Pharmaceutical Industry Prepares for Regulatory Shift as FTC Shifts Antitrust Tactics

Editor’s Note: The article “Pharmaceutical Industry Prepares for Regulatory Shift as FTC Shifts Antitrust Tactics” highlights the pharmaceutical sector’s reaction to the Biden administration’s robust antitrust agenda under FTC Chair Lina Khan. Spotlighting a strategic shift towards litigation to clarify antitrust laws, the article examines the impact on major companies, like Amgen Inc., facing intense FTC scrutiny. It discusses the pharmaceutical industry’s ‘third wave’ of mergers and the FTC’s efforts to prevent ‘killer acquisitions.’

Despite the FTC’s aggressive stance, companies continue to pursue significant mergers, challenging current antitrust policies. Criticisms of the FTC’s effectiveness and calls for legislative reform underscore the complexity of modern antitrust challenges. This narrative holds significant implications for the eDiscovery ecosystem, especially in antitrust investigations, underlining the importance of staying abreast of regulatory changes for eDiscovery professionals.

Industry News

Pharmaceutical Industry Prepares for Regulatory Shift as FTC Shifts Antitrust Tactics

ComplexDiscovery Staff

In response to the Biden administration’s intensified antitrust agenda, the pharmaceutical sector is bracing for a surge in regulatory challenges. Under the leadership of FTC Chair Lina Khan, the Federal Trade Commission has shifted its focus towards litigation to clarify antitrust laws, as opposed to merely blocking deals. This strategic shift, as described by lawyer and former FTC official David Balto, indicates that the FTC’s priority is “to clarify law” rather than simply winning cases. Companies across the pharmaceutical landscape are adapting to this new environment, including Amgen Inc., whose $43 billion takeover of Seagen Inc. faces a rigorous FTC review. However, despite EU regulators having already greenlit the transaction, no lawsuit from the FTC has emerged thus far.

The pharmaceutical industry has entered a ‘third wave’ of mergers, marked by major firms acquiring startups, consequently stifling competition and innovation. UC Law Professor Robin Feldman points out that the FTC’s proactive scrutiny of acquisitions like Amgen’s is indicative of this new regulatory era, where the avoidance of so-called ‘killer acquisitions’ is paramount. Feldman views the FTC’s recent move to share data with the Justice Department and Health and Human Services as a strategic play to identify and scrutinize anticompetitive mergers that might otherwise go unnoticed. The litigious climate has prompted Balto to caution companies, saying, “They really need to run themselves through the blender looking at whether there are forms of anticompetitive conduct.”

Despite FTC’s aggressive stance, recent merger announcements imply that businesses are willing to challenge the administration’s antitrust efforts. According to Wedbush analyst Dan Ives who spoke to Business Insider, the failure of the FTC to block Microsoft’s purchase of Activision Blizzard has not deterred companies from pursuing significant deals. The potential $60 billion merger between health insurance giants Cigna and Humana, as well as other sizable transactions across various industries, underscore this trend.

Amid criticisms of the FTC’s effectiveness, former Bidenomics advisors have argued that Khan’s anti-merger overreach could harm American competitiveness. They contest that not every merger is intrinsically anticompetitive, and that across the board, the FTC has yet to win a litigated merger challenge. Despite these setbacks, Khan maintains her optimistic stance on FTC’s role, citing “suing to block mergers is not the only arrow in our quiver,” in light of abandoned deals following FTC interventions.

While companies test the limits of Biden’s antitrust policies, the debate continues on updating long-standing antitrust legislations such as the Sherman Antitrust Act. Figures like Congressman Ro Khanna have emphasized the necessity of legislative reform, pointing out the pressing need for “tightening of the law” to effectively monitor and manage mergers and acquisitions in the modern economy.

News Sources

• Big Pharma Braces for More FTC Suits Over M&A Bound for Approval
• Mega-Mergers Show Corporate America Unafraid of Biden, FTC in Election Year
• Competition Cop Lina Khan’s Antitrust Overreach is Hurting U.S. Competitiveness–and Destroying Billions of Dollars in Value

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Additional Reading

• HSR Act Reporting: A ComplexDiscovery Chronology
• FTC Annual Competition Reports (Hart-Scott-Rodino Act Reports)

Source: ComplexDiscovery