International trade officials to review impact of pharma mergers

The Federal Trade Commission will work with international regulators to review the effects of pharma mergers and update approaches to analysing them.

Close up of handshake on city background - idea of mergers and acquisitions

The US Federal Trade Commission (FTC) has announced that it is forming an international working group and launching a broad review into how pharmaceutical company mergers may be harming competition.

The working group will include officials from the Canadian Competition Bureau, the European Commission Directorate General for Competition, the UK’s Competition and Markets Authority, the US Department of Justice Antitrust Division and Offices of State Attorneys General.

According to the FTC, the review aims to “identify concrete and actionable steps to review and update the analysis of pharmaceutical mergers”. The organisation said that the project will ensure that FTC investigations “include fresh approaches that fully analyse and address the varied competitive concerns that these mergers and acquisitions raise”.

FTC Acting Chair Rebecca Kelly Slaughter commented: “Given the high volume of pharmaceutical mergers in recent years, amid skyrocketing drug prices and ongoing concerns about anti-competitive conduct in the industry, it is imperative that we rethink our approach toward pharmaceutical merger review. Working hand in hand with international and domestic enforcement partners, we intend to take an aggressive approach to tackling anticompetitive pharmaceutical mergers.”

According to the commission, some questions the investigation will ask include:

  • What is the full range of a pharmaceutical merger’s effects on innovation?
  • In merger review, how should we consider pharmaceutical conduct such as price fixing, reverse payments, and other regulatory abuses?
  • What evidence would be needed to challenge a transaction based on any new or expanded theories of harm?
  • What have we learned about the scope of assets and characteristics of firms that make successful divestiture buyers?

Slaughter has also indicated that the review may examine the impact of past pharma merger reviews by the FTC to assess whether errors were made. While the commission seldom reverses these decisions, that possibility has raised industry concerns.