DC Circuit: Pharmaceutical Industry Must Comply with Amended Hart-Scott-Rodino Rule | Practical Law

DC Circuit: Pharmaceutical Industry Must Comply with Amended Hart-Scott-Rodino Rule | Practical Law

In Pharmaceutical Research and Manufacturers of America v. FTC, the US Court of Appeals for the District of Columbia Circuit held that the pharmaceutical industry must comply with the Federal Trade Commission's (FTC) amended Hart-Scott-Rodino (HSR) rule requiring reporting certain transfers of exclusive patent rights to the FTC and Department of Justice (DOJ) for review.

DC Circuit: Pharmaceutical Industry Must Comply with Amended Hart-Scott-Rodino Rule

Practical Law Legal Update 4-616-4111 (Approx. 4 pages)

DC Circuit: Pharmaceutical Industry Must Comply with Amended Hart-Scott-Rodino Rule

by Practical Law Antitrust
Published on 10 Jun 2015 • USA (National/Federal)
In Pharmaceutical Research and Manufacturers of America v. FTC, the US Court of Appeals for the District of Columbia Circuit held that the pharmaceutical industry must comply with the Federal Trade Commission's (FTC) amended Hart-Scott-Rodino (HSR) rule requiring reporting certain transfers of exclusive patent rights to the FTC and Department of Justice (DOJ) for review.
On June 9, 2015, the US Court of Appeals for the District of Columbia Circuit held in Pharmaceutical Research and Manufacturers of America v. FTC that the pharmaceutical industry must adhere to an amended 2013 Federal Trade Commission (FTC) Hart-Scott-Rodino (HSR) Act rule requiring reporting certain transfers of exclusive patent rights to the FTC and DOJ for review (No. 14-5182, (D.C. Cir. June 9, 2015)).
In November 2013, the FTC finalized an amendment to the HSR premerger notification rules specific to the pharmaceutical industry. The amended HSR rule sets out clear definitions to help practitioners determine when an HSR premerger filing is necessary in connection with the transfer of exclusive pharmaceutical patent rights, including:
  • All commercially significant rights.
  • Limited manufacturing rights.
  • Co-rights.
For more information on the amendments, see Legal Update, FTC Issues Final HSR Rule for Transfer of Exclusive Pharmaceutical Industry Patent Rights.
The appellant argued that because the rule applies only to the pharmaceutical industry, the rule:
  • Exceeds the FTC's grant of statutory authority under the HSR Act.
  • Is arbitrary and capricious.
The court held that:
  • The FTC did not exceed its delegated rulemaking authority under the HSR Act in passing a rule that focuses on a specific industry.
  • The FTC’s experience in the pharmaceutical industry allowed it to develop a rule that was tailored to that industry, including its experience with HSR filings and fielding informal requests for HSR guidance.
  • The amended rule was not arbitrary and capricious.
  • The amended rule is consistent with the purpose of the HSR Act, which is to allow the FTC and DOJ to:
    • more easily identify potentially anticompetitive transactions; and
    • fully evaluate the effects of a proposed acquisition before the acquisition is consummated.
For more information on the Hart-Scott-Rodino Act, see Practice Note, Hart-Scott-Rodino Act: Overview and Determining Hart-Scott-Rodino Applicability.