On Tuesday, May 11, 2021, an international coalition of competition enforcement agencies including the Federal Trade Commission, the U.S. Department of Justice's Antitrust Division, Offices of State Attorneys General, Canada's Competition Bureau, the European Commission Directorate General for Competition, and the U.K.'s Competition and Markets Authority issued a notice seeking public input to inform their approaches to analyzing the competitive effects of pharmaceutical mergers.

In March 2021, the agencies announced that they formed the Multilateral Pharmaceutical Merger Task Force ("Task Force") to identify steps to review and update their analysis of pharmaceutical mergers. The Task Force seeks to explore "new or refreshed" theories of harm to address anticompetitive effects from pharmaceutical mergers, acquisitions, joint ventures, and consolidation. Specifically, the Task Force will review what evidence would be relevant to determine whether a merger gives rise to competitive concerns and would successfully support a potential challenge by the agency, and will also consider potential remedies to resolve competition concerns, including the feasibility and effectiveness of divestitures under any new theories of harm.

The Task Force's notice seeking public comment poses questions designed to solicit ideas that will lead to the development of future enforcement and policy efforts:

  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?

The notice for public comment comes as outgoing FTC Commissioner Rohit Chopra criticized the Commission for having long "pursued a pro-merger policy" with respect to pharmaceutical mergers, noting that "commissioners across multiple administrations have been highly permissive" and that he was "unable to identify a single instance in recent history where the agency has filed a complaint in federal court seeking to halt a prescription drug company merger." Commissioner Chopra also stated that the agency has "generally been comfortable with superficial analyses of product overlaps resolved by settlements with a narrow set of divestitures" in lieu of "allocating resources to conduct robust investigations covering the full range of anticompetitive effects."

In contrast, FTC Commissioners Noah Joshua Phillips and Christine S. Wilson noted that while the FTC and other U.S. agencies will benefit from collaboration via the Task Force, but any assertions of systemic failure by the Commission's review of pharmaceutical mergers must be supported by facts. Commissioners Phillips and Wilson noted that any recalibration of the FTC's current approach "should be undertaken only if warranted by industry dynamics, economic analysis, and transaction-specific evidence, and only after a thorough evaluation of how that new approach would work."

Interested parties are invited to submit written comments on the topics described above to the FTC, on behalf of the Task Force on or before June 25, 2021. Staff at the agencies will consider these comments when developing potential research projects or a public workshop agenda, and may use these comments in subsequent reports or policy papers. The Task Force will receive and make available all submissions online through the FTC's portal on www.regulations.gov.

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