Citing the “high volume of pharmaceutical mergers” and “skyrocketing drug prices,” Slaughter stated that the FTC would “rethink” its approach to pharmaceutical merger review and would “take an aggressive approach to tackling anticompetitive pharmaceutical mergers” moving forward.² The announcement did not specify what the FTC’s “aggressive approach” would look like in practice or how it would differ from the agency’s present approach. Instead, it outlined a number of criteria the FTC will consider in rethinking its analysis of pharmaceutical mergers, including:

1. How current theories of harm can be expanded and refreshed;
2. The full range of a pharmaceutical merger’s effects on innovation;
3. How to consider regulatory abuses in pharmaceutical conduct, such as price fixing, reverse payments, etc.;
4. The evidence needed to challenge a transaction based on new or expanded theories of harm;
5. The types of remedies that would work in the cases to which those theories are applied; and
6. Lessons learned about the scope of assets and characteristics of firms that make successful divestiture buyers.

A Consistent Stance Advocating Change

Acting Chair Slaughter’s focus on pharmaceutical merger cases is not new; she has consistently used dissenting statements in these cases to advocate changes to the FTC’s current method of analysis.³ According to Slaughter, the FTC has a practice of using the same analytical approach when examining pharmaceutical mergers: identifying any overlaps in the merging parties’ current product lines or product pipelines, and requiring a divestiture if a significant overlap exists. This has led to an increasing number of settlements in pharmaceutical merger cases. While Slaughter believes the current approach addresses some concerns, she has stated that it may not fully capture the competitive consequences that may arise from these mergers. In general, Slaughter’s dissents have pushed for a more expansive analysis to determine the potential for anticompetitive conduct in each merger case that comes before the FTC.

In a recent statement before the Subcommittee on Antitrust, Commercial, and Administrative Law in the U.S. House of Representatives, Slaughter advocated using the full scope of the FTC’s Section 5 enforcement power when evaluating pharmaceutical mergers.⁴ This would include taking on riskier cases where the FTC may not be confident in a successful outcome. According to Slaughter’s statements during a press conference on the FTC’s March 16 announcement, wielding its authority under Section 5 could also mean re-examining past merger decisions to learn from prior mistakes, and taking corrective action if necessary.

Key Takeaways: What This Could Mean

With a new administration and two open commissioner seats, some change to the FTC’s approach to pharmaceutical mergers is likely. Time will tell what specific changes the working group will recommend. However, given Slaughter’s consistent stance against the FTC’s current approach, the bottom-line impact of the working group could be more extensive and time consuming reviews of pharmaceutical mergers.

¹ Press Release, Fed. Trade Comm’n, FTC Announces Multilateral Working Group to Build a New Approach to Pharmaceutical Mergers (Mar. 16, 2021).

² Id.

³ See also Dissenting Statement of Comm’r Rohit Chopra Joined by Comm’r Rebecca Kelly Slaughter, In re Pfizer Inc. / Mylan N.V., Comm’n File No. 191-0182 (Oct. 30, 2020); Dissenting Statement of Comm’r Rebecca Kelly Slaughter, In re AbbVie/Allergan, Comm’n File No. 191-0169 (May 5, 2020).

⁴ This has not been the first time Slaughter has suggested this approach. In 2019, Slaughter and fellow Democratic Commissioner, Rohit Chopra, released a joint statement advocating for the FTC to “consider the full breadth of its statutory authority under Section 5” in pharmaceutical merger cases. See Statement of Comm’rs Rohit Chopra and Rebecca Kelly Slaughter, Federal Trade Commission Report on the Use of Section 5 to Address Off-Patent Pharmaceutical Price Spikes, Fed. Trade Comm’n (June 24, 2019).