The Saint Regis Mohawk Tribe agreement doesn't affect Allergan's patent battles in the federal court system. That patent litigation, under the more traditional challenge through abbreviated new drug applications – or ANDAs – just wrapped a five-day trial in federal district court.
There is no precedent for this kind of move in the pharmaceutical industry, at least that Saunders said he was aware of.
But it has been done before with state universities, said Bob Bailey, Allergan's chief legal officer.
Bailey said Allergan was approached with the idea in early August.
"My first reaction was: 'This is brilliant,'" he said Friday.
The pharmaceutical industry has railed against the IPR system for patent challenges ever since hedge fund manager Kyle Bass used it to launch a series of attacks against drugmakers, while shorting their stocks.
Saunders pointed out the legality of the IPR process has been challenged and is expected to be heard by the United States Supreme Court this fall.
Teva Pharmaceutical, one of the companies that has used the IPR process to try to invalidate the patents for Restastis called the agreement "a new and unusual way for a company to try to delay access to high quality and affordable generic alternatives."
"Teva will continue to pursue its ANDA and accompanying patent challenges and also will be interested to see what comments are made about this tactic by regulatory agencies," a Teva spokeswoman said.
The Saint Regis Mohawk Tribe called the agreement "a viable and sound opportunity" in its joint statement with Allergan on Friday. The tribe is working with the law firm Shore Chan DePumpo.
In an interview, Dale White, general counsel for the Saint Regis Mohawk Tribe, said it is seeking additional economic opportunities, including a soy plant project and other contracts, to add to the revenue it already gets from a casino.
The tribe is based in upstate New York, along the border of Canada, with a population of about 13,000.
"We're experiencing what a lot of tribes are experiencing: unless you're in a heavily populated area, you may not be able to rely on the revenues from casinos forever," White said. "Then this came along, and at first it was like, 'This is too good to be true.'"
So should we expect to see more such partnerships from pharma? Evercore ISI analyst Umer Raffat says, potentially, yes.
"Allergan just made a legal move that is extremely important for the industry to track," Raffat wrote in a research note. He said if Allergan's partnership holds up in the courts, three other companies may seek to do the same: Eli Lilly, Amgen and Pfizer.
White strongly agreed.
Asked if the tribe would consider other similar deals with pharmaceutical companies, White said: "Yes. Can you put my phone number in your article?"