The pharmaceutical company Allergan shocked the prescription drug market this month when it transferred its intellectual property rights to its blockbuster drug Restasis, a treatment for dry eyes that generated $1.5 billion in sales last year, to the Saint Regis Mohawk Indian Tribe in exchange for an exclusive licensing deal. This bold tactic was intended to avoid patent review panels that a former chief federal patent judge called “death squads” for patents.
In this never-seen-before move, Allergan is forcing policymakers to take notice of a brewing controversy over how our nation’s medicines are developed, marketed, and transitioned to less expensive generics. This cautionary tale is all about unintended consequences from the 2011 enactment of the American Invents Act (AIA). At that time, “patent trolls” were using old, questionable patents to extort money from high-tech companies that independently developed innovative products. Because patent litigation can be expensive, the trolls were able to generate settlements for less than the cost of defending their often specious claims.
To take away the troll’s leverage, Congress gave the Patent Trial and Appeal Board the authority to invalidate old, poorly constructed patents. This post-patent review process is called inter partes review (IPR). It could be used instead of, or in addition to litigation, and could be filed by anyone and at any time after the Patent & Trademark Office issues a patent. The targets here were dubious high-tech patents that were generally the result of little investment and written to be overly broad. Congress was hoping that, by removing these obstacles, it could achieve the social and economic benefit of facilitating the next generation of technology.
Read more at The Hill.
