Allergen Deal with Tribe Faces Backlash

The September decision by the Allergen drug company to enter into a contract with the St. Regis Tribal Council to protect its Restasis eye drug patent is drawing fire from members of the US Congress who are introducing legislation to strip all Native nations of the authority to enter into such agreements. The reaction has resulting in a significant downturn in the company’s stock. In one news report the following information is cited as a cause of concern for both the Tribe and Allergen:

From the web site: http://www.minyanville.com dated October 17/2017:

Allergen (AGN) stock is down over 0.39% to close on Wednesday after lawmakers take aim at the company over a patent deal they made with a Native American tribe. The pharmaceutical company struck a deal with Saint Regis Mohawk Tribe in September.

The patent deal would transfer Allergen’s patent for Restasis, an eye drug, to the Native American tribe.

Lawmakers state that the deal is an attempt to leverage the advantages that tribes have with patent challenges. Sovereign immunity allows the tribe to maintain exclusive rights to the drug through 2024, shielding the company from the generic competition.

Allergen - known for their Botox drug that is used for anti-aging purposes, hyperhidrosis, muscle stiffness, spasms, eye disorders, wrinkles and uncontrolled blinking - is accused of using the workaround to protect the drug from competition.

The company’s September press release states that it entered into a «sophisticated» opportunity. The deal, transferring the patent rights to the tribe, allows the company to protect 15% of their profits.

Botox helped the pharma company boost their revenue by 10% annually, offsetting the falling revenue of older drugs the company offers. Botox is also under pressure as alternative medicines, and treatments, like iontophoresis, continue to threaten the company’s blockbuster product.

Restasis accounts for $1.5 billion of the company’s sales. St. Regis’ deal allows the tribe to receive up to $15 million per year in royalties and a $13.75 million payment. Tribes, along with universities, have patent protection.

The tribe said that the deal was a way for them to diversify their income.

“We realize that we cannot depend solely on casino revenues and, in order for us to be self-reliant, we must enter into diverse business sectors to address the chronically unmet needs of the Akwesasne community; such as housing, employment, education, healthcare, cultural and language preservation,” states the tribe’s council.

Legal professionals and lawmakers state that anyone who cares about drug prices should be worried about the deal.

Allergen’s move will keep generic drugs from reaching the market, allowing the company to maintain no competition. The drug’s prices will remain unrivaled by the competition.

In retrospect the Tribe should have negotiated a better deal. They could have insisted on the actual manufacturing of the drug on Akwesasne territory, providing employment on a number of levels while enhancing its legal and economic status.  The Tribe now “owns” the patent on paper; perhaps it should have secured a percentage of the profits beyond the 1% of the proceeds. It could have secured places on the all-important Board of Directors, which would enable the Tribe to appoint its own corporate directors. 

What has actually happened is the Tribe has sold its sovereignty to a company that is seeking to prevent the generic productions of its products which enables Allergen to keep its prices high. Generic products are substantially cheaper as it fosters competition that drives down the costs, which Allergen is trying to avoid.

The Tribe’s claim to “treaty” status is not substantiated by the facts. It did not exist when the Seven Nations of Canada “treaty” was imposed on Akwesasne in 1796, nor was it involved in the 1797 Brant “treaty”. The Treaty of Canandaigua does not apply to the Tribe which is not a part of the Rotinosionni (Haudenosaunee-Six Nations) Treaty of 1794. The Tribe was, as is common knowledge, empowered by New York State in 1892, a fact which will be cited in the inevitable legal challenges. This may not be the best instance to litigate Native sovereignty given that it will be seen as an effort to suppress a free market and does not produce anything of substance for the Mohawk community.

And, most importantly, the Tribe might have moved in concert with the other two councils, which would have greatly enhanced its legal and public relations standing.