Under the Hatch-Waxman and America Invents Acts, Congress has established a system for judicial and administrative review of prescription-drug patents that balances exclusive rights for patent holders and the entry of generic competitors. Threatening this balance, the pharmaceutical company Allergan recently transferred prescription drug patents to the Saint Regis Mohawk Tribe, a federally recognized Indian tribe. Because tribal sovereign immunity limits the jurisdiction of courts and other adjudicatory bodies to hear cases involving tribal interests, such actions by brand-name pharmaceutical companies may prevent generic companies and other parties from invalidating patents, likely leading to higher drug prices.

This Essay proposes an option to discourage such transactions: an antitrust suit, which would not require the joinder of all co-conspirators and could thereby sidestep sovereign immunity. The Allergan-Tribe transaction improperly increases the probability that Allergan’s patent is upheld beyond what was envisioned by Congress’s original grant of market power. To evaluate such transactions, this Essay argues that courts should adopt the permissive “no economic sense” test: when an agreement makes no economic sense but for its anticompetitive purpose, patent assignments to a sovereign actor are anticompetitive. This test would prevent the naked lease of sovereign immunity such as the present Allergan-Tribe transaction, while still allowing for productive collaborations between private parties, and sovereign states or tribes. The Essay concludes, however, that antitrust law alone cannot address all misuses of sovereign immunity for private gain; Congress must also take a broader approach to address the lack of tribal economic opportunities.

Read the full Yale Law Journal article.

Cecilia Cheng

Yale Law Journal

Cecilia Cheng is a student at Yale Law School.

Theodore T. Lee

Theodore T. Lee is a student at Yale Law School.

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