Multilateral task force seeks public input on approach to pharma mergers

Public input

As we wrote a couple of months ago, antitrust authorities of the US, Canada, UK, and EU formed, in March, an international working group: the Multilateral Pharmaceutical Merger Task Force (the Task Force). Task Force members are now seeking public input until 25 June 2021 on how to refresh their approach to analysing the effects of pharmaceutical mergers. A public workshop may follow the public consultation. 

Recognising how pharmaceutical antitrust issues affect the whole of society, Task Force members encourage the public to share ideas that will lead to the development of future enforcement and policy efforts. They are in particular looking for input from health policy experts, economists, attorneys, scientists, health care practitioners, academics, and consumers. 

The Task Force invites the public to submit comments on all issues concerning the effect of pharmaceutical mergers, but specifically asks them to consider:

1.  What theories of harm should enforcement agencies consider when evaluating pharmaceutical mergers, including theories of harm beyond those currently considered
2. What is the full range of a pharmaceutical merger’s effects on innovation? What challenges arise when mergers involve proprietary drug discovery and manufacturing platforms?
3. In pharmaceutical merger review, how should we consider the risks or effects of conduct such as price setting practices, reverse payments, and other ways in which pharmaceutical companies respond to or rely on regulatory processes?
4. How should we approach market definition in pharmaceutical mergers, and how is that implicated by new or evolving theories of harm?
5. What evidence may be relevant or necessary to assess, and if applicable, challenge a pharmaceutical merger based on any new or expanded theories of harm?
6. What types of remedies would work in the cases to which those theories are applied?
7. What factors, such as the scope of assets and characteristics of divestiture buyers, influence the likelihood and success of pharmaceutical divestitures to resolve competitive concerns?

Announcing this initiative, Acting Federal Trade Commission (FTC) Chairwoman Rebecca Kelly Slaughter said: “Public input is critical to the process of refreshing our approach to pharmaceutical mergers. In the face of skyrocketing drug prices and ongoing concerns about anticompetitive conduct by pharmaceutical companies, we need to ensure that our investigations fully capture the potential impact on prices, quality, access, drug supply chain resilience, capital market investment, and innovation for new drugs”.

Political developments 

The notice seeking public input comes at a time when Democratic Commissioner Rohit Chopra has criticised the FTC’s seemingly permissive approach towards pharma merger control and the assumption that mergers do not affect innovation. In a statement, Chopra said: “Today, antitrust agencies around the world have launched a solicitation for public comment on ways to improve the analytical rigor of pharmaceutical merger review. This is a reflection of the severe shortcomings of the FTC’s pharmaceutical merger enforcement program”. 

In a rehearsal of standard arguments between Republican and Democratic Commissioners, Chopra’s views clashed with those of Republican Commissioners, Noah Joshua Phillips and Christine S. Wilson. Phillips and Wilson jointly stated: “To stop a merger, the government must articulate a viable theory of harm to competition that explains why that merger violates the law, and must proffer evidence to support that theory. Merely asserting a general opposition to large pharmaceutical mergers, however heartfelt, does not suffice”.

Yet, the pendulum seems to have swung towards the Democrats. On 12 May, a U.S. Senate panel approved the nomination of progressive antitrust scholar Lina Khan to the FTC. This brings the FTC, currently split 2:2 between Democrats and Republicans, nearer to a Democratic majority. 
Whether these developments herald an era of toughness towards pharmaceutical mergers remains to be seen. 

This article was co-authored by Elaine Johnston and Shahab Uddin.