A federal judge in Texas refuted four key patents for the dry-eye treatment Restasis inflicting a blow to its manufacturer Allergan which had solicited to safeguard its patents by shifting them to a Native American tribe.
Allergan said it was disappointed and plans an appeal of the ruling, which would enable the generic drug companies to sell their own versions of Restasis.
Wells Fargo analyst David Maris said he believes the ruling had largely already been priced into the company's shares, since Allergan's market value has dropped around $9 billion since early September due in part to worries about the Restasis patents. 8,633,162 and 8,642,556, are listed in the Orange Book for Restasis and expire on August 27, 2024.
The federal judge, William Bryson, expressed concerns about the legitimacy of the tribal transfer, calling it a ploy by Allergan to "rent" the tribe's sovereign immunity.
She noted the ruling comes after weeks of criticism on Capitol Hill, where politicians have slammed Allergan's move as a sham, with one USA senator introducing a bill to ban attempts to take advantage of tribal sovereignty. "Because that is in essence is [sic] what the agreement between Allergan and the Tribe does, the Court has serious reservations about whether the contract between Allergan and the Tribe should be recognised as valid, rather than being held void as being contrary to public policy". None of the generic versions have been approved by the Food and Drug Administration, but Mylan CEO Heather Bresch welcomed the decision.
It said that Allergan had "invoked the benefits of the patent system", but refused to accept the limitations of those benefits.
But after Bryson's ruling, other patent owners will be less likely to transfer such patents to tribes to shield them from review, said Rachel Sachs, a professor of patent law at Washington University in St. Louis. The measure was aimed to ward off a patent challenge different from the federal court case - that is underway in an administrative proceeding before a unit of the United States Patent and Trademark Office.
Bryson's decision "will make patent owners question the arrangement, but I don't know if the ruling will prevent it entirely", Landau said. Allergan's stock lost nearly 4% in value after the ruling became public.