A bitter pill? U.S., foreign, and state antitrust agencies form a group to change pharmaceutical mergers

In recent years, the US Federal Trade Commission (FTC) Democratic commissioners have expressed dissatisfaction with the agency’s historical treatment of pharmaceutical mergers. As a result, the FTC has now started a process aimed at changing the way in which pharmaceutical M&A transactions are analyzed and ultimately resolved.

Previous dissenting statements by now-incumbent FTC chairperson Rebecca Kelly Slaughter and Commissioner Rohit Chopra criticized traditional antitrust analysis for pharmaceutical transactions. Slaughter and Chopra called on the FTC to file legal disputes against such mergers rather than addressing competitive concerns through divestments of overlapping drugs either in the market or in the development pipeline of the merging parties.[1] In a joint declaration at the end of 2020, they wrote: “[t]The FTC’s record of reviewing pharmaceutical mergers suggests that the agency will simply never attempt to block a merger. “[2]

In its March 16, 2021 press release, the FTC announced that it had set up a working group with several other competition authorities to “update their approach to analyzing the effects of drug mergers”.[3] For this project, the FTC is working with the Canadian Competition Bureau, the European Commission’s Competition Directorate-General, the UK Competition and Markets Authority, the US Department of Justice and the offices of several Attorney General’s offices.[4]

According to the incumbent FTC chairman, “this is imperative [the FTC] rethink [their] Approach to Pharmaceutical Merger Review “due to the” high volume of pharmaceutical mergers in recent years, given skyrocketing drug prices and ongoing concerns about anti-competitive behavior in the industry “.

The Acting Chairman also announced that the FTC intends to “take an aggressive approach to combating anti-competitive pharmaceutical mergers” while “[w]Working hand in hand with international and national enforcement partners. “[5] A cross-border effort is particularly useful in an industry like the pharmaceutical industry, in which the larger, established companies are globally or at least internationally oriented.

The FTC press release notes that the working group will consider the following key questions:

  • How can current theories of damage be expanded and refreshed?
  • What impact does a pharmaceutical merger have on innovation?
  • When reviewing mergers, how should the FTC consider pharmaceutical behavior such as price fixing, refunds, and other regulatory abuses?
  • What evidence would be required to challenge a transaction based on new or expanded theories of harm?
  • What kinds of remedies would work in the cases to which these theories are applied?
  • What has the FTC learned about the size of the assets and characteristics of companies that are successful sale buyers?

None of the agencies involved has provided a schedule or explained what the final work product will look like. Given that the two current Republican commissioners who have assisted the current analysis on pharmaceutical mergers are holding the two seats of the FTC commissioners pending proposed federal corrections to the handling of all mergers,[6] and the uncertainty about the position the new Biden government might take will be worth following this international working group.

[1] See e.g. B. Statement by Commissioner Rohit Chopra, with Commissioner Rebecca Kelly Slaughter, On the Pfizer Inc./ Mylan NV matter, Commission File No. 1910182 (October 30, 2020), available at https: //www.ftc. gov / system / files / documents / public_statements / 1582382 / 191_0182_pfizer-mylan _-_ dissenting_statement_of_commrs_chopra_and_slaughter_1.pdf; Dissenting statement by Commissioner Rebecca Kelly Slaughter, On the AbbVie / Allergan matter, Commission file number 191-0169 (May 5, 2020), available at https://www.ftc.gov/system/files/documents/public_statements / 1574577 / 191_0169_dissenting_statement_of_commissioner_rebecca_kelly_slaughter_in_the_matter_of_abbvie_and_0.pdf; Dissenting statement by Commissioner Rohit Chopra, On the AbbVie, Inc. / Allergan plc matter, Commission file number 1910169 (May 5, 2020), available at https://www.ftc.gov/system/files/documents/ public_statements /1574583/191-0169_dissenting_statement_of_commissioner_rohit_chopra_in_the_matter_of_abbvie-allergan_redacted.pdf; Counter-declaration by Commissioner Rebecca Kelly Slaughter, On the Bristol-Myers Squibb and Celgene matter, Commission file number 191-0061 (November 15, 2019), available at https://www.ftc.gov/system/files/ documents / public_statements / 1554283/17 _-_ final_rks_bms-celgene_statement.pdf; Dissenting statement by Commissioner Rohit Chopra in relation to Bristol-Myers Squibb / Celgene, Commission file number 1910061 (15 November 2019).

[2] Statement by Commissioner Rohit Chopra with Commissioner Rebecca Kelly Slaughter on the Pfizer Inc. / Mylan NV Commission case file number 1910182.

[3] See https://www.ftc.gov/news-events/press-releases/2021/03/ftc-announces-multilateral-working-group-build-new-approach.

[4] At the time of publication, the following attorneys general have indicated that they will join the working group: California, Pennsylvania, Virginia and Wisconsin. See e.g. B. WisPolitics.com, “Dept. of Justice: The Wisconsin DOJ was appointed to the International Task Force on Pharmaceutical Mergers ”(March 16, 2021), available at https://www.wispolitics.com/2021/dept-of-justice-wisconsin-doj-named -to-international -Task-Force-on-Pharmaceutical-Mergers /; Augusta Free Press, “Hering Joins Task Force to Investigate Pharmaceutical Mergers (March 16, 2021), available at https://augustafreepress.com/herring-joining-task-force-to-examine-pharmaceutical-mergers.

[5] See https://www.ftc.gov/news-events/press-releases/2021/03/ftc-announces-multilateral-working-group-build-new-approach.

[6] See e.g. B. Trust-Busting For the 21st Century Act; Competition and Antitrust Reform Act of 2021 (pp.225 – 117th Congress (2021-2022)); and Anti-competitive Exclusion Behavior Act of 2020 (p.3426 – 116th Congress (2019-2020)).

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