Allergan Loses Appeal Over Validity of Restasis Patents

(Bloomberg) -- Allergan Plc’s patents on its blockbuster eye drug Restasis are invalid, a U.S. appeals court ruled Tuesday.

Without issuing a formal opinion, the U.S. Court of Appeals for the Federal Circuit in Washington affirmed a trial court decision that the patents are invalid, in a victory for Teva Pharmaceutical Industries Ltd., Akorn Inc. and Mylan NV. The court ruling came a week after it heard arguments on the case.

Investors had been expecting a loss, though the quick turnaround was unusual. Allergan fell less than 1 percent to $163.03 at 10:54 a.m. in New York trading.

Allergan had been counting on the patents to block generic competition until 2024; all other patents on the drug have since expired. Restasis brought in $1.5 billion last year, or 9.2 percent of the Madison, New Jersey-based company’s revenue. It’s the second-biggest money-maker behind the wrinkle treatment Botox.

It effectively ends a drama in which Allergan took the extraordinary step of transferring ownership of the patents to an American Indian tribe to shield them from review at the U.S. Patent and Trademark Office. That much-derided strategy didn’t work, and it turned out the real threat was a trial court in Texas.

The U.S. Food and Drug Administration hasn’t yet granted final approval to any of the generic-drug companies looking to sell copies of the treatment. A federal judge in Washington is handling a dispute in which Teva claims it should be the only one on the market for 180 days as a reward for being first to challenge the patents.

The three-judge panel of the Federal Circuit had been put in the position of second-guessing the work of one of their colleagues -- Circuit Judge William Bryson was sitting by designation in Texas and wrote the opinion that Allergan never should have gotten the patents.

In his decision last year, Bryson said the patents cover a formulation of cyclosporine that’s little different than what was already known, and Allergan is “not entitled to renewed patent rights for Restasis in the form of a second wave of patent protection.”

Kelley Dougherty, a spokeswoman for Teva, said the company was pleased with the result. Officials with other companies didn’t immediately respond to queries seeking comment.

The case is Allergan Inc. v. Teva Pharmaceuticals Inc., 18-1130, U.S. Court of Appeals for the Federal Circuit (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman, Laurie Asséo

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