AbbVie’s $63 billion megamerger with Allergan generated immediate pushback and skepticism from within the industry, but now unions and public interest groups are piling on.
They're asking the FTC to take a close look at the proposed tie-up and consider blocking it, citing a history of "anticompetitive conduct" at both companies. With pharma deals running into increased scrutiny at the agency lately, the groups' concerns might carry some extra weight.
For years, AbbVie and Allergan have used price hikes, controversial rebate deals and aggressive patent enforcement strategies to hinder competition, the unions and public interest groups wrote in a letter to FTC chairman Joseph Simons. The proposed deal will only hurt competition in biopharma, where consolidation is already a concern, the letter states.
The groups, which include Families USA, Doctors for America, and Public Citizen, represent more than 10 million subscribers and members.
Each company sells market-leading blockbusters—Humira and Imbruvica in AbbVie's case, and Botox in Allergan's, among others—and the groups believe they'd wield their combined power to hinder competition if allowed to proceed.
After all, the combined company would vault into fourth place among the world's largest drugmakers, giving it the power to "more broadly leverage market power to force health insurers and pharmacy benefit managers (PBMs) to agree to exclusionary conditions that hamper the ability of rivals to compete," the letter states.
The groups listed concerns specific to AbbVie and Allergan, as well as some broader issues with biopharma M&A. AbbVie has used “anticompetitive patent practices” on Humira, plus price hikes on the world’s bestselling drug, to protect and bolster sales, the groups wrote.
Allergan used a unique strategy involving a Native American tribe to try to defend against a Restasis patent challenge. The company has also faced allegations of using rebates to stifle competition.
Neither company immediately responded to a request for comment.
And as with other mergers, the groups believe the deal would reduce competition in specific markets, reduce innovation, and lead to higher prices. They asked the FTC to take a careful look at the merger and “take effective enforcement action" to protect consumers.
“And we hope this investigation will be part of a reinvigorated broader look at pharmaceutical drug mergers,” they added.
AbbVie’s big Allergan buy follows other recent megamergers in biopharma and numerous midsized deals, several of which attracted stepped-up demands from the FTC.
Notably, to win FTC approval for its Bristol-Myers Squibb megamerger, Celgene had to sell Otezla, a blockbuster immunology drug that went to Amgen for $13 billion. That deal is still pending. And in January, Takeda closed its $62 billion Shire buyout after selling off some products to win antitrust approval.
Meanwhile, the regulatory hold on Roche’s $4.8 billion Spark Therapeutics buy has many market watchers taking notice. The deal was originally set to close in the second quarter of 2019, but thanks to increased regulatory scrutiny, Roche has extended its deadline repeatedly, most recently earlier this month.
Analysts have raised questions about the FTC's prolonged look at the deal; after all, it's the sort of Big Pharma-biotech buyout common across biopharma. And as a result of the antitrust worries, dealmakers could have second thoughts about pulling the trigger on deals down the road, according to a Bloomberg survey.