Special Issues in M

1
Special Issues in MA Transactions for Marketed
Products

• John A. Hurvitz
• Covington Burling
• Washington, DC
• jhurvitz_at_cov.com
• [phone]

2
Overview

• Purchased Assets
• Regulatory Issues
• Returns, Rebates and Chargebacks
• Manufacturing and Supply
• Liability

3
Purchased Assets

• Discrete Assets Will Be Conveyed e.g., INDs,
  NDAs, Inventory, Patents, Trademarks, Contracts
• Territorial restrictions
• Wary of sufficiency representations
• Hybrid Asset Purchase, License, Right of
  Reference
• Partial Assignment of Contracts
• Personnel
• Diligence Considerations

4
Regulatory Issues

• United States
• Practical considerations
• Europe
• Tripartite Process
• Seller must apply for transfer
• Buyer must affirmatively agree to assume
  responsibilities
• Regulatory authorities must be assured that buyer
  can and will assume legal and regulatory
  responsibility
• Closing Cannot be Conditioned on Transfer
• Pharmacovigilence

5
European Practice Points

• Complexity Depends on the Manner of Approval
• Centralized Approvals clear process
• Otherwise, up to 25 national marketing
  authorizations that are transferred in different
  ways at different times
• Regulations permit selling of product without MA
  to ensure continuity of supply ? complexity
• Pricing and reimbursement typically attach to
  product
• Pending Applications

6
Commercial Considerations

• Returns, Rebates and Chargebacks
• Manufacturing and Supply

7
CONSUMER
Premium
Payment Flow
Rebate Flow
EMPLOYER/PLAN SPONSOR OR HEALTH INSURER
Product Flow
Negotiated Payment
Member Cost Share or Payment for Drug if Cash Pay
PHARMACY BENEFITS MANAGER
DRUG WHOLESALER/ DISTRIBUTOR
PHARMACY (Retail, Mail-order)
Negotiated Payment
Prompt Pay. Volume Discounts
DRUG MANUFACTURER
Source The Health Strategies Consultancy LLC
8
Returns

• Notify Distributors
• Split or Mark Lots
• Channel Stuffing vs. Accelerated Returns
• Shelf life

9
Rebates and Chargebacks

• Financial
• Match responsibility with economic benefit
• Chargebacks based on sale by wholesaler
• Rebates based on utilization
• Government e.g., Medicaid
• Private e.g., PBMs
• Rough justice based on pipeline
• Sunset period

10
Rebates and Chargebacks (contd)

• Regulatory
• Seller must process and report rebates on its NDC
  number
• Buyer cooperation
• Reporting for Best Price calculations
• Price increases can affect rebates
• Restrict price increases
• Cap liability
• Transition products from Sellers to Buyers FSS

11
Manufacturing and Supply

• Transition Services
• Objectives of the Parties
• Capacity
• Liability
• Structure appropriate incentives e.g.,
  escalating supply costs

12
Liability

• Transition as of closing, except
• manufacturing defects in inventory or under
  transition supply agreement
• Post closing activities of Buyer
• Formula for prorating

13
Special Issues in MA Transactions for Marketed
Products

• John A. Hurvitz
• Covington Burling
• Washington, DC
• jhurvitz_at_cov.com
• [phone]