A federal judge in Texas invalidated four key patents for the dry-eye treatment Restasis on Monday, dealing a blow to its manufacturer, Allergan, which had sought to protect its patents by transferring them to a Native American tribe. The ruling, by United States Circuit Judge William C. Bryson of the Eastern District of Texas, does not mean that generic versions of the drug will be available soon, however. Allergan said that it would appeal the decision, and the Food and Drug Administration has not yet approved copycat versions of the drug. Still, the decision was a setback for the company, whose stock dipped more than 5 percent on the news. Restasis is Allergan’s second best-selling product, behind the wrinkle treatment Botox, bringing in nearly $1.5 billion in 2016. In September, Allergan took the highly unusual step of paying the Saint Regis Mohawk Tribe in upstate New York to take possession of the patents, which then were leased back to the company. The tactic was a way to protect the company from a patent challenge — separate from the federal court case — that is underway in an administrative proceeding before a unit of the United States Patent and Trademark Office. The Mohawk tribe has claimed that sovereign immunity shields the patents from challenges under that process. Allergan’s deal with the tribe did not extend to the legal battle playing out in the Eastern District of Texas, where manufacturers of generic drugs, including Teva Pharmaceuticals and Mylan, are also fighting Allergan over the validity of the patents. The tribe did not claim sovereign immunity in that case. In a ruling on Monday, Judge Bryson criticized Allergan’s deal with the tribe and said such arrangements could ultimately damage the country’s patent process. “Sovereign immunity should not be treated as a monetizable commodity that can be purchased by private entities as part of a scheme to evade their legal responsibilities,” he wrote. In a statement, Allergan said it was “carefully reviewing the court’s decision.” The patent office is still reviewing the case, including the Mohawks’ argument that the patents are protected by the tribe’s sovereign immunity. The two legal processes operate independently of each other, although decisions in federal court typically supersede the administrative review, experts said. “If a court overturns the patent, then that is game over for the patent,” said Michael Carrier, a professor at Rutgers Law School who studies patent law. Brendan F. White, a spokesman for the tribe, said it was “in the process of reviewing the decision and its impact on our patent business.” Under the deal, Allergan paid the tribe $13.75 million, with the promise of $15 million in annual royalties as long as the patents remained valid. Allergan’s arrangement with the Mohawk tribe had been greeted with outrage by members of Congress and consumer groups, who said it was just the latest tactic by drug makers to foil generic competitors and protect their profits. The tribe had countered that it was within its rights and that further deals could serve as an added source of revenue for its community of more than 15,000 people in a rural, economically depressed region near the Canadian border. Allergan has said it entered into the deal with the tribe to avoid what it described as the double jeopardy of having its patents challenged in both federal court and through the administrative review. Many patent holders have argued that the administrative process is unfair and unnecessary because patents already can be challenged in federal courts. The review was created by Congress in 2011 as a way to streamline patent challenges by allowing them to be decided by a panel, the Patent Trial and Appeal Board. The Supreme Court will take up the issue next year in the case Oil States vs. Greene’s Energy Group.
A federal judge in Texas invalidated four key patents for the dry-eye treatment Restasis on Monday, dealing a blow to its manufacturer, Allergan, which had sought to protect its patents by transferring them to a Native American tribe.