Bad Medicine
September 11, 2017 10:46 AM   Subscribe

Allergan, maker of eye drug Restasis, tries to sidestep a patent challenge by transferring the drug's patent rights to the St. Regis Mohawk Indian Nation, under the theory that the tribe's sovereign immunity will prevent the patent from being invalidated. An expert wonders if this will open a new chapter in IP law where "“The validity of your patents is subject to review, unless you pay off some Indian tribe”.
posted by w0mbat (40 comments total) 11 users marked this as a favorite
 
That sound I just heard was a thousand mefites smacking their heads all at once.

Of course, we have legislative bodies that can change the law. If they want to.
posted by Melismata at 11:12 AM on September 11


"Pay off" implies that there's something inherently improper about this. A gaming-the-system motive is the rule, not the exception, in patent sale-and-license-back transactions. Recognized tribes's property's immunity from some applications of federal law goes back hundreds of years and is used by tribes for their economic benefit constantly. If it's a problem, Congress can freely prohibit a non-tribal entity from selling or licensing patents from a tribe in this manner, or subject to the sales or royalties to taxes that have the same effect.
posted by MattD at 11:12 AM on September 11 [4 favorites]


Oh, capitalism, you're such a scamp! [sitcom jingle]
posted by tonycpsu at 11:13 AM on September 11 [11 favorites]


I'm all for it. Sure, it seems kind of weird, but if craven drug companies end up thinking it's a good idea to give native tribes $13 million annually as essentially a legal fee, that seems like an unalloyed good. We're unfortunately not likely to see actual reparations any time soon, so this is fine with me.

But of course just wait – American capitalism will be screaming about how utterly wrong it is for them to have to give money to tribes, and how wrong it is that tribes have this power, within the week, if they haven't started already. And the first option will of course be to strip tribal power, rather than limit drug companies.
posted by koeselitz at 11:18 AM on September 11 [9 favorites]


> "Pay off" implies that there's something inherently improper about this. A gaming-the-system motive is the rule, not the exception, in patent sale-and-license-back transactions.

"Everyone else does it" is not an answer to an allegation that something is improper.

> If it's a problem, Congress can freely prohibit a non-tribal entity from selling or licensing patents from a tribe in this manner, or subject to the sales or royalties to taxes that have the same effect.

Whether or not something is a problem has no relationship to what Congress does about it. There are serious problems that Congress cannot or will not solve. The reaction (or lack thereof) to something is not the sole factor in whether we are allowed to view it as problematic.
posted by tonycpsu at 11:18 AM on September 11 [8 favorites]


I don't blame the St. Regis Mohawk for a second for finding an unusual way to make money when 20% of the people on their reservation are living in poverty, but happily their counterparty here is an incredibly scummy drug company, so it's pretty obvious who the bad actor is here. The gross way this commodifies tribal sovereignty and turns a bunch of people in desperate straits into a prop to extend your monopoly rights is bad enough, but stuff like this is also corrosive to the entire rule of law in this country. We make fun of sovereign citizens because they seem to think they can yell "admiralty flag" or "I am Ronald of the family McDonald" as if they're incantations that will magically cause the legal system to stop working despite all evidence to the contrary and the whole thing not making any sense. I guess if you're Allergan and you say the correct magical spell in front of the correct people, though, it suddenly does work, and you can get completely counterintuitive, stupid, and evil results for just a small fee (relative to your revenues).
posted by Copronymus at 11:19 AM on September 11 [26 favorites]


"Pay off" implies that there's something inherently improper about this.

Recognized tribes's property's immunity from some applications of federal law goes back hundreds of years and is used by tribes for their economic benefit constantly. If it's a problem, Congress can freely prohibit a non-tribal entity from selling or licensing patents from a tribe in this manner, or subject to the sales or royalties to taxes that have the same effect.


As the child of someone who is on the roll of a federally recognized tribe I have to say that it's important to tread lightly here. I've mentioned something similar before, insofar as to say that just because a tribe's legal/sovereign status allows for this or that action it doesn't mean that it's a wise or prudent choice. Nor am I saying that tribes should be held to higher standards by outsiders for any sort of woo or, honestly, racist reasons. I am saying that treading carefully has to be part of the balancing act for tribes lest they lose their soul at the cost of their existence. It's a Catch-22 that's really, really hard to solve.

I guess what I'm saying is that I hope you aren't trying to justify shitty actions JUST BECAUSE one of the actors here, in this case the tribe, has been subject to shitty actions in the past. I have no idea if this particular thing is shitty or not, but knowing what I know about patent law and pharmaceutical companies and how they operate here in the US I'm very hesitant to view this as a good or safe move by a federally recognized tribal entity.
posted by RolandOfEld at 11:24 AM on September 11 [18 favorites]


I also should add that I'm mostly not all that thrilled about anything that causes Congress to get involved in new and interesting ways with Tribal sov and legal affairs. Shit has a history of not working out well for the tribes or the members, ya'know. So the idea that this, if it is indeed problematic, will somehow magically sort itself out in Congress is just... well, almost abhorrent to speak of.

*goes outside to spit*
posted by RolandOfEld at 11:26 AM on September 11 [22 favorites]


One would think, after the Shkreli debacle, that pharma companies would be a little more conservative with regards to their technically-legal-but-sideeye-inducing legal maneuvers. As TFA mentions, this could backfire on the entire industry by attracting a lot of attention to the drugmakers business practices just in time for the mid-term elections, and during a period when the dominant party is fucking desperate to find something to talk about that's not horrendously controversial.

But even setting aside Congress, Shkreli found out on an individual level that thumbing your nose at society works, right up until society decides to grab that thumb and twist it behind your back until you scream a little. Allergan seems prepared to try the same thing with the IP law system, and the USPTO in particular. As much as big government bureaucracies appear faceless, they are fundamentally made up of people, who even in very regimented jobs often have certain amounts of discretion. Their entire business is essentially dependent on the USPTO. Do they really want every one of their filings to get mysteriously delayed? I suspect there are other products that could potentially be subject to IPR — are they prepared to do sale-and-leaseback transactions to their entire portfolio? I guess that would work out well for the Mohawk nation, but it seems like a questionable bit of business strategy.

Hey, I'm glad they tried it, though. In the short run the Mohawks will get some money, which is probably better than it just going to Allergan. And in the long run it will keep people focused on how fucked-up the entire pharma industry is, and the giant burden that it puts on Americans compared to the rest of the world in order to keep those companies living high on the hog. The more they act like the parasitic slugs they are, the faster we'll get around to pouring some salt on them.
posted by Kadin2048 at 11:31 AM on September 11 [4 favorites]


I'm all for it. Sure, it seems kind of weird, but if craven drug companies end up thinking it's a good idea to give native tribes $13 million annually as essentially a legal fee, that seems like an unalloyed good. We're unfortunately not likely to see actual reparations any time soon, so this is fine with me.

I'll stop here lest I suck all the air out of the room but if, hypothetically, a tribe was involved in schemes to prop up drug prices for medicines that would cure childhood blindness, solve the common cold, banish leukemia to the nether regions of history, or, hell, nearly anything short of helping men keep their erections harder for longer... if a tribe was involved in something like that, even if every penny went to the poorest among their number, that'd be against nearly everything I imagine when I think of tribal values and principals which considers everyone and their environments as worthy of respect and care and decency.

Unalloyed good? Fuck no.
posted by RolandOfEld at 11:31 AM on September 11 [17 favorites]


Sure, it seems kind of weird, but if craven drug companies end up thinking it's a good idea to give native tribes $13 million annually as essentially a legal fee, that seems like an unalloyed good.

I mean, a big drug company doesn't just pay $13 million expecting nothing in return. The benefit they get is the ability to maintain patents on drugs that would otherwise be struck down for vagueness or prior art. And the obvious goal is to continue abusing their artificial monopoly to overcharge patients. (Presumably to the detriment of a much larger number of people than the 3,288 who are getting paid off.)

So no, it actually seems like there's some alloying going on here after all.
posted by teraflop at 11:33 AM on September 11 [10 favorites]


There's also the potential for this to spread to other things companies get sued for. Matt Levine points out that it's already been used by payday lenders, and if this Allergan thing works, who knows what the limits could be. Maybe everything a corporation does is legal and liability-free as long as they work out a deal with a tribe with sovereign immunity before they do it.
posted by Copronymus at 11:35 AM on September 11 [3 favorites]


RolandOfEld: “I'll stop here lest I suck all the air out of the room but if, hypothetically, a tribe was involved in schemes to prop up drug prices for medicines that would cure childhood blindness, irritate the common cold, banish leukemia to the nether regions of history, or, hell, nearly anything short of helping men keep their erections harder for longer... if a tribe was involved in something like that, even if every penny went to the poorest among their number, that'd be against nearly everything I imagine when I think of tribal values and principals which values everyone and their environments as worthy of respect and care and decency. Unalloyed good? Fuck no.”

Agreed completely. My initial reaction was one of frustration at how awful the tribes are generally treated, particularly in my home state of New Mexico, and at how people see tribal sovereignty as some sort of dumb legal complication or loophole rather than an essential part of the landscape. And I believe reparations are absolutely necessary. But you're right; "unalloyed good" is an outsider's perspective, and not a particularly nuanced one.
posted by koeselitz at 11:36 AM on September 11 [4 favorites]


I'm curious about the contract and lease terms Allergan signed with the St. Regis Mohawk Indian Nation. Is it under tribal law? Could the tribe renege on the deal and lease the patent to the highest bidder next year? Alternately, if it's under ordinary US law, is that some avenue to prove that the patent is not really under tribal jurisdiction?
posted by Nelson at 11:42 AM on September 11 [2 favorites]


Given $13 million, the fee paid to the tribes, what percentage is that of the gross revenue associated with the patent in question?

Would it be less shameful of an action if it was 20% instead of, likely, 0.01%?
posted by crysflame at 11:49 AM on September 11 [1 favorite]


The pharmaceutical companies really are complete bastards, aren't they?
posted by Anticipation Of A New Lover's Arrival, The at 12:06 PM on September 11 [5 favorites]


I'm curious about the contract and lease terms Allergan signed with the St. Regis Mohawk Indian Nation. Is it under tribal law? Could the tribe renege on the deal and lease the patent to the highest bidder next year? Alternately, if it's under ordinary US law, is that some avenue to prove that the patent is not really under tribal jurisdiction?

It's not a question of jurisdiction (it's a U.S. patent so U.S. jurisdiction is where actions are occurring) - sovereign immunity means a nation state (tribes being recognized federally as domestic nations) cannot be sued except where it has allowed itself to be. The patents have been transferred from a private corporation and are now owned by a state, ergo the logic is the suits are now against a nation state and therefore unable to continue.

My guess is the contract is pretty iron-clad on the licensure and the patents would revert to Allergan if the contact is breached.
posted by notorious medium at 12:08 PM on September 11


My guess is the contract is pretty iron-clad on the licensure and the patents would revert to Allergan if the contact is breached.

Dang. There goes my hope the tribe would take the money for a year then release the patent to the public for free.
posted by gusottertrout at 12:12 PM on September 11 [3 favorites]


NYT has dome additional info in their description.
posted by mark k at 12:13 PM on September 11


I'd need to read further into this, but this seems a little odd to me, in that commercial activity is one of the built-in exceptions to the Foreign Sovereign Immunity Act. But probably the general news coverage just isn't being technical enough.
posted by praemunire at 12:22 PM on September 11


Forty thousand patent trolls just fired up skype...
posted by Ogre Lawless at 12:29 PM on September 11


I don't blame the St. Regis Mohawk for a second for finding an unusual way to make money when 20% of the people on their reservation are living in poverty, but happily their counterparty here is an incredibly scummy drug company, so it's pretty obvious who the bad actor is here. The gross way this commodifies tribal sovereignty and turns a bunch of people in desperate straits into a prop to extend your monopoly rights is bad enough, but stuff like this is also corrosive to the entire rule of law in this country.

I don't know if this enters into your calculation of who the bad actor is, but according to the Bloomberg story the link in this post is commenting on, it was the St. Regis Mohawks who came up with the idea. Allergan said it had been approached by the tribe with what it called a “sophisticated opportunity to strengthen the defense” of Restatis’s patents, which have been challenged under a process called inter partes review, or IPR.

So if it's a gross commodification of tribal sovereignty, it's one the tribe's leadership is not only willing to accept but eager to exploit. And if it turns desperate people into props, once again it's not the evil corporation that suggested they should be used that way.
posted by layceepee at 12:29 PM on September 11


Allergan's behavior related to Restasis has been problematic from the very beginning.
posted by TedW at 12:31 PM on September 11 [2 favorites]


So if it's a gross commodification of tribal sovereignty, it's one the tribe's leadership is not only willing to accept but eager to exploit. And if it turns desperate people into props, once again it's not the evil corporation that suggested they should be used that way.

That bit is directly from Allergan's corporate press release - aka, not a statement of fact. It would not be unprecedented for two parties to "agree" on a presentation of facts that is not in fact exactly how things went down.
posted by notorious medium at 12:33 PM on September 11 [1 favorite]


The pharmaceutical companies really are complete bastards, aren't they?

Just to put this fully in perspective, Restasis, an ophthalmic formulation of a literally ancient medicine, cyclosporine, retails for $541 for 15 mL. The medical indication for this far more precious than gold miracle substance? "Dry eyes."

And medical insurance sometimes pays for this nonsense. And the brilliant people at Allergan are now exploiting a loop hole to protect this. I really worry about the precedent this might set for things like HIV and Hep C meds when they go off patent.

For anyone not in healthcare, this is but one example of the monumentally evil system someone who needs medical care to actually function affordably faces.
posted by Slarty Bartfast at 12:35 PM on September 11 [9 favorites]


I really worry about the precedent this might set for things like HIV and Hep C meds when they go off patent.

To be fair, this has nothing to do with things going off patent.

Drug patents expire in the US. This is to defend against a challenge during the patent period (current patent for Restasis expires in 2024) and from what I've read, the licensure agreement is only until that point.
posted by notorious medium at 12:37 PM on September 11 [2 favorites]


That's not to say there aren't people who "need" Restasis, but it is a drug that is heavily marketed to consumers and most people getting prescriptions don't lack tears, most are people who walk in to their primary care doctor's office and say "my eyes feel dry sometimes, is Restasis right for me?" And the doctor says "well sure, I've got 5 minutes to spend with you, let me just write you out a prescription with this nice Allergan pen the drug rep gave me."
posted by Slarty Bartfast at 12:39 PM on September 11 [4 favorites]


To be fair, this has nothing to do with things going off patent.

It's also to make it easier to defend when Restasis goes off patent and Allergan can come out with new and improved! Restasis XR.
posted by Slarty Bartfast at 12:41 PM on September 11


While this has nothing to do with drugs once they go off-patent, the general concern does have merit, in the sense that this maneuver is very deliberately designed to counter an effort, passed by Congress, which attempted to make it easier to bring prior-art challenges against bad patents. (In effect, an anti-"patent troll" / make-patents-less-terrible thing.) So yeah, there's reason to be somewhat concerned that someone could sneak a patent through, and then use this as a way to prevent it from being thrown out for prior art in an IPR.

I think it has potentially more impact on tech patents, where it's easier to sneak a patent through the system (at least, in my experience) than pharma patents, but perhaps that's just because I'm not familiar enough with the latter's territory, and if I was I'd think that just as many trivial patents got through.
posted by Kadin2048 at 12:43 PM on September 11 [2 favorites]


a literally ancient medicine

Thus why they have a bug-eyed skellington in all the Restasis ads. I assume the medicine is formulated from wipings taken from the coins placed over dead people's eyes.
posted by robocop is bleeding at 12:43 PM on September 11


i mean laugh it up all you want but chronic dry eye is fucking agonizing and my insurance won't cover restasis bc they think i can just use some otc shit that i've been using daily for years and has done absolutely nothing of note.
posted by poffin boffin at 12:45 PM on September 11 [7 favorites]


More about how Allergan ripped off the University of Georgia (where Restasis was invented) and in the process screwed Renee Kaswan (the professor who invented it) out of millions of dollars can be found here.
posted by TedW at 12:46 PM on September 11 [8 favorites]


And in the long run it will keep people focused on how fucked-up the entire pharma industry is

Or, as the oft-repeated talismanic incantation goes, “surely, this!”
posted by acb at 12:53 PM on September 11 [3 favorites]


Given $13 million, the fee paid to the tribes, what percentage is that of the gross revenue associated with the patent in question?

From this Bloomberg link, it appears that Allergan saw $1.49B in sales last year, so $15M would be approximately 1% royalty on net sales, which is not uncommon for licensing deals of this type. This is a fascinating development in licensing and IP, as it's the first time I've seen a government holding patent rights and defending them using sovereignty. The federal government, for example, retains certain rights under Bayh-Dole to patents arising from federally funded research, but has not (and may not have the right to under the law) done anything like this. It's pretty uncharted territory. What's to stop Allergan, or any other company, from assigning patent rights from any jurisdiction on the planet to a tribe to protect them from challenge? What's to stop a foreign government in need of cash from taking such an action? There's nothing specific in this to pharma either; any number of patent holders in any industry are probably eying this strategy. It's likely that there's going to be regulatory repercussions to this.

The UGA saga is equally as fascinating; UGA apparently saw fit to grant the rights to patent to Allergan in exchange for an (admittedly hefty) upfront fee, which is not uncommon. They appear to have done so without consulting the inventor, and indeed may have taken additional monies with the expectation that they would be in turn sued by the inventor. Allergan may have behaved unethically there, but UGA appears to have been at fault as well.
posted by Existential Dread at 1:03 PM on September 11 [8 favorites]


Huh. So, after talking to a few colleagues, I found this little gem in the NYT article:
Mr. Bailey and others said the legal theory behind the Mohawk deal stemmed from a decision by the patent-review panel earlier this year involving the University of Florida, which owned a patent being challenged by the medical-device maker Covidien. The university, which was also represented by the Shore Chan DePumpo firm, successfully argued that the challenges should be dismissed because, as an arm of the state of Florida, the university should be granted sovereign immunity.
Apparently state universities are attempting to use this argument to defend their own patents against IPRs, which in turn inspired the Allergan action.
posted by Existential Dread at 1:12 PM on September 11 [3 favorites]


While this makes patent challenges potentially difficult, doesn't this transfer the onus of defending and litigating the patent onto the Mohawk nation?

Like, they can't be sued, but they still can sue, and must sue, if someone violates their patent. If a company believes the patent isn't actually valid, why not just thumb their nose at Allergan and refuse to respect it.

I'd be really amused if the Mohawks just took a few different patent deals, accepted payment, and then when it came time to litigate, they just shrugged and decided not to sue. What's Allergan going to do? Sue them? Sovereign Immunity cuts both ways!
posted by explosion at 1:41 PM on September 11 [1 favorite]


What's Allergan going to do?

Not give them any more patent deals (including that really juicy one hinted at being just over the horizon).
posted by acb at 1:42 PM on September 11


I don't understand why an inter partes review is construed as a demand against one of the parties which could be defeated by sovereign immunity. I would have thought that it's an appeal for declaratory relief about the validity of a patent, and since the Federal Government is the one that issued the patent, Tribal sovereign immunity doesn't come into it.
posted by Joe in Australia at 4:04 PM on September 11


I would have thought that it's an appeal for declaratory relief about the validity of a patent

Sovereign immunity also applies to declaratory judgment jurisdiction in federal district court, for what it's worth. But if the tribe or Allergan brought an infringement suit, then the patent's validity could be challenged at that point. The arrangement is purely a defensive measure, albeit a very strong one.

since the Federal Government is the one that issued the patent, Tribal sovereign immunity doesn't come into it.

In the US system sovereigns enjoy immunity in all courts except where the immunity has been waived, either by constitution, statute, or voluntary action. So, for example, a US state has sovereign immunity in federal court and the federal government in state court.
posted by jedicus at 8:07 PM on September 11 [1 favorite]


The NYT article is more clear that there are two active challenges. This trick stops one, the one under Hatch-Waxman which is a specific law about drugs and generics. They could still lose the standard patent challenge in court. (The subtleties of why it breaks this way are well beyond me.)

Patent challenges are routine even when there's no apparent merit to them. One reason IIUC is that when generic companies like Teva challenge they apparently lock in exclusivity when it finally does go generic. The fact that if you actually get to a jury trial it can be a bizarre crapshoot also means they can occasionally shake a few months early in a private deal.

While this makes patent challenges potentially difficult, doesn't this transfer the onus of defending and litigating the patent onto the Mohawk nation?

Like, they can't be sued, but they still can sue, and must sue, if someone violates their patent. If a company believes the patent isn't actually valid, why not just thumb their nose at Allergan and refuse to respect it.


If they licensed it exclusively to Allergan they can't let anyone else use it. Same as if Allergan licensed it to another drug company, they couldn't then go into competition and say 'gotcha.' (I would bet money under the contract it is Allergan's lawyers who sue regardless.)

But more to the point why would Mohawk nation sign a deal if they didn't want to profit from it? They did this to make money off high drug prices, not to end them.
posted by mark k at 9:51 PM on September 11 [1 favorite]


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