The Federal Trade Commission (FTC) has announced the launch of a new working group to update the agency’s approach to analyzing the effects of pharmaceutical mergers.

 

The update to the agency’s approach signals that the FTC may now have an eye toward taking a more aggressive stance against drug company deals that may be harmful to competition.

 

The FTC initiated the new approach, but the working group will also include international organizations such as the Canadian Competition Bureau, the European Commission Directorate General for Competition, the United Kingdom’s Competition and Markets Authority, and domestic partners like the U.S. Department of Justice Antitrust Division and Offices of State Attorneys General.

 

“The goal of this initiative is to identify concrete and actionable steps to review and update the analysis of pharmaceutical mergers. This project will ensure that FTC investigations include fresh approaches that fully analyze and address the varied competitive concerns that these mergers and acquisitions raise,” read the FTC’s announcement of the working group.

 

Rebecca Slaughter was given the position as acting head of the FTC in January when President Joe Biden took office. The administration has yet to decide who will be the FTC’s permanent chair, but Slaughter is a contender for the spot.

 

Historically, the FTC has not frequently blocked pharmaceutical merger deals outright. Typically, the agency only challenges portions of the merger. The partial challenges often lead to the merging drug companies agreeing to sell off assets when they have overlapping product lines in their pharmaceutical portfolios.

 

In past cases of pharmaceutical mergers, Slaughter has dissented from the FTC’s approval of the deals. In one case, her 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.

 

“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. Working hand in hand with international and domestic enforcement partners, we intend to take an aggressive approach to tackling anticompetitive pharmaceutical mergers,” said FTC Acting Chair Rebecca Kelly Slaughter.

 

Some organizations have criticized the FTC’s role in managing the allocation and ownership of important pharmaceutical assets. The Antitrust Institute claims that the FTC’s policy has deprived the antitrust community and the public of essential transparency measures in this process. 

 

Because challenged mergers are not litigated in federal court, there is no judicial record of how highly concentrative mergers were likely to have survived judicial review. There is also no way to evaluate the claims that pharmaceutical mergers deliver favorable outcomes to consumers, such as lower prices through claimed cost savings or consumer benefits due to improved quality and innovation.

 

The working group set to review the FTC’s practices will examine concerns about the impact on innovation through mergers but likely will not ease all concerns about the process.