price gouging.