October 10, 2017
`
`
`The Honorable Paul Ryan
`Speaker
`United States House of Representatives
`H-232, United States Capitol
`Washington, D.C. 20515
`
`The Honorable Nancy Pelosi
`Democratic Leader
`United States House of Representatives
`H-204, United States Capitol
`Washington, D.C. 20515
`
`
`
`
`The Honorable Mitch McConnell
`Majority Leader
`United States Senate
`S-230, United States Capitol
`Washington, D.C. 20510
`
`The Honorable Charles Schumer
`Democratic Leader
`United States Senate
`S-221, United States Capitol
`Washington, D.C. 20510
`
`Dear Majority Leader McConnell, Leader Schumer, Speaker Ryan, and Leader Pelosi:
`
`We write today to add our names to the growing list of organizations and individuals who have
`
`raised significant concerns with Allergan, Plc’s (Allergan) recent decision to transfer the patent rights to
`its blockbuster drug Restasis® to the St. Regis Mohawk Tribe in order to block generic competition.
`Allergan, a Dublin, Ireland-based drug company, is claiming that placing its U.S. patents with the St.
`Regis Mohawk Tribe will shield these patents from review by the U.S. Patent and Trademark Office (PTO)
`as Congress authorized in the America Invents Act. Indeed, Allergan’s scheme may be the first ever “IP
`Inversion.”
`
`According to a recent poll by the Kaiser Family Foundation, 77 percent of Americans believe the
`cost of prescription medicines is “unreasonable.” Allergan’s move to protect profits at the expense of
`patients confirms why. Congress should take steps to stop this behavior and eliminate barriers to the
`timely entry of U.S Food and Drug Administration (FDA) approved generic versions of these expensive
`treatments. As brand name drug companies continue to increase their prices year-over-year, lawmakers
`should also be aware of the unprecedented price deflation in the market for generic medicines. If
`transactions like those devised by Allergan are allowed to continue unchecked, brand name drug prices
`will continue to rise and hurt patients. And generic drug companies will be squeezed from the market,
`keeping affordable medicines from patients. Congress cannot allow this to stand.
`
`I.
`
`Allergan’s Patent Transfer Scheme
`
`Allergan’s questionable business practice threatens patient access to needed health treatments,
`threatens the underpinnings of the U.S. patent system and runs afoul of congressional intent in enacting
`a legal pathway for generic competition. Allergan’s transfer of patent ownership rights to the St. Regis
`Mohawk Tribe is a brazen attempt to circumvent U.S. law and engineer a mechanism to maintain
`monopolistic high drug prices. We encourage Congress to vigorously exercise its oversight authority over
`
`
`
`MYLAN - EXHIBIT 1149
`Mylan Pharmaceuticals Inc. et al. v. Allergan, Inc.
`IPR2016-01127, -01128, -01129, -01130, -01131, -01132
`
`1
`
`

`

`drug companies operating in U.S. commerce, the PTO and the FDA’s drug approval process to provide
`transparency to the public about the effects of this transaction in order to determine whether this latest
`scheme to protect drug industry profits at the expense of patients and taxpayers will stand.
`
`On September 8, 2017 Allergan announced it had transferred all Orange Book-listed patents for
`
`Restasis® 0.05 percent to the St. Regis Mohawk Tribe. Allergan was then granted an exclusive license by
`the St. Regis Mohawk Tribe to the Restasis® patents by the new patent “holder,” allowing Allergan to
`maintain its U.S. monopoly over the drug and control over its ever-increasing cost. In January 2016 the
`price of Restasis® increased 9.9 percent.1 As part of this arrangement, the St. Regis Mohawk Tribe
`announced the same day that it would move to dismiss an ongoing inter partes review (IPR) challenge of
`the Restasis® patents based on the St. Regis Mohawk Tribe’s sovereign immunity. Cyclosporine, the
`active ingredient in Restasis® was first approved by the FDA in 1983. Allergan developed Restasis® as an
`ophthalmic solution and received U.S. approval for the drug in December 2002. The drug’s initial patents
`expired in 2014, but Allergan filed six additional patents in late 2013 and early 2014 that, if left
`unchallenged, would expire in 2024 – well beyond the monopoly period that Congress intended or the
`public should support.
`
`For Allergan, the deal with the St. Regis Mohawk Tribe, if allowed to proceed, would be a
`profitable one. Restasis® generated $1.4 billion in 2016 sales.2 For less than 0.01 percent of the drug’s
`annual sales, Allergan’s deal could delay competition (by protecting its new patents from review) for at
`least six additional years. According to press reports, Allergan provided an initial payment of $15 million
`to the St. Regis Mohawk Tribe and $13.75 million in annual licensing fees. Every day Allergan delays
`competition, the company takes in over $4 million in revenue due to the lack of generic competition.
`According to our calculations, Allergan will recoup this licensing fee in around four days.
`
`II.
`
`Allergan’s Attempt to Circumvent Review of its New Patents Under America Invents Act
`
`In 2011 the America Invents Act (P.L. 112-29) created the IPR process within the Patent Trial and
`
`Appeal Board (PTAB). Its intent was to create an administrative process to consider the validity of
`patents, quickly and cost-effectively. AIA is closely aligned with the legislative intent of the Drug Price
`Competition and Patent Term Restoration Act (Hatch-Waxman), and the Biologic Price Competition and
`Innovation Act (BPCIA): the need to increase competition in pharmaceutical markets by encouraging
`challenges to weak patents to expedite generic and biosimilar market entry.
`
`IPR is an important option for the pharmaceutical industry when adjudicating patent disputes.
`In 2015, the brand name drug industry was unsuccessful in its efforts to invalidate the AIA for drug
`patents, when the industry failed to secure a pharmaceutical carve-out in the IPR process. The same
`year, using the law as Congress intended, several generic developers filed an IPR challenge to Allergan’s
`six late-filed Restasis® patents. Successfully challenging these patents would clear the way for the timely
`entry of safe, effective and more affordable generic competitors to Restasis® and would thus save
`patients, taxpayers and health care payors billions of dollars. After two years of litigation, PTAB heard
`
`1 “Drugmakers Raise Prices Despite Criticisms,” Wall Street Journal, January 2016. (link)
`2 Alllergan plc, Annual Report (Form 10-K), at 59 (February 2017) (link)
`
`
`
`2
`
`

`

`the challenge between August 28 and September 1, 2017. A decision was expected later this year; the
`PTAB’s decision may be postponed due to the St. Regis Mohawk Tribe’s claim of sovereign immunity.
`
`Allergan’s decision to transfer patents to the St. Regis Mohawk Tribe and rely on the use of
`sovereign immunity to remove its patents from IPR proceedings is an end-run around the AIA’s IPR
`process that Congress established specifically to challenge questionable patents. Allergan’s actions
`threaten to upend the very foundation of the nation’s intellectual property framework. We are
`concerned that, if left unchallenged, this scheme sets a dangerous precedent and other brand drug
`companies could quickly follow suit – protecting and extending their monopolies at all costs – keeping
`drug prices high for patients and payors.
`
`The actions taken by Allergan to ensure that patients and payors do not benefit from timely
`generic competition to Restasis® is an alarming new example of the steps that brand name drug
`companies will take to put profits above the public interest. Over the last two years there has been a
`great deal of congressional, media and public focus and scrutiny paid to branded products like Daraprim
`and EpiPen. Given the ongoing concern about drug costs, it warrants mention that Restasis® generates
`more in annual revenue than both of those products combined.
`
`We call on Congress to fully examine the impact that this questionable business tactic would
`have on our current and future drug supply and, most importantly, the economic impact it would have
`on patients. If left unchallenged, this potentially precedent-setting transfer of patents to Native
`American tribes to avoid lawful review of these government-granted monopolies may represent the
`beginning of a lucrative business strategy at the expense of the public interest, thus jeopardizing timely
`access to lower-cost generic and biosimilar medicines. This issue deserves the prompt attention of
`Congress, and we encourage you to vigorously apply your oversight authority to shine a light on the
`possible effects of this transaction between Allergan and the St. Regis Mohawk Tribe and its implications
`for U.S. health care spending, intellectual property law, and access to affordable medicines.
`
`Sincerely,
`
`Alliance of Community Health Plans (ACHP)
`America’s Health Insurance Plans (AHIP)
`American Academy of Family Physicians
`American College of Physicians
`American Hospital Association
`Association for Accessible Medicines (AAM)
`BlueCross BlueShield Association (BCBSA)
`Federation of American Hospitals
`Pharmaceutical Care Management Association (PCMA)
`Public Sector HealthCare Roundtable
`
`
`cc: House and Senate Judiciary Committees, Senate Health, Education, Labor, and Pensions Committee,
`House Energy and Commerce Committee, Senate Indian Affairs Committee, House Committee on Natural
`Resources, and the House and Senate Committees on Oversight and Government Reform
`
`
`
`3
`
`