[Federal Register Volume 84, Number 232 (Tuesday, December 3, 2019)]
[Notices]
[Pages 66191-66198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26074]
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FEDERAL TRADE COMMISSION
[File No. 191 0061]
Bristol-Myers Squibb Company and Celgene Corporation; Analysis of
Agreement Containing Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis of Agreement Containing Consent Orders to Aid
Public Comment describes both the allegations in the complaint and the
terms of the consent orders--embodied in the consent agreement--that
would settle these allegations.
DATES: Comments must be received on or before January 2, 2020.
ADDRESSES: Interested parties may file comments online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write: ``Bristol-Myers Squibb
Company and Celgene Corporation; File No. 191 0061'' on your comment,
and file your comment online at https://www.regulations.gov by
following the instructions on the web-based form. If you prefer to file
your comment on paper, mail your comment to the following address:
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania
Avenue NW, Suite CC-5610 (Annex D), Washington, DC 20580, or deliver
your comment to the following address: Federal Trade Commission, Office
of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor,
Suite 5610 (Annex D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Kari Wallace (202-326-3085), Bureau of
Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for November 15, 2019), on the World Wide Web,
at https://www.ftc.gov/news-events/commission-actions.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before January 2, 2020.
Write ``Bristol-Myers Squibb Company and Celgene Corporation; File No.
191 0061'' on your comment. Your comment--including your name and your
state--will be placed on the public record of this proceeding,
including, to the extent practicable, on the https://www.regulations.gov website.
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online through the https://www.regulations.gov website.
If you prefer to file your comment on paper, write ``Bristol-Myers
Squibb Company and Celgene Corporation; File No. 191 0061'' on your
comment and on the envelope, and mail your comment to the following
address: Federal Trade Commission, Office of the Secretary, 600
Pennsylvania Avenue NW, Suite CC-5610 (Annex D), Washington, DC 20580;
or deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Constitution Center, 400 7th
Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If
possible, submit your paper comment to the Commission by courier or
overnight service.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure that your comment does not include any sensitive or
confidential information. In particular, your comment should not
include any sensitive personal information, such as your or anyone
else's Social Security number; date of birth; driver's license number
or other state identification number, or foreign country equivalent;
passport number; financial account number; or credit or debit card
number. You are also solely responsible for making sure that your
comment does not include any sensitive health information, such as
medical records or other individually
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identifiable health information. In addition, your comment should not
include any ``trade secret or any commercial or financial information
which . . . is privileged or confidential''--as provided by Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2)--including in particular competitively sensitive information
such as costs, sales statistics, inventories, formulas, patterns,
devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the public FTC website--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from the FTC website,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
Visit the FTC website at http://www.ftc.gov to read this Notice and
the news release describing it. The FTC Act and other laws that the
Commission administers permit the collection of public comments to
consider and use in this proceeding, as appropriate. The Commission
will consider all timely and responsive public comments that it
receives on or before January 2, 2020. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Analysis of Agreement Containing Consent Orders To Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') from Bristol-Myers Squibb Company (``BMS'') and Celgene
Corporation (``Celgene'') designed to remedy the anticompetitive
effects resulting from BMS's proposed acquisition of Celgene. The
proposed Decision and Order (``Order'') contained in the Consent
Agreement requires Celgene to divest all rights and assets related to
its Otezla business to Amgen, Inc. (``Amgen'').
The proposed Consent Agreement has been placed on the public record
for thirty days for receipt of comments by interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will review the comments received and
decide whether it should withdraw, modify, or make the Consent
Agreement final.
Pursuant to an Agreement and Plan of Merger dated as of January 2,
2019, BMS plans to acquire all of the voting securities of Celgene in a
cash and stock transaction with an equity value of approximately $74
billion (the ``Acquisition''). The Commission's Complaint alleges that
the proposed Acquisition, if consummated, would violate Section 7 of
the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal
Trade Commission Act, as amended, 15 U.S.C. 45, by substantially
lessening competition in the U.S. market for oral products to treat
moderate-to-severe psoriasis. The proposed Consent Agreement will
remedy the alleged violations by preserving the competition that
otherwise would be lost in this market as a result of the proposed
Acquisition.
II. The Parties
Headquartered in New York City, BMS researches, develops,
manufactures, and sells prescription pharmaceutical products and
biologic products in several therapeutic areas, including oncology,
cardiology, virology, and inflammatory diseases. Among other products,
BMS is developing an oral product to treat moderate-to-severe
psoriasis. Like BMS, Celgene researches, develops, manufactures and
sells prescription pharmaceutical products in the United States.
Celgene markets eight products, including an oral treatment for
moderate-to-severe psoriasis.
III. The Relevant Product and Structure of the Market
Psoriasis is a chronic skin disease caused by an overactive immune
system. The disease causes skin cells to multiply faster than normal
and leads to a build-up of cells on the skin surface, forming bumpy red
patches that are covered with white scales, known as plaques. The
plaques can appear anywhere on the body, although they are most
commonly found on the scalp, elbows, knees, and lower back. The
severity of psoriasis (mild, moderate, or severe) is determined based
upon the percentage of body surface area affected and the parts of the
body that are affected. Typically, mild psoriasis covers less than 3
percent of the body, moderate psoriasis covers 3 to 10 percent of the
body and severe psoriasis covers more than 10 percent of the body.
When deciding how to treat psoriasis, dermatologists typically
evaluate the severity of the disease, any risk factors or
contraindications for the patient, and the patient's preferences.
Dermatologists consider efficacy data, safety data, and side effect
profile of each product, as well as mode of administration to select
the appropriate treatment course for their patients. While many
injectable and infused products are approved to treat moderate-to-
severe psoriasis, a number of patients object to such injections or
find them inconvenient. For those patients, dermatologists often select
an oral product.
Celgene's apremilast, marketed under the brand name Otezla, is a
phosphodiesterase 4 inhibitor. Otezla is the most popular oral product
approved to treat moderate-to-severe psoriasis in the United States.
Several older oral generic products, including methotrexate and
acitretin, are approved by the U.S. Food and Drug Administration
(``FDA'') to treat psoriasis that does not respond to light, topical
agents, and other forms of therapy. These drugs are still occasionally
used in the treatment of psoriasis, but most doctors have moved to
prescribing newer agents with better efficacy, better safety, or a more
favorable side effect profile for patients with moderate-to-severe
psoriasis who desire an oral treatment. BMS is developing BMS 986165,
an oral, selective tyrosine kinase 2 inhibitor that is the most
advanced oral treatment in development for moderate-to-severe
psoriasis.
IV. The Relevant Geographic Market
The United States is the relevant geographic market in which to
assess the competitive effects of the proposed Acquisition. Oral
products to treat moderate-to-severe psoriasis are prescription
pharmaceutical products and regulated by FDA. As such, products sold
outside the United States, but not approved for sale in the United
States, do not provide viable competitive alternatives for U.S.
consumers.
V. Competitive Effects of the Acquisition
The proposed Acquisition would likely result in substantial
competitive harm to consumers in the market for
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oral products to treat moderate-to-severe psoriasis. Celgene is
currently the market leader and BMS would likely be the next entrant
into the market. Upon entry, BMS 986165 likely will compete directly
with, and take sales from, Otezla.
VI. Entry Conditions
Entry in the relevant market would not be timely, likely, or
sufficient in magnitude, character, and scope to deter or counteract
the anticompetitive effects of the proposed Acquisition. New entry
would require significant investment of time and money for product
research and development, regulatory approval by the FDA, developing
clinical history supporting the long-term efficacy of the product, and
establishing a U.S. sales and service infrastructure. Such development
efforts are difficult, time-consuming, and expensive, and often fail to
result in a competitive product reaching the market.
VII. The Consent Agreement
The Consent Agreement eliminates the competitive concerns raised by
the proposed Acquisition by requiring BMS and Celgene to divest
Celgene's worldwide Otezla business, including its regulatory
approvals, intellectual property, contracts, and inventory to Amgen.
BMS and Celgene also must transfer all confidential business
information, research and development information, regulatory,
formulation, and manufacturing reports related to the divested
products, as well as provide access to employees who possess or are
able to identify such information. Additionally, to ensure that the
divestiture is successful and to maintain continuity of supply, the
proposed Order requires BMS and Celgene to supply Amgen with Otezla for
a limited time while Amgen establishes its own manufacturing
capability. The provisions of the Consent Agreement ensure that Amgen
becomes an independent, viable, and effective competitor in the U.S.
market.
Founded in 1980 and headquartered in Thousand Oaks, California,
Amgen discovers, develops, manufactures and sells innovative human
pharmaceutical and biologic products. Amgen's existing business
includes products that are highly complementary to the divestiture
assets. Amgen has the expertise, U.S. sales infrastructure, and
resources to restore the competition that otherwise would have been
lost due to the proposed Acquisition.
BMS and Celgene must accomplish the divestitures no later than ten
days after consummating the proposed Acquisition. If the Commission
determines that Amgen is not an acceptable acquirer, or that the manner
of the divestitures is not acceptable, the proposed Order requires BMS
and Celgene to unwind the sale of rights and assets to Amgen and then
divest the affected product to a Commission-approved acquirer within
six months of the date the Order becomes final. To ensure compliance
with the Order, the Commission has agreed to appoint a Monitor to
ensure that BMS and Celgene comply with all of their obligations
pursuant to the Consent Agreement and to keep the Commission informed
about the status of the transfer of the Otezla rights and assets to
Amgen. The proposed Order further allows the Commission to appoint a
trustee in the event that BMS and Celgene fail to divest the products
as required.
The purpose of this analysis is to facilitate public comment on the
Consent Agreement, and it is not intended to constitute an official
interpretation of the proposed Order or to modify its terms in any way.
By direction of the Commission.
April J. Tabor,
Acting Secretary.
Statement of Commissioner Noah Joshua Phillips
I write to address the dissenting statements issued by my
colleagues, Commissioners Chopra and Slaughter.
From these statements, a reader unfamiliar with the U.S. antitrust
laws could be forgiven for gleaning several inaccurate conclusions.
First, companies in the U.S. may not merge unless the antitrust
enforcement agencies permit them to do so. Second, to stop a merger,
the government need not provide any theory as to why a merger violates
the law, nor any evidence to support that theory. Third, antitrust
enforcement agencies can and should condemn mergers they cannot prove
violate the law because the agencies deem the business justifications
for the merger insufficient.
The unfamiliar reader would be wrong on each count. That is not the
law. (Nor, for that matter, is it sound policy.)
The structural remedy agreed to by the merging parties in this case
addresses every competition concern uncovered after an extensive
investigation. Every one. But Commissioners Chopra and Slaughter still
dissent. Why?
Commissioner Chopra cites a study purporting to show that mergers
``can choke off innovation''. Okay. But how does this merger do that?
Without an answer to that question, the logic is rather like saying an
individual defendant is guilty of a crime because there is too much of
that crime in society. Thank goodness that is not how our criminal
justice system works.
He next writes that we must approach our investigations of
pharmaceutical mergers with careful scrutiny and with great humility. I
agree completely. What I fail to see is how careful scrutiny and great
humility lead to the conclusion, without any clearly articulated theory
of liability or facts to support it, that this merger violates the
law--or, again without any facts in support, that the remedy is
inadequate.
The next basis Commissioner Chopra offers for his dissent is his
view that the merger is animated by financial and tax considerations,
which he deems insufficient to justify the merger. Leaving aside the
question of why he thinks the job of antitrust enforcers is to value-
judge a merger beyond its impact upon competition, that gets the law
precisely backwards. The parties get to merge unless we can show a harm
to competition, not the other way round.
His dissent also alludes to ``distorted'' incentives of the buyer
due to the overlapping ownership of the parties. I must admit that the
precise meaning of that escapes me. Perhaps it is a reference to the
theory of ``common ownership'', which has stoked great academic debate
and about which I have spoken repeatedly.\1\ Whatever the meaning,
Commissioner Chopra fails to articulate how the merger will distort the
buyer's incentives, much less in a way that violates the law. To sue,
or to seek an additional remedy, we need more.
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\1\ Noah Joshua Phillips, Commissioner, U.S. Fed. Trade Comm'n,
Taking Stock: Assessing Common Ownership, Address at the Global
Antitrust Economics Conference (June 1, 2018), https://www.ftc.gov/system/files/documents/public_statements/1382461/phillips_-_taking_stock_6-1-18_0.pdf; Noah Joshua Phillips, Commissioner, U.S.
Fed. Trade Comm'n, Competing for Companies: How M&A Drives
Competition and Consumer Welfare, Address at the Global Antitrust
Economics Conference (May 31, 2019), https://www.ftc.gov/system/files/documents/public_statements/1524321/phillips_-_competing_for_companies_5-31-19_0.pdf.
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The dissenting commissioners both criticize the Commission's
investigations of pharmaceutical mergers generally, expressing concern
that they fail to capture all the harms to competition posed by such
mergers.\2\ But, again, the most they offer is speculation about
vaguely articulated harms, without reference to any
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evidence that this merger is likely to exacerbate them. Nor do the
dissenters cite a previous case that resulted in anticompetitive
effects that they insinuate the Commission missed. The dissenting
statements mention various violations of the antitrust laws committed
by firms in the pharmaceutical industry, but neither explains how this
merger makes such conduct more likely. For decades, the Federal Trade
Commission has pursued enforcement against many different kinds of
anticompetitive conduct in the pharmaceutical industry. That work,
critical to controlling healthcare costs for Americans, will continue.
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\2\ Like Commissioner Wilson, I believe staff conducted a
careful investigation of this merger. See Statement of Commissioner
Christine S. Wilson, In the Matter of Bristol-Myers Squibb Company/
Celgene Corporation.
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Neither dissenting commissioner argues that the consent order and
associated divestiture are bad for competition or consumers, or
identifies any additional remedy they believe is warranted. And neither
proposes any basis to sue to stop the merger.\3\ So, again, why
dissent? At the end of the day, we are left only with the sense that
Commissioners Chopra and Slaughter feel the merger will threaten
competition and wish to dissociate themselves with it. To me, that is
not enough. (Even if it were, a vote to join Commissioners Chopra and
Slaughter would result, at the end of the day, in the merger without
the remedy. Are they calling on their colleagues to vote with them?)
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\3\ In fairness, Commissioner Chopra does state his view that
the agency should litigate to block more pharmaceutical mergers
outright. But he fails to answer whether the Commission should
litigate this case, and--more importantly--on what legal and factual
basis. That is the question we face today.
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Returning to our unfamiliar reader, here is how the law actually
works. First, to block a merger outright, U.S. antitrust enforcement
agencies must convince a judge that it violates the law. In this
country, where people and companies are free to do what they wish with
their property subject to the constraints imposed by the law, our
judges are somewhat hostile to the notion that we should block a merger
when the parties have agreed to address every problem that we can
identify. Second, we need to articulate a viable theory of harm to
competition posed by the merger and produce evidence to support that
theory. Third, our job is to enforce the antitrust laws, which guard
against particular (competitive) harms that mergers may present. Other
parts of the government guard against other harms posed by mergers, for
example the Committee on Foreign Investment in the United States, which
looks at certain investments for their potential impact on national
security,\4\ or the Securities and Exchange Commission, which reviews
transactions to protect investors.\5\ Our job is not to opine on
whether a merger is ``good'' or ``bad'' for society as a whole, or to
use our authority to make sure firms merge for reasons that someone
might like (innovation) as opposed to reasons that they may not
(tax).\6\
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\4\ See 50 U.S.C. 4565.
\5\ See, e.g., 15 U.S.C. 78m(d), 78n(d).
\6\ This is not to say that we should view financial or tax
considerations as improper motivations for a merger.
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In reviewing the dissenting statements, readers--unfamiliar and
otherwise--would do well to keep all of that in mind.
Statement of Commissioner Christine S. Wilson
The Commission has accepted, subject to final approval after
receiving public comments, an Agreement Containing Consent Order from
Bristol-Myers Squibb Company and Celgene Corporation that remedies the
anticompetitive effect that otherwise would arise from BMS's proposed
acquisition of Celgene. All members of the Commission (including
Commissioners Chopra and Slaughter) \1\ agree that the only evidence of
harm to competition that staff found was in the market for oral
products that treat moderate-to-severe psoriasis.\2\ All members of the
Commission also agree that the remedy in that market--a complete
divestiture of all of Celgene's products and associated assets in that
area--will preserve competition in that market. Moreover, this $13
billion divestiture is the largest in the history of U.S. merger
enforcement.
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\1\ See Dissenting Statement of Commissioner Rebecca Kelly
Slaughter, In the Matter of Bristol-Myers Squibb and Celgene;
Dissenting Statement of Commissioner Rohit Chopra on Bristol-Myers
Squibb/Celgene.
\2\ While Commissioner Chopra agrees that there is no evidence
of harm to innovation, he concludes that the lack of evidence
implies there is a problem with the investigative process. I
disagree with Commissioner Chopra's hypothesis.
Staff conducted the investigation of this proposed transaction
in the same careful manner that all pharmaceutical transactions are
investigated. The investigation examined the likely competition
between and among all of BMS and Celgene's current products and
those now in development. The investigation identified a likely harm
to innovation involving oral products to treat moderate-to-severe
psoriasis; the identified overlap includes a product that is still
in development by BMS. In addition, staff investigated whether the
proposed transaction would decrease innovation competition; instead,
the investigation found that reduced innovation competition was
unlikely.
Moreover, there is no reason to believe there will be reduced
innovation in the pharmaceutical industry as a result of this
transaction. No fewer than 711 companies are conducting late-stage
research and development in oncology, the therapeutic category in
which BMS and Celgene conduct research. See IQVIA Institute Global
Oncology Trends 2019, at 19, May 2019, available at https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/global-oncology-trends-2019.pdf.
To support his hypothesis that there must be additional
unidentified harm to innovation, Commissioner Chopra seeks to
introduce factors outside the analytical framework demanded by the
statutes enforced by the Commission, including Section 7 of the
Clayton Act, without offering any evidence to show that these non-
competition factors may reduce innovation.
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I agree with Commissioner Slaughter that pharmaceutical price
levels in the United States today are cause for concern. And there is
ample evidence that prices of branded pharmaceuticals have increased
much faster--perhaps six to eight times as fast--as prices in the rest
of the economy.\3\
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\3\ See, e.g., Suzanne M. Kirchhoff et al., Congressional
Research Service, Frequently Asked Questions About Prescription Drug
Pricing and Policy, at 8-9 (Apr. 24, 2018), available at https://fas.org/sgp/crs/misc/R44832.pdf (plotting CPI-U data from the U.S.
Bureau of Labor Statistics); Stephen W. Schondelmeyer & Leigh
Purvis, AARP Public Policy Institute, Rx Price Watch Report: Trends
in Retail Prices of Brand Name Prescription Drugs Widely Used by
Older Americans: 2017 Year-End Update, at 6-8 (Sept. 2018),
available at https://www.aarp.org/content/dam/aarp/ppi/2018/09/trends-in-retail-prices-of-brand-name-prescription-drugs-year-end-update.pdf (using data from Truven MarketScan to estimate that
``brand name drug prices went up more than 8.5 times the rate of
general inflation during [the] 12-year period [from December 31,
2005 to December 31, 2017]''); Robert Pearl, How Big Pharma Might Be
Cut Down to Size, Forbes.com, May 11, 2017, available at https://www.forbes.com/sites/robertpearl/2017/05/11/how-big-pharma-might-be-cut-down-to-size/ (``[A]ccording to the U.S. Bureau of Labor
Statistics, prices for U.S.-made pharmaceuticals have climbed over
the past decade six times as fast as the cost of goods and services
overall.''); Charles Silver & David A. Hyman, Overcharged: Why
Americans Pay Too Much for Health Care 25-27 (2018) (discussing
analyses from Schondelmeyer & Purvis, Pearl, and others).
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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. But within its limited
authority as a competition agency, the Commission can--and does--pursue
a comprehensive agenda to address anticompetitive mergers and unlawful
conduct in the pharmaceutical industry. Specifically, the Commission:
Carefully Screens Pharmaceutical Mergers: Similar to the
current enforcement action, the Commission routinely has challenged
anticompetitive mergers and acquisitions. During the past five years,
the Commission has issued complaints challenging 13 mergers and
required the divestiture of 130 branded and generic products to address
competitive overlaps for the sale or development of particular
drugs.\4\
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\4\ See Baxter Int'l Inc., Dkt. No. C-4620 (F.T.C. July 20,
2017); Amneal Holdings, LLC, Dkt. No. C-4650 (F.T.C. Apr. 27, 2018);
FTC v. Mallinckrodt ARD Inc., No. 1:17-cv-00120 (D.D.C. Jan. 18,
2017); Mylan, N.V., Dkt. No. C-4590 (F.T.C. July 26, 2016); Teva
Pharmaceutical Indus. Ltd., Dkt. No. C-4589 (F.T.C. July 26, 2016);
Hikma Pharmaceuticals PLC, Dkt. No. C-4572 (F.T.C. Mar. 28, 2016);
Hikma Pharmaceuticals PLC, Dkt. No. C-4568 (F.T.C. Feb. 26, 2016);
Lupin Ltd., Dkt. No. C-4566 (F.T.C. Feb. 18, 2016); Endo Int'l PLC,
Dkt. No. C-4539 (F.T.C. Sept. 24, 2015); Pfizer Inc., Dkt. No. C-
4537 (F.T.C. Aug. 21, 2015); Impax Labs, Inc., Dkt. No. C-4511
(F.T.C. Mar. 5, 2015); Novartis AG, Dkt. No. C-4510 (F.T.C. Feb. 20,
2015); Sun Pharmaceutical Indus. Ltd, Dkt. No. C-4506 (F.T.C. Jan.
30, 2015).
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Combats Anticompetitive Patent Litigation Settlements: In
2013, the FTC won a landmark victory at the Supreme Court in the
Actavis case,\5\ and has prevailed in subsequent challenges of similar
agreements. For instance, earlier this year, the Commission issued a
unanimous opinion condemning a patent litigation settlement after
finding that the brand manufacturer possessed market power in the
market for branded and generic oxymorphone ER, the potential generic
entrant received a large and unjustified payment, and the respondent
failed to show a cognizable justification for the restraint.\6\ The
Commission's successful challenges of prior settlements have
substantially reduced the number of anticompetitive patent litigation
settlements into which companies are entering today.
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\5\ FTC v. Actavis, Inc., 570 U.S. 136 (2013).
\6\ See, e.g., Impax Laboratories, Inc., Dkt. No. 9373 (F.T.C.
April 3, 2019) (Commission Decision).
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Challenges Abuse of FDA Regulatory Processes: The
Commission has brought several cases alleging that pharmaceutical
companies misuse FDA regulatory processes to impede competition. For
example, in 2014 the FTC challenged a pharmaceutical company for
abusing the litigation process by filing meritless patent lawsuits
against competitors to keep them off the market. The Commission won a
judgment for $448 million.\7\ The FTC also sued Shire ViroPharma in
2017, alleging anticompetitive abuse of the FDA citizen-petition
process to keep the FDA from approving the competitive products,
thereby keeping those lower-cost drugs off the market. (Unfortunately,
the Commission lost the case on a statutory construction issue that
kept the Court of Appeals from ruling on the merits of the
allegations.\8\) And under Chairman Tim Muris, the FTC challenged
wrongful listings in the FDA Orange Book \9\ by BMS, one of the very
parties before us today, that allegedly were used obtain unwarranted
automatic 30-month stays of FDA approval of generic pharmaceuticals
that would have competed with BMS branded products.\10\
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\7\ FTC v. AbbVie, Inc. 329 F. Supp. 3d 98 (E.D. Pa. 2018).
\8\ FTC v. Shire ViroPharma, Inc., 917 F.3d 147, 156 (3d Cir.
2019).
\9\ Pursuant to the FDC Act, a brand-name drug manufacturer
seeking to market a new drug product must first obtain FDA approval
by filing a New Drug Application (``NDA''). At the time the NDA is
filed, the NDA filer must also provide the FDA with certain
categories of information regarding patents that cover the drug that
is the subject of its NDA. 21 U.S.C. 355(b)(1). Upon receipt of the
patent information, the FDA is required to list it in an agency
publication entitled ``Approved Drug Products with Therapeutic
Equivalence,'' commonly known as the ``Orange Book.'' Id. Sec.
355(j)(7)(A).
\10\ See Complaint, Bristol-Myers Squibb Co., Dkt. No. C-4076
(F.T.C. filed Apr. 14, 2003).
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Advocates for the Reform of Misused Regulations: The FTC
advised the FDA and Congress of possible abuses of the Risk Evaluation
and Mitigation Strategy (REMS) framework to forestall competitors'
entry by denying access to branded drugs required to conduct
bioequivalence testing, a gating factor for FDA approval to launch.\11\
In remarks before a Subcommittee of the Senate Committee on Commerce,
Science, and Transportation, I encouraged Congress to take action on
this front.\12\ And under the bipartisan leadership of first Chairman
Bob Pitofsky and then Chairman Tim Muris, the FTC conducted a 6(b)
study of generic drugs and issued a report recommending refinements to
the Hatch Waxman Act and changes to the FDA regulatory framework, many
of which were implemented, so as to fulfill the original balance of
innovation and competition struck by the Hatch Waxman Act.
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\11\ See, e.g., Statement of the Federal Trade Commission to the
Department of Health and Human Services Regarding the HHS Blueprint
to Lower Drug Prices and Reduce Out-of-Pocket Costs (July 16, 2018);
Prepared Statement of Markus H. Meier, Acting Director, Bureau of
Competition, Federal Trade Commission before the U.S. House of
Representatives, Judiciary Committee, Subcommittee on Regulatory
Reform, Commercial and Antitrust Laws, on ``Antitrust Concerns and
the FDA Approval Process'' (July 27, 2017).
\12\ See Commissioner Christine S. Wilson, Oral Statement before
Senate Committee on Commerce, Science & Transportation, Subcommittee
on Consumer Protection, Product Safety, Insurance, & Data Protection
(Nov. 27, 2018).
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Challenges Novel Anticompetitive Strategies As They Arise:
Earlier this year the Commission challenged and settled a case against
Reckitt Benckiser Group plc alleging that Reckitt introduced a film
version of Suboxone, which treats opioid addiction, and pushed the
market to use the film version rather than the existing tablet version
that was about to face generic competition.\13\ The complaint alleged
that Reckitt pushed the market toward the film and away from the
tablets by claiming the film was safer than tablets while having no
data to back up the claim and significantly raising the price of the
tablet when the film was costlier to make. Under the terms of the
settlement, Reckitt was required to contribute $50 million to a fund to
be distributed to those who were overcharged.\14\
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\13\ See Joint Motion for Entry of Stipulated Order for
Permanent Injunction and Equitable Monetary Relief, FTC v. Reckitt
Benckiser Group, PLC, No. 1:19-cv-00028 (W.D. Va. filed July 11,
2019).
\14\ I was recused from this enforcement action because, before
joining the Commission, I represented a generic drug company before
the FTC and FDA challenging this anticompetitive conduct.
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Informs Courts of Relevant Competition Principles and
Policies: The Commission has filed briefs as amicus curiae in cases
involving patent litigation settlements,\15\ REMS and restricted
distribution systems,\16\ and product hopping.\17\
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\15\ See, e.g., Br. of amicus curiae Federal Trade Commission in
Support of Plaintiffs-Appellants, In re Lamictal Direct Purchaser
Antitrust Litigation, No. 2:12-cv-995, (3d Cir. filed Apr. 28, 2014)
(explaining that a commitment not to introduce an authorized generic
product is the type of settlement subject to antitrust scrutiny);
Supp. Br. of amicus curiae Federal Trade Commission in Support of
Plaintiffs-Appellants, In re Effexor XR Antitrust Litig., No. 3:11-
cv-05479 (3d Cir. filed Mar. 17, 2016) (explaining that litigation
settlements among private parties are private commercial agreements
and are not exempt from antitrust scrutiny under the Noerr
doctrine).
\16\ See, e.g., Br. of amicus curiae Federal Trade Commission,
Mylan Pharmaceuticals, Inc. v. Celgene, No. 2:14-cv-2094 (D.N.J.
filed June 17, 2014) (explaining that a monopolist's refusal to sell
to potential competitors may, under certain limited circumstances,
violate Section 2 of the Sherman Act and that a brand name drug
manufacturer's patents do not reach activities undertaken in
connection with bioequivalence testing).
\17\ See Br. of amicus curiae Federal Trade Commission, Mylan
Pharmaceuticals, Inc. v. Warner Chilcott Public Ltd. Co., No. 12-cv-
3824 (E.D. Pa. filed Nov. 21, 2012) (explaining that minor, non-
therapeutic changes to a branded pharmaceutical product that harm
generic competition can constitute exclusionary conduct that
violates U.S. antitrust laws).
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This list of actions by the FTC is by no means exhaustive.\18\ But
the message is clear--the FTC uses the full force and weight of its
authority to protect consumers from unlawful conduct that increases
prices and reduces innovation in this important sector of our economy.
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\18\ For a complete review of the Commission's ongoing and
extensive efforts to combat anticompetitive mergers and unlawful
conduct in the pharmaceutical industry, see Markus H. Meier, Bradley
S. Albert, & Kara Monahan, Overview of FTC Actions in Pharmaceutical
Products and Distribution (Sept. 2019), available at https://www.ftc.gov/system/files/attachments/competition-policy-guidance/20190930_overview_pharma_final.pdf.
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Notwithstanding the Commission's valiant efforts, there are many
factors that contribute to increasing drug prices but that are not
cognizable under the antitrust laws, and therefore that the FTC does
not have the legal authority to fix. Even if the FTC and other
government enforcers did their job
[[Page 66196]]
flawlessly (and our ``retrospective'' reviews of our past work suggests
we do quite well), pharmaceutical prices would still rise for many
other reasons. For example, last year the Trump Administration released
two reports identifying various market imperfections in health care
markets, including prescription drug markets, and various regulatory
and legislative reforms that would increase consumer choice and
provider competition.\19\ Similarly, former FDA Administrator Scott
Gottlieb has identified several flaws in the market for biosimilars--
generic biologic medicines--that he believes require Congressional
action.\20\ And Professors David Hyman (also a former FTC Special
Counsel) and Charles Silver have identified a host of other legal and
regulatory factors that increase drug prices,\21\ including FDA delays
in processing generic applications and a Medicare system pursuant to
which the government purchases one- third of all retail drugs but is
barred from negotiating the prices that it pays.\22\
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\19\ U.S. Dep't of Health and Human Servs., American Patients
First: A Trump Administration Blueprint to Lower Drug Prices and
Reduce Out-of-Pocket Costs (May 2018), available at https://www.hhs.gov/sites/default/files/AmericanPatientsFirst.pdf; U.S.
Dep't of Health and Human Servs., U.S. Dep't of the Treasury, & U.S.
Dep't of Labor, Reforming America's Healthcare System Through Choice
and Competition 63-67 (2018), available at https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf (discussing, e.g., the use of ``any-
willing-provider'' laws in the context of drug prescription plans
and Medicare Part D). FTC staff consulted with HHS on the latter
report. See id. at 3 (``Executive Order 13813, . . . requires the
Secretary of Health and Human Services (HHS), in consultation with
the secretaries of the Treasury and Labor and the Federal Trade
Commission, to provide a report to the President.'').
\20\ Scott Gottlieb, Op-Ed, Don't Give Up on Biosimilars--
Congress Can Give Them a Boost, Wall St. J., Aug. 25, 2019, https://www.wsj.com/articles/dont-give-up-on-biosimilarscongress-can-give-them-a-boost-11566755042.
\21\ See, e.g., Charles Silver & David A. Hyman, Here's a Plan
to Fight High Drug Prices that Could Unite Libertarians and
Socialists, Vox.Com, June 21, 2018, https://www.vox.com/the-big-
idea/2018/6/21/17486128/prescription-drug-prices-monopolies-epipen-
shkreli-sanders-patents-prizes; see also Statement of Commissioner
Rebecca Kelly Slaughter, supra note 1, at 2 n.10 (citing Silver &
Hyman approvingly).
\22\ See Silver & Hyman, supra note 3, at 53-60.
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There is broad concern about prescription drug price levels, and I
share those concerns. But here, Commission staff conducted a thorough
investigation and found evidence that the acquisition of Celgene by BMS
would, if not addressed, diminish competition in one relevant market.
Commission staff then negotiated a record-breaking consent agreement
that replaces the competition otherwise lost because of the merger by
divesting all of Celgene's relevant products and assets to a new and
robust competitor. Rather than asserting that staff should have found
something--anything--more to justify asking a court to block the
transaction, we should recognize the limited authority we have been
granted by Congress and encourage other responsible governmental actors
to fix the many problems in this sector that lie beyond our
jurisdiction.
Dissenting Statement of Commissioner Rebecca Kelly Slaughter
The Federal Trade Commission has a long history of reviewing
mergers between pharmaceutical manufacturers using an analytical
framework that identifies specific product overlaps between the merging
parties, including of drugs in development, and requiring divestitures
of one of those products. This approach addresses significant
competitive concerns in these mergers,\1\ but I am concerned that it
does not fully capture all of the competitive consequences of these
transactions.\2\
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\1\ Within the standard analytical framework for pharmaceutical
mergers, the Commission has done a good job of studying the effects
of previous divestitures, and has taken seriously the lesson that
divestitures of on-market, rather than pipeline products, are often
more likely to succeed in preserving competition among the
overlapping products. See Bruce Hoffman, It Only Takes Two to Tango:
Reflections on Six Months at the FTC, at 6 (Feb. 2, 2018).
\2\ The Commission has been very successful in negotiating
settlements with merging parties to address drug overlaps. The
Commission has not recently litigated pharmaceutical merger cases,
and, although merger litigation in other industries and merger
guidelines provide useful guidance, we simply do not have a
contemporary body of pharmaceutical merger caselaw to clarify the
boundaries for our analytical approach.
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The consent decree in this case follows the Commission's standard
approach. It remedies a serious concern about a drug-level overlap
between BMS's development-stage BMS 986165 (or ``TYK2'') and Celgene's
on-market Otezla for the treatment of moderate-to-severe psoriasis.
This is important, and I support the Commission's effort to remedy this
drug-level overlap. However, I remain concerned that this analytical
approach is too narrow. In particular, I believe the Commission should
more broadly consider whether any pharmaceutical merger is likely to
exacerbate anticompetitive conduct by the merged firm or to hinder
innovation.
Several recent developments enhance my concerns. Branded drug
prices have increased substantially in recent years,\3\ and
pharmaceutical merger activity persists at a high pace.\4\ The high
rate of drug company consolidation has coincided with a sea change in
the structure of pharmaceutical research and development; recent
studies suggest mergers may inhibit research, development, or approval
in this changing environment.\5\ In addition, the pharmaceutical
industry has long been the focus of anticompetitive conduct enforcement
by both the Commission and private litigants, including for practices
such as pay-for-delay settlements,\6\ sham litigation,\7\ and
anticompetitive product hopping.\8\ We must carefully consider the
facts in each specific merger to understand whether or how it may
facilitate anticompetitive conduct, and therefore be more likely to
result in a substantial lessening of competition.
---------------------------------------------------------------------------
\3\ See IQVIA Institute for Human Data Science, The Global Use
of Medicine in 2019 and Outlook to 2023, at 11 (Jan. 29, 2019);
IQVIA Institute for Human Data Science, Medicine Use and Spending in
the U.S., at 8 (Apr. 19, 2018); Laura Entis, Why Does Medicine Cost
So Much? Here's How Drug Prices Are Set, Time (Apr. 9, 2019),
https://time.com/5564547/drug-prices-medicine/; see also Joanna
Shepherd, The Prescription for Rising Drug Prices: Competition or
Price Controls?, 27 Health Matrix 315, 315-16 (2017); Aimee Picchi,
Drug Prices in 2019 are Surging, With Hikes at 5 Times Inflation,
CBS News (July 1, 2019), https://www.cbsnews.com/news/drug-prices-in-2019-are-surging-with-hikes-at-5-times-inflation/.
\4\ See Barak Richman, et al., Pharmaceutical M&A Activity:
Effects on Prices, Innovation, and Competition, 48 Loy. U. Chi. L.
J. 787, 790-91 (2017); Meagan Parrish, What's Behind all the M&A
Deals in Pharma, Pharma Manufacturing (July 31, 2019).
\5\ See Justus Haucap & Joel Stiebale, Research: Innovation
Suffers When Drug Companies Merge, Harvard Business Review (Aug. 3,
2016); Justus Haucap & Joel Stiebale, How Mergers Affect Innovation:
Theory and Evidence From the Pharmaceutical Industry (2016) (finding
a negative effect on research and development activity of the merged
firm and rival firms); but see Richman, et al., supra note 4 at 799-
801, 817-18 (finding a positive correlation between increased
pharmaceutical merger and drug development activity, but noting
competitive concerns about a ``bottleneck'' in FDA approval).
\6\ See Press Release, Fed. Trade Comm'n, Last Remaining
Defendant Settles FTC Suit that Led to Landmark Supreme Court Ruling
on Drug Company ``Reverse Payments'' (Feb. 28, 2019), https://www.ftc.gov/news-events/press-releases/2019/02/last-remaining-defendant-settles-ftc-suit-led-landmark-supreme.
\7\ See Press Release, Fed. Trade Comm'n, Statement of FTC
Chairman Joe Simons Regarding Federal Court Ruling in FTC v. AbbVie
(June 29, 2018), https://www.ftc.gov/news-events/press-releases/2018/06/statement-ftc-chairman-joe-simons-regarding-federal-court-ruling.
\8\ See Press Release, Fed. Trade Comm'n, Reckitt Benckiser
Group plc to Pay $50 Million to Consumers, Settling FTC Charges that
the Company Illegally Maintained a Monopoly over the Opioid
Addiction Treatment Suboxone (July 11, 2019), https://www.ftc.gov/news-events/press-releases/2019/07/reckitt-benckiser-group-plc-pay-50-million-consumers-settling-ftc.
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Going forward, I hope the Commission will take a more expansive
approach to analyzing the full range of competitive consequences of
[[Page 66197]]
pharmaceutical mergers. I urge not only the Commission, but also
researchers and industry experts to think carefully and creatively
about these cases, and in particular to study the effects of recent
consummated mergers on drug research, development, and approval.
Outside of merger enforcement, we should also continue to police
aggressively business practices that suppress competition. Indeed, as
Commissioner Chopra and I have explained elsewhere, we should unleash
the full scope of our authority under Section 5 to combat high drug
prices.\9\
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\9\ See Statement of Commissioners Rohit Chopra and Rebecca
Kelly Slaughter Regarding the Federal Trade Commission Report on the
Use of Section 5 to Address Off-Patent Pharmaceutical Price Spikes,
(June 27, 2019).
---------------------------------------------------------------------------
The problem of high drug prices is too important to leave any
potential solutions unexhausted. As a society, we should also consider
all other policy interventions that would help combat high drug
prices.\10\
---------------------------------------------------------------------------
\10\ The problem of high drug prices has prompted a number of
proposed policy solutions in addition to antitrust enforcement,
including (1) reference pricing, (2) reforming import restrictions,
(3) innovation prizes, and (4) Medicare Part D price negotiation.
See So-Yeon Kang, et al., Using External Reference Pricing in
Medicare Part D to Reduce Drug Price Differentials With Other
Countries, 5 Health Aff. 38 (2019); Tim Wu, How to Stop Drug Price
Gouging, N.Y. Times (Apr. 20, 2017), https://www.nytimes.com/2017/04/20/opinion/how-to-stop-drug-price-gouging.html; Charles Silver &
David A. Hyman, Here's a Plan to Fight High Drug Prices That Could
Unite Libertarians and Socialists, Vox (Jun. 21, 2018), https://www.vox.com/the-big-idea/2018/6/21/17486128/prescription-drug-prices-monopolies-epipen-shkreli-sanders-patents-prizes; Juliette
Cubanski & Tricia Neuman, Searching for Savings in Medicare Drug
Price Negotiations, Henry J. Kaiser Family Foundation (Apr. 26,
2018).
---------------------------------------------------------------------------
Dissenting Statement of Commissioner Rohit Chopra
Summary
Today's troubles in the pharmaceutical industry are well
known. Drug pricing is out-of-control and innovation is too slow. Given
the consequences for human life, the FTC must ensure fierce competition
in this market through close scrutiny of mergers and conduct.
The agency has scored big victories in court to combat
anticompetitive conduct in the industry. But, when it comes to mergers,
Commissioners have typically voted to steer clear of the courtroom,
instead focusing on settlements that address product overlaps.
Given the size and potential impact of this massive
merger, I am skeptical that the status quo approach will uncover the
range of potential harms to American patients.
When it comes to life-saving pharmaceuticals, the Federal Trade
Commission should never ignore serious warning signs that most
Americans see clearly. Many of us depend on prescription drugs to
survive, but too many cannot afford the high costs. The argument that
sky-high prices are necessary for innovation has been falling apart, as
more evidence reveals that many new drugs seem to be designed to extend
exclusivity, rather than providing meaningful therapeutic benefits.\1\
---------------------------------------------------------------------------
\1\ Donald W. Light & Joel R. Lexchin, Pharmaceutical R&D: What
do we get for all that money?, 345 British Med. J. 22, 24 (2012),
https://www.bmj.com/bmj/section-pdf/187604?path=/bmj/345/7869/Analysis.full.pdf.
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Predicting the anticompetitive effects of massive mergers in any
industry is difficult. This is especially true in pharmaceuticals,
where research and discovery are core to competition. Some evidence
shows that these mergers have choked off innovation,\2\ creating harms
that are immeasurable for those waiting for a cure.
---------------------------------------------------------------------------
\2\ See generally, Justus Haucap & Joel Stiebale, How Mergers
Affect Innovation: Theory and Evidence from the Pharmaceutical
Industry (D[uuml]sseldorf Inst. for Competition Economics,
Discussion Paper No. 218, 2016), http://www.dice.hhu.de/fileadmin/redaktion/Fakultaeten/Wirtschaftswissenschaftliche_Fakultaet/DICE/Discussion_Paper/218_Haucap_Stiebale.pdf.
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Routine vs. Rigor
Over the years, the agency has worked to combat abuse of
intellectual property and other anticompetitive conduct by
pharmaceutical companies, achieving major victories in courts across
the country. Our approach to pharmaceutical mergers, however, has
focused primarily on reaching settlements, rather than litigation or
in-depth merger studies. The agency has focused on seeking divestitures
of individual products, usually to another major pharmaceutical player.
There have been longstanding, bipartisan concerns about whether
this strategy is truly working. For example, in 2005, as he reflected
on his six years of service as Commissioner, Thomas Leary lamented that
the agency's approach to these investigations mostly stayed the same,
despite overarching concerns about other anticompetitive harms.\3\
---------------------------------------------------------------------------
\3\ Interview with Commissioner Thomas B. Leary, 19 (3) A.B.A.
Antitrust Health Care Chronicle 1, 5 (2005), https://www.ftc.gov/public-statements/2005/09/health-care-interview-commissioner-thomas-b-leary.
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During my time as a Commissioner, I have pushed for the agency to
be more rigorous across all of our work by opening our eyes to new
types of analysis and sources of evidence,\4\ while avoiding
assumptions that may be outdated. Given some of the clear warning signs
in the industry, we must approach our investigations of pharmaceutical
mergers with careful scrutiny and great humility about our longstanding
practices.
---------------------------------------------------------------------------
\4\ I have previously noted that the agency can enhance its
assessments of the likelihood of entry by new innovators, as well as
its approach to vetting the financial condition of divestiture
buyers. Statement of Commissioner Rohit Chopra, In the Matter of
Fresenius Medical Care AG & Co. KGaA and NxStage Medical, Inc. (Feb.
19, 2019), https://www.ftc.gov/public-statements/2019/02/statement-commissioner-chopra-matter-fresenius-medical-care-ag-co-kgaa;
Statement of Commissioner Rohit Chopra, In the Matter of Linde AG,
Praxair, Inc., and Linde PLC (Oct. 22, 2018), https://www.ftc.gov/public-statements/2018/10/statement-commissioner-chopra-matter-linde-ag-praxair-inc-linde-plc.
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This massive $74 billion merger between Bristol-Myers Squibb (NYSE:
BMY) and Celgene (NASDAQ: CELG) may have significant implications for
patients and inventors, so we must be especially vigilant. In my view,
this transaction appears to be heavily motivated by financial
engineering \5\ and tax considerations \6\ (as opposed to a genuine
drive for greater discovery of life-saving medications), without clear
benefits to patients or the public. The buyer's incentives might also
be distorted, given overlaps in ownership.\7\
[[Page 66198]]
In addition, there are also concerns about a history of anticompetitive
conduct.\8\ Expansive investigation for mergers like these is time well
spent.
---------------------------------------------------------------------------
\5\ This transaction will lead to changes in the merged firm's
capital structure, as well as an acceleration of share buybacks. I
fear that these changes will alter the firm's incentives in ways
that might increase the likelihood of anticompetitive conduct. See
Bristol-Myers Squibb, Press Release, Bristol-Myers Squibb Announces
Agreement Between Celgene and Amgen to Divest OTEZLA[supreg] for
$13.4 Billion (Aug. 26, 2019, 6:30 a.m.), https://news.bms.com/press-release/corporatefinancial-news/bristol-myers-squibb-announces-agreement-between-celgene-and-a.
\6\ Tax avoidance appears to be one of the primary motivations
of the deal, rather than a meaningful increase in the firms' ability
to innovate or operate effectively. See, e.g., Siri Bulusu, Celgene
Holders May See Tax Benefit From Bristol-Myers Deal (1), Bloomberg
Tax (Jan. 4, 2019, 4:43 p.m.), https://news.bloombergtax.com/daily-tax-report/celgene-holders-may-see-tax-benefit-from-bristol-myers-deal-1 (noting that the buyer went out of its way to make sure the
stock component of the merger will be taxable and describing how
that tax would be deductible by Celgene shareholders). Tax
considerations were also relevant to Amgen, the Commission's
approved buyer of a divested asset. Amgen publicly disclosed that it
would recognize $2.2 billion in tax benefits, on a present value
basis. See Michael Erman & Manas Mishra, Amgen to buy Celgene
psoriasis drug Otezla for $13.4 billion, Reuters (Aug. 26, 2019),
https://www.reuters.com/article/us-bristol-myers-divestiture-amgen/amgen-to-buy-celgene-psoriasis-drug-otezla-for-13-4-billion-idUSKCN1VG102.
\7\ For example, I noted with great interest that two-thirds of
Bristol-Myers Squibb's 100 largest shareholders also have stakes in
Celgene, according to data assembled by Refinitiv. See, e.g., Svea
Herbst-Bayliss & Michael Erman, Starboard joins opposition to
Bristol-Myers' $74 billion Celgene deal, Reuters (Feb. 28, 2019,
6:59 a.m.), https://www.reuters.com/article/us-celgene-m-a-bristol-myers-wellington/starboard-joins-opposition-to-bristol-myers-74-billion-celgene-deal-idUSKCN1QH1K7.
\8\ For example, last year, the Food & Drug Administration
published a list of drug makers that were the subject of complaints
that they had restricted generic drug companies from accessing drug
samples, which enable generic firms to develop viable alternatives.
Celgene was a top recipient of these complaints. Alison Kodjak, How
a Drugmaker Gamed The System To Keep Generic Competition Away, NPR
(May 17, 2018; 5:00 a.m.), https://www.npr.org/sections/health-shots/2018/05/17/571986468/how-a-drugmaker-gamed-the-system-to-keep-generic-competition-away.
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Again, with a few exceptions,\9\ many FTC Commissioners have
primarily scrutinized pharmaceutical mergers based on an examination of
whether there are any product overlaps between the merging
corporations, or where there may be clear-cut incentives to foreclose
rivals with the ability to compete.\10\ When there are no obvious
overlaps or foreclosure possibilities, the Commission typically does
not challenge any aspect of the transaction.\11\
---------------------------------------------------------------------------
\9\ See, e.g., Statement of the Federal Trade Commission, In the
Matter of Teva Pharmaceuticals Industries Ltd. and Allergan plc
(July 27, 2016), https://www.ftc.gov/public-statements/2016/07/statement-federal-trade-commission-matter-teva-pharmaceuticals-industries; cf. Concurring Statement of Commissioner J. Thomas
Rosch, Federal Trade Commission v. Ovation Pharmaceuticals, Inc.
(Dec. 16, 2008), https://www.ftc.gov/public-statements/2008/12/concurring-statement-commissioner-j-thomas-rosch-federal-trade-commission.
\10\ In this matter, the Analysis of Agreement Containing
Consent Orders to Aid Public Comment focuses primarily on a specific
product market overlap. This is similar to many past analyses
contained in public notices seeking comment on proposed consent
orders in the FTC's pharmaceutical merger actions. See, e.g.,
Analysis Of Agreement Containing Consent Orders To Aid Public
Comment, In the Matter of Boston Scientific Corporation, File No.
191-0039, https://www.ftc.gov/system/files/documents/cases/191_0039_boston_scientific_aapc.pdf; Analysis Of Agreement
Containing Consent Orders To Aid Public Comment, In the Matter of
Amneal Holdings, LLC, Amneal Pharmaceuticals LLC, Impax
Laboratories, Inc., and Impax Laboratories, LLC, File No. 181-0017,
https://www.ftc.gov/system/files/documents/cases/1810017_amneal_impax_analysis_4-27-18.pdf. See also Markus Meier et
al., Fed. Trade Comm'n, Overview of FTC Actions In Pharmaceutical
Products and Distribution (2019), https://www.ftc.gov/system/files/attachments/competition-policy-guidance/overview_pharma_june_2019.pdf.
\11\ For example, in January 2015 the Commission granted early
termination of the Hart-Scott-Rodino waiting period and took no
enforcement action against the proposed $66 billion merger between
Actavis plc and Allergan, Inc. See Fed. Trade Comm'n, Early
Termination Notices, 20150313: Actavis plc; Allergan, Inc. (Jan. 9,
2015), https://www.ftc.gov/enforcement/premerger-notification-program/early-termination-notices/20150313.
---------------------------------------------------------------------------
I am deeply skeptical that this approach can unearth the complete
set of harms to patients and innovation, based on the history of
anticompetitive conduct of the firms seeking to merge and the
characteristics of today's pharmaceutical industry when it comes to
innovation. Will the merger facilitate a capital structure that
magnifies incentives to engage in anticompetitive conduct or abuse of
intellectual property? Will the merger deter formation of biotechnology
firms that fuel much of the industry's innovation? How can we know the
effects on competition if we do not rigorously study or investigate
these and other critical questions? Given our approach, I am not
confident that the Commission has sufficient information to determine
the full scope of potential harms to competition of this massive
merger.
Conclusion
The financial crisis and the Great Recession taught our country a
tough lesson: When watchdogs wear blindfolds or fail to evolve with the
marketplace, millions of American families can suffer the consequences.
The regulators and enforcers of the mortgage industry failed to stop
the widespread abuses that plagued the marketplace. And there are many
more examples every year, from the opioid crisis to the failures of the
Boeing 737 Max, where blindfolded regulators and the absence of
rigorous investigation proved to be catastrophic to human life, despite
so many warning signs.
When enforcers conduct wide-ranging, intensive inquiries that do
not uncover unlawful conduct, then, of course, they cannot take action.
However, when they wear blindfolds or cling to the status quo, they
cannot assume that the public is protected.
For these reasons, I respectfully dissent.
[FR Doc. 2019-26074 Filed 12-2-19; 8:45 am]
BILLING CODE 6750-01-P