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Speaker 1: A serious legal blow to one of Allergan's blockbuster drugs.

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Speaker 1: A federal judge has invalidated Allergan's patents for one of

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Speaker 1: its best selling drugs, Ristasis. Judge William Bryson also criticized

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Speaker 1: Allergan's novel and controversial deal with the Saint Regis Mohawk

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Speaker 1: tribe to take advantage of the tribe's sovereign immunity to

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Speaker 1: game the system. Milon and Teva pharmaceutical are seeking to

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Speaker 1: sell generic versions of Ristasis, but they don't have regulatory

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Speaker 1: approval yet. The skyrocketing costs of prescription drugs are part

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Speaker 1: of the healthcare debate. On Monday, President Trump said the

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Speaker 1: drug companies were getting away with murder. The same exact

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Speaker 1: pill from the same company, the same box, same everything

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Speaker 1: is a tiny fraction of what a court in the

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Speaker 1: United says. We are going to get drug prices, prescription

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Speaker 1: drug prices way down because the world has taken advantage

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Speaker 1: of us. Allergan is appealing the decision. Joining us are

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Speaker 1: Michael Carrier, professor at Rutgers University Law School, and Ode Gersbacker,

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Speaker 1: Bloomberg News senior Lytic Asian analyst oh tell Us about

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Speaker 1: Judge Bryson's decision on the patents. Okay, so there there

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Speaker 1: are really two decisions yesterday that came down, um, one

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Speaker 1: on the patents, invalidating all of them, so that really

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Speaker 1: clears the way for generics. And the other was the

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Speaker 1: decision to actually join the tribe to the lawsuit. Could

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Speaker 1: you could you explain what the decision was based on

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Speaker 1: the tribe decision? No, the decision on the patents. On

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Speaker 1: the patents, I'm sorry. Um, So the patents were invalidated

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Speaker 1: for um, what we call obviousness in patent law, and

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Speaker 1: that just means that the judge found that prior to

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Speaker 1: elegant filing these patent applications that eventually became patents, the

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Speaker 1: the invention had already been um made or discovered or

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Speaker 1: written about in different pieces of literature. Mike tell us

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Speaker 1: about the other decision, Uh so, um that he could

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Speaker 1: have stopped. I guess that one decision that ode was

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Speaker 1: just talking about invalidating the patents, but he also wrote

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Speaker 1: something separate that talked about what he called a ploy

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Speaker 1: to transfer the patents to a Native American trap tell

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Speaker 1: us a little bit about that issue, if you would.

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Speaker 1: So that question was whether or not Allergun's motion would

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Speaker 1: be granted to join a party to join the tribe

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Speaker 1: to the lawsuit. At the end of the day, the

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Speaker 1: court said, yet, because it wasn't willing to take the

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Speaker 1: chance that by not joining the tribe, eventually the decision

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Speaker 1: could be thrown out if the tribe really did play

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Speaker 1: a role, a valid role in this transaction. So the

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Speaker 1: court was really being conservative in saying, there's a chance

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Speaker 1: that the tribe could play a role, so I will

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Speaker 1: allow them to join the case. But in doing that,

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Speaker 1: to Judge was as clear as I have ever seen

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Speaker 1: in a court opinion that this is basically a sham transaction,

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Speaker 1: and there was tons of language that made that clear.

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Speaker 1: Judge Bryson said, in reality, it's paid the tribe to

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Speaker 1: allow are going to purchase, or perhaps more precisely, to rent,

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Speaker 1: the tribe's sovereign immunity in order to defeat the pending

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Speaker 1: i PR proceedings in the p g O. So oh,

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Speaker 1: tell us about the i PR proceedings, what they are,

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Speaker 1: and why Allergan was so anxious to have the tribe

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Speaker 1: in that part of it. So the i p R

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Speaker 1: s are fairly new proceeding um that I can invalidate

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Speaker 1: a patent outside of the court. It's really just the

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Speaker 1: patent office rethinking its decision of granting a patent um

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Speaker 1: And we've seen this, especially in the pharmaceutical industry. We've

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Speaker 1: had that as an issue for the last couple of years,

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Speaker 1: and it's it's easier to actually invalidate patents at that

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Speaker 1: level than it is in court for various reasons. Um

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Speaker 1: and there is an interplay between the two, so that

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Speaker 1: if the patent office invalidates a patent and that actually

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Speaker 1: survives on appeal and the patent is validated, then it

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Speaker 1: is no longer at play in the court, and then

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Speaker 1: vice versa. If this, if this decision stands and then

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Speaker 1: it actually as on appeal, then that will actually be binding. So, Mike,

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Speaker 1: why why would Allergan want to transfer the patent to

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Speaker 1: the st regious tribe? What what did that do that

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Speaker 1: let them get out from under or try to get

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Speaker 1: out from under the I p R proceeding. The primary

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Speaker 1: reason is that it allows them to make an argument

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Speaker 1: that they are now immune from having their patents challenged.

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Speaker 1: Sovereign immunity is a doctrine that goes back centuries and

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Speaker 1: the reason is that state. Historically we're not able to

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Speaker 1: be sued. Tribal sovereign immunity is a little different. It

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Speaker 1: doesn't have the same exact basis. But the point here

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Speaker 1: is that Allergan was trying to transfer the patents to

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Speaker 1: the Native American tribe so that the tribe would be immune.

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Speaker 1: So if generics were challenging the patents at the patent office,

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Speaker 1: then they can say you're out of luck. The game's

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Speaker 1: over because we are immune from suit. We're talking about

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Speaker 1: a judge invalidating the patents covering Allergan's hoops selling eye

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Speaker 1: drug stasis with Michael Carrier, professor at Rutgers University Law

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Speaker 1: School and ode gers Backer, Bloomberg News senior litigation analyst

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Speaker 1: Michael where there's a two track review process going on

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Speaker 1: by the district court, the federal courts there and the

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Speaker 1: Patent Trial and Appeal Board and different standards, and so

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Speaker 1: many patents have been invalidated by the Patent Trail and

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Speaker 1: Appeal Board that it's been called a death squad. And

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Speaker 1: that was first coined by the former Chief Judge of

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Speaker 1: the Court of Appeals, which oversees the patent disputes in

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Speaker 1: the country. Randall Radar. So explain the different legal standards

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Speaker 1: and why the double track. So there are different standards

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Speaker 1: in what you need to show to show that the

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Speaker 1: patent is not valid. So in the patent office, in particular,

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Speaker 1: in front of what's done a stab the appellate board,

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Speaker 1: you have to show by a reponderance of the evidence,

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Speaker 1: in other words, that the patent should not have been granted.

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Speaker 1: In contrast, in federal court it's a higher standard. You

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Speaker 1: have to show by clear and convincing evidence that the

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Speaker 1: patent should not have been granted. And so you see

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Speaker 1: what that difference. That it's possible for a patent to

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Speaker 1: be overturned at the patent office proceeding while still not

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Speaker 1: being overturned in federal courts. So many parents say that

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Speaker 1: it is a death squad and these patents never survived.

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Speaker 1: On the other hand, many patents should not have beenished

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Speaker 1: in the first place. Time examiners have a very short

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Speaker 1: period of time to look at these. So maybe this

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Speaker 1: is the right answer what the key tap is doing.

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Speaker 1: And oh, just so we're clear on on how that

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Speaker 1: all applies to Allergan. Allergan has has this case in

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Speaker 1: district court where we have the ruling this week, and

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Speaker 1: it's got a proceeding at p TAB To to preserve

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Speaker 1: its patents on this drug, does Allergant have to win

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Speaker 1: both of those cases. So to preserve it, Allergan has

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Speaker 1: to win on appeal. Um. The patent trial and Appeal

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Speaker 1: Board decisions and the Trick Court decisions all get moved

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Speaker 1: up to the Federal Circuit Court of Appeals, which makes

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Speaker 1: a decision pretty much final decision unless it goes to

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Speaker 1: the Supreme Court. So as it stands right now, the

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Speaker 1: patents are invalidated by the court, which um will We'll

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Speaker 1: get appeal or has been appealed when that decision comes down.

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Speaker 1: If they're upheld, then we can look back at the

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Speaker 1: i p R and see if it gets invalidated there.

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Speaker 1: But if if um, if that, if Elegant doesn't succeed

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Speaker 1: on appeal, then they're invalidated and the i prs really

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Speaker 1: don't matter. Michael, can you talk a little bit about

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Speaker 1: how difficult it is to make a drug like this

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Speaker 1: into a generic, In other words, how long it would

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Speaker 1: take before Milon and Teva could actually get a generic

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Speaker 1: on the market. So one of the difficulties here is

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Speaker 1: that there are shifting standards. So initially there was a

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Speaker 1: talent that covered with spaces. It was did a couple

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Speaker 1: of decades ago, and it expired in and then Allergan

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Speaker 1: got a second wave of patents, and so that wave

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Speaker 1: of patents has been keeping the generics off the market.

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Speaker 1: The generics also need FDA approval. That second wave of

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Speaker 1: patents was what was just invalidated by the district court yesterday.

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Speaker 1: But still the generic has to get FDA approval and

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Speaker 1: that process could take a couple of years. And so

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Speaker 1: even though the patents were invalidated, generics are not about

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Speaker 1: to enter the market immediately. Oh. One of the other

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Speaker 1: perhaps confusing, perhaps intriguing aspects of this case is that

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Speaker 1: the judge in the in the district court, Judge Bryson,

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Speaker 1: is actually a judge on that federal appeals court that

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Speaker 1: handles patent case. But he cases but he was sitting

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Speaker 1: by designation in this at the district court level. Tell

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Speaker 1: us a little bit about him and whether he is

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Speaker 1: opinion on the subject of the Native American tribe might

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Speaker 1: be influential with his colleagues on the federal circuit. Yes,

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Speaker 1: I mean, it's very interesting that Federal Circuit judge would

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Speaker 1: come would have this decision um. I definitely think that

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Speaker 1: that also contributed to the length of the opinion on

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Speaker 1: on the motion elegant um um got granted, eventually adding

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Speaker 1: the tribe. You know, he pretty much lays out the

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Speaker 1: argument for the p TAB and eventually that that decision

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Speaker 1: will get reviewed by the Federal Circuit. So I definitely

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Speaker 1: think that he is one who knows patent law. I mean,

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Speaker 1: he's on the court that reviews all patent decisions, and

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Speaker 1: that will definitely influence the court. Michael the In June,

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Speaker 1: the Supreme Court agreed to take a case to determine

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Speaker 1: if these p TAB reviews are constitutional. Tell us a

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Speaker 1: little bit about that and where you see that going

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Speaker 1: or how you see that going. So Algan said that

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Speaker 1: they don't want to be subject to double jeopardy by

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Speaker 1: having their patent scrutinized not only in the courts, but

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Speaker 1: at the TAB as well. Double jeopardy doesn't really apply

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Speaker 1: your it's more of a criminal concept. They are saying

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Speaker 1: that it's not there for the patent office to overturn patents.

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Speaker 1: If that's something for the court to do. I don't

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Speaker 1: think that argument will be effective at the Supreme Court

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Speaker 1: later this year. And the reason is that patents don't

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Speaker 1: fall from the sky. There's no natural right to patents.

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Speaker 1: They're created by Congress, and Congress can create the mechanism

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Speaker 1: by which patents can be reviewed. And for several decades,

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Speaker 1: Congress has said that patents can be reviewed by the

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Speaker 1: Patent Office in these perceivings. After the American Events Act

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Speaker 1: in twenty eleven, the form of the proceedings changed a bit,

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Speaker 1: but nonetheless it's still Congress saying, Okay, Patent Office, take

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Speaker 1: a second look at these things. Maybe you didn't get

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Speaker 1: right the first time. Litigation is so expensively so long

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Speaker 1: that the second look is fine. And so I think

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Speaker 1: that's what the Extreme Court will say, that this is constitutional.

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Speaker 1: Oh only about thirty seconds. But Wayne on the Supreme

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Speaker 1: Court case, how significant is that in the world of

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Speaker 1: patent law. Yeah, I mean, I agree actually with Michael,

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Speaker 1: because we've had these kinds of proceedings already, right, we

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Speaker 1: have re examinations, We've had different iterations of this. This

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Speaker 1: is just a new iteration. So I agree with that.

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Speaker 1: I want to thank you both for being on Bloomberg Law.

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Speaker 1: It's a really interesting case and so many facets we

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Speaker 1: could go on for a long time. That's Ogre s Backer.

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Speaker 1: She's a Bloomberg News senior litigation analyst. And Michael Carrier,

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Speaker 1: he's a professor at Rutgers University Law School. Coming up,

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Speaker 1: we're going to be talking about Colin Kaepernick, who started

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Speaker 1: the national anthem protests that are now causing such controversy

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Speaker 1: in the NFL that the owners are going to be

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Speaker 1: discussing them at their meetings today and tomorrow. Now, he's

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Speaker 1: filed a grievance accusing the NFL of colluding to keep

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Speaker 1: him out of the league because of that national anthem protest.

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Speaker 1: But he faces a really tough legal hurdle. We're gonna

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Speaker 1: be discussing that hurdle coming up. This is Bloomberg. Thank