Antitrust Lawyer Blog Commentary on Current Developments

Articles Posted in Healthcare

On May 5, 2020, the FTC approved AbbVie Inc.’s (“AbbVie”) $63 billion acquisition of Allergan plc (“Allergan”) on the condition that the merging parties divest three minor products.  The consent agreement was approved by a 3-2 party line vote.

The FTC has a long history of scrutinizing transactions in the pharmaceutical industry, but Commissioners’ statements demonstrate that they are not on the same page with regards to the analytical approach of analyzing pharmaceutical mergers and how to remedy the competitive problems that are identified.

The three Republican Commissioners in the majority adhere to the traditional framework, which examines actual competition between existing treatments and potential competition between existing and pipeline treatments, and then tailors very narrow remedies to address those competitive overlaps.

On February 18, 2020, a group of unions, consumer groups, and public interest organizations filed a letter with the U.S. Federal Trade Commission (“FTC”) raising concerns that the divestiture of Allergan plc’s (“Allergan”) pipeline drug, brazikumab, will not succeed unless the FTC addresses AbbVie’s use of rebate walls.

Consumer Group Concerns Regarding Rebate Walls and the Proposed Divestiture

The letter expresses concerns that the proposed divestiture to AstraZeneca of Allergan’s brazikumab, a drug in development, is inadequate to address the clear anticompetitive effects of the AbbVie/Allergan merger.  The letter makes the following points:

On September 12, 2019, a coalition of unions, consumer groups, and public interest organizations filed a letter with the U.S. Federal Trade Commission (“FTC”) opposing AbbVie Inc.’s (“AbbVie”) acquisition of Allergan plc (“Allergan”).

Coalition Opposing the Merger

The coalition includes Families USA, Public Citizen, U.S. PIRG Education Fund, Service Employees International Union, American Federation of State, County, and Municipal Employees, UNITE HERE, Consumer Action, American Federation of Teachers, Alliance for Retired Americans, American Family Voices, Doctors for America, End AIDS Now, Prescription Justice, Social Security Works, the Other 98, Treatment Action Group, and NextGen California.  It is asking the FTC to conduct a thorough investigation and to block the merger if the facts support it and a remedy cannot be devised to restore competition.  The coalition highlights the competitive problems arising from continued consolidation in the pharmaceutical industry and requests that the FTC include in its investigation ongoing anticompetitive conduct by the parties, such as the use of rebate walls, which will have an even more profound anticompetitive effect if this merger is consolidated, as well as past abuse of the patent system.

The STRONGER Patents Act is proposed legislation that if passed would ultimately lead to higher drug prices for patients while lining the pockets of the big pharmaceutical companies.

American patients are well-acquainted with the high prices Big Pharma charges for prescription drugs. Families across the country are struggling to afford life-saving and maintaining medication they desperately need while the big pharmaceutical companies reap the rewards.  In fact, prescription drug prices here in the United States are so high that Americans pay significantly more than any other high-income nation for the exact same drugs.

A significant reason that drug prices are so high is that Big Pharma has established effective monopolies by preventing and delaying generic drug competition. Big Pharma has many techniques they use to prevent and delay competition and keep drug prices high, but their most pervasive and damaging tool is the abuse of America’s patent system.

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