TreatiseAnswer Book

Health Care Mergers and Acquisitions Answer Book (2017 Edition)

 by Andrew L Bab, Kevin A Rinker
 
 Copyright: 2017

 Product Details >> 

Product Details

  • ISBN Number: 9781402429729
  • Page Count: 1474
  • Number of Volumes: 1
  •  

M&A activity in the health care industry is at its highest level since the 1980s. Health Care Mergers and Acquisitions Answer Book, co-edited by Andrew L. Bab and Kevin A. Rinker at Debevoise & Plimpton LLP, provides the reader with a roadmap to this booming sector. Organized into four parts, it includes practical advice on how to address the various industry-specific issues arising in health care acquisitions:

  • Part I: Structuring Health Care M&A Transactions focuses on the various legal and practical areas that can have an impact on the structure of a health care M&A transaction, including provisions relating to purchase price, as well as regulatory, antitrust, financing, and tax and accounting considerations. 
  • Part II: Due Diligence, discusses how to conduct diligence in health care transactions, including with regard to the regulatory and compliance issues arising in health care transactions, such as compliance with the federal and state health care fraud and abuse laws, Medicare and Medicaid rules, HIPAA and other health care regulations. Other topics discussed include intellectual property rights, material contracts, and product liability and medical malpractice claims. 
  • Part III: Transaction Documentation, analyzes the principal elements of a purchase agreement for a health care transaction, including industryspecific representations and warranties, pre- and post-closing covenants, closing conditions, and indemnification provisions typically found in health care acquisition agreements. 
  • Part IV: Special Topics covers special issues arising in acquisitions of U.S. companies by non-U.S. buyers, as well as an overview of health care M&A transactions in France, Germany, England, Russia, and Canada.

Health Care Mergers and Acquisitions Answer Book analyzes recent health care transactions, and provides practice tips on what to look out for and how to avoid the various pitfalls that may be encountered while working on health care transactions. It covers dealmaking involving pharmaceutical and biotech companies, hospitals, health insurers and private equity and financial services firms investing in the health care sector. In addition to transactions involving outright acquisitions of health care companies, Health Care Mergers and Acquisitions Answer Book reviews alternative structures used in health care M&A transactions, such as: joint ventures • strategic alliances • product and portfolio acquisitions • option transactions, and • licensing and collaboration agreements.

  Table of Contents
  About This Book
  Glossary and Abbreviations
  Current Trends in Health Care M&A
  Impact of Health Care Reform Legislation on Health Care Transactions
Chapter 1: Basic Transaction Structures in Health Care M&A
  • : Acquisition of the Whole Business1-2
  • Q 1.1 : What is a whole business acquisition?1-2
    • Q 1.1.1 : What is a stock purchase?1-3
    • Q 1.1.2 : What is a merger?1-4
    • Q 1.1.3 : What is a tender offer?1-5
    • Q 1.1.4 : What is an asset purchase?1-9
  • : Product and Portfolio Acquisitions1-10
  • Q 1.2 : What is a product or portfolio acquisition?1-10
  • : Option Transactions1-11
  • Q 1.3 : What are typical M&A structures in the pharmaceutical and biotechnology industries?1-11
  • Q 1.4 : What are the key terms of an option transaction?1-11
    • Q 1.4.1 : What is the purpose of the up-front payment?1-12
    • Q 1.4.2 : What determines the duration of the option?1-14
    • Q 1.4.3 : How is the option transaction documented?1-16
  • : Other Structuring Considerations1-17
  • Q 1.5 : What other factors may affect the structuring decision in health care M&A transactions?1-17
  • Q 1.6 : When should the transaction be structured as a stock purchase as opposed to an asset purchase?1-18
    • Q 1.6.1 : What are assumed vs. excluded assets and liabilities?1-18
    • Q 1.6.2 : What are the tax implications of structuring the transaction as a stock or asset deal?1-20
    • Q 1.6.3 : How does the transaction structure affect the need to obtain regulatory approvals and third-party consents?1-23
    • Q 1.6.4 : What are relevant documentary considerations?1-25
Chapter 2: Contingent Payments
  • : Contingent Value Rights2-2
  • Q 2.1 : What are contingent value rights?2-2
    • Q 2.1.1 : What are stock-based CVRs and when are they used?2-2
    • Q 2.1.2 : What are event-driven CVRs?2-3
  • Q 2.2 : What events can trigger payments under event-driven CVRs?2-4
  • Q 2.3 : Are event-driven CVRs equity, debt, or something else entirely?2-5
  • Q 2.4 : When is an event-driven CVR treated as a security and not a contract right?2-5
  • Q 2.5 : How are CVRs treated from an accounting perspective?2-6
  • Q 2.6 : Must issuers of CVRs exert a certain level of effort to bring about the agreed milestones?2-7
    • Q 2.6.1 : What efforts obligations may courts imply?2-7
    • Q 2.6.2 : What efforts obligations do health care issuers typically include in their CVR agreements?2-8
  • Q 2.7 : What special issues confront private equity sponsors who buy health care companies and who wish to use CVRs?2-11
  • : Earnouts Compared to CVRs2-12
  • Q 2.8 : What is an earnout?2-12
  • Q 2.9 : What triggers are used in earnouts?2-12
  • Q 2.10 : Can earnouts pay the buyer rather than the seller, if the target performs poorly?2-13
  • Q 2.11 : Do earnouts last as long as CVRs?2-13
  • Q 2.12 : Are earnouts more likely than CVRs to be enforced?2-13
  • Q 2.13 : What are the income tax consequences of earnouts?2-14
Chapter 3: Purchase Price Adjustments
  • : Functions of Purchase Price Adjustments3-2
  • Q 3.1 : What are the functions of a purchase price adjustment?3-2
  • : Balance Sheet Adjustments3-4
  • Q 3.2 : What is the most common type of purchase price adjustment used in health care M&A transactions?3-4
  • Q 3.3 : What is a working capital adjustment?3-4
    • Q 3.3.1 : How should working capital be defined in the agreement?3-6
    • Q 3.3.2 : What is the appropriate baseline for a working capital adjustment?3-9
    • Q 3.3.3 : What accounting principles should be used in calculating the working capital adjustment?3-11
    • Q 3.3.4 : What are the mechanics of a working capital adjustment?3-12
  • Q 3.4 : What other types of balance sheet adjustments are used in health care acquisitions?3-14
  • : Other Types of Purchase Price Adjustments3-15
  • Q 3.5 : What other types of purchase price adjustments are used in health care M&A transactions?3-15
    • Q 3.5.1 : What are event-driven purchase price adjustments?3-16
    • Q 3.5.2 : What are liability-driven purchase price adjustments?3-17
  • : Purchase Price Adjustments Versus Indemnification3-18
  • Q 3.6 : What is the difference between a purchase price adjustment and indemnification?3-18
  • Q 3.7 : What is the interaction between a working capital adjustment and indemnification provisions?3-19
  • : Dispute Resolution3-20
  • Q 3.8 : How are disputes about purchase price adjustments typically resolved?3-20
Chapter 4: License-and-Collaboration Agreements
  • : Scope of the License4-2
  • Q 4.1 : What are the principal terms of a license grant for a pharmaceutical product?4-2
    • Q 4.1.1 : Should a license be exclusive or nonexclusive?4-3
    • Q 4.1.2 : Should the license cover one or more fields of use or should the field of use be unlimited?4-3
    • Q 4.1.3 : Should the license cover one or more jurisdictions or be worldwide?4-4
  • : Payments4-5
  • Q 4.2 : What are the typical economic arrangements in a license?4-5
    • Q 4.2.1 : What are up-front payments?4-5
    • Q 4.2.2 : What are milestone payments?4-5
    • Q 4.2.3 : What are royalties?4-6
  • Q 4.3 : Are there other types of payments?4-7
  • : Assigning the Responsibilities of the Parties4-7
  • Q 4.4 : Which party is typically responsible for development of the product?4-7
  • Q 4.5 : Which party is typically responsible for filing and maintaining New Drug Applications and conducting related studies?4-8
  • Q 4.6 : Which party is responsible for prosecution of trademarks and patents?4-8
  • Q 4.7 : When should the parties consider a co-promotion arrangement?4-9
  • Q 4.8 : Should the licensee seek a right of first negotiation, first offer, or first refusal?4-9
  • Q 4.9 : Should the license-and-collaboration agreement include a noncompetition covenant?4-10
  • Q 4.10 : Which party is typically responsible for manufacturing?4-11
    • Q 4.10.1 : Should the licensee have manufacturing transfer assistance from the licensor?4-11
  • Q 4.11 : Under what circumstances may each party terminate the agreement?4-12
Chapter 5: Joint Ventures and Strategic Alliances
  • : Objectives5-2
  • Q 5.1 : Why create a joint venture or strategic alliance in the health care industry?5-2
    • Q 5.1.1 : Is capital the only reason to consider a joint venture or strategic alliance?5-3
  • Q 5.2 : What additional motivations might health care service providers have for creating joint ventures and strategic alliances?5-4
  • Q 5.3 : What additional motivations might pharmaceutical and biotechnology companies have for creating joint ventures and strategic alliances?5-6
  • : Health Care Providers5-7
  • Q 5.4 : What are common strategic alliances involving health care service providers?5-7
  • Q 5.5 : When might a joint venture be appropriate for a hospital or other health care service provider?5-8
  • Q 5.6 : What else should health care providers keep in mind in determining whether to form a joint venture?5-10
  • : Pharmaceutical and Biotech Companies5-12
  • Q 5.7 : What are common joint ventures and strategic alliances involving pharmaceutical and biotechnology companies?5-12
  • Q 5.8 : What factors influence the structure of the pharmaceutical or biotechnology joint venture or strategic alliance?5-14
    • Q 5.8.1 : What concerns may influence the allocation of control in pharmaceutical and biotechnology joint ventures and strategic alliances?5-15
  • Q 5.9 : How should the parties deal with the possibility of termination of the joint venture?5-16
  • : Examples5-17
  • Q 5.10 : What are some recent examples of joint ventures in health care services?5-17
  • Q 5.11 : What are some recent examples of strategic alliances in health care services?5-19
  • Q 5.12 : What are some recent examples of joint ventures in pharmaceuticals and biotechnology?5-21
  • Q 5.13 : What are some recent examples of strategic alliances in pharmaceuticals and biotechnology?5-22
Chapter 6: Transfer of Regulatory Approvals, Licenses, and Clearances
  • : Drugs and Biologics6-2
  • Q 6.1 : Is it possible to transfer ownership of a New Drug Application or Abbreviated New Drug Application?6-2
  • Q 6.2 : Is it possible to transfer ownership of a Biologics License Application?6-3
  • : Devices6-4
  • Q 6.3 : Is it possible to transfer ownership of a Premarket Approval?6-4
  • Q 6.4 : Is it possible to transfer ownership of a 510(k)?6-5
Chapter 7: Regulatory Issues in Acquisitions of Health Insurers
  • : General Considerations7-2
  • Q 7.1 : When does a change of control occur?7-2
  • Q 7.2 : What are the basic regulatory approvals required in order to effect the acquisition of control of a health insurer?7-2
  • Q 7.3 : If the health insurer is a health maintenance organization, are any additional regulatory approvals required?7-3
  • Q 7.4 : As a practical matter, what is the best way to manage and coordinate all the jurisdictions where filings are required?7-4
  • : Form A7-5
  • Q 7.5 : What information is required to complete the Form A change-of-control filing?7-5
  • Q 7.6 : Is information submitted with a Form A confidential?7-6
  • Q 7.7 : In addition to the insurer’s domiciliary regulator, do any other states’ insurance regulators have to approve a change of control?7-7
  • : Form E7-8
  • Q 7.8 : When is a Form E required?7-8
  • : Approval Process7-9
  • Q 7.9 : Once the filings are made, how long will it take to receive an approval?7-9
  • : Additional Approvals and Filings7-9
  • Q 7.10 : What if the insurer being acquired is a third-party administrator or utilization review agency?7-9
  • Q 7.11 : If the health insurer being acquired has entered into Medicare or Medicaid contracts, will additional approvals be required?7-10
  • Q 7.12 : Do federal premerger notification rules apply?7-10
  • Q 7.13 : Are there additional filings that may be required?7-10
Chapter 8: Not-for-Profit Issues
  • : Public Interest8-2
  • Q 8.1 : What are the key differences between not-for-profit and for-profit organizations that can affect acquisitions and joint ventures?8-2
  • : Federal Tax-Exempt Status8-3
  • Q 8.2 : What are the benefits of tax-exempt status?8-3
    • Q 8.2.1 : If an organization has tax-exempt status, is all of its income exempt from federal tax?8-4
  • Q 8.3 : What are the requirements for tax-exempt status?8-4
  • Q 8.4 : What makes a health care provider’s activities “charitable” within the meaning of section 501(c)(3)?8-5
    • Q 8.4.1 : Are additional requirements imposed by the health care reform law?8-6
  • Q 8.5 : Can a health insurance provider be tax-exempt?8-9
  • Q 8.6 : Can an HMO be tax-exempt?8-11
  • Q 8.7 : Can a tax-exempt, not-for-profit health care provider engage in transactions involving for-profit investors without jeopardizing its exempt status or incurring federal or state sanctions?8-11
  • : Joint Ventures8-12
  • Q 8.8 : Why are joint ventures between nonprofit and for-profit entities useful in the health care industry?8-12
  • Q 8.9 : For the nonprofit to maintain its tax-exempt status, how must the joint venture be structured?8-13
    • Q 8.9.1 : What sort of control of the joint venture must the nonprofit maintain?8-13
    • Q 8.9.2 : What other factors are relevant?8-14
  • : State Law Requirements for Asset Sales8-15
  • Q 8.10 : What are typical state law requirements for approving a sale of assets by a nonprofit health care organization?8-15
    • Q 8.10.1 : What are the California requirements?8-15
    • Q 8.10.2 : What are the Massachusetts requirements?8-17
    • Q 8.10.3 : What are the New York requirements?8-18
  • : State Approval of For-Profit’s Acquisition of Not-for-Profit Facilities8-20
  • Q 8.11 : What special conditions can a state impose before granting approval of the acquisition of a nonprofit health care provider’s facilities?8-20
  • : Excess-Benefits Transactions8-23
  • Q 8.12 : What sanctions can the Internal Revenue Service impose on individuals who receive “excess” benefits in a deal between a nonprofit and a for-profit entity?8-23
  • Q 8.13 : How does a charitable organization establish the rebuttable presumption that a transaction is not an excess-benefit transaction?8-24
    • Q 8.13.1 : What is approval by an authorized body?8-25
    • Q 8.13.2 : What is reliance on comparable data?8-26
    • Q 8.13.3 : What is the proper-documentation requirement?8-27
Chapter 9: Antitrust Considerations
  • : Premerger Notification9-2
  • Q 9.1 : What is the Hart-Scott-Rodino Act?9-2
  • Q 9.2 : What types of transactions are covered by the HSR Act?9-2
    • Q 9.2.1 : Are licensing transactions covered by the HSR Act?9-3
  • Q 9.3 : What information is required in the HSR filing?9-4
  • Q 9.4 : What happens after the HSR filing?9-5
  • Q 9.5 : What additional information is typically sought by the Assigned Agency during the initial waiting period?9-5
  • Q 9.6 : What happens after the initial waiting period?9-5
    • Q 9.6.1 : What information is sought by the formal request for additional information (or second request)?9-6
    • Q 9.6.2 : Once a second request has been issued, is there any possibility of the Agencies granting clearance without substantial compliance?9-6
    • Q 9.6.3 : How burdensome is compliance with a second request?9-7
  • Q 9.7 : Once the parties submit the information called for by the second request, how does the Assigned Agency proceed?9-7
  • : Merger Analysis9-8
  • Q 9.8 : What is merger analysis?9-8
  • Q 9.9 : What types of transactions are subject to merger analysis?9-8
  • Q 9.10 : How is the relevant product market defined?9-9
    • Q 9.10.1 : How is the relevant product market defined for hospital mergers?9-9
    • Q 9.10.2 : How is the relevant product market defined for pharmaceutical mergers?9-11
    • Q 9.10.3 : How is the relevant product market defined for licensing arrangements?9-13
  • Q 9.11 : How is the relevant geographic market determined?9-15
    • Q 9.11.1 : How is the relevant geographic market determined for hospital mergers?9-15
    • Q 9.11.2 : How is the relevant geographic market determined for pharmaceutical mergers?9-17
  • Q 9.12 : What market conditions are considered in assessing market power?9-18
    • Q 9.12.1 : How might a merger impair competition in the relevant market?9-19
    • Q 9.12.2 : What types of procompetitive effects might outweigh any potential impairment of competition?9-20
  • Q 9.13 : What other “defenses” might be argued in the face of a post-merger market with competitive impairment?9-21
    • Q 9.13.1 : What is the “failing firm” defense?9-22
    • Q 9.13.2 : What is the “ease of entry” defense?9-24
  • : Protections for Certain Health Care Mergers9-25
  • Q 9.14 : Does the nonprofit status of a hospital affect the analysis of a merger involving the hospital?9-25
  • Q 9.15 : What transactions are protected under the state action immunity doctrine?9-28
  • Q 9.16 : What guidance is available from the antitrust authorities on health care merger analysis?9-29
  • : Antitrust Considerations Applicable to Patent Pools9-30
  • Q 9.17 : What are patent pools?9-30
  • Q 9.18 : What is the Agencies’ approach to reviewing patent pools?9-30
  • Q 9.19 : What guidance is available from the Agencies on the treatment of patent pools?9-32
Chapter 10: Valuation Issues
  • : The Appraisal Process10-3
  • Q 10.1 : What is an appraisal?10-3
  • Q 10.2 : Are appraisers and the appraisal process subject to professional standards?10-3
    • Q 10.2.1 : How do regulatory requirements in the health care industry relate to appraisal standards?10-3
    • Q 10.2.2 : What is the scope-of-work rule?10-4
    • Q 10.2.3 : What are the different types of valuation reports?10-4
  • Q 10.3 : When is a valuation necessary?10-5
  • Q 10.4 : What is the appropriate standard of value in a given case?10-6
    • Q 10.4.1 : What is the typical standard of value used in health care transactions?10-7
    • Q 10.4.2 : What is the typical standard of value used in the pharmaceutical and biotech industry?10-8
  • Q 10.5 : What are the primary approaches to value?10-8
  • : Cost Approach10-9
  • Q 10.6 : What is the cost approach?10-9
  • Q 10.7 : When is the cost approach most appropriate?10-9
  • Q 10.8 : What are the strengths and weaknesses of the cost approach/asset-based approach?10-10
  • Q 10.9 : How are intangible assets identified and categorized?10-10
    • Q 10.9.1 : What are market-related intangible assets?10-11
    • Q 10.9.2 : What are consumer-related intangible assets?10-11
    • Q 10.9.3 : What are contract-based intangible assets?10-12
    • Q 10.9.4 : What are technology-based intangible assets?10-12
  • : Market Approach10-12
  • Q 10.10 : What is the market approach?10-12
    • Q 10.10.1 : What is the guideline publicly traded company method?10-13
    • Q 10.10.2 : What is the guideline merged and acquired company method?10-14
    • Q 10.10.3 : What is the direct sales comparison method?10-15
  • Q 10.11 : When is the market approach most appropriate?10-15
  • : Income Approach10-17
  • Q 10.12 : What is the income approach?10-17
  • Q 10.13 : What is the discounted cash flow analysis?10-18
    • Q 10.13.1 : What are the main components of a DCF analysis?10-18
    • Q 10.13.2 : How are revenues estimated?10-19
    • Q 10.13.3 : How are expenses determined?10-19
    • Q 10.13.4 : What is the economic measure generated from the DCF?10-19
    • Q 10.13.5 : What is the reversion?10-20
    • Q 10.13.6 : What are the special considerations in applying the DCF analysis in health care transactions?10-21
  • Q 10.14 : What are the decision tree method and real options analysis?10-21
  • : Reconciliation10-22
  • Q 10.15 : What is the reconciliation?10-22
  • : Other Functions for Valuation Opinions10-23
  • Q 10.16 : What is the role of valuation in complying with acquisition accounting rules?10-23
  • Q 10.17 : How can a valuation be used to facilitate compliance with fraud and abuse laws?10-24
  • Q 10.18 : How can a valuation opinion be used to ensure compliance with the IRS regulations relating to “excess-benefit transactions”?10-25
Chapter 11: Financing Drug Development
  • : Background11-3
  • Q 11.1 : How have companies addressed recent developments in the biopharmaceutical industry?11-3
  • : Financing from Seed Capital to Initial Public Offering11-4
  • Q 11.2 : How has the industry financed drug development historically?11-4
  • Q 11.3 : What is the current role of angel investors?11-4
  • Q 11.4 : What is the current role of venture capital?11-5
  • Q 11.5 : What is the current role of initial public offerings?11-5
  • : Post-IPO Financing for Public Biotech Companies11-6
  • Q 11.6 : What financing needs exist after the initial public offering?11-6
    • Q 11.6.1 : What is a follow-on offering?11-6
    • Q 11.6.2 : What is a registered direct offering?11-7
    • Q 11.6.3 : What are private investments in public equity?11-7
    • Q 11.6.4 : What are at-the-market offerings?11-8
    • Q 11.6.5 : What are committed equity financing facilities?11-8
    • Q 11.6.6 : What other forms of equity financings are used to raise capital?11-9
  • : Licensing and Other Collaborations Between Pharmaceutical and Biotech Companies11-9
  • Q 11.7 : Why is licensing becoming more attractive to big pharma?11-9
  • Q 11.8 : What can big pharma and biotech companies each contribute in a collaboration?11-9
  • Q 11.9 : At what stage of drug development does a collaboration take place?11-10
  • Q 11.10 : What terms can be expected in a licensing transaction?11-10
  • Q 11.11 : When are contingent value rights used?11-11
  • : More Financing Alternatives11-11
  • Q 11.12 : What are some alternatives to dilutive equity financing of drug development?11-11
    • Q 11.12.1 : What is venture lending?11-11
    • Q 11.12.2 : What are royalty-based financings?11-12
    • Q 11.12.3 : What are financings linked to clinical research organizations?11-12
    • Q 11.12.4 : What are structured drug development financings?11-13
Chapter 12: Financing of Health Care M&A Transactions
  • : Acquisition Financing Generally12-2
  • Q 12.1 : What are the different types of acquisition financing?12-2
    • Q 12.1.1 : What is cash-flow financing and how is it used in acquisition financing?12-3
    • Q 12.1.2 : What is asset-based financing and how is it used in acquisition financing?12-4
  • : Acquisition Financing in the Health Care Industry12-5
  • Q 12.2 : What are typical financing concerns when financing the acquisition of a target in the health care industry?12-5
  • Q 12.3 : Why is the “corporate practice of medicine” doctrine relevant to acquisition financing?12-6
  • Q 12.4 : How does HIPAA affect the due diligence process, inspection rights, enforcement rights, and control mechanisms of a lender?12-7
    • Q 12.4.1 : Is it possible to avoid having HIPAA apply to a financing?12-8
  • Q 12.5 : What are typical asset-based financing issues in the health care industry?12-9
    • Q 12.5.1 : What is a borrowing base?12-9
    • Q 12.5.2 : What is the typical payor mix in the borrowing base of a borrower in the health care industry?12-10
    • Q 12.5.3 : What are Medicare and Medicaid?12-10
    • Q 12.5.4 : How does the payor mix affect collectability of accounts receivable and, in turn, the borrowing base?12-11
    • Q 12.5.5 : Why do gross and net health care receivable amounts differ substantially?12-12
    • Q 12.5.6 : What protections are built into the borrowing base against deterioration of the health care business?12-13
    • Q 12.5.7 : What issues are associated with lending against inventory in the health care industry?12-14
  • Q 12.6 : How predictable is the cash flow of a health care business and how is it relevant for financing?12-15
    • Q 12.6.1 : What are setoff rights?12-15
    • Q 12.6.2 : What is the true-up process?12-16
  • Q 12.7 : How does a lender perfect a security interest in government receivables such as Medicare and Medicaid receivables?12-17
    • Q 12.7.1 : What is Article 9 of the Uniform Commercial Code?12-17
    • Q 12.7.2 : How does Article 9 apply to government receivables?12-17
    • Q 12.7.3 : What are Medicare and Medicaid anti-assignment laws?12-18
    • Q 12.7.4 : How do anti-assignment laws affect acquisition financing in the health care industry?12-19
    • Q 12.7.5 : What is a double lockbox structure?12-21
    • Q 12.7.6 : Does the double lockbox structure provide complete control to the lender?12-21
  • Q 12.8 : What other enforcement risks do lenders face?12-22
Chapter 13: Tax Considerations
  • : Inversions13-2
  • Q 13.1 : What is an inversion?13-2
  • Q 13.2 : Why would a U.S. target wish to be acquired by a foreign corporation?13-2
  • Q 13.3 : Were there tax restrictions on inversions prior to the Notices and Regulations?13-3
  • Q 13.4 : Why have inversions so frequently involved U.S. pharma companies?13-4
  • Q 13.5 : What provisions of the Notices and Regulations are most significant for the pharma industry?13-5
  • Q 13.6 : Will the Notices and Regulations put an end to all pharma inversions?13-6
  • : Tax Reform13-7
  • Q 13.7 : Will the Trump Administration’s tax reform proposals affect the health care industry?13-7
  • : Tax Consequences of Acquiring Publicly Traded Target Shares for Cash and CVRs13-7
  • : Open Transactions13-7
  • Q 13.8 : What is the open transaction doctrine?13-7
  • Q 13.9 : Is open transaction reporting available in connection with the issuance of CVRs in a corporate acquisition?13-7
  • Q 13.10 : What is the tax treatment of shareholders who receive CVRs in an open transaction?13-8
  • Q 13.11 : Is the open transaction doctrine always favorable to the taxpayer?13-8
  • : Closed Transactions13-9
  • Q 13.12 : What is the closed transaction doctrine?13-9
  • Q 13.13 : What is the tax treatment of shareholders who receive CVRs in a closed transaction?13-9
  • Q 13.14 : Can the installment sale method of reporting be used in connection with the receipt of a CVR?13-10
  • : Other Issues13-11
  • Q 13.15 : What special tax issues may arise when CVRs are issued to non-U.S. persons?13-11
  • Q 13.16 : Can a CVR that only pays in shares of the issuer be received free of tax in a corporate reorganization?13-11
  • : International Tax Issues Relating to IP Licensing13-11
  • Q 13.17 : What are the key international tax issues arising out of the cross-border licensing of intellectual property in the pharmaceutical industry?13-11
Chapter 14: Accounting Considerations
  • : EBITDA14-3
  • Q 14.1 : What is EBITDA and how does it impact valuation?14-3
    • Q 14.1.1 : What are common derivatives of EBITDA?14-4
    • Q 14.1.2 : What is Management EBITDA?14-5
  • Q 14.2 : What considerations are unique to the health care industry and result in financial statement risk?14-6
  • : Revenue Recognition14-7
  • Q 14.3 : What are the primary considerations with respect to proper revenue recognition?14-7
  • Q 14.4 : What are the gross-to-net revenue reconciling items impacting revenue recognition in health care services companies?14-9
  • Q 14.5 : What are the gross-to-net-revenue adjustments impacting revenue recognition in life sciences companies?14-11
    • Q 14.5.1 : How are product returns handled?14-12
    • Q 14.5.2 : How are chargebacks handled?14-12
  • Q 14.6 : What is the potential impact of the new revenue recognition standard on life sciences transactions?14-12
    • Q 14.6.1 : What is the potential impact on collaboration arrangements?14-13
    • Q 14.6.2 : What is the potential impact on estimating variable consideration?14-14
    • Q 14.6.3 : What is the potential impact on reseller and distributor arrangements?14-15
    • Q 14.6.4 : What is the potential impact on licenses of intellectual property?14-15
  • Q 14.7 : What are the general revenue recognition considerations related to research and development arrangements between life sciences entities?14-17
  • Q 14.8 : How can one determine the substance of a R&D arrangement?14-18
  • Q 14.9 : What are the accounting considerations for R&D arrangements from the point of view of the entities involved?14-22
  • Q 14.10 : How are collaborations or arrangements to perform R&D services that are not financing arrangements accounted for?14-24
  • Q 14.11 : How should up-front fees be recognized for R&D activity?14-26
  • Q 14.12 : What are multiple-element contracts?14-27
  • Q 14.13 : What are important revenue recognition issues related to intellectual property licensing?14-28
  • : Balance Sheet Considerations14-28
  • Q 14.14 : What balance sheet considerations are particularly important during due diligence?14-28
  • Q 14.15 : What is unique about patient receivables in a health care services setting?14-29
  • Q 14.16 : What are third-party settlements?14-29
  • Q 14.17 : What are medical claims liabilities?14-30
  • Q 14.18 : What risks arise in analyzing medical malpractice, workers’ compensation, and other self-insured claims?14-31
  • Q 14.19 : What are key considerations with respect to product warranties with life sciences companies?14-31
  • Q 14.20 : How should research and development costs be treated in target financial statements?14-32
  • Q 14.21 : What other liabilities should be considered in conducting due diligence of health care entities?14-34
  • Q 14.22 : What are restructuring reserves and expenses?14-35
  • : Commitments and Contingencies14-35
  • Q 14.23 : What are commitments and contingencies?14-35
    • Q 14.23.1 : How are commitments and contingencies quantified?14-36
  • Q 14.24 : What types of commitments and contingencies are common in health care services entities?14-37
    • Q 14.24.1 : What risks relate to managed care agreements with employers or subcontract agreements with payors?14-37
    • Q 14.24.2 : What risks relate to physician guarantees?14-37
  • : Change in Control14-38
  • Q 14.25 : What change-in-control considerations are there with respect to share-based compensation?14-38
  • Q 14.26 : What change-in-control considerations are there with respect to employment contracts?14-39
  • Q 14.27 : What change-in-control considerations are raised by debt and financing agreements?14-40
  • Q 14.28 : What change-in-control considerations are specific to joint ventures and alliances?14-40
  • Q 14.29 : What change-in-control considerations are raised by licenses and service contracts?14-40
  • : Risk-Based Capital14-40
  • Q 14.30 : What is risk-based capital?14-40
  • Q 14.31 : What is statutory net worth?14-41
  • Q 14.32 : How does SAP accounting impact statutory net worth?14-41
  • Q 14.33 : What calculations are typically used to assess the adequacy of an insurer’s statutory net worth?14-41
    • Q 14.33.1 : What measure do most advisors use to assess an insurer’s statutory net worth?14-42
  • Q 14.34 : How are the insurer’s RBC ratio and authorized control level calculated?14-42
  • Q 14.35 : Why are RBC and statutory net worth relevant in health care M&A?14-43
  • : Financial Statements Needed to Finance and Complete an Acquisition14-43
  • Q 14.36 : What are the SEC reporting requirements for public companies in connection with acquisitions?14-43
  • Q 14.37 : What tests are used to determine whether an acquisition is considered to be a significant subsidiary?14-45
  • Q 14.38 : What are the timing requirements for filing?14-46
  • Q 14.39 : What are the requirements with respect to foreign acquisitions?14-47
  • Q 14.40 : What is pro forma financial information as required by the SEC?14-48
  • Q 14.41 : For what period is pro forma financial information required?14-48
  • Q 14.42 : What are pro forma adjustments?14-49
    • Q 14.42.1 : When are pro forma adjustments factually supportable?14-51
    • Q 14.42.2 : How are purchase price allocations handled?14-52
    • Q 14.42.3 : What new arrangements should be presented as pro forma adjustments?14-54
    • Q 14.42.4 : What adjustments are inappropriate in pro forma financial statements?14-54
  • Q 14.43 : What financial statements do banks require in connection with an acquisition?14-55
  • : Other Bank Requirements14-55
  • Q 14.44 : What should I consider in negotiating bank covenants?14-55
  • Q 14.45 : What are reasonable financial reporting requirements?14-57
  • Q 14.46 : What is minimum working capital?14-57
  • : Acquisition Method14-58
  • Q 14.47 : Under what circumstances does the acquisition method of accounting apply?14-58
  • Q 14.48 : How does the acquirer determine whether or not a transaction is considered a business combination?14-59
  • Q 14.49 : What are the accounting considerations in assessing the valuation of the balance sheet?14-60
  • Q 14.50 : What is pushdown accounting?14-61
  • Q 14.51 : When can pushdown accounting be applied?14-62
  • Q 14.52 : What are the most important measurement and recognition concepts and what are the exceptions?14-62
  • Q 14.53 : How does the acquisition method of accounting impact inventory?14-63
  • Q 14.54 : What are considerations in a business combination when an acquirer has a preexisting relationship with the target?14-64
  • Q 14.55 : How does the acquisition method of accounting impact leases?14-64
  • Q 14.56 : How does the acquisition method of accounting impact research and development assets?14-65
  • Q 14.57 : What is the subsequent accounting for IPR&D acquired in a business combination?14-65
  • Q 14.58 : What should an acquirer consider in evaluating a target company’s deferred revenue?14-66
  • : Earnouts14-68
  • Q 14.59 : When are earnouts used in acquisitions and what are the accounting implications?14-68
Chapter 15: Introduction to Due Diligence in Health Care M&A Transactions
  • : Due Diligence Generally15-3
  • Q 15.1 : Why is due diligence important?15-3
  • Q 15.2 : When is due diligence conducted?15-4
  • : Due Diligence in Health Care Deals15-5
  • Q 15.3 : What is the proper scope of health care M&A due diligence?15-5
  • Q 15.4 : What are the key areas of health care M&A due diligence?15-7
  • Q 15.5 : Who are the key parties and how are due diligence responsibilities typically allocated?15-7
Chapter 16: Product Development and Marketing
  • : Definitions16-2
  • Q 16.1 : What is a “drug” under the Federal Food, Drug, and Cosmetic Act?16-2
  • Q 16.2 : What is a “new drug”?16-3
  • Q 16.3 : What is a “biologic”?16-3
  • Q 16.4 : What is a “medical device”?16-4
  • Q 16.5 : What categories of medical devices are regulated by FDA?16-4
    • Q 16.5.1 : What is a Class I medical device?16-7
    • Q 16.5.2 : What is a Class II medical device?16-7
    • Q 16.5.3 : What is a Class III medical device?16-8
  • : Preclinical Testing16-8
  • Q 16.6 : What is preclinical testing and why is it conducted?16-8
  • Q 16.7 : What types of preclinical tests must be completed before engaging in clinical testing in humans?16-9
  • Q 16.8 : What are good laboratory practices for preclinical testing?16-9
  • : Clinical Studies: The IND and IDE Processes16-11
  • Q 16.9 : What are clinical studies?16-11
  • Q 16.10 : What are the clinical trial registry requirements?16-12
  • Q 16.11 : What is the Investigational New Drug process?16-13
    • Q 16.11.1 : What is a “sponsor” of an IND?16-14
    • Q 16.11.2 : What are an IND sponsor’s responsibilities?16-14
  • Q 16.12 : What is an Investigational Device Exemption?16-16
  • Q 16.13 : What device studies do not require an IDE?16-17
  • Q 16.14 : What device studies require an IDE?16-17
    • Q 16.14.1 : What is the procedure for investigational devices that present nonsignificant risks?16-18
    • Q 16.14.2 : What is the procedure for investigational devices that present significant risks?16-18
  • Q 16.15 : What phases of clinical studies are conducted during the IND process?16-19
  • Q 16.16 : What is an institutional review board (IRB)?16-20
  • : Clinical Studies: Good Clinical Practice Requirements16-21
  • Q 16.17 : What are FDA’s good clinical practice (GCP) requirements?16-21
  • Q 16.18 : What are the requirements for obtaining informed consent from study subjects?16-22
    • Q 16.18.1 : What information must be provided to subjects?16-23
    • Q 16.18.2 : Are there exceptions to the informed consent requirements?16-24
  • Q 16.19 : What financial disclosures must be made by clinical investigators?16-26
    • Q 16.19.1 : What must be included in FDA Form 3455?16-26
    • Q 16.19.2 : What must be included in FDA Form 3454?16-27
    • Q 16.19.3 : What can FDA do if it has concerns about an investigator’s financial bias?16-27
  • : Other FDA Powers16-27
  • Q 16.20 : With regard to clinical studies, what inspection rights does FDA have?16-27
  • Q 16.21 : What is an FDA clinical hold?16-28
  • : Applications to FDA16-29
  • Q 16.22 : What is a New Drug Application?16-29
  • Q 16.23 : What is an Abbreviated New Drug Application?16-29
  • Q 16.24 : What is a 505(b)(2) NDA?16-30
  • Q 16.25 : What is a biologics license application (BLA)?16-31
  • Q 16.26 : Is there an approval process for generic or “follow-on” biologics?16-31
  • Q 16.27 : What is a device premarket approval application?16-32
  • Q 16.28 : What is a device 510(k) clearance?16-32
    • Q 16.28.1 : What is an abbreviated 510(k)?16-33
    • Q 16.28.2 : What is a special 510(k)?16-34
  • Q 16.29 : Can any medical devices be marketed without prior FDA review or approval?16-35
  • : Application Fees16-35
  • Q 16.30 : What diligence is needed regarding payment of application fees to FDA?16-35
  • Q 16.31 : What are drug user fee laws?16-35
    • Q 16.31.1 : Can companies obtain a waiver of PDUFA user fees?16-37
    • Q 16.31.2 : Can “small” companies obtain a waiver of PDUFA user fees?16-38
  • Q 16.32 : What is the Medical Device User Fee and Modernization Act?16-38
    • Q 16.32.1 : Can companies obtain a waiver of MDUFMA user fees?16-39
  • : Assessing the Target’s Regulatory Basis for Marketing Regulated Products16-40
  • Q 16.33 : What are basic diligence issues regarding the target’s marketing of drug, biologic, and medical device products?16-40
  • Q 16.34 : What is FDA’s over-the-counter drug review process?16-41
  • Q 16.35 : What if the target produces homeopathic drugs?16-43
  • Q 16.36 : What issues are raised by unapproved drugs?16-45
  • Q 16.37 : What issues are raised by 510(k) clearances?16-47
  • Q 16.38 : What issues are raised by medical devices marketed without prior FDA review or approval?16-48
  • Q 16.39 : What issues are raised by modifications to a drug, device, or biologic that has been approved or cleared by FDA?16-49
  • Q 16.40 : What issues are raised by promotion of drugs limited to certain indications?16-50
  • Q 16.41 : What issues are raised by drug approval limited to specific patient populations?16-50
  • Q 16.42 : What other limitations may be placed on a product by the terms of its approval or clearance?16-51
  • : Postapproval Requirements16-52
  • Q 16.43 : What are postapproval requirements for approved or cleared products?16-52
  • Q 16.44 : What types of postapproval requirements can FDA impose on drug products?16-53
    • Q 16.44.1 : What NDA and ANDA supplements may be required?16-53
    • Q 16.44.2 : What annual reports may be required?16-54
    • Q 16.44.3 : What postmarket studies may be required?16-54
  • Q 16.45 : What types of postapproval requirements can FDA impose on medical devices?16-55
    • Q 16.45.1 : What PMA supplements may be required?16-56
    • Q 16.45.2 : What annual reports may be required?16-56
    • Q 16.45.3 : What postmarket studies may be required?16-56
    • Q 16.45.4 : What general postapproval requirements may be imposed?16-57
Chapter 17: Patent Extensions and Market Exclusivities
  • : Summary of Incentives17-2
  • Q 17.1 : What are the chief ways in which the law creates incentives for drug development and competition?17-2
  • : Extensions of Patent Term17-4
  • Q 17.2 : What are the available statutory patent term extensions?17-4
  • : Exclusivities17-5
  • Q 17.3 : What is five-year “new chemical entity” exclusivity under the Hatch-Waxman Act?17-5
  • Q 17.4 : What is three-year exclusivity under the Hatch-Waxman Act?17-6
  • Q 17.5 : What is seven-year orphan drug exclusivity?17-6
  • Q 17.6 : What is six-month pediatric exclusivity?17-7
  • Q 17.7 : What is innovator product exclusivity for biologic products?17-8
  • Q 17.8 : What are 180-day generic drug exclusivity, follow-on biologic exclusivity, and the thirty-month stay of generic drug approval?17-8
Chapter 18: Manufacturing and Distribution Requirements
  • : Good Manufacturing Practices18-2
  • Q 18.1 : What are FDA’s good manufacturing practice requirements for drugs?18-2
  • Q 18.2 : What are FDA’s quality system regulations?18-3
  • Q 18.3 : Can FDA inspect the premises of drug, biologic, and device manufacturers?18-3
  • Q 18.4 : What due diligence is appropriate regarding current good manufacturing practices?18-4
  • : Standard Operating Procedures18-5
  • Q 18.5 : What are “standard operating procedures” for drug, device, and biologic operations?18-5
  • Q 18.6 : What types of operations should be supported by written SOPs?18-5
  • Q 18.7 : What are the benefits of maintaining standard operating procedures?18-6
  • Q 18.8 : What due diligence should be conducted regarding the target’s standard operating procedures?18-6
  • : Systems for Handling Reports of Failures or Malfunctions18-7
  • Q 18.9 : What systems should a company have for responding to product failures or malfunctions?18-7
  • Q 18.10 : What are “corrective and preventive action” requirements generally?18-7
  • Q 18.11 : What are the CAPA requirements for medical devices?18-8
  • Q 18.12 : What are the CAPA requirements for drugs and biologics?18-9
  • Q 18.13 : What due diligence should be conducted regarding the target’s CAPA systems?18-9
  • : Contract Manufacturers18-11
  • Q 18.14 : What role do contract manufacturers play in the industry?18-11
  • Q 18.15 : What are the respective responsibilities of contract manufacturers and entities holding FDA approvals or clearances?18-11
  • Q 18.16 : What due diligence should be conducted regarding the target’s use of contract manufacturers?18-12
  • : Establishment Registration, Product Listing, and Requirements for Bulk Active Pharmaceutical Ingredients18-12
  • Q 18.17 : What are FDA registration requirements for drug and device establishments?18-12
  • Q 18.18 : What due diligence should be conducted regarding registration issues?18-13
  • Q 18.19 : What are FDA listing requirements for drugs and devices?18-14
  • Q 18.20 : What due diligence should be conducted regarding listing issues?18-14
  • Q 18.21 : What are the requirements for bulk active pharmaceutical ingredients?18-15
  • Q 18.22 : What due diligence should be conducted regarding bulk active pharmaceutical ingredients?18-15
  • : Distribution of Prescription Drugs18-16
  • Q 18.23 : What is the closed drug distribution system?18-16
  • Q 18.24 : What is the Prescription Drug Marketing Act?18-16
  • Q 18.25 : What are licensed drug distributors?18-16
  • : State Licensing Requirements18-17
  • Q 18.26 : Do the states require licenses to manufacture, repackage, or distribute drugs, biologics, or medical devices?18-17
  • Q 18.27 : What due diligence should be conducted regarding the target’s state law licensing?18-17
Chapter 19: FDA Investigations and Enforcement
  • : Inspections19-2
  • Q 19.1 : What is an FDA inspection?19-2
  • Q 19.2 : What is FDA Form 483?19-2
    • Q 19.2.1 : Must a company respond to a Form 483?19-3
    • Q 19.2.2 : What is the significance of Form 483 for due diligence?19-3
  • Q 19.3 : How does FDA classify inspection results?19-4
  • Q 19.4 : What is an establishment inspection report?19-4
  • Q 19.5 : Where can official information about past inspections be found?19-5
  • Q 19.6 : What other inspection-related communications with FDA are relevant to due diligence?19-5
  • : Enforcement Mechanisms19-6
  • Q 19.7 : What is FDA’s general enforcement authority?19-6
  • Q 19.8 : What is a warning letter?19-6
  • Q 19.9 : What is an untitled letter?19-7
  • Q 19.10 : What is a seizure?19-8
  • Q 19.11 : What is an injunction?19-8
  • Q 19.12 : What is an FDA consent decree?19-9
  • Q 19.13 : What criminal penalties are available under the FFDCA?19-9
  • Q 19.14 : What civil monetary penalties are available under the FFDCA?19-10
  • Q 19.15 : What are disqualification and debarment?19-10
  • Q 19.16 : What are due diligence considerations regarding corrective actions in response to FDA enforcement?19-11
  • : Product Recalls and Market Withdrawals19-11
  • Q 19.17 : What are product recalls?19-11
  • Q 19.18 : How does FDA classify recalls?19-11
  • Q 19.19 : What are “voluntary” recalls?19-12
    • Q 19.19.1 : What are FDA-requested recalls?19-13
    • Q 19.19.2 : What information must be provided to FDA if a company initiates a recall?19-13
  • Q 19.20 : When can FDA recall medical devices?19-14
  • Q 19.21 : When can FDA recall biological products?19-15
  • Q 19.22 : What is a market withdrawal?19-15
  • Q 19.23 : What is a stock recovery?19-15
  • : Reporting Adverse Events19-15
  • Q 19.24 : What is an adverse drug event?19-15
  • Q 19.25 : How does a company find out about adverse events involving its drugs?19-16
  • Q 19.26 : What is an adverse event report?19-16
  • Q 19.27 : Is adverse event reporting required for nonprescription, over-the-counter drugs?19-17
  • Q 19.28 : Is adverse event reporting required for medical devices?19-18
    • Q 19.28.1 : What MDR event reports must be made by user facilities?19-18
    • Q 19.28.2 : What MDR event reports must be made by manufacturers?19-18
  • Q 19.29 : What systems should a company have for responding to and reporting adverse drug events?19-19
  • Q 19.30 : What systems should a company have for responding to and reporting adverse medical device events?19-20
Chapter 20: Promotion and Advertising
  • : General Principles20-2
  • Q 20.1 : What are the fundamental requirements for drug promotion and advertising?20-2
  • Q 20.2 : How do FDA and FTC share regulation of drug advertising?20-2
  • : FDA Regulation of Drug Promotion and Advertising20-3
  • Q 20.3 : What are advertising and promotional labeling?20-3
  • Q 20.4 : What is “off-label” promotion?20-3
  • Q 20.5 : What is risk information and how is it to be disclosed?20-4
  • Q 20.6 : What else can cause drug promotion to be considered misleading?20-6
  • Q 20.7 : What are the rules for direct-to-consumer advertising?20-7
  • Q 20.8 : What is drug preapproval promotion?20-7
  • Q 20.9 : Must promotional materials be submitted to or approved by FDA?20-8
  • Q 20.10 : What is the Office of Prescription Drug Promotion?20-8
  • : FDA Regulation of Device Marketing and Advertising20-9
  • Q 20.11 : How does FDA regulate device marketing and advertising?20-9
  • : FTC Advertising Requirements20-10
  • Q 20.12 : How do the FTC and FDA work together to regulate OTC drug promotion?20-10
  • Q 20.13 : What are the basic principles of FTC advertising regulation?20-10
Chapter 21: Compliance with Import and Export Requirements
  • : FDA Import Regulation21-2
  • Q 21.1 : What is FDA’s general authority over imports?21-2
  • Q 21.2 : How is responsibility for imports shared by FDA and Customs and Border Protection?21-2
  • Q 21.3 : How does FDA become aware of an import subject to its authority?21-2
  • Q 21.4 : What initial steps does FDA take to determine if an imported article violates the law?21-3
  • Q 21.5 : What is the procedure when no violation is found?21-3
  • Q 21.6 : What is the procedure when a violation is found?21-3
  • Q 21.7 : What if the imported article is intended for export from the United States?21-5
  • Q 21.8 : What is FDA’s authority to refuse imports under the “appears-to-be-violative” standard?21-5
  • Q 21.9 : What are FDA import alerts?21-6
  • Q 21.10 : How does FDA regulate the importing of active pharmaceutical ingredients?21-7
  • : FDA Export Regulation21-7
  • Q 21.11 : What are FDA requirements to export a product produced in compliance with the FFDCA?21-7
  • Q 21.12 : Can adulterated or misbranded products be exported?21-7
    • Q 21.12.1 : How can a company establish that a product meets the specifications of a foreign purchaser?21-8
    • Q 21.12.2 : How can a company establish that a product does not conflict with the laws of the importing country?21-9
    • Q 21.12.3 : How can a company satisfy the labeling requirement?21-10
    • Q 21.12.4 : How can a company show that the product is not sold or offered for sale in the United States?21-10
  • Q 21.13 : Can unapproved drugs, biological products, and devices be exported?21-11
    • Q 21.13.1 : What are the basic export requirements for unapproved drugs, biological products, and devices?21-11
    • Q 21.13.2 : What are the additional requirements to export unapproved drugs, biological products, and devices to a listed country?21-13
    • Q 21.13.3 : What are the additional requirements to export unapproved new drugs, biological products, and devices, to an unlisted country?21-14
Chapter 22: Miscellaneous Communications with FDA
  • : Comments and Petitions22-2
  • Q 22.1 : When does FDA solicit comments regarding rulemakings, guidance documents, or other topics?22-2
  • Q 22.2 : What is a Citizen Petition to FDA?22-2
  • : Other Communications22-3
  • Q 22.3 : What other formal or informal communications with FDA should be investigated?22-3
Chapter 23: Compliance with DEA Controlled Substance Requirements
  • : Scheduled Drugs23-2
  • Q 23.1 : What are the general consequences of scheduling a drug as a controlled substance?23-2
  • Q 23.2 : What are the five schedules of controlled substances?23-3
  • Q 23.3 : What is the process by which drug substances are scheduled?23-3
  • : Registration23-4
  • Q 23.4 : Who must register with the DEA?23-4
  • : Quotas23-5
  • Q 23.5 : What are DEA’s manufacturing and procurement quotas for controlled substances?23-5
  • : Security23-5
  • Q 23.6 : What are the general requirements for security in storing and handling controlled substances?23-5
  • Q 23.7 : What factors does DEA consider in evaluating whether a company has good security regarding controlled substances?23-6
  • Q 23.8 : What are the storage requirements for controlled substances?23-7
  • Q 23.9 : How are manufacturing processes regulated?23-7
  • Q 23.10 : What are the security requirements for distribution and shipping?23-8
  • : Recordkeeping and Reporting23-8
  • Q 23.11 : What records must be kept by those working with controlled substances?23-8
  • Q 23.12 : What reporting obligations do registrants have?23-9
  • : Inspections and Enforcement Actions23-9
  • Q 23.13 : What are DEA’s inspection powers?23-9
  • Q 23.14 : When does DEA need a warrant to make an inspection?23-10
  • Q 23.15 : How often do inspections occur?23-11
  • Q 23.16 : What administrative enforcement actions can the DEA pursue?23-11
  • Q 23.17 : Can the DEA seek monetary penalties?23-12
  • Q 23.18 : Can the DEA seek criminal penalties?23-12
Chapter 24: Compliance with Federal and State Health Care Fraud and Abuse Laws
  • : The Anti-Kickback Statute24-3
  • Q 24.1 : What is the Anti-Kickback Statute?24-3
  • Q 24.2 : What kinds of payment are prohibited?24-3
  • Q 24.3 : What level of knowledge and intent is required?24-5
  • Q 24.4 : To whom does the Anti-Kickback Statute apply?24-5
  • Q 24.5 : To what types of goods and services does the Anti-Kickback Statute apply?24-5
  • Q 24.6 : What is a “federal health care program”?24-6
  • Q 24.7 : Are there any statutory safe harbors?24-6
  • Q 24.8 : Are there any regulatory safe harbors?24-7
  • Q 24.9 : What criteria must be satisfied for a payment to fall within a safe harbor?24-9
  • Q 24.10 : What are the potential direct consequences of an anti-kickback violation?24-10
  • Q 24.11 : What are the potential collateral consequences of an anti-kickback violation?24-10
  • Q 24.12 : What due diligence is appropriate regarding anti-kickback issues?24-11
  • : The Stark Law24-13
  • Q 24.13 : What is the Stark law?24-13
  • Q 24.14 : What intent is required for a violation of the Stark law?24-14
  • Q 24.15 : What are the differences between the Stark law and the Anti-Kickback Statute?24-15
  • Q 24.16 : To what services does the Stark law apply?24-16
  • Q 24.17 : What is a “referral” for purposes of the Stark law?24-17
  • Q 24.18 : Are there any exceptions to the Stark law?24-17
    • Q 24.18.1 : What is the hospital-ownership exception?24-18
    • Q 24.18.2 : What is the personal-services exception?24-18
  • Q 24.19 : What are the potential direct consequences of a Stark law violation?24-19
  • Q 24.20 : What are the potential collateral consequences of a Stark law violation?24-20
  • Q 24.21 : What due diligence is appropriate regarding Stark law issues?24-20
  • : The False Claims Act24-21
  • Q 24.22 : What is the False Claims Act?24-21
  • Q 24.23 : What is a “claim”?24-22
  • Q 24.24 : What are “false or fraudulent” claims?24-22
  • Q 24.25 : What level of knowledge or intent is required?24-22
  • Q 24.26 : Who is liable for the submission of false or fraudulent claims?24-23
  • Q 24.27 : What are the potential consequences of a False Claims Act violation?24-23
  • Q 24.28 : What are the qui tam provisions?24-24
    • Q 24.28.1 : What is the relator’s share?24-24
  • Q 24.29 : What changes to the False Claims Act were made by PPACA?24-25
  • Q 24.30 : Are there state false claims statutes?24-25
  • Q 24.31 : What due diligence is appropriate regarding False Claims Act issues?24-25
  • : Criminal Offenses24-27
  • Q 24.32 : What is criminal “health care fraud”?24-27
  • Q 24.33 : To what services does the health care fraud statute apply?24-27
  • Q 24.34 : What is a “health care benefit program”?24-27
  • Q 24.35 : How does the fraud statute differ from the Anti-Kickback Statute and Stark law?24-28
  • Q 24.36 : To whom does the health care fraud statute apply?24-28
  • Q 24.37 : What is a criminal conspiracy, and why might conspiracy charges be useful to prosecutors in health care fraud cases?24-29
  • Q 24.38 : What level of knowledge and intent is required for a violation of the health care fraud statute?24-29
  • Q 24.39 : Is the fraud victim’s lack of care a defense?24-30
  • Q 24.40 : What are the potential direct consequences of a health care fraud violation?24-30
  • Q 24.41 : What are the potential collateral consequences of a health care fraud violation?24-31
  • Q 24.42 : What due diligence is appropriate regarding criminal health care fraud issues?24-32
  • : State Criminal Health Care Fraud and Abuse Statutes24-32
  • Q 24.43 : Are there state criminal health care fraud and abuse statutes?24-32
  • Q 24.44 : What are state “corporate practice of medicine” laws?24-32
  • Q 24.45 : What are the potential consequences for a violation of corporate practice of medicine laws?24-33
  • : Compliance Programs24-34
  • Q 24.46 : What is a compliance program and why is it important?24-34
  • Q 24.47 : What are the duties of a chief compliance officer?24-34
  • Q 24.48 : What should you expect to see in a compliance program?24-35
  • Q 24.49 : How should a compliance program be structured?24-35
  • Q 24.50 : What is the relevance of the U.S. Sentencing Guidelines to compliance programs?24-36
  • Q 24.51 : What other guidance is available from the government?24-37
  • Q 24.52 : What is a corporate integrity agreement?24-37
  • Q 24.53 : What due diligence is appropriate for the target’s compliance program?24-38
Chapter 25: Regulatory Issues in Acquisitions of Health Care Facilities and Physician Practices
  • : Acquisitions of Licensed Health Care Facilities25-2
  • Q 25.1 : What are the principal health care regulatory issues likely to be implicated in the acquisition of a hospital or other type of licensed health care facility?25-2
  • Q 25.2 : What state health care regulations may impact the acquisition of a licensed health care facility?25-4
  • : Transfer of the License25-5
  • Q 25.3 : What is a health care facility license?25-5
  • Q 25.4 : How may the benefit of a health care facility license be “transferred” from seller to buyer?25-5
  • Q 25.5 : Does a “change in control” of a licensed health care facility require prior notice and also approval?25-7
  • Q 25.6 : Are there similar requirements for the Medicare and Medicaid programs?25-8
  • : Transfer of the Certificate of Need25-10
  • Q 25.7 : What is a certificate of need program?25-10
  • Q 25.8 : How is the benefit of a certificate of need “transferred” from seller to buyer?25-10
  • Q 25.9 : Is prior notice or approval required?25-11
  • : Other Permits and Approvals25-12
  • Q 25.10 : What other health care–related permits may require attention?25-12
  • Q 25.11 : When might the host state’s attorney general become involved?25-13
  • : Medicare and Other Federal Law Issues25-14
  • Q 25.12 : What are the sources of federal health care regulation that may impact the acquisition of a licensed health care facility?25-14
  • Q 25.13 : What Medicare regulations and rules may be implicated in an acquisition?25-15
  • Q 25.14 : What are Provider Transaction Access Numbers and National Provider Identification numbers?25-15
  • Q 25.15 : What are Medicare “conditions of participation” and “conditions for coverage”?25-16
  • Q 25.16 : What approvals are required for a licensed health care facility to provide and bill for services to Medicare beneficiaries?25-17
  • Q 25.17 : How does the buyer secure the right for the acquired facility to continue to provide and bill for services to Medicare beneficiaries?25-18
  • Q 25.18 : What is a Medicare CHOW?25-19
  • Q 25.19 : How may the buyer handle regulatory risks arising from the seller’s pre-acquisition operation of the health care facility?25-22
  • : Other Federal Approvals25-23
  • Q 25.20 : What approvals are required for a clinical laboratory?25-23
  • Q 25.21 : What approvals are required for a pharmacy?25-24
  • Q 25.22 : What are the requirements for accreditation and why do they matter?25-25
  • : Acquisitions of Physician Practices25-26
  • Q 25.23 : What areas of state health care regulation may impact the acquisition of a physician practice?25-26
  • : Corporate Practice of Medicine25-27
  • Q 25.24 : What is the corporate practice of medicine?25-27
  • Q 25.25 : What is the underlying public policy?25-27
  • Q 25.26 : Are there exceptions to CPOM prohibitions?25-27
  • Q 25.27 : How do CPOM considerations affect the transaction structure?25-28
  • : Fee-Splitting25-28
  • Q 25.28 : What is fee-splitting?25-28
  • Q 25.29 : What is the public policy underlying the prohibitions?25-29
  • Q 25.30 : Are there exceptions to fee-splitting prohibitions?25-29
  • Q 25.31 : How do fee-splitting considerations affect the transaction structure?25-30
  • : Covenants Not to Compete25-31
  • Q 25.32 : What is a covenant not to compete?25-31
  • Q 25.33 : What is the public policy underlying the limitations?25-32
  • Q 25.34 : In what situations is a covenant not to compete most likely to be enforceable?25-32
  • Q 25.35 : How do limitations on the use of covenants not to compete affect the transaction structure?25-32
  • : Patient Records25-33
  • Q 25.36 : What limitations arise in connection with the transfer and maintenance of patient medical records?25-33
  • : Medicare and Other Federal Law Issues25-34
  • Q 25.37 : What are the primary sources of federal health care regulation that may impact the acquisition of a physician practice?25-34
  • Q 25.38 : What Medicare regulations may be implicated?25-35
  • Q 25.39 : What are Provider Transaction Access Numbers and National Provider Identification Numbers?25-36
  • Q 25.40 : What approvals are required in order for physicians (or their employers) to provide, and bill for, services to Medicare beneficiaries prior to closing?25-37
  • Q 25.41 : How does the buyer acquire the right for the acquired facility or practice group to continue to provide and bill for physician and NPP services to Medicare beneficiaries?25-37
Chapter 26: Compliance with HIPAA and Other Privacy and Security Laws
  • : Sanctions26-3
  • Q 26.1 : What sanctions enforce compliance with HIPAA?26-3
  • : Overview of HIPAA Coverage26-4
  • Q 26.2 : What activities does HIPAA cover?26-4
  • Q 26.3 : What is a “covered entity”?26-4
  • Q 26.4 : What is a “hybrid entity”?26-6
  • Q 26.5 : What is a “business associate”?26-6
  • : HIPAA Compliance26-8
  • Q 26.6 : What are the core components of HIPAA compliance?26-8
  • Q 26.7 : Who has responsibility for determining HIPAA compliance?26-9
  • Q 26.8 : What is an internal HIPAA assessment or audit?26-10
  • Q 26.9 : What documents should a covered entity or business associate establish and maintain?26-10
  • Q 26.10 : What workforce training programs are required?26-12
  • Q 26.11 : How should the use and disclosure of PHI and ePHI be monitored and tracked?26-13
  • Q 26.12 : What is the “minimum necessary” standard?26-14
  • Q 26.13 : How should an entity respond to requests from individuals to exercise their rights under HIPAA?26-14
  • Q 26.14 : What administrative, technical, and physical safeguards are required?26-15
  • Q 26.15 : How should internal and external complaints be handled?26-16
  • : Impact of the HITECH Act on HIPAA Compliance26-17
  • Q 26.16 : How does the HITECH Act modify compliance with HIPAA?26-17
  • Q 26.17 : What are the expanded requirements for business associates?26-17
  • Q 26.18 : What are the HITECH Act’s changes to the HIPAA limitations on marketing and fundraising communications?26-18
  • Q 26.19 : What are the changes to the HIPAA “use and disclosure” regulations?26-19
  • Q 26.20 : What are the breach notification requirements?26-19
  • Q 26.21 : How will enforcement authority granted to state attorneys general affect HIPAA compliance?26-21
  • Q 26.22 : What is the impact of the new audit requirements?26-22
  • : State Privacy and Security Laws26-22
  • Q 26.23 : How do state privacy and security laws interact with federal law?26-22
  • : Evolving Law26-24
  • Q 26.24 : How does the evolving nature of privacy law affect a due diligence review?26-24
Chapter 27: Litigation
  • : Purposes of Litigation Due Diligence27-2
  • Q 27.1 : What is litigation due diligence?27-2
  • Q 27.2 : What is the purpose of litigation due diligence?27-2
  • Q 27.3 : What are the potential consequences of failing to conduct adequate litigation due diligence?27-3
  • : Basics of Civil Litigation27-4
  • Q 27.4 : What is civil litigation?27-4
  • Q 27.5 : What is a class action?27-5
  • Q 27.6 : What is a mass tort action?27-5
  • Q 27.7 : What are the potential consequences of liability in civil litigation?27-5
  • Q 27.8 : What are compensatory damages?27-6
  • Q 27.9 : What is injunctive relief?27-6
  • Q 27.10 : What are punitive damages?27-6
  • Q 27.11 : What are treble damages?27-6
  • Q 27.12 : What is an award of attorneys’ fees?27-6
  • : Common Lawsuits Against Health Care Companies27-7
  • Q 27.13 : What is patent litigation?27-7
  • Q 27.14 : What is product liability litigation?27-7
  • Q 27.15 : What is consumer fraud litigation?27-8
  • Q 27.16 : What is securities litigation?27-8
  • Q 27.17 : What is antitrust litigation?27-9
  • Q 27.18 : What is trademark litigation?27-9
  • Q 27.19 : What is employment litigation?27-10
  • Q 27.20 : What types of contract disputes do health care companies face?27-10
  • Q 27.21 : What is insurance carrier litigation?27-10
  • : Regulators and Regulatory Enforcement Actions27-11
  • Q 27.22 : What is a regulatory enforcement action?27-11
  • Q 27.23 : What is a criminal enforcement action?27-11
  • Q 27.24 : What is a civil enforcement action?27-12
  • Q 27.25 : What are the potential consequences of a regulatory enforcement action?27-12
  • Q 27.26 : What is the role of the Food and Drug Administration?27-13
  • Q 27.27 : What is the role of the Department of Justice and U.S. Attorneys’ Offices?27-14
  • Q 27.28 : What is the role of the U.S. Securities and Exchange Commission?27-15
  • Q 27.29 : What is the role of the Federal Trade Commission?27-15
  • Q 27.30 : What is the role of the Patent and Trademark Office?27-15
  • Q 27.31 : What is the role of state attorneys general in enforcing laws against health care companies?27-15
  • Q 27.32 : What is the role of licensing authorities and accreditation bodies?27-16
  • : Relevant Statutes27-17
  • Q 27.33 : What is the Federal Food, Drug, and Cosmetic Act?27-17
  • Q 27.34 : What is the Prescription Drug Marketing Act?27-19
  • Q 27.35 : What are securities laws?27-20
  • Q 27.36 : What are antitrust laws?27-20
  • Q 27.37 : What is medical malpractice litigation?27-22
  • Q 27.38 : What is the Stark Law?27-22
  • Q 27.39 : What are the Foreign Corrupt Practices Act and the UK Bribery Act?27-23
  • Q 27.40 : What are international trade laws?27-24
  • : Health Care Fraud27-24
  • Q 27.41 : What is health care fraud?27-24
  • Q 27.42 : What are federal health care programs?27-24
  • Q 27.43 : What is the role of the Office of Inspector General of the U.S. Department of Health and Human Services?27-25
  • Q 27.44 : What is the Anti-Kickback Statute?27-26
  • Q 27.45 : What is the False Claims Act?27-26
  • Q 27.46 : What does it mean to be excluded from federal health care programs?27-29
  • Q 27.47 : What is a corporate integrity agreement?27-29
  • Q 27.48 : What is a corporate monitor?27-30
  • Q 27.49 : What is the Civil Monetary Penalties Law?27-30
  • Q 27.50 : What is the Health Care Fraud Statute?27-30
  • : Materiality27-31
  • Q 27.51 : How is the materiality of a litigation matter assessed?27-31
  • Q 27.52 : Should certain litigation matters be considered presumptively material, regardless of projected financial exposure?27-32
  • Q 27.53 : What is an indemnitor?27-32
  • Q 27.54 : What is successor liability?27-33
  • : Due Diligence Inquiries, Analysis, and Reporting27-33
  • Q 27.55 : What types of information should be requested?27-33
  • Q 27.56 : Which employees of the target should be interviewed?27-36
  • Q 27.57 : What basic questions should be asked?27-37
  • Q 27.58 : What is a litigation reserve?27-38
  • Q 27.59 : What is the attorney-client privilege?27-38
  • Q 27.60 : How does the attorney-client privilege become relevant during litigation due diligence?27-39
  • Q 27.61 : How should the acquiring company respond when a target raises concerns about attorney-client privilege?27-39
  • Q 27.62 : Is it ever appropriate to demand that privileged materials be turned over?27-39
  • Q 27.63 : How is the value of a potentially material litigation matter assessed?27-40
  • Q 27.64 : Once the diligence review is complete, how are findings communicated?27-41
  • Q 27.65 : What is post-closing due diligence?27-42
Chapter 28: Intellectual Property
  • : Due Diligence Overview28-2
  • Q 28.1 : What are the key intellectual property due diligence issues in health care M&A transactions?28-2
  • : Patents and Patent Applications28-3
  • Q 28.2 : What are patents?28-3
  • Q 28.3 : What are the parts of a patent?28-4
  • Q 28.4 : Do patents have cross-border effects?28-4
  • Q 28.5 : How can one determine which patents, patent applications, and inventions are included in the deal?28-5
  • Q 28.6 : How is ownership or rights in patents or applications acquired?28-6
  • Q 28.7 : What does it mean if the list of inventors is not accurate?28-7
  • Q 28.8 : What is a shop right?28-8
  • Q 28.9 : How can one confirm that the patent-holding company has full rights to the patents and applications?28-8
  • Q 28.10 : How can one confirm that the key patents are valid?28-9
  • Q 28.11 : How can one determine whether the key patents cover the technology?28-12
  • Q 28.12 : How can one determine if the technology infringes another’s patent?28-13
  • Q 28.13 : How can one determine if patents remain in force?28-14
  • Q 28.14 : How does FDA exclusivity supplement patent protection for drugs?28-15
  • Q 28.15 : What is the significance of a listing in the Orange Book?28-16
  • Q 28.16 : What are continuation, divisional, and continuation-in-part patent applications?28-17
  • Q 28.17 : How can companies maximize patent terms to extend the life of their product lines?28-17
  • Q 28.18 : What procedure should a company follow regarding its records of inventions?28-20
  • Q 28.19 : What is a patent term extension?28-20
  • : Trademarks28-21
  • Q 28.20 : What are trademarks?28-21
  • Q 28.21 : How can a company protect its trademarks and service marks?28-22
  • Q 28.22 : Why are names important to branded pharmaceuticals?28-23
  • Q 28.23 : What if the target company has unregistered trademarks?28-24
  • : Copyrights and Software28-24
  • Q 28.24 : What are copyrights?28-24
  • Q 28.25 : What rights permit one to update, improve, or modify any software or copyrighted materials?28-25
  • Q 28.26 : How should a company protect its copyrights and software?28-25
  • Q 28.27 : What are the dangers of using open-source software?28-26
  • Q 28.28 : How does one investigate the protection of software and copyright-eligible intellectual property?28-27
  • : Trade Secrets and Know-How28-27
  • Q 28.29 : What are trade secrets?28-27
  • Q 28.30 : How do trade secrets complement patents in protecting a company’s technology?28-28
  • Q 28.31 : Can nontechnical matters be protected as trade secrets?28-28
  • Q 28.32 : What due diligence issues arise if the target has licensed trade secrets?28-28
  • Q 28.33 : How should trade secrets and know-how be protected from general distribution?28-29
  • : Other Due Diligence Considerations28-29
  • Q 28.34 : What if someone has a valid security lien against the acquired intellectual property?28-29
  • Q 28.35 : How should a company’s employment agreements and employee manuals protect intellectual property rights?28-31
  • Q 28.36 : What due diligence issues may arise with respect to intellectual property litigation?28-31
  • Q 28.37 : What due diligence issues may arise with respect to proceedings before the Patent and Trademark Office?28-32
  • Q 28.38 : What are “march-in” rights?28-32
  • Q 28.39 : Is indemnification typically available for intellectual property infringement?28-33
  • Q 28.40 : How can due diligence review of freedom-to-operate, clearance, and invalidity opinions be addressed without waiving privilege?28-34
  • Q 28.41 : What other IP or IP-related issues should be considered during due diligence?28-34
Chapter 29: Material Contracts
  • : Principal Types of Material Contracts in Health Care Transactions29-2
  • Q 29.1 : What are the principal types of material contracts that a health care target is likely to have?29-2
    • Q 29.1.1 : What are the principal types of material contracts that hospitals and other health care service providers are likely to have?29-3
    • Q 29.1.2 : What are the principal types of material contracts that a pharmaceutical or biotechnology company is likely to have?29-4
  • : Change of Control Provisions29-5
  • Q 29.2 : What due diligence should be conducted to determine whether the proposed transaction triggers a change-of-control or anti-assignment provision in any of the target’s contracts?29-5
  • : Agreements with Third-Party Payors, Health Care Professionals, and Patient Referral Sources29-6
  • Q 29.3 : What are the key issues in due diligence review of agreements with third-party payors?29-6
  • Q 29.4 : What are the key issues in due diligence review of agreements with health care professionals?29-7
  • Q 29.5 : What are the key issues in due diligence review of agreements with patient referral sources?29-7
  • : Commercial Contracts and Debts29-8
  • Q 29.6 : How should the target’s commercial contracts be evaluated with respect to their economic terms?29-8
  • Q 29.7 : What other issues may arise in the target’s commercial contracts?29-9
  • Q 29.8 : What issues may arise with respect to the target’s outstanding indebtedness?29-10
  • : Agreements Relating to Prior Mergers and Acquisitions29-10
  • Q 29.9 : What issues may arise with respect to the target’s acquisition and disposition agreements?29-10
  • : Joint Venture Agreements29-11
  • Q 29.10 : What are the key issues when performing due diligence review on joint venture agreements?29-11
  • : Licenses and Other Contracts Involving Intellectual Property29-13
  • Q 29.11 : What types of agreements relating to intellectual property might a target company have?29-13
  • Q 29.12 : What are the key issues in due diligence review of license-and-collaboration agreements?29-14
  • Q 29.13 : What risks are associated with in-licensing of technology rights?29-15
  • Q 29.14 : What should be the focus when reviewing the target’s outbound technology licenses?29-17
  • Q 29.15 : What due diligence concerns arise where the target’s research and development agreements address intellectual property ownership and protection?29-17
  • Q 29.16 : What is a material transfer agreement?29-18
Chapter 30: Environmental Considerations
  • : Principal Risks30-2
  • Q 30.1 : Why should parties assess environmental risks in health care transactions?30-2
  • Q 30.2 : What is contamination?30-3
  • Q 30.3 : To what types of environmental claims can a health care company be subject?30-4
  • Q 30.4 : What types of compliance issues arise in health care transactions?30-5
  • : Principal Environmental Laws Affecting the Health Care Industry30-5
  • Q 30.5 : What is the Resource Conservation and Recovery Act?30-5
  • Q 30.6 : What laws regulate medical waste?30-6
  • Q 30.7 : What is the Clean Air Act?30-7
  • Q 30.8 : What is the Toxic Substances Control Act?30-7
  • Q 30.9 : What requirements are imposed on storage tanks?30-8
  • Q 30.10 : What requirements are imposed on dental practices?30-8
  • Q 30.11 : What other environmental statutes may be relevant?30-8
  • : How Purchasers Can Assess Risk30-9
  • Q 30.12 : How can prospective purchasers assess environmental risks?30-9
    • Q 30.12.1 : What documents should the purchaser review?30-9
    • Q 30.12.2 : Should a purchaser interview the target’s personnel?30-10
    • Q 30.12.3 : Should the purchaser commission a Phase I environmental site assessment?30-10
  • : Contract Provisions30-11
  • Q 30.13 : What environmental representations and warranties are typically included in purchase agreements in the health care industry?30-11
    • Q 30.13.1 : What purpose do such representations and warranties serve?30-12
  • Q 30.14 : Are indemnities used?30-12
Chapter 31: Employee Benefits
  • : Diligence Overview31-2
  • Q 31.1 : What are the major elements of diligence relating to executive compensation and employee benefits?31-2
  • Q 31.2 : What benefits information is typically available with respect to a public target?31-3
  • Q 31.3 : Why do single-employer defined benefit pension plans present significant diligence issues?31-5
  • Q 31.4 : Why do retiree medical benefits present significant diligence issues?31-6
  • : Issues Involving Senior Management31-7
  • Q 31.5 : Why do arrangements with senior management present significant diligence issues?31-7
  • Q 31.6 : What are “single-trigger” versus “double-trigger” compensation arrangements?31-8
  • Q 31.7 : What special rules apply to “golden parachutes”?31-9
  • : Issues Involving Unions31-10
  • Q 31.8 : What diligence issues are raised by collective bargaining agreements?31-10
  • Q 31.9 : What are “multiemployer” pension plans?31-11
  • Q 31.10 : For multiemployer plans, what is “withdrawal liability”?31-12
  • : Impact of Health Care Reform31-13
  • Q 31.11 : Is health care reform significant for due diligence regarding employee benefits?31-13
  • Q 31.12 : What is the significance of section 162(m)(6) of the Internal Revenue Code?31-14
  • : Carve-out Issues31-15
  • Q 31.13 : What special considerations apply to carve-out transactions?31-15
  • Q 31.14 : What arrangements may be made for transitional handling of employment benefits?31-16
  • Q 31.15 : What alternatives are available for tax-qualified retirement plans?31-16
  • Q 31.16 : What is “controlled group” liability?31-17
  • Q 31.17 : Under what circumstances might the Pension Benefit Guaranty Corporation intervene in an M&A transaction?31-18
  • : Downsizing31-19
  • Q 31.18 : What is the Worker Adjustment and Retraining Notification Act?31-19
  • Q 31.19 : What antidiscrimination laws may apply in a downsizing?31-20
  • Q 31.20 : Will terminated employees have a right to continued benefits?31-20
  • : Other Notice Requirements31-21
  • Q 31.21 : What other employment-related SEC filings might be required?31-21
  • Q 31.22 : What other PBGC filings might be required?31-21
Chapter 32: Foreign Corrupt Practices Act
  • : Scope of the Statute32-2
  • Q 32.1 : What is the FCPA?32-2
  • Q 32.2 : Who is subject to the FCPA?32-2
  • Q 32.3 : Who enforces the FCPA?32-3
  • Q 32.4 : What are the potential consequences of violating the FCPA?32-3
  • Q 32.5 : Do other countries have laws similar to the FCPA?32-4
  • Q 32.6 : Why is the health care industry particularly susceptible to FCPA risks?32-5
  • : The Antibribery Provisions32-6
  • Q 32.7 : What types of payments are prohibited by the FCPA’s antibribery provisions?32-6
  • Q 32.8 : Who qualifies as a “foreign official” under the FCPA?32-7
  • Q 32.9 : What makes a payment “corrupt” for purposes of “obtaining or retaining” business in violation of the FCPA?32-8
  • Q 32.10 : What type of “knowledge” of a subsidiary’s or other affiliate’s conduct is required for liability under the antibribery provisions?32-8
  • Q 32.11 : Can a company be liable for payments made by third parties, such as sales agents, consultants, and distributors?32-8
  • Q 32.12 : What exceptions are available under the antibribery provisions?32-9
  • Q 32.13 : What affirmative defenses are available under the antibribery provisions?32-9
  • : Exposure of Acquiring Companies32-10
  • Q 32.14 : Is an acquiring company exposed to FCPA liability for the target’s violations?32-10
  • Q 32.15 : What is an acquiring company’s potential exposure to liability for the target’s antibribery violations?32-10
  • Q 32.16 : What is an acquiring company’s potential exposure to liability for the target’s pre-acquisition violations of the accounting provisions?32-11
  • : Diligence Strategies32-12
  • Q 32.17 : What are some of the benefits of pre-acquisition FCPA diligence?32-12
  • Q 32.18 : What steps should a company take as part of pre-acquisition FCPA diligence?32-13
  • Q 32.19 : What information should be sought during the due diligence process?32-14
  • Q 32.20 : What types of questions should be asked regarding potential FCPA liability?32-14
  • Q 32.21 : Can a company ever conduct too much FCPA diligence prior to an acquisition?32-15
  • Q 32.22 : What if FCPA diligence cannot be completed pre-acquisition?32-16
  • Q 32.23 : What post-acquisition steps are advisable where comprehensive FCPA diligence cannot be completed prior to closing?32-17
  • Q 32.24 : Is requesting a DOJ opinion a viable option?32-18
  • : Compliance Programs32-18
  • Q 32.25 : What factors should be considered in assessing whether a target company has a robust FCPA compliance program?32-18
  • Q 32.26 : What potential FCPA risks should be considered with respect to clinical trials?32-20
  • Q 32.27 : What potential FCPA risks should be considered with respect to sales and marketing programs?32-21
  • Q 32.28 : What potential FCPA risks should be considered with respect to government product approvals, product certifications, and other licensing requirements?32-22
  • : Disclosing Violations to the Government32-22
  • Q 32.29 : In the M&A context, when is it advisable to disclose an FCPA violation to the government?32-22
  • Q 32.30 : What considerations weigh in favor of a voluntary disclosure?32-24
  • Q 32.31 : What considerations militate against a voluntary disclosure?32-25
Chapter 33: Real Property
  • : Separate Ownership of Real Estate33-2
  • Q 33.1 : Are there advantages to having real property held by an entity distinct from the entity conducting health care operations?33-2
  • : Due Diligence Considerations33-3
  • Q 33.2 : What kind of real estate diligence is needed as part of a health care M&A transaction?33-3
    • Q 33.2.1 : What diligence is typically needed for a target’s owned properties?33-3
    • Q 33.2.2 : What diligence is typically needed regarding leased properties?33-4
    • Q 33.2.3 : What if the property is the subject of a sale-leaseback arrangement?33-5
  • Q 33.3 : What other issues may arise in real estate diligence?33-6
    • Q 33.3.1 : How does a prospective acquirer review zoning?33-6
    • Q 33.3.2 : When should a prospective acquirer review underlying land use issues?33-6
Chapter 34: Elements of Acquisition Agreements
  • : Principal Elements34-2
  • Q 34.1 : What are the principal elements of a health care acquisition agreement?34-2
  • : Variations34-3
  • Q 34.2 : What provisions do parties typically focus on in health care M&A transactions?34-3
Chapter 35: Representations and Warranties
  • : Purposes and Effects35-2
  • Q 35.1 : What is the difference between a representation and a warranty?35-2
  • Q 35.2 : How can representations and warranties in acquisition agreements be categorized?35-3
  • Q 35.3 : What purposes do representations and warranties serve in health care acquisition agreements?35-4
  • : Typical Provisions in Health Care Deals35-5
  • Q 35.4 : What industry-specific representations and warranties are typically included in health care acquisition agreements?35-5
  • Q 35.5 : What industry-specific representations and warranties are typically included in acquisition agreements involving pharmaceutical or biotechnology companies or medical device manufacturers?35-6
    • Q 35.5.1 : What representations and warranties relating to legal and regulatory compliance are typical?35-6
    • Q 35.5.2 : What representations and warranties relating to intellectual property are typical?35-9
    • Q 35.5.3 : What representations and warranties relating to material contracts are typical?35-9
    • Q 35.5.4 : What representations and warranties relating to litigation and product liability matters are typical?35-10
  • Q 35.6 : What additional representations and warranties may be included in purchase agreements relating to product or portfolio acquisitions?35-11
  • Q 35.7 : What industry-specific representations and warranties are typically included in acquisition agreements involving health care providers?35-13
    • Q 35.7.1 : What representations and warranties relating to legal and regulatory compliance are typical?35-14
    • Q 35.7.2 : What representations and warranties relating to the target’s participation in Medicare, Medicaid, CHAMPUS, TRICARE, and other federal, state, or local government reimbursement programs are typical?35-16
    • Q 35.7.3 : What representations and warranties relating to the target’s accounts receivable and billing practices are typical?35-17
    • Q 35.7.4 : What representations and warranties relating to the target’s material contracts are typical?35-18
    • Q 35.7.5 : What representations and warranties relating to the target’s licensed personnel and medical staff matters are typical?35-18
    • Q 35.7.6 : What representations and warranties relating to the target’s environmental matters are typical?35-19
  • : Limiting the Scope of Representations and Warranties35-21
  • Q 35.8 : How can parties limit the scope of their representations and warranties in health care acquisition agreements?35-21
    • Q 35.8.1 : What is the role of materiality qualifiers?35-21
    • Q 35.8.2 : What is the role of knowledge qualifiers?35-22
Chapter 36: Covenants and Deal Protection
  • : Pre-Closing Covenants36-3
  • Q 36.1 : What types of pre-closing covenants related to the transaction process are typically included in health care M&A agreements?36-3
  • Q 36.2 : What is the interim-conduct-of-business covenant?36-4
  • Q 36.3 : What is “gun jumping”?36-6
  • Q 36.4 : What covenants relating to regulatory approvals and third-party consents may be included in health care acquisition agreements?36-7
  • Q 36.5 : What is a buyer financing covenant?36-8
  • Q 36.6 : What is a financing cooperation covenant?36-9
  • Q 36.7 : What industry-specific covenants are sometimes included in agreements for the acquisition of pharmaceutical, biotechnology, or medical device companies?36-9
  • Q 36.8 : What industry-specific covenants are sometimes included in agreements for the acquisition of a health care service provider?36-13
  • Q 36.9 : What are the legal consequences of breaching a pre-closing covenant?36-13
  • : Post-Closing Covenants36-14
  • Q 36.10 : What types of post-closing covenants are typically included in health care M&A agreements?36-14
  • Q 36.11 : What is a covenant for further assurances?36-15
  • Q 36.12 : What is a covenant not to compete?36-15
  • Q 36.13 : What are the remedies for a breach of a post-closing covenant?36-18
  • : Deal Protection36-19
  • Q 36.14 : What are deal protection provisions?36-19
  • Q 36.15 : What is a “no-shop” provision?36-19
  • Q 36.16 : What is a termination fee?36-21
  • Q 36.17 : What is a reverse termination fee?36-21
Chapter 37: Closing Conditions
  • : Mutual and Individual Conditions37-2
  • Q 37.1 : What types of mutual closing conditions typically appear in health care transactions?37-2
  • Q 37.2 : What closing conditions applicable to only one party may appear in health care acquisition agreements?37-3
  • : Conditions Relating to Regulatory Approvals and Third-Party Consents37-4
  • Q 37.3 : What types of regulatory approvals and third-party consents may be included as closing conditions in health care M&A agreements?37-4
  • Q 37.4 : What types of antitrust approvals typically constitute closing conditions in health care M&A agreements?37-5
  • Q 37.5 : What other types of regulatory approvals and third-party consents may be included as closing conditions in health care M&A agreements?37-6
  • Q 37.6 : What are typical points of negotiation with respect to closing conditions relating to regulatory approvals and third-party consents?37-7
  • Q 37.7 : How does the structure of the deal affect the choice of regulatory approvals and third-party consents as closing conditions?37-8
  • : The Bringdown Condition and Related Provisions37-9
  • Q 37.8 : What is the bringdown condition?37-9
  • Q 37.9 : Should the bringdown condition require that the representations and warranties be true and correct as of signing as well as of closing?37-9
  • Q 37.10 : Should all of the parties’ representations be reaffirmed as of the closing date?37-10
  • Q 37.11 : What materiality standard should be used?37-10
  • Q 37.12 : For what representations is a materiality standard considered inappropriate?37-11
  • Q 37.13 : Is performance of the parties’ covenants typically included as a closing condition in health care acquisition agreements?37-12
  • Q 37.14 : What is the purpose of an officer’s certificate?37-12
  • : Material Adverse Effect Conditions37-13
  • Q 37.15 : What is a standalone material adverse effect condition?37-13
  • : Conditions Specific to the Business or Industry37-15
  • Q 37.16 : What industry-specific closing conditions may be included in health care acquisition agreements?37-15
Chapter 38: Documentation for Indemnification
  • : Purposes and Types of Indemnification Provisions in Health Care Acquisition Agreements38-3
  • Q 38.1 : What purposes do indemnities serve in health care acquisition agreements?38-3
  • Q 38.2 : What is the interaction of indemnification provisions with purchase price adjustment mechanics?38-6
  • Q 38.3 : What industry-specific special indemnities may be included in health care acquisition agreements?38-7
    • Q 38.3.1 : What industry-specific indemnities may be included in acquisition agreements involving pharmaceutical or biotechnology companies or medical device manufacturers?38-8
    • Q 38.3.2 : What industry-specific indemnities may be included in acquisition agreements involving health care providers?38-9
  • : Limitations on Indemnification Obligations in Health Care Acquisition Agreements38-10
  • Q 38.4 : How can parties limit the scope of their indemnification obligations in health care acquisition agreements?38-10
  • Q 38.5 : What is a cap?38-10
  • Q 38.6 : What is a basket?38-11
  • Q 38.7 : What is a materiality read-out?38-12
  • Q 38.8 : What is a minimum claim threshold?38-12
  • Q 38.9 : What is a survival period?38-13
  • Q 38.10 : What is the effect of buyer’s knowledge of the breach on indemnification?38-14
  • Q 38.11 : What is loss mitigation?38-16
  • Q 38.12 : Is there an obligation to seek available insurance proceeds?38-16
  • Q 38.13 : What is the effect of tax benefits on indemnification obligations?38-17
  • : Security for the Indemnifying Party’s Obligations38-17
  • Q 38.14 : What arrangements may be used to secure indemnification obligations in health care transactions?38-17
  • Q 38.15 : What is the difference between an escrow and a holdback?38-18
  • : Transaction Insurance in Health Care Acquisitions38-19
  • Q 38.16 : What is transaction insurance?38-19
  • Q 38.17 : Do health care transactions present special problems for this type of insurance?38-20
Chapter 39: Documentation for License-and-Collaboration Agreements
  • : Licensing and Collaborative Use39-2
  • Q 39.1 : Which types of intellectual property may be licensed?39-2
  • Q 39.2 : In what ways may the licensee use the licensed intellectual property?39-2
  • Q 39.3 : May the licensee sublicense the intellectual property to affiliates or third parties?39-3
  • Q 39.4 : Which party owns intellectual property developed after the grant date?39-3
  • : Defense and Enforcement39-3
  • Q 39.5 : Which party controls the defense or prosecution of infringement claims?39-3
  • Q 39.6 : What are the potential solutions to a third-party infringement claim?39-4
  • Q 39.7 : How are recoveries from an enforcement action allocated between the licensor and the licensee?39-4
  • : Representations, Warranties, and Indemnities39-5
  • Q 39.8 : How do intellectual property representations and warranties in a license-and-collaboration agreement compare to those in an outright acquisition?39-5
  • Q 39.9 : What are the key indemnities?39-5
  • : Confidentiality, Duration, and Wind-Down39-6
  • Q 39.10 : Should confidentiality obligations be included?39-6
  • Q 39.11 : What is the typical duration of a license-and-collaboration agreement?39-6
  • Q 39.12 : What are the typical wind-down arrangements after expiration or termination of the license-and-collaboration agreement?39-7
Chapter 40: Documentation for Joint Ventures
  • : Organization of the Joint Venture40-2
  • Q 40.1 : What legal entities may be used for an equity joint venture?40-2
  • Q 40.2 : What sorts of contributions do the participants make to an equity joint venture?40-5
  • Q 40.3 : What are the key terms of a joint venture agreement?40-5
  • : Objectives40-6
  • Q 40.4 : Should the objectives of the joint venture be addressed in the joint venture agreement?40-6
  • : Management and Governance40-8
  • Q 40.5 : How should management and governance be addressed in the joint venture agreement?40-8
  • Q 40.6 : Should the joint venture have a board of directors?40-9
  • Q 40.7 : What is the role of officers?40-9
  • Q 40.8 : What issues arise with respect to decision making by the joint venture participants?40-9
  • Q 40.9 : What if the decision makers do not agree on a course of action?40-11
  • : Indemnification40-12
  • Q 40.10 : What kinds of losses can be indemnified?40-12
  • : Allocation of Income40-13
  • Q 40.11 : How is income allocated among participants?40-13
  • : Transfer of Interests40-14
  • Q 40.12 : Should there be restrictions on transfers of joint venture interests?40-14
    • Q 40.12.1 : What is a right of first offer?40-15
    • Q 40.12.2 : What is a right of first refusal?40-15
    • Q 40.12.3 : What is a tag-along right?40-16
    • Q 40.12.4 : What are drag-along rights?40-16
    • Q 40.12.5 : What are put and call rights?40-17
    • Q 40.12.6 : What are registration rights?40-17
  • Q 40.13 : What transfer issues arise if a participant’s interests are held by a special-purpose company?40-17
  • : Termination40-18
  • Q 40.14 : What are typical circumstances for termination of the joint venture, or the exit of partners?40-18
  • Q 40.15 : What are some important termination issues that should be addressed in the agreement?40-19
Chapter 41: Acquisitions of U.S. Companies by Non-U.S. Buyers
  • : Statutory Basis41-2
  • Q 41.1 : What is the source of the U.S. government’s authority to review foreign acquisitions of U.S. businesses?41-2
  • : Filing a Notice41-3
  • Q 41.2 : Is filing a Notice required?41-3
  • Q 41.3 : What are the benefits of filing a Notice?41-3
  • Q 41.4 : What transactions might be subject to CFIUS review and a Notice?41-3
    • Q 41.4.1 : What constitutes national security?41-4
    • Q 41.4.2 : What health care–related transactions might raise national security concerns?41-5
    • Q 41.4.3 : What types of corporate transactions are covered?41-6
    • Q 41.4.4 : What constitutes control?41-7
    • Q 41.4.5 : What sorts of transactions are not “covered”?41-8
  • Q 41.5 : When should the Notice be filed?41-8
  • Q 41.6 : What are the contents of the Notice?41-9
  • : Government Review41-10
  • Q 41.7 : What is the process prior to the filing of the Notice?41-10
  • Q 41.8 : What happens after filing of the Notice?41-10
  • Q 41.9 : What happens during the review and investigation periods?41-11
  • Q 41.10 : Are the Notice and CFIUS review process confidential?41-12
  • Q 41.11 : What happens at the end of the process?41-12
Chapter 42: Health Care M&A Transactions in France
  • : Principal Considerations in Structuring Health Care M&A Transactions in France42-4
  • Q 42.1 : What considerations affect the choice between a stock deal and an asset deal?42-4
  • : Stock Deals42-5
  • Q 42.2 : What are the legal requirements for stock deals involving providers of medical services?42-5
  • Q 42.3 : What are the legal requirements for stock deals involving manufacturers of health products?42-6
  • Q 42.4 : What are the legal requirements for stock deals involving biomedical laboratories?42-7
  • : Asset Deals42-9
  • Q 42.5 : What are the French law requirements applicable to asset deals generally?42-9
  • Q 42.6 : What are the legal requirements for asset deals involving health care establishments?42-10
  • Q 42.7 : What are the legal requirements for asset deals involving pharmaceutical establishments?42-10
  • Q 42.8 : What are the legal requirements for asset deals involving manufacturers of health products?42-10
  • Q 42.9 : What are the legal requirements for asset deals involving manufacturers of health equipment?42-11
  • : Transfers42-11
  • Q 42.10 : What are the legal requirements for the transfer of intellectual property rights?42-11
  • Q 42.11 : What are the legal requirements for the transfer of marketing authorizations?42-11
  • : Antitrust, Tax, and Social Security Issues42-14
  • Q 42.12 : What antitrust notices are required for health care transactions in France?42-14
  • Q 42.13 : What substantive antitrust rules are applicable?42-15
  • Q 42.14 : What are the tax incentives for the development of pharmaceutical or medical devices under French law?42-17
  • Q 42.15 : What pricing considerations are relevant to health care M&A transactions?42-18
  • : Principal Due Diligence Considerations42-20
  • Q 42.16 : What are the key due diligence considerations in health care M&A transactions in France?42-20
  • Q 42.17 : What are the key due diligence considerations in transactions involving health institutions?42-21
  • Q 42.18 : What are the key due diligence considerations in transactions involving developers or manufacturers of health care products?42-22
    • Q 42.18.1 : What considerations are relevant if the target is a pharmaceutical company?42-22
    • Q 42.18.2 : What considerations are relevant if the target develops medicinal products?42-23
    • Q 42.18.3 : What considerations are relevant if the target develops or manufactures medical devices?42-25
  • Q 42.19 : What are the operational constraints on health care companies under French law?42-25
  • Q 42.20 : What are the regulatory constraints on manufacturing health care products in France?42-27
  • Q 42.21 : What are the regulatory constraints on the distribution and marketing of health care products in France?42-29
    • Q 42.21.1 : What are the registration and certification requirements?42-29
    • Q 42.21.2 : What testing is required?42-30
    • Q 42.21.3 : What are the distribution constraints?42-31
  • Q 42.22 : What due diligence issues arise with respect to investigations or enforcement actions by governmental agencies involving the target?42-33
  • Q 42.23 : What are the product liability rules applicable to health care products?42-34
  • Q 42.24 : What are the medical malpractice liability rules?42-35
  • Q 42.25 : What are the applicable environment law constraints?42-37
  • Q 42.26 : What are the key intellectual property issues relating to medicinal products and medical devices?42-38
  • Q 42.27 : What are the applicable labor law considerations?42-39
  • Q 42.28 : Are there any issues related to foreign anticorruption programs?42-42
  • : Transaction Documents42-43
  • Q 42.29 : What special issues should be addressed in drafting and negotiating transaction documents in health care M&A transactions in France?42-43
  • Q 42.30 : Is the works council’s opinion required?42-43
  • Q 42.31 : How should the transfer of permits be addressed?42-44
  • Q 42.32 : Are any foreign investment approvals required?42-44
  • Q 42.33 : What are the special documentation requirements in stock deals?42-44
  • Q 42.34 : What are the special documentation requirements in asset deals?42-45
  • Q 42.35 : What are some typical issues to be addressed in a licensing or collaborative arrangement?42-46
Chapter 43: Health Care M&A Transactions in Germany
  • : Regulation of Hospitals43-7
  • Q 43.1 : How is a hospital operated under German law?43-7
  • Q 43.2 : What are the requirements for patient data protection in German hospitals?43-8
  • Q 43.3 : How are German hospitals financed?43-13
  • : Regulation of Medicinal Products43-16
  • Q 43.4 : What is the regulatory regime that governs the development, manufacture, and distribution of medicinal products?43-16
  • Q 43.5 : What is a medicinal product?43-16
  • Q 43.6 : What are the requirements for developing medicinal products in Germany?43-17
  • Q 43.7 : What are the rules facilitating the development of generic medical products?43-22
  • Q 43.8 : What are the regulatory requirements for manufacturing medicinal products in Germany?43-22
  • Q 43.9 : What are the regulatory requirements for marketing medicinal products in Germany?43-23
  • Q 43.10 : What are the national authorization procedures in Germany?43-24
  • Q 43.11 : What are the European authorization procedures?43-27
    • Q 43.11.1 : What is the Centralized Procedure in the EU?43-27
    • Q 43.11.2 : What are the Decentralized Procedure and the Mutual Recognition Procedure in the EU?43-28
  • Q 43.12 : What are the pricing concerns in connection with the distribution of medicinal products in Germany?43-29
  • Q 43.13 : What are the basic price regulations for medicinal products in Germany?43-31
  • Q 43.14 : How are insured persons reimbursed for medicinal product costs?43-32
  • : Regulation of Medical Devices43-34
  • Q 43.15 : What is the regulatory regime that governs the development, manufacture, and distribution of medical devices in Germany?43-34
  • Q 43.16 : What are the requirements for developing and manufacturing medical devices in Germany?43-35
  • Q 43.17 : What are the requirements for distributing medical devices in Germany?43-36
  • Q 43.18 : What are the pricing concerns in connection with the distribution of medical devices in Germany?43-38
  • Q 43.19 : What is pharmacovigilance?43-39
  • : Product Liability and Medical Malpractice43-40
  • Q 43.20 : What special product liability rules apply to medicinal products and medical devices?43-40
  • : Regulation of Health Care Advertising43-44
  • Q 43.21 : What rules govern advertising in the health care sector?43-44
  • : Health Care M&A Issues43-47
  • Q 43.22 : What are the key considerations in structuring a health care M&A transaction in Germany?43-47
  • : Stock Transactions43-48
  • Q 43.23 : What are the key legal considerations in connection with stock transactions?43-48
    • Q 43.23.1 : What are the considerations for partnerships?43-48
    • Q 43.23.2 : What are the considerations for limited liability companies?43-49
    • Q 43.23.3 : What are the considerations for stock corporations and partnerships limited by shares?43-49
  • Q 43.24 : What are the rights of the target’s employees and their representatives in stock transactions?43-51
  • Q 43.25 : What are the tax considerations in stock transactions?43-52
  • Q 43.26 : What are the health care–specific issues in stock transactions?43-53
  • : Asset Transactions43-55
  • Q 43.27 : What are the key legal considerations in connection with asset transactions?43-55
  • Q 43.28 : What are the rules governing the transfer of assets, liabilities, and contracts?43-55
  • Q 43.29 : What are the rights of the target company’s employees and their representatives in asset transactions?43-58
  • Q 43.30 : What are the tax considerations in asset transactions?43-61
  • Q 43.31 : What are the health care–specific issues in asset transactions?43-62
  • Q 43.32 : What are the key legal considerations in connection with a transfer of intellectual property rights?43-65
  • : Merger Control, Data Protection, and Other Restrictions43-66
  • Q 43.33 : What are the key merger control considerations in connection with health care M&A transactions in Germany?43-66
  • Q 43.34 : What are the key data protection considerations in German M&A transactions?43-68
  • Q 43.35 : Are there any restrictions on foreign investment?43-69
  • Q 43.36 : Are there applicable foreign exchange controls or reporting requirements?43-70
  • : Due Diligence43-71
  • Q 43.37 : What are the key due diligence considerations in health care M&A transactions in Germany?43-71
  • Q 43.38 : What are the key due diligence considerations in connection with the sale of a hospital business?43-72
    • Q 43.38.1 : What is the importance of determining the legal status of the target hospital?43-72
    • Q 43.38.2 : What issues arise regarding the financing arrangements of the target hospital?43-73
  • Q 43.39 : What are the key due diligence considerations in connection with the sale of a pharmaceutical or medical devices business?43-73
    • Q 43.39.1 : Why is it important to determine the legal status of the target’s products?43-75
    • Q 43.39.2 : Why is it important to determine whether the target is in possession of necessary marketing authorizations?43-76
    • Q 43.39.3 : What are the potential issues relating to the prescription status and off-label use of the target company’s medicinal products?43-77
    • Q 43.39.4 : What are the potential issues relating to pricing and eligibility for health insurance reimbursement?43-79
    • Q 43.39.5 : What are the potential pharmacovigilance and product liability issues?43-79
    • Q 43.39.6 : What are the potential issues relating to the protection of intellectual property rights?43-80
Chapter 44: Health Care M&A Transactions in Russia
  • : The Health Care Industry in Russia44-2
  • Q 44.1 : What are Russia’s development goals for the health care industry?44-2
  • Q 44.2 : What recent legislation affects the health care market?44-3
  • Q 44.3 : What roles does the Russian government play in the health care industry?44-5
  • : Structuring Health Care M&A Transactions in Russia44-7
  • Q 44.4 : How are health care M&A transactions usually structured in Russia?44-7
    • Q 44.4.1 : Why are stock deals more common than asset deals?44-7
    • Q 44.4.2 : What are typical offshore transactions?44-8
  • Q 44.5 : What types of companies do health care M&A transactions in Russia primarily involve?44-8
  • Q 44.6 : What types of corporate reorganizations are used in M&A activity in the health care sector?44-10
  • Q 44.7 : Are there restrictions on foreign ownership of Russian companies operating in the health care market?44-10
  • Q 44.8 : What regulatory approvals are required for M&A transactions in the Russian health care market?44-12
    • Q 44.8.1 : What transactions require competition clearance?44-13
    • Q 44.8.2 : What transactions require strategic investment clearance?44-14
  • : Key Due Diligence Considerations44-15
  • Q 44.9 : What challenges do buyers face in acquisitions of Russian health care companies?44-15
  • Q 44.10 : What are the key issues in conducting due diligence of a Russian health care company?44-17
  • Q 44.11 : What are the potential issues relating to the seller’s title to the shares or assets of the target company?44-18
    • Q 44.11.1 : What is a void transaction?44-18
    • Q 44.11.2 : What is a voidable transaction?44-19
  • Q 44.12 : What types of health care activities are subject to licensing?44-20
  • Q 44.13 : What are the principal industry-specific regulatory requirements?44-20
    • Q 44.13.1 : What is state registration of pharmaceuticals and medical equipment?44-21
    • Q 44.13.2 : What is state regulation of pricing?44-22
    • Q 44.13.3 : What are the key regulatory requirements for the manufacture of pharmaceuticals?44-24
    • Q 44.13.4 : What are the requirements for the storage of pharmaceuticals?44-24
    • Q 44.13.5 : What are the applicable disclosure rules with respect to side effects?44-25
    • Q 44.13.6 : What are the standards and procedures for the provision of medical services?44-25
    • Q 44.13.7 : What are the rules for accreditation of employees engaged in performing medical or pharmaceutical activities?44-25
    • Q 44.13.8 : What are the applicable sanitary rules?44-25
    • Q 44.13.9 : What are the applicable restrictions on advertising?44-26
    • Q 44.13.10 : What preferences exist for pharmaceuticals originating from the Eurasian Economic Union?44-26
  • Q 44.14 : How can intellectual property rights to pharmaceuticals and medical equipment be established and protected under Russian law?44-28
  • Q 44.15 : Are Russian anticorruption requirements consistent with international standards?44-28
  • Q 44.16 : What are the main labor safety and environmental requirements affecting the Russian health care industry?44-29
  • Q 44.17 : Can information relating to litigation matters and other disputes involving the target company be obtained from public sources?44-30
  • : Choice of Law44-30
  • Q 44.18 : Can the parties choose non-Russian law to govern the deal?44-30
  • : Arbitration44-31
  • Q 44.19 : What dispute resolution mechanisms are typically used in health care M&A transactions in Russia?44-31
Chapter 45: Health Care M&A Transactions in England
  • : Background45-2
  • Q 45.1 : What is the role of the public sector?45-2
  • Q 45.2 : How is the role of the private sector changing?45-2
  • Q 45.3 : What is the size of the health care market?45-3
  • Q 45.4 : What factors affect the current health care M&A market?45-3
    • Q 45.4.1 : What sorts of entities are typically involved in deals?45-4
    • Q 45.4.2 : How does the public/private distinction affect the market?45-4
    • Q 45.4.3 : What are the opportunities in the social care area?45-4
    • Q 45.4.4 : What are the opportunities in the pharmaceuticals area?45-5
  • : Organization of the Public Health Care System in England45-5
  • Q 45.5 : What is the NHS?45-5
  • Q 45.6 : What is the “commissioning” of health care services?45-6
  • Q 45.7 : What is NHS England?45-6
  • Q 45.8 : What is Monitor or NHS Improvement?45-7
  • Q 45.9 : What is a clinical commissioning group?45-8
  • Q 45.10 : What is an NHS Trust?45-8
  • Q 45.11 : What is an NHS Foundation Trust?45-8
  • Q 45.12 : Can an NHS organization provide privately funded health care?45-10
  • Q 45.13 : How is the system of health care funded in England?45-11
  • Q 45.14 : How are prices set for public health care?45-11
  • Q 45.15 : How are health care services planned and purchased?45-12
  • Q 45.16 : Do elected bodies have any role in the provision of health care?45-13
  • Q 45.17 : What is the role of local authorities in the planning and provision of health care?45-13
  • Q 45.18 : How is the provision of health care regulated?45-13
    • Q 45.18.1 : What is the role of the Care Quality Commission?45-14
    • Q 45.18.2 : What is the role of Monitor and the NHS Trust Development Authority?45-14
  • Q 45.19 : How is regulatory oversight managed?45-15
  • Q 45.20 : What happens to failing regulated providers?45-16
    • Q 45.20.1 : What if a private provider fails?45-17
  • Q 45.21 : How are health care professionals regulated?45-18
  • Q 45.22 : Are there other relevant regulatory authorities?45-18
  • Q 45.23 : How is the public engaged in the provision of health care in England?45-19
  • Q 45.24 : What is the role of the Secretary of State for Health in the provision of health care?45-19
  • Q 45.25 : What is Public Health England?45-20
  • Q 45.26 : What are primary, secondary, and tertiary care, and how are their practitioners organized?45-20
  • Q 45.27 : Can an NHS Trust (including an FT) or its assets be transferred into private ownership?45-21
  • Q 45.28 : How are medicines licensed for manufacture and use?45-21
    • Q 45.28.1 : Are there special provisions for herbal medicines?45-22
    • Q 45.28.2 : Can marketing authorizations be transferred?45-22
  • Q 45.29 : How are medical devices authorized?45-23
  • : Private Health Care Provision in England45-23
  • Q 45.30 : What types of activities are currently covered by private company providers?45-23
  • Q 45.31 : How can new private providers enter the English health care market?45-24
    • Q 45.31.1 : What is a startup?45-24
    • Q 45.31.2 : What is a Public Private Partnership?45-24
    • Q 45.31.3 : What is a joint venture?45-25
  • : Mergers and Acquisitions Involving Private Health Care Companies45-25
  • Q 45.32 : How are transactions typically structured?45-25
  • Q 45.33 : How is the purchase price paid?45-25
  • Q 45.34 : What are the advantages and disadvantages of share purchases?45-26
    • Q 45.34.1 : What protections are available to the buyer in a share purchase?45-26
    • Q 45.34.2 : What if some assets are to stay with the seller?45-27
  • Q 45.35 : What are the advantages and disadvantages of asset purchases?45-27
    • Q 45.35.1 : Are there special considerations for employment contracts?45-27
  • Q 45.36 : Are there alternatives to share and asset purchases?45-28
  • Q 45.37 : Are there restrictions on foreign ownership of companies operating in health care?45-28
  • Q 45.38 : What regulatory approvals are relevant to health care M&A transactions under the Monitor license?45-28
    • Q 45.38.1 : Who is exempt from the requirement of a Monitor license?45-29
  • Q 45.39 : What competition laws should be considered?45-29
  • Q 45.40 : What are the tax considerations in share purchase transactions?45-31
  • Q 45.41 : What are the tax considerations in asset purchase transactions?45-32
  • Q 45.42 : Does the choice of law have any impact?45-32
  • : Due Diligence45-33
  • Q 45.43 : Are there particular due diligence issues for share purchases?45-33
  • Q 45.44 : Are there particular due diligence issues for asset purchases?45-33
  • Q 45.45 : What issues arise with respect to overtime pay for employees?45-34
  • Q 45.46 : What is the impact of the “duty of candor”?45-34
  • Q 45.47 : What is the impact of the “any qualified provider” concept?45-34
  • Q 45.48 : What if the seller is subject to product liability claims?45-35
    • Q 45.48.1 : What are the elements of a product liability action?45-35
    • Q 45.48.2 : Who are the potential defendants?45-35
    • Q 45.48.3 : What defenses are available?45-36
    • Q 45.48.4 : What is the limitation period?45-36
  • Q 45.49 : What if the seller is subject to clinical negligence claims?45-36
    • Q 45.49.1 : What are the elements of a tort action for clinical negligence?45-36
    • Q 45.49.2 : Who are the potential defendants?45-37
    • Q 45.49.3 : Can a contract action be brought?45-37
    • Q 45.49.4 : What is the limitation period?45-37
  • Q 45.50 : Where can a buyer find published quality or performance data about the target?45-38
  • Q 45.51 : What data protection considerations apply in health care M&A transactions?45-38
  • Q 45.52 : Are there particular intellectual property considerations?45-39
  • Q 45.53 : Does the Bribery Act have any implications in health care transactions?45-40
  • Q 45.54 : Are there any special requirements to be a director of a health care company?45-40
  • Q 45.55 : What impact will Brexit have on M&A transactions in the health care sector in England?45-41
Chapter 46: Health Care M&A Transactions in Canada
  • : Regulatory Environment46-3
  • Q 46.1 : What is Health Canada?46-3
  • Q 46.2 : What role do the provinces play?46-4
  • Q 46.3 : What is the role of the Patent Medicine Prices Review Board?46-5
  • Q 46.4 : How is the advertising of health care products regulated?46-5
  • Q 46.5 : Is there self-regulation in the industry?46-6
  • Q 46.6 : What legislation governs pharmaceutical products, medical devices, and natural health products in Canada?46-7
    • Q 46.6.1 : What is the scope of the Food and Drugs Act?46-7
    • Q 46.6.2 : What criminal laws are applicable?46-7
    • Q 46.6.3 : Are there applicable provincial laws as well?46-7
    • Q 46.6.4 : What is the effect of the Patent Act?46-8
    • Q 46.6.5 : What competition laws apply?46-8
  • : Structuring the Transaction and Obtaining Regulatory Approvals46-8
  • Q 46.7 : What considerations affect the choice of a share purchase versus an asset purchase?46-8
  • Q 46.8 : What is the general process for transferring licenses and approvals for pharmaceutical and medical device products?46-9
  • Q 46.9 : What notices and approvals do health regulatory authorities require in connection with transactions involving pharmaceutical products?46-10
  • Q 46.10 : What notices and approvals do health regulatory authorities require in connection with transactions involving medical device products?46-12
  • : Competition Law46-14
  • Q 46.11 : What mergers are subject to Canadian competition laws?46-14
  • Q 46.12 : What are the thresholds that trigger a duty to give notice of a merger?46-14
    • Q 46.12.1 : What is the effect of the Canadian thresholds as compared to the lower U.S. thresholds?46-15
  • Q 46.13 : What substantive test is applied to mergers under Canadian competition/antitrust laws?46-16
  • Q 46.14 : What is the current enforcement policy regarding the health care industry?46-17
  • Q 46.15 : In what ways does the Canadian Competition Bureau cooperate with agencies in other countries?46-18
  • Q 46.16 : What are some examples of transactions that have raised competition concerns?46-19
  • : Investment Canada Act46-21
  • Q 46.17 : Are there any restrictions on foreign investment in the health care industry in Canada?46-21
  • : Bulk Sales46-22
  • Q 46.18 : Is compliance with bulk sales legislation required?46-22
    • Q 46.18.1 : What does the Ontario Bulk Sales Act require?46-23
    • Q 46.18.2 : Can compliance be avoided?46-23
  • : Some Due Diligence Considerations46-24
  • Q 46.19 : What are the legal requirements for transferring material contracts?46-24
    • Q 46.19.1 : Should notice be given to the counterparty in any case?46-25
  • Q 46.20 : What issues should be considered relating to third-party distribution arrangements?46-25
  • Q 46.21 : What are the anticorruption risk considerations?46-27
  • : Privilege46-28
  • Q 46.22 : What privileges are recognized in Canadian law?46-28
    • Q 46.22.1 : What is solicitor-client privilege?46-28
    • Q 46.22.2 : What is litigation privilege?46-28
    • Q 46.22.3 : What is settlement privilege?46-28
    • Q 46.22.4 : What is common interest privilege?46-28
  • Q 46.23 : When documents need to be disclosed, what should be done to preserve a potential claim for common interest privilege?46-29
  • : Anti-Spam Laws46-30
  • Q 46.24 : What restrictions apply to sending commercial electronic messages?46-30
  • Q 46.25 : What are the penalties for violations?46-30
  • Q 46.26 : What due diligence is appropriate?46-31
  • : Transaction Documents46-32
  • Q 46.27 : What documentation is typically required in a share purchase?46-32
  • Q 46.28 : What documentation is typically required in an asset purchase?46-32
    • Q 46.28.1 : What is the value of a separate transfer agreement relating to Canadian assets?46-33
  • Q 46.29 : What is a transition services agreement?46-33
  • : Product Liability46-34
  • Q 46.30 : Are class actions used in product liability cases?46-34
  • Q 46.31 : Are individual actions used in product liability cases?46-35
  • Q 46.32 : What is the basis for a product liability claim?46-35
  • Q 46.33 : Who is potentially liable?46-36
  • Q 46.34 : What damages may be available?46-36
  • Q 46.35 : Where can one find public information about claims against the target?46-37
  • : Anticorruption Laws46-37
  • Q 46.36 : What are the main Canadian anticorruption statutes?46-37
  • Q 46.37 : How does the CFPOA address corruption?46-37
    • Q 46.37.1 : Could “foreign public officials” include non-Canadian health care professionals?46-38
    • Q 46.37.2 : What payments are permitted as exceptions?46-38
    • Q 46.37.3 : What are the penalties for violations?46-38
  • Q 46.38 : How does the Criminal Code address corruption?46-39
    • Q 46.38.1 : When is a health care professional a “government official”?46-39
    • Q 46.38.2 : Do the Criminal Code provisions reach private sector activity?46-40
    • Q 46.38.3 : What are the penalties for violation of the anticorruption offenses?46-40
  • Q 46.39 : How does Canadian anticorruption law compare to that of the United States?46-41
  • Q 46.40 : How does Canadian anticorruption law compare to that of the United Kingdom?46-41
  • Q 46.41 : Can an acquiring company be liable for the target’s anticorruption violations?46-42
  • : Procurement System46-43
  • Q 46.42 : What is the legal framework applicable to the procurement of health care goods and services in Canada?46-43
  • Q 46.43 : What information does a purchaser need to know about a target’s eligibility to participate in the Canadian public procurement process?46-45
  • Q 46.44 : If a target has a bid pending in a binding competitive government procurement, is there anything a purchaser should consider?46-47
  Index

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