Recent IRS Anti-Inversion Proposals: Notice 2014-52


A corporate transaction that has received considerable publicity in recent months is the so-called “inversion” where a public U.S. company migrates to a foreign country, typically by merging with a smaller foreign company and thereby becoming a subsidiary of a new public foreign company (“Foreign Parent”). Not surprisingly, the potential for income tax savings usually is among the key objectives of an inversion transaction.   The United States has one of the highest corporate tax rates in the world, and a complicated set of rules designed to tax the earnings of foreign subsidiaries of a U.S. company, while a number of foreign jurisdictions, including the United Kingdom, have become attractive alternatives for a public company to organize by offering lower corporate tax rates and tax exemptions for earnings derived from operations conducted outside their borders.
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More Stringent Safe Harbor Requirements: The Right Prescription?


Privacy issues raise questions for pharmaceutical companies and the future of cross-border data sharing under the U.S. Department of Commerce’s Safe Harbor program. Rolled out in 2000 between the United States and European Union, the program helps U.S. companies satisfy E.U. data protection laws when receiving personal data from the E.U. Participating companies self-certify that they follow a core set of privacy principles. These principles include the duty to notify users regarding the purpose for which their information is collected and the obligation to provide individuals with an opportunity to opt-out of disclosures to third-parties or uses other than those for which the data was originally collected. Companies also represent that they will secure the personal data. Of the nearly 5,000 U.S. companies that have certified that they abide by the Safe Harbor framework, 238 identify themselves as part of the drugs or pharmaceutical industry.
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CMS Returns Rejected Sunshine Data; What’s Next?


On September 30, 2014, CMS publically published Open Payments data and needless to say, it has been a bumpy road. With about 40 percent of records de-identified due to what CMS stated was a result of “inconsistent physician information, such as National Provider Identifier (NPI) for one doctor and a license number for another”, the lack of follow-up left applicable manufacturers and Group Purchasing Organizations (GPOs) with their hands tied.
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The Plaintiff Bar’s Latest Attack on Generic Drug Manufacturers: How a New FDA Rule Could Dismantle Recent Legal Victories


Over the past few years, generic drug manufacturers have achieved significant legal victories in the United States, including Supreme Court rulings that state law “failure to warn” and design defect claims against these manufacturers are preempted by federal law. The plaintiffs’ bar, however, has proven to be unflagging in its determination to find a way to impose liability on generic manufacturers, which account for 86% of prescriptions written and 29% of total drug sales in the United States. In this effort, plaintiffs’ attorneys have apparently found a receptive and powerful ear in the Food and Drug Administration (FDA), who, in November 2013, after meeting with the American Association of Justice, a lobbying organization for the plaintiffs’ bar, issued a Notice of Proposed Rulemaking that would effectively deprive generic manufacturers’ preemption defense by allowing generic manufacturers to independently update their products labels. A final version of the proposed rule is expected before the end of the year. Such a move would short-circuit now established legal principles, and expose generic manufactures to numerous lawsuits. The end result could be a monumental increase in the cost of generic prescriptions. In addition, the change may lead to a decrease in the availability of generic drugs that manufacturers perceive as having an elevated risk of litigation.
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Property Tax Incentives for R&D Facilities in Texas


A majority of U.S. states aggressively incentivize R&D, seeking innovation and the creation of new highly skilled, high-paying jobs. Texas, in particular, has ramped up its efforts following legislative findings. While Texas ranks 3rd in gross R&D spending, it ranks only 28th in R&D spending when compared to gross state product. 2013 legislation resurrected incentives that had expired in 2006, permitting taxpayers engaged in R&D to choose between sales tax exemptions and franchise tax credits. While much attention has been paid to these new sales and franchise tax incentives, substantial property tax incentives available to companies embarking upon new R&D projects in Texas are often unutilized.
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USPTO Guidance on Natural Product Development


To be eligible for patent protection, an invention must meet several requirements under U.S. patent law. One of those requirements – whether the patent claims eligible subject matter (35 U.S.C. § 101) – has been front and center in several recent Supreme Court cases. Two of those cases directly concern life science inventions—the Mayo and Myriad cases—while a third—Alice Corp.—is likely to have broad applicability to any patentable method.

In light of these cases, the United States Patent and Trademark Office (USPTO) recently issued guidelines to patent examiners on how to analyze claims reciting or involving “Laws of Nature/Natural Principles, Natural Phenomena, And/Or Natural Products.” (http://www.uspto.gov/patents/law/exam/myriad-mayo_guidance.pdf) (Mayo/Myriad guidance). The analytical framework of the guidance involves a “decision tree” with three sequentially addressed questions:
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