Acting FTC chief wants new approach for analyzing how drug-company deals affect competition
WASHINGTON—The Federal Trade Commission on Tuesday announced plans to reconsider its approach to scrutinizing pharmaceutical mergers, with an eye toward taking a more aggressive stance against drug-company deals that may harm competition.
The initiative, spurred by the FTC’s acting Democratic chairwoman, Rebecca Kelly Slaughter, signals what could be a tougher road ahead for the industry during the Biden administration.
“Given the high volume of pharmaceutical mergers in recent years, amid skyrocketing drug prices and ongoing concerns about anticompetitive conduct in the industry, it is imperative that we rethink our approach toward pharmaceutical merger review,” Ms. Slaughter said.
The FTC is starting a working group that will take a broader look at how pharmaceutical deals affect the marketplace. Other participants include the Justice Department’s antitrust division, state attorneys general and competition officials from Canada, the U.K. and Europe, the FTC said.
Working with those officials, “we intend to take an aggressive approach to tackling anticompetitive pharmaceutical mergers,” Ms. Slaughter said.
Ms. Slaughter was designated the acting head of the FTC by President Biden after he took office in January. She is in the running to be named the permanent chair of the five-member body, but the administration has yet to announce its plans.
The FTC has challenged portions of drug-company mergers with regularity but doesn’t often block such deals outright. Instead, merging drug companies usually agree to sell off assets when they have overlapping product lines in their pharmaceutical portfolios.
A typical example came last year when the commission allowed AbbVie Inc.’s$63 billion acquisition of Allergan PLC on the condition that the merged firm sell off Allergan’s rights and assets related to three drugs.
The FTC’s approval of that deal came on a 3-2 vote with Democrats, then in the minority, dissenting. Ms. Slaughter’s dissent argued that the FTC should be analyzing industry mergers with a broader lens to consider issues such as how a merger might affect research and development and innovation.
The FTC’s Republican majority at the time said the commission appropriately investigated the potential loss of competition threatened by the AbbVie-Allergan transaction and fully remedied those concerns by requiring the merged firm to divest assets.
The FTC’s new working group will explore the kinds of questions Ms. Slaughter previously raised, including whether it is possible to make broader arguments against pharmaceutical mergers—and what kind of evidence antitrust enforcers would need to do so.
This article was originally published by The Wall Street Journal on March 16, 2021.