PhRMA Opposes FTC’s Proposed Rules for Reporting Certain Pharmaceutical Licensing Transactions

We recently reported that during the August doldrums the Federal Trade Commission (FTC) proposed for comment amendments to the Hart-Scott-Rodino rules that would require reporting of licensing agreements under which a patent holder grants an “exclusive” license, but retains the limited right to manufacture solely for the recipient of the patent rights, or a right to assist in developing and commercializing the product covered by the patent (“co-rights”) and the value of the license exceeds the HSR minimum (currently $68.2 million).

On the last day of the comment period, the Pharmaceutical Research and Manufacturers of America (PhRMA), whose membership includes most large developers and manufacturers of branded drugs, filed a 47-page comment objecting to the proposed Rulemaking.

According to PhRMA, “[t]he proposed rules constitute an unprecedented attempt by the agency to increase the HSR Act requirements for a single industry.” PhRMA’s most fundamental concerns are that: (1) “the HSR Act is a statute of general application that must be applied even-handedly to all ‘persons,’ except as Congress expressly authorized.” Nothing in the Act empowers the FTC to increase the reporting burdens for a single industry; (2) “The proposed discriminatory treatment of the pharmaceutical industry … directly conflicts with the principles of non-discrimination in antitrust enforcement espoused by the U.S. antitrust agencies globally;” (3) the proposed rules fail to comply with the Administrative Procedures Act because there is no basis for the discriminatory treatment of the industry, and the proposed rulemaking “fails to point to any evidence to justify such adverse discrimination.” Indeed, PhRMA states, “the types of intellectual property licensing transactions targeted by the proposed amendments are by no means limited to the pharmaceutical industry,” and “frequently occur in many other industries where innovators may turn to third parties to collaborate on development and commercialization”; and (4) the proposal fails to comply with the Paperwork Reduction Act.

How much weight will PhRMA’s comments carry? We will continue to follow and report.

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