U.S. senator slams Allergan patent deal with Native-American tribe

(Reuters) - U.S. Senator Sherrod Brown said on Friday a deal that drugmaker Allergan Plc made with a Native-American tribe to shield patents “rips off consumers” and cannot “become the new normal.”

The Ohio Democrat said he will look at how Congress can “close loopholes that drug companies exploit to avoid competition.”

Brown’s staff has requested a meeting with Allergan representatives to press them about the transaction.

Allergan said it has reached out to Brown’s office “to provide the facts and context around this agreement with the Saint Regis Mohawk Tribe.”

Allergan said on Sept. 8 it will transfer patents relating to its dry-eye medicine Restasis to the Saint Regis Mohawk Tribe, which will exclusively license them back to the company in exchange for ongoing payments.

Allergan said the tribe’s sovereign status puts the patents beyond the authority of the Patent Trial and Appeal Board, an administrative court created in 2011 that can cancel patents.

Companies like Allergan that sell brand-name prescription drugs typically hold several patents that cover the technology behind their medicines.

Rivals need to wait until the patents expire to launch lower-cost generic versions unless they win a court ruling that the patents should not have been granted in the first place.

Generic drug companies frequently challenge patents through lawsuits at the patent board, a cheaper and faster alternative to litigation in federal court.

Legal experts said if Allergan’s strategy is widely copied, generic drug companies will lose access to an effective venue for these patent disputes and brand-name drug companies will have an easier time preserving their monopolies on various medicines.

Allergan has said the maneuver is only intended to shield the company’s Restasis patents from review at the patent board and would not affect patent challenges filed in federal court.

“We have clearly stated that this agreement with the Tribe has no impact on the pending patent litigations regarding the Restasis patent family which recently completed a five-day trial in Federal District Court in Marshall, Texas,” Allergan said in a statement.

Allergan Chief Executive Officer Brenton Saunders told Reuters on Monday the patent board is a flawed court and that Congress did not intend for it to be a major forum for pharmaceutical patent disputes.

Brown objected last year to Allergan’s proposed merger with Pfizer Inc, through which Pfizer would have slashed its tax bill by redomiciling to Ireland where Allergan is registered.

Brown has also worked on legislation that would lower drug prices and increase access to cheaper “biologic” copies of certain prescription drugs.