The Federal Trade Commission (FTC)’s recently finalized Hart-Scott-Rodino (HSR) premerger notification rule places a significant time and cost burden on companies engaging in procompetitive mergers and acquisitions (M&A), according to top legal analyses and the Agency’s own estimates.
Despite certain revisions from the FTC’s initial proposal, the final rule considerably expands the scope of information required as part of the premerger notification process. This additional burden risks broadly discouraging M&A – even clearly procompetitive M&A – which the life sciences industry depends on to advance the next generation of treatments and cures to patients. The final rule will be especially harmful to the estimated 80 percent of life sciences companies which operate without a profit.
“The new rules, which represent the most significant changes to the HSR filing regime since the HSR Act was enacted over 45 years ago, will significantly increase the burden on parties submitting HSR filings…”
“Although scaled back from the agency’s 2023 proposal, the final rules will materially increase the burden on merging parties because it requires significantly more information than is currently reported on the HSR form.”
On average, the FTC estimates that complying with its new rule will require companies to spend:
- 105 total hours on average to compile the required documents and disclosures, a 68-hour increase over the current form
- $39,644 in increased labor and administrative costs
Applied to the deals they reviewed in 2023, the FTC estimates that the rule would have resulted in over $139 million in total additional costs for companies to comply with the new requirements.
Life sciences companies already face steep odds, with 90% of medicines tested in clinical trials never reaching patients. U.S. antitrust enforcers must recognize the unique and fundamental role of life sciences M&A in bringing breakthroughs to patients in need.