November 24, 2020

Antitrust Vice Chair Joe Neguse Calls for a Hearing on the FTC's Handling of Mergers in the Pharmaceutical Industry

Washington D.C.—Antitrust Subcommittee Vice Chair Joe Neguse is asking the House Judiciary Committee to hold a hearing on the Federal Trade Commission’s (FTC’s) handling of mergers and acquisitions in the pharmaceutical industry. As the Committee wraps up a very successful and thorough investigation of the state of competition in the digital economy, the letter addressed to Judiciary Chairman Jerrold Nadler and Antitrust Subcommittee Chairman David Cicilline, suggests addressing anti-competitive concerns in the pharmaceutical industry, beginning with a look at the FTC’s review process of pharmaceutical mergers and acquisitions.

“In the COVID-19 environment, it is critical that there is robust competition within our pharmaceutical market. Soaring prescription drug prices pose a significant challenge to American consumers who are facing economic uncertainty,” said Congressman Joe Neguse. “It’s unimaginable to have to choose between life-saving prescription drugs and putting food on the table for your family. While House Democrats continue our legislative work to lower the cost of healthcare and prescription drugs, I believe it is also vital for the House Judiciary Committee to determine whether the FTC’s standard approach of pharmaceutical divestitures is an appropriate remedy to address anticompetitive harms.” 

The U.S. healthcare industry has witnessed a steady increase of multibillion-dollar deals, with no evidence of letting up. The letter from Congressman Neguse cites that over the last few months, the FTC has approved acquisitions between AbbVie and Allergan, and most recently between Mylan and Pfizer, which would create the world’s largest generic pharmaceutical firm. 

“This of course is against a backdrop of soaring drug prices, declining innovation, and reports that 58 million adults are unable to afford needed medications,” reads the letter. “It would be one thing if the acquisitions resulted in deterring future anticompetitive conduct and decreased drug prices for consumers. However, there is growing consensus that increases in drug prices can be attributed, in part, to mergers and consolidation in the industry.”  

A U.S. Government Accountability (GAO) study found that less competition “is associated with higher drug prices for generic drugs.” Additionally, an analysis by the American Antitrust Institute found that many of the drug companies most active in merger and acquisitions are defendants in federal, state, and private civil and criminal antitrust cases, providing “strong evidence that the FTC’s policy of settling all challenged mergers with targeted divestiture remedies has created market conditions that have led to the exercise of market power by dominant firms and oligopolies of firms.”