Over the past several years, the Democratic commissioners of the U.S. Federal Trade Commission (FTC) have voiced their dissatisfaction with the agency’s historic treatment of pharmaceutical mergers. And as a result, the FTC has now launched a process aimed at changing the way in which pharmaceutical M&A transactions are analyzed and ultimately resolved.
Past dissenting statements issued by now-Acting FTC Chair Rebecca Kelly Slaughter and Commissioner Rohit Chopra criticized the traditional antitrust analysis applied to pharmaceutical transactions. Slaughter and Chopra urged the FTC to file litigation challenging such mergers rather than resolving competition-related concerns through divestitures of overlapping drugs either on the market or in the development pipeline of the merging parties. In fact, in a late 2020 joint statement, they wrote that “[t]he FTC’s record when it comes to reviewing pharmaceutical mergers suggests that the agency will simply never seek to block a merger.”
In its March 16, 2021 press release, the FTC announced that it has initiated a working group with several other competition enforcement agencies to “update their approach to analyzing the effects of pharmaceutical mergers.” For this project, the FTC is joining forces with the Canadian Competition Bureau, the European Commission Directorate General for Competition, the U.K.’s Competition and Markets Authority, the U.S. Department of Justice, and the offices of several state attorneys general.
According to Acting FTC Chair, “it is imperative that [the FTC] rethink [their] approach toward pharmaceutical merger review” because of the “high volume of pharmaceutical mergers in recent years, amid skyrocketing drug prices and ongoing concerns about anticompetitive conduct in the industry.”
The acting chair further announced that the FTC intends to “take an aggressive approach to tackling anticompetitive pharmaceutical mergers,” while “[w]orking hand in hand with international and domestic enforcement partners.” A cross-border effort makes particularly good sense in an industry like pharmaceuticals, where the larger established companies are global or at least international in scale.
The FTC’s press release notes that the working group will consider the following key questions:
- How can current theories of harm be expanded and refreshed?
- What is the full range of a pharmaceutical merger’s effects on innovation?
- In merger review, how should the FTC consider pharmaceutical conduct, such as price fixing, reverse payments, and other regulatory abuses?
- What evidence would be needed to challenge a transaction based on any new or expanded theories of harm?
- What types of remedies would work in the cases to which those theories are applied?
- What has the FTC learned about the scope of assets and characteristics of firms that make successful divestiture buyers?
None of the involved agencies has provided a timetable, nor have they explained what the final work product will look like. Further, given the of the two current Republican commissioners who have supported the current analysis applied in pharmaceutical mergers, the two FTC commissioner seats, pending and suggested proposed federal fixes to the treatment of all mergers, and uncertainty as to the position that the new Biden administration might take, this international working group will be worth following.
 See, e.g., Statement of Commissioner Rohit Chopra Joined By Commissioner Rebecca Kelly Slaughter, In the Matter of Pfizer Inc. / Mylan N.V., Commission File No. 1910182 (Oct. 30, 2020), available at https://www.ftc.gov/system/files/documents/public_statements/1582382/191_0182_pfizer-mylan_-_dissenting_statement_of_commrs_chopra_and_slaughter_1.pdf; Dissenting Statement of Commissioner Rebecca Kelly Slaughter, In the Matter of AbbVie/Allergan, Commission File No. 191-0169 (May 5, 2020), available at https://www.ftc.gov/system/files/documents/public_statements/1574577/191_0169_dissenting_statement_of_commissioner_rebecca_kelly_slaughter_in_the_matter_of_abbvie_and_0.pdf; Dissenting Statement of Commissioner Rohit Chopra, In the Matter of AbbVie, Inc. / Allergan plc, Commission File No. 1910169 (May 5, 2020), available at https://www.ftc.gov/system/files/documents/public_statements/1574583/191-0169_dissenting_statement_of_commissioner_rohit_chopra_in_the_matter_of_abbvie-allergan_redacted.pdf; Dissenting Statement of Commissioner Rebecca Kelly Slaughter, In the Matter of Bristol-Myers Squibb and Celgene, Commission File No. 191-0061 (Nov. 15, 2019), available at https://www.ftc.gov/system/files/documents/public_statements/1554283/17_-_final_rks_bms-celgene_statement.pdf; Dissenting Statement of Commissioner Rohit Chopra, In the Matter of Bristol-Myers Squibb/Celgene, Commission File No. 1910061 (Nov. 15, 2019).
 Statement of Commissioner Rohit Chopra Joined By Commissioner Rebecca Kelly Slaughter, In the Matter of Pfizer Inc. / Mylan N.V. Commission File No. 1910182.
 At the time of publication, the following state attorneys general have indicated they are joining the working group: California, Pennsylvania, Virginia, and Wisconsin. See, e.g., WisPolitics.com, “Dept. of Justice: Wisconsin DOJ named to International Task Force on pharmaceutical mergers” (March 16, 2021), available at https://www.wispolitics.com/2021/dept-of-justice-wisconsin-doj-named-to-international-task-force-on-pharmaceutical-mergers/; Augusta Free Press, “Herring Joining Task Force to Examine Pharmaceutical Mergers (March 16, 2021), available at https://augustafreepress.com/herring-joining-task-force-to-examine-pharmaceutical-mergers.
 See, e.g., Trust-Busting For the 21st Century Act; Competition and Antitrust Law Enforcement Reform Act of 2021 (S.225 — 117th Congress (2021-2022)); and Anticompetitive Exclusionary Conduct Prevention Act of 2020 (S.3426 — 116th Congress (2019-2020)).