Federal Appeals Court Rules in Favor of FTC: Pharmaceutical Industry Patent Rights Reportable under Hart Scott Rodino Act

Debbie Feinstein, the Director of the Federal Trade Commission’s Bureau of Competition, issued the following statement regarding yesterday’s decision by the U.S. Court of Appeals for the District of Columbia Circuit upholding a November 2013 FTC rulemaking that deems the transfers of pharmaceutical patent rights to be reportable assets under the Hart-Scott-Rodino Act – even if the sellers retain some manufacturing rights.

“The rulemaking is an important part of our efforts to protect competition in the pharmaceutical sector, and I am pleased that the appeals court has affirmed it,” Feinstein said.

The HSR Act requires most of the proposed transactions that affect commerce in the United States and are over a certain size to be reviewed by the FTC or the Department of Justice. Either agency can take legal action to block deals that it believes would “substantially lessen competition.”

The FTC’s November 2013 rulemaking modified the HSR Act, clarifying how the Act applies to patent transfer arrangements that are commonly used in the pharmaceutical industry. It was later challenged by the Pharmaceutical Research and Manufacturers of America.

The Court’s decision upholds a 2014 order issued by the U.S. District Court for the District of Columbia that denied summary judgment for Pharmaceutical Research and Manufacturers of America, and granted summary judgment to the FTC.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave., NW, Room CC-5422, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.