Industry watchers largely expected that Bristol-Myers Squibb and Celgene would win U.S. antitrust clearance for their $74 billion merger. But what’s perhaps unexpected is that the permission was not unanimous, spelling an ill omen for future large biopharma deals should Democrats move into the White House.
The Federal Trade Commission (FTC) has allowed the deal to move ahead on the condition of the agreed selloff of blockbuster psoriasis drug Otezla, the agency said Friday.
However, the 3-2 vote on the green light was split along the party lines, with the Republican majority led by Chairman Joseph Simons triumphing. All five current FTC commissioners were selected by President Donald Trump in a rare complete turnover during a change of administrations.
The FTC argued that the acquisition “would harm consumers in the U.S. market for treatments taken orally for moderate-to-severe psoriasis” if approved as-is. Without naming it, the agency pointed to Bristol’s phase 3 TYK-2 inhibitor BMS-986165 as “the most advanced oral treatment” that could compete directly with Otezla.
“While many injectable and infused products are approved to treat moderate-to-severe psoriasis, some patients object to them or find them inconvenient,” the FTC said in its statement Friday.
Industry watchers expressed shock at the forced divestiture when it was first unveiled in June, noting that BMS-986165, yet to report phase 3 data, is still a risky project and belongs to a different drug class from Otezla.
But with the 3-2 vote, it now seems like even removing that concern isn’t enough for two Democratic commissioners.
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In a dissenting statement (PDF), Commissioner Rohit Chopra, a known consumer advocate, challenged the common FTC approach of examining only product overlap when reviewing pharma mergers.
“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,” he wrote. He raised a series of questions, calling for a closer look at whether a deal would magnify anticompetitive behavior such as patent abuse or deter innovation from small biotech firms.
Commissioner Rebecca Kelly Slaughter, previously chief counsel to Senate minority leader Sen. Chuck Schumer, applauded the Otezla ruling itself in her separate statement (PDF) but also suggested that simply looking at drug-level overlap is “too narrow.”
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Celgene has reached a deal to sell Otezla to Amgen for $13.4 billion in what the FTC called the largest divestiture that the FTC or the U.S. Department of Justice has ever required in a merger enforcement. However, that is not a done deal.
While the FTC said Amgen “has the expertise, U.S. sales infrastructure, and resources to restore the competition” that would otherwise be lost, it also reserves the rights to unwind the sale—and force a different deal to another FTC-approved acquirer—if it finds Amgen’s marketing efforts don’t live up to expectations.
This is not the first FTC vote under the new leadership that was split along party lines. In January, the agency sanctioned Staples’ acquisition of office supply wholesaler Essendant with Chopra and Slaughter in dissent. And the two Democratic members in July voted against a $5 billion fine against Facebook for its privacy practices, calling for more.
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For biopharmas, having both Democrats move against such a major M&A deal regardless of an already surprising requirement definitely sounds alarm bells around what’s to come if Democrats get the majority of seats at the FTC once the party wins a presidential election.
On top of BMS-Celgene, several other biopharma M&A deals have hit FTC hurdles. Roche’s $4.8 billion buyout of Spark Therapeutics has been repeatedly delayed after a so-called “second request” from the agency for more information. And AbbVie and Allergan were dealt the same slowdown on their proposed $63 billion merger, even after Allergan voluntarily put up two drugs with potential overlap for sale.
Friday, Bristol-Myers Squibb said it has satisfied all regulatory requirements and expects to complete the transaction on Wednesday.