Competition authorities in the UK, EU, US and Canada have joined forces to form a working group dedicated to issues around mergers in the pharmaceutical sector.
The authorities will share knowledge and consider how to most effectively scrutinise mergers and acquisitions in the sector. As explained by the European Commission: "The number of mergers in the pharmaceutical sector has grown in recent years, and there is the need to scrutinise closely to detect those that could lead to higher drug prices, lower innovation or anticompetitive conduct."
In terms of what the group hopes to achieve, in its press release the UK Competition and Markets Authority focused on a desire to "explore issues including current theories of harm and whether they should be expanded, the full impact of pharmaceutical mergers on innovation and the types of remedies needed to address any competition concerns."
For their part, the FTC set out the following questions that they want the working group to tackle:
- How can current theories of harm be expanded and refreshed?
- What is the full range of a pharmaceutical merger’s effects on innovation?
- In merger review, how should we consider pharmaceutical conduct such as price fixing, reverse payments, and other regulatory abuses?
- What evidence would be needed to challenge a transaction based on any new or expanded theories of harm?
- What types of remedies would work in the cases to which those theories are applied?
- What have we learned about the scope of assets and characteristics of firms that make successful divestiture buyers?
The formation of a working group for a specific sector is an unusual step for competition authorities to take. However, given the prominence of the sector over the past year and the difficulties that competition authorities have had in the recent past in assessing the impact of pharma mergers on e.g. early stage pipeline products and R&D it is not entirely surprising.
No concrete goals or outputs have been agreed by the working group and so for now it is very much a case of 'watch this space'. We will continue to monitor the activity of the group and report on any updates.