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FTC joins overseas antitrust regulators in reexamination of pharma M&A

Dive Brief:

  • The U.S. Federal Trade Commission will join European, British and Canadian regulators, as well as with counterparts at the U.S. Justice Department and states attorneys general, to update their approach to reviewing pharmaceutical acquisitions, a move the commission’s acting chair said was prompted by the “high volume of these mergers,” increasing drug prices and other anti-competitive issues.


  • Rebecca Kelly Slaughter, the acting chair, told reporters Tuesday the agency’s analysis of acquisitions like Bristol Myers Squibb’s $74 billion takeover of Celgene or AbbVie’s $63 billion buyout of Allergan raised concerns its “approach doesn’t encompass the entirety of these transactions.”


  • Antitrust regulators watch drugmaker mergers closely to determine whether tie-ups could impede development of newer and potentially better medicines. In 2019, the FTC’s review of the Celgene and Allergan transactions, as well as Roche’s buyout of Spark Therapeutics, led to questions among investors whether the agency’s scrutiny might slow dealmaking.


Dive Insight:

Acquisitions have sustained large pharmaceutical companies as they’ve restructured their research and sought to buffer the effects of lost patent protection on top-sellers. Deals can also lead acquiring companies to discontinue medicines in development, or shutter research on potential competitors that overlap with existing products.

As a result, regulators sometime require companies to divest products in the name of competition.

When Bristol Myers bought Celgene, for instance, the latter company was forced to sell its autoimmune disease drug Otezla due to Bristol Myers’ ownership of competing product Orencia and another experimental therapy for such conditions.

Allergan, meanwhile, had to sell its drug brazikumab to AstraZeneca before being absorbed by AbbVie, which sold a rival therapy called Skyrizi. (The FDA usually requires the marketed product be divested.)

A little further back, Roche’s acquisition of Spark was slowed while FTC investigators examined the potential for the Swiss pharma to thwart development of a hemophilia A gene therapy so as to prevent competition with its fast-selling product Hemlibra.

While pharma dealmaking got off to a very slow start in 2020, acquisition activity heated up in the late summer and fall. With a new president in Joe Biden, and bipartisan interest in tackling rising drug prices, the FTC appears to be empowered to take a closer look at drug industry M&A.

Slaughter didn’t specify how the commission’s legal analysis might change. But she said measures like combined market share don’t fully capture the effects pharma acquisitions can have on innovation and competition.

“The impact of pharmaceutical mergers isn’t just about the respective size of the two companies, because pharma is an area that depends so heavily on innovation and entry of new products often developed by small competitors,” she said.

“We’re really looking at these questions about innovation and what’s going to get new treatments and new drugs to the market so that consumers have access to them and, importantly, have access to them at prices that they can afford.”

The FTC and its partners will look at expanding the definition of competitive harm, the evidence they need to demonstrate that harm, and remedies to address it. Other traditional aspects of competition, such as price fixing, will be part of the review. Agency staff will also look at what types of companies buy divested products.

Slaughter raised the possibility some transactions could be subject to retrospective review. “Where we see the need for [after-the-fact] action, I want us to be thinking about whether we should take it,” she said.