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Federal Trade Commission Announces New Multilateral Working Group to Examine Pharma Mergers

On March 16, Rebecca Kelly Slaughter, the Acting Chair of the Federal Trade Commission (FTC) announced that the agency will create a working group to revise its approach used to analyze the effects of pharmaceutical mergers.

The group will include the Department of Justice’s Antitrust Division, state attorneys general, and foreign antitrust agencies including the Canadian Competition Bureau, the European Commissioner Directorate General for Competition, and the United Kingdom’s Competition and Markets Authority.  The group may also include academics, policymakers, and other global partners.

The goal of the group is to create steps to review and update the analysis the FTC uses to review mergers of pharmaceutical companies.  The group will examine the following topics as part of its review:

  • How current theories of harm can be expanded and modernized, what evidence would be needed to challenge a transaction, and what types of remedies could be used based on those theories;
  • The effects of pharmaceutical mergers on innovation;
  • How price fixing, reverse payments, and regulatory abuses play a role in merger reviews; and
  • The scope of assets and characteristics of firms that make successful divestiture buyers.

According to Politico, pharmaceutical companies have closed nearly 600 mergers and acquisitions in the past decade.  The pace of the mergers has not slowed down, prompting FTC to reconsider its strategy.  Acting Chair Slaughter has not said when the working group will release its updated analysis, but indicated that the agency will review prior enforcement action and decide whether the agency needs to issue corrective action.  Some have argued that consolidation in the pharmaceutical industry has created less resiliency in the market to withstand problems and other disruptions, resulting in drug shortages.  Mitigating drug shortages has been a long-standing priority for Janet Woodcock, Acting Commissioner of the Food and Drug Administration (FDA).  In 2019, FDA issued a report that examined the root causes of drug shortages, which included input from FTC.

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