An international working group has been formed to evaluate the approach of competition law agencies in Canada, the United States, the United Kingdom, and Europe relating to pharmaceutical merger reviews.
The working group will consider the following issues:
- the effects of a pharmaceutical merger on innovation;
- how pharmaceutical conduct (i.e., price fixing, reverse payments, etc.) should be considered during merger review;
- characteristics of successful divestiture buyers and scope of assets;
- whether current theories of harm can be expanded and refreshed;
- what evidence would be required to challenge a transaction based on new or expanded theories of harm; and
- what types of remedies would work in the cases to which those theories of harm are applied.
Although a timetable has not been set, the establishment of the working group is a significant development given the recent call to action by U.S. Acting Federal Trade Commission Chair, Rebecca Slaughter, for "fresh approaches that fully analyze and address the varied competitive concerns that these mergers and acquisitions raise."
In any given year, pharmaceutical mergers account for less than 3% of total mergers reviewed by competition law agencies in the jurisdictions noted above. However, competition law agencies have maintained an active interest in the pharmaceutical industry for decades. Further, given current socio-economic conditions raised by the COVID-19 pandemic, and as signaled by this newly-formed working group, it is likely that pharmaceutical mergers will be reviewed with increased scrutiny. Accordingly, should a proposed transaction be contemplated, transacting parties should be mindful and plan accordingly for a more rigorous and extensive review.
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