AAI submitted comments in the Federal Trade Commission (FTC) proceeding: Pharmaceutical Task Force, Docket No. FTC-2021-0025. AAI commends Commissioner Slaughter for jumpstarting the task force in her capacity as Acting Chair and encourages Chair Khan to pursue this vitally important initiative with all of its intended vigor and thoroughness. AAI’s comments address a key topic posed by the Multilateral Pharmaceutical Task Force request for public comment: effective remedies for anticompetitive mergers of branded and generic pharmaceutical companies.
In September 2020, AAI issued the widely-cited report: From Competition to Conspiracy: Assessing the Federal Trade Commission’s Merger Policy in the Pharmaceutical Sector (AAI Pharma Report). AAI’s comments in the proceeding are based on the empirical research, analysis, and recommendations contained in the report. The analysis highlights the fading promise of competition, in both branded pharmaceutical R&D and generic drug markets, for ensuring the provision of accessible, affordable, essential drugs to U.S. consumers.
The AAI Pharma Report highlights the FTC’s long-term policy of settling virtually all challenged drug mergers subject to divestitures, the effect of which has been the “swapping” of pharmaceutical assets within a shrinking group of increasingly powerful drug manufacturers. Moreover, many of the very firms that were the most active in M&A, and as purchasers of divestiture assets, have been named as defendants in private, state, and federal non-merger antitrust litigations and in federal criminal indictments.
AAI offers a variety of recommendations to re-vamp the FTC’s merger policy to promote competition and protect consumers. These include: (1) abandoning the current merger policy of not seeking injunctions, (2) automatically seeking injunctions to stop generic “mega-mergers, (3) discouraging further M&A by “serial acquirers,” (4) banning certain antitrust “violators” from purchasing divested assets, (5) requiring reporting on claimed efficiencies, and (6) monitoring the “turn-around” sales of divested assets.
AAI has a more than a 20-year history of research, education, and advocacy on the importance of vigorous antitrust enforcement and constructive competition policy in the pharmaceutical sector. AAI has provided legal, economic, business, and institutional analysis of the adverse effects of consolidation and concentration on competition, consumers, and innovation. AAI is uniquely positioned to provide insight into the structure of pharmaceutical markets, strategic anticompetitive practices, anticompetitive abuse of regulatory processes, remedies that fully restore competition, and policies that promote competition and the protection of consumers and innovation. The integrity and stability of the healthcare system is a matter not only of competition and consumer welfare, but also of national wellness, safety, and security.