Following a year-long probe into tech giants Amazon, Apple, Facebook, and Google, the House Judiciary antitrust subcommittee has its next target in its sights – big pharma.
Following a year-long probe into tech giants Amazon, Apple, Facebook and Google, the House Judiciary antitrust subcommittee has its next target in its sights – big pharma.
Vice chairman of the subcommittee representative Joe Neguse called for a hearing to probe the FTC’s approach to pharmaceutical mergers.
Neguse told CNBC, “I think that this first hearing could be a starting point of sorts in providing both the committee and the American public with a better understanding of the scope of issues. And from there, depending on what we glean during that hearing regarding the FTC’s merger policy, I think it could very well lead to a broader investigation similar to the investigation that the committee undertook in the digital economy and Big Tech.”
The subcommittee’s investigation into the tech industry giants has so far led to not one but two lawsuits by the Justice Department against Google for violation of federal antitrust laws.
The global pandemic has brought perhaps more attention than ever to the pharma industry, raising louder concerns over drug pricing and reduced innovation, a theory backed up by a 2017 study that found less competition was linked to higher generic drug prices.
“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,” Neguse wrote in his request letter to committee Chairman Jerrold Nadler and subcommittee Chairman David Cicilline.
Neguse zeroed in his criticism on the recent approvals by the FTC of Abbvie’s acquisition of Allergan and the proposed merger between Pfizer and Mylan.
FTC Commissioner Rohit Chopra, who disapproved of the Pfizer-Mylan deal, said, “the status quo approach of seeking settlements through divestitures of individual products is myopic and misses some of the fundamental elements of how firms compete in this industry.”
Fellow Commissioner Christine Wilson voted to approve that merger, but also voiced concerns about high drug prices. Wilson pointed to the fact that the FTC’s power is limited.
Last year saw the most expensive biopharma acquisition in the last 20 years with Bristol Myers Squibb’s massive $74 billion purchase of Celgene. In an official statement regarding this merger, Wilson wrote, “Unfortunately, many of the causes of higher drug prices, including systemic distortions created by massive regulatory regimes and a pervasive principal/agent problem, fall outside the jurisdiction and legal authority of the Federal Trade Commission.”
On the same day Neguse sent his hearing request, pharma giant Merck announced a new deal to bolster their COVID-19 pipeline with the acquisition of privately-held OncoImmune for $425 million in cash.
Neguse hasn’t given out a blacklist of targeted companies, saying he will defer to committee leadership. His biggest takeaway from the investigation into the tech industry was the value of using the subcommittee’s brains and resources to evaluate potential harm from an industry on the American public.
“We were able to glean for the American public quite a bit of information that was perhaps not otherwise or previously known,” he said of the tech investigation. “Turning now to the next task, which would be to address this other area where there is clear consumer harm and using those same techniques, in my view, would inure to the benefit of the American public.”
BioSpace reached out to big pharma lobbying group PhRMA regarding the coming investigation, but they declined to comment.
