Did Allergan Rip Off A University Foundation?
6 CommentsBy Ed Silverman // August 18th, 2008 // 2:10 pm
The University of Georgia and a former faculty member stand to make about $70 million from a license on an invention used for the popular Restatis eyedrops, which are sold by Allergan. But for more than a decade, Renee Kaswan, a former professor of veterinary medicine, hs been prodding the institution to be more aggressive in commercializing the invention, The Chronicle of Higher Education writes.
She contends the university would be entitled to substantially more - as much as $230 million in additional cash - were it not for the deal the university’s research foundation cut with Allergan behind her back in 2003, a deal she calls naïve and shortsighted. “They got suckered,” Kaswan tells the paper. The deal allowed Allergan to reduce royalties to the university in exchange for an upfront payment of $23 million and additional payments later.
Sales of Restasis have taken off, but the university is not getting the full benefit because of the 2003 agreement. University leaders have said that their arrangement with Allergan guaranteed the institution a lucrative payday even if the prescription product was later found to be unsafe or was overtaken by a competing drug. The dispute that is now slowly working its way through a state court in Georgia shows why so few university inventions become blockbusters for their institutions.
You can read the background to their ugly dispute right here. A state court judge appears ready to unseal documents showing the arrangement between Allergan and The University of Georgia Research Foundation, which the drugmaker has tried to keep secret, The Atlanta Business Chronicle reports.
Superior Court Judge David Sweat told the Chronicle he will begin the process of unsealing almost all of the documents. A transcript of an April 24, 2007, hearing refers to documents that describe how Allergan orchestrated what Sweat referred to as “a bad deal” for the foundation - one in which it will gain $72 million instead of a potential $294 million, according to an analysis done by Kaswan. We are reaching out to Allergan for comment and will update you when we receive a reply.
Hat tip to PharmaGossip
Piper
I’m going to take a stab in the dark and say UGA didn’t get paid more because they actually had no legal right to commercialize the product. Allergan paid a far larger sum to Novartis, who had the patent rights on cyclosporine A at the time. It was all well and good for UGA to develop a cyclosporine emulsion that worked in the eyes, but they probably did not have the wherewithal (or desire) to deal with a European based company (Novartis). Restasis may have nice looking top-line numbers, but they didn’t come for free. I suspect Allergan would have paid UGA more if the technology had with a patent - but it didn’t. There are no patents on Restasis and nothing keeping generics off the market - in that regard, UGA is free to come to the market any time…especially since cyclosporine is now a generic.
P.S. Welcome Back Ed!
IP Lover
Actually, there is a patent for the product. If you search on the USPTO for Dr. Kaswan - the inventor in the article - you will see she definitely has a patent and taht UGA was assigned the patent.
There is not a generic for Restasis and will not be for several more years.
Not sure where you got your premise, but it’s way, way off the mark.
UGA had the patent and got swindled by Allergan. Allergan also screwed Novartis in the process as well. I think they did it just because they could…
Ed Silverman
Hi IP Lover,
Thanks for the note. The premise, as you put it, was the contention as reported by the two newspapers, if you click on the links I provided. If you do, you’ll see the piece from the Chronicle of Higher Education notes that Kaswan holds a patent. And I don’t believe I referred to a generic version. In any event, you appear to conclude the same thing as Kaswan, which is that Allergan did UGA wrong. So which premise is ‘way off the mark?’
Regards
ed
Piper
Ed, IP Lover is saying that I am way off the mark. Unfortunately, he fails to understand the the difference being having a patent on something and being able to use that patent to keep active equivalents off the market. According to Allergan (not me!), there is no reason another company could not come to market with a cyclosporine-based aqueous solution for the eye. At the inception of Restasis, it was believed (albeit incorrectly) that the “active ingredient” (being Novartis’ cyclosporine A) was the most important part of the product. In retrospect, it is clear that the aqueous base, which prevents the cyclosporine from searing the eye, is probably the more important component of Restasis. Why? Because no company has been able to produce a cyclosorine-based eye-drop that doesn’t cause intense pain when placed in the eye. Both Allergan and Novartis dismissed it as the most simplistic aspect of the business. Novartis walked away from a blockbuster product, because cyclosporine was at the end of its patent life and they assumed competition would be around the door - at the time, people questioned why Allergan was paying up for a drug that would soon be a generic. As for Kaswan’s IP, it’s not on the active ingredient and in pharmaceuticals, that is key. Who could have predicted it would be so difficult to replicate the proprietary solution? Not Novartis and certainly not UGA….at least not at that time. Everybody has to make decisions without knowing what the future holds. If Restasis had failed miserably, I doubt Kaswan would be volunteering to give the money back…..
Ed Silverman
Hi Piper,
Thanks, I misunderstood. And I also appreciate the observations. Messy stuff, but interesting.
Regards
ed
Renee Kaswan
A colleague just informed me of this conversation and while I am joining it quite late, I hope my comments will still have merit. From my perspective what is unique about the Restasis situation is not the patentability or cross patents with other technical developments. What concerns me is that at the end of the day, when the product was finally FDA approved, all of the cooperation and mutual trust was tossed aside and the profits went up for grabs in secret renegotiations. Its my belief based upon my limited knowlege and evidence, that Allergan’s Niv Caviar, came up with a scheme to save up to a billion dollars in royalties that Allergan would have owed to Inspire, Novartis, and UGARF. I suspect Niv’s ‘Florida plan’ was to lowball the potential profitability of Retasis and secretly renegotiate 3 Allergan royalty licenses simultaneously to their huge advantage, short changing Novartis, Inspire and UGA. Allergan may have accomplished a short term coup, but at what expense to the tech transfer industry that relies on trust between academic faculty, Universities, public funding, and industry? Look deeper.