Senators Introduce Legislation to Limit Sovereign Immunity From Patent Challenges

This week, Senators Tom Cotton, R-Arkansas, and Claire McCaskill, D-Missouri, introduced the Preserving Access to Cost-Effective Drugs or PACED Act in response to Allergan’s recent transfer of its patents covering its dry-eye drug, Restasis, to the Saint Regis Mohawk Tribe in exchange for the Tribe’s invocation of sovereign immunity against inter partes review.

While the US Patent Trial and Appeal Board (PTAB) ultimately decided that the Tribe could not claim sovereign immunity in this case, Allergan’s unusual gambit to protect its market share—and the Tribe’s motion to seek discovery into the internal workings of the PTAB itself—sparked ire among lawmakers and other pharmaceutical industry stakeholders who feared that other drug makers would follow in Allergan’s footsteps, essentially insulating their high-earning innovator products from competition from generic or biosimilar drugs.

According to Cotton, "It's far past time that we crack down on patent abuse, which is raising costs for our seniors,” and the newly introduced bill “will make sure unscrupulous patent holders can't game the system and block their competitors from entering the market. That'll go a long way to help seniors get the drugs they need.”

"We watched a company brazenly try to exploit a potential legal loophole to game the system in an effort to protect their bottom line,” added McCaskill. “That should be illegal, and our bipartisan bill would make it so by ending this astounding assertion of sovereign immunity to avoid patent review, before any other companies follow suit."

The bipartisan bill would amend title 35 of the United States Code to provide that a patent owner may not assert sovereign immunity as a defense in actions before the United States Patent and Trademark Office. In cases in which foreign states are the owners of patents, the PTAB will make the determination of whether the owner is immune from the PTAB’s jurisdiction. Under the proposed law, in any action involving a patent claim that is otherwise within the jurisdiction of the United States, a tribe may not assert sovereign immunity as a defense.

The bill has support of organizations including America’s Health Insurance Plans, the Association for Accessible Medicines, Patients for Affordable Drugs Now, and the BlueCross BlueShield Association.