Last November, the Federal Trade Commission (“FTC”) announced a rule requiring advance notice of proposed exclusive patent license agreements in the pharmaceutical industry that exceed $75.9 million in value. Upon receipt of such a notice, the FTC or the Justice Department may then oppose the transaction on antitrust grounds.
This was the first industry-specific rule that the FTC had issued under the Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”). Sure enough, the Pharmaceutical Research and Manufacturers of America (“PhRMA”) filed suit, arguing that, although the HSR Act allows the FTC to exempt certain industries from the Act’s filing requirements, it does now allow the FTC to create a rule which specifically targets an industry.
PhRMA reasoned that an earlier version of the HSR Act included a provision allowing the FTC to “impose reporting burdens on certain classes or categories of persons” but this was removed from the final version of the Act. Congress’s removal of this language constituted a refusal to grant the FTC the power to target a specific industry, PhRMA contended.
On May 30, 2014, the judge presiding over PhRMA v. FTC granted the FTC’s motion for summary judgment and upheld both the FTC’s power to target a single industry and the new rule (the “Final Rule”) itself. The court turned PhRMA’s argument regarding the legislative history on its head: If the FTC can exempt industries under the HSR Act, it can exempt all industries except for the pharmaceutical industry. Rather than make the FTC pursue this roundabout path to the same result, the court upheld the FTC’s more direct route.
As of this publication, PhRMA has not appealed the court’s decision or announced on its website any intention to do so.
Now that the Final Rule has survived a court challenge, let’s review its scope: The rule requires prior notification to the FTC of exclusive patent licenses in the pharmaceutical industry. The FTC and the Justice Department then have 30 days to decide whether to object to the transaction on antitrust grounds.(More)
This was the first industry-specific rule that the FTC had issued under the Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”). Sure enough, the Pharmaceutical Research and Manufacturers of America (“PhRMA”) filed suit, arguing that, although the HSR Act allows the FTC to exempt certain industries from the Act’s filing requirements, it does now allow the FTC to create a rule which specifically targets an industry.
PhRMA reasoned that an earlier version of the HSR Act included a provision allowing the FTC to “impose reporting burdens on certain classes or categories of persons” but this was removed from the final version of the Act. Congress’s removal of this language constituted a refusal to grant the FTC the power to target a specific industry, PhRMA contended.
On May 30, 2014, the judge presiding over PhRMA v. FTC granted the FTC’s motion for summary judgment and upheld both the FTC’s power to target a single industry and the new rule (the “Final Rule”) itself. The court turned PhRMA’s argument regarding the legislative history on its head: If the FTC can exempt industries under the HSR Act, it can exempt all industries except for the pharmaceutical industry. Rather than make the FTC pursue this roundabout path to the same result, the court upheld the FTC’s more direct route.
As of this publication, PhRMA has not appealed the court’s decision or announced on its website any intention to do so.
Now that the Final Rule has survived a court challenge, let’s review its scope: The rule requires prior notification to the FTC of exclusive patent licenses in the pharmaceutical industry. The FTC and the Justice Department then have 30 days to decide whether to object to the transaction on antitrust grounds.(More)
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