Yet Another Turn of the Screw: The FTC Again Targets Pharmaceutical Industry, This Time Through the HSR Act

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Fresh from its victory in the Third Circuit on “pay-for-delay” deals involving brand name and generic pharmaceutical companies, the Federal Trade Commission (“FTC”) has announced yet another initiative aimed at the pharmaceutical industry. The FTC seeks to add to its arsenal against the industry, already central to the FTC’s enforcement agenda, by requiring that certain patent licenses be notified under its Hart-Scott-Rodino (“HSR”) premerger review procedures.

Four weeks ago, the Third Circuit announced it was adopting the FTC’s approach to pay-for-delay settlements, setting up an unambiguous conflict with three other circuits very likely to be taken up by the Supreme Court. Less than two weeks later, on July 31, 2012, the agency announced a new policy concerning disgorgement, giving itself freer rein to seek monetary relief from companies engaging in anticompetitive conduct. Now the agency proposes to target patent licenses in the pharmaceutical industry — the first instance of an industry -specific filing obligation in the nearly 40-year history of the HSR Act. Under the proposed FTC rule, patent licenses conferring “commercially significant” rights on a licensee in the pharmaceutical industry would be required to be filed under the HSR procedures that give the federal antitrust agencies advance notice of significant mergers and acquisitions. Adding to the sense of an industry under antitrust siege, the HSR proposal came on the same day that the FTC announced it had filed an amicus brief arguing that licenses of authorized generics should be treated the same as other pay-for-delay deals.

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