Allergan Faces Fresh Criticism and a New Lawsuit Over Restasis

Drug maker Shire has filed suit in a federal court in Newark, New Jersey, alleging that rival Allergan has violated antitrust laws in trying to preserve market share of its cyclosporine ophthalmic emulsion (Restasis) by blocking competition from Shire’s dry-eye drug, lifitegrast (Xiidra), on the Medicare Part D formulary.

The complaint alleges that Allergan “has and will continue to use bundled discounts, exclusive dealing, coercion and interference to unlawfully 'block' Shire from competing with it, and to maintain its monopoly in the [Medicare] Part D market at all costs.” Shire says that it will lose millions in sales if the court does not intervene to stop Allergan from engaging in contracting practices that keep Xiidra from gaining a placement on the formulary.

The suit is not the only challenge facing Allergan with respect to Restasis; the Ireland-based drug developer has drawn ire for transferring its Restasis patents to the Saint Regis Mohawk Tribe in exchange for a bulk payment of $13.75 million and an additional $15 million per year in royalties. In return for those payments, the Tribe has invoked sovereign immunity from ongoing inter partes reviews (IPRs) of several patents covering the drug.

The unusual legal maneuver has not escaped congressional attention; in a September 27 letter to the Senate’s Committee on the Judiciary, 4 US senators, Margaret Wood Hassan (D-New Hampshire), Robert Casey, Jr (D-Pennsylvania), Sherrod Brown (D-Ohio), and Richard Blumenthal (D-Connecticut) said that they were “Deeply concerned with the numerous patent law and anti-competitive implications of Allergan’s deal, which harm patients’ ability to afford medications.” The senators urged the committee to launch an immediate investigation, saying that sovereign immunity is a fundamental precept of the American legal structure, and that private companies should not be allowed to pay sovereign entities to invoke such rights as a way to “exploit sovereign immunity at the expense of patients.”

A fifth senator, Claire McCaskill (D-Missouri), added her voice to the controversy, calling on Pharmaceutical Research and Manufacturers of America to involve itself in the issue by “telling its members that this action isn’t appropriate.”

The Patent Trial and Appeal Board (PTAB) has previously granted motions to dismiss IPRs on the basis of sovereign immunity in the cases of patents owned by public universities. Because states are treated as sovereign entities under the US Constitution, some public universities have successfully argued that they are agents of the state and therefore immune from IPR proceedings under the PTAB’s authority. However, in the cases of the public universities, the letter to the Judiciary Committee points out, the universities were the owners of the original patents, not third parties paid to invoke sovereign immunity.

Allergan responded to the senators’ letter with a message of its own; Allergan’s CEO, Brent Saunders, sent an October 3 letter to the Judiciary Committee urging a review of what he termed a “broken and flawed” IPR process. IPRs, he says, undermine the traditional patent challenge process created in the 1984 Hatch-Waxman Act and place an “unnecessary and unfair burden” on drug makers.