Editor’s Note: The article below is the second in our three-part series, Federal Antitrust Enforcement in Health Care: 2023 Year in Review. (Click here to read part 1.) The series is based on our recent webinar, 2023 Health Care Enforcement Trends: Spotlight on Consumer Protection, Antitrust and Fraud. Click here to view the free webinar on demand.
Merger challenges in pharmaceuticals, medtech and devices received a lot of attention and resources at the Federal Trade Commission (FTC) and State Attorneys General in 2023. Success in several high profile enforcement actions was in many ways a preview of coming attractions in the antitrust arena, as enforcers focus on industry-changing deals and make an effort to address what they perceive as historical underenforcement of the antitrust laws in health care industries.
Pharmaceutical Mergers
Illumina/Grail. In biopharmaceuticals, the FTC ordered the unwinding of a vertical merger in April 2023. DNA sequencing company Illumina had previously acquired Grail, a developer of cancer detection tests, for $7.1 billion. The FTC found that the merger had given Illumina the incentive and ability to harm cancer detection test rivals.1 As a result, the FTC opined that prices for cancer detection tests would likely increase and innovation in the market would decrease.2 Illumina and Grail appealed the decision to the United States Court of Appeals for the Fifth Circuit and the Commission’s decision was stayed, in light of the European Commission’s hold separate requirement regarding the merger.3
In December 2023, the Fifth Circuit sided with the FTC in its challenge to the vertical merger. The Fifth Circuit agreed with the FTC that the merger is likely to substantially lessen competition under Section 7 of the Clayton Act because Illumina would have the ability and incentive to foreclose Grail’s rivals after the merger as it pursued a strategy to become the market leader in clinical testing.4 Although the court also held that the Commission had to reconsider Illumina’s “open offer” to supply customers with DNA sequencing products at the liability stage, not the remedy stage, this timing issue did not alter the ultimate outcome, as the Fifth Circuit also found Illumina’s efficiencies arguments wanting.5 Days after the circuit court’s decision, Illumina announced it would unwind the transaction and divest Grail, which the FTC called “a major win” as it seeks “to protect competition in health care.6
Sanofi/Maze. In December 2023, the FTC filed a lawsuit in Massachusetts federal court to thwart an attempt by pharmaceutical company Sanofi to secure an exclusive license from Maze Therapeutics to a therapy in development for Pompe disease.7 The Commission alleged that the license would eliminate nascent competition to Sanofi’s monopoly for Pompe disease treatment, in violation of Section 2 of the Sherman Act, Section 7 of the Clayton Act and Section 5 of the FTC Act.8 As a result of the FTC challenge, the parties abandoned the transaction, explaining that the “delay associated with a long litigation has led Sanofi to conclude that it would not be in the best interests of patients to contest this litigation.”9
Amgen/Horizon. In May 2023, the FTC, along with six state attorneys general, sued to enjoin biopharmaceutical company Amgen’s $27.8 billion acquisition of Horizon Therapeutics, in the first FTC challenge to a pharmceutical merger in more than a decade. Plaintiffs alleged that post-merger Amgen would bundle Horizon’s thyroid eye disease and gout medications with Amgen’s products and entrench its market position.10 In August 2023, the FTC and state plaintiffs settled the claims in a consent order prohibiting Amgen from bundling any of its products with Horizon’s medications.11 Amgen also agreed not to condition any product rebate or contract terms on the sale or positioning of Horizon’s medications, not to use any rebate or contract term to exclude or disadvantage competing products and to secure prior approval from the FTC for the next ten years before acquiring pharmaceuticals being manufactured or in development with the same indications as Horizon’s medications.12 Amgen also agreed to monitoring and to submit annual compliance reports to the FTC and the six plaintiff states.13
Medtech and Device Mergers
IQVIA/Propel. In July 2023, the FTC sued to block IQVIA, a provider of programmatic advertising targeted specifically at health care professionals, from acquiring Propel Media, a competing programmatic advertiser.14 The FTC alleged that combining two of the top three largest providers of advertising for drugs and other health care products to health care professionals would result in increased prices, reduced choice, and diminished innovation.15 The FTC also alleged that post-merger the firm would have the ability and incentive to disadvantage rival platforms that rely on IQVIA for key inputs but compete with Propel, which would result in higher prices for data, reduced quality and restrictions on the use of data.16
After a trial, the court ruled for the FTC in December 2023, enjoining the merger.17 Days later, the parties abandoned the merger.18 In the redacted opinion, the court concluded that health care provider programmatic advertising was a relevant product market, that the post-merger market share above 30 percent and increase in concentration supported the FTC’s prima facie case of anticompetitive effects, and that defendants’ rebuttal arguments were insufficient to prevail.19
Boston Scientific/M.I.Tech. In May 2023, the FTC announced that Boston Scientific dropped its attempted $230 million purchase of a majority stake of M.I. Tech Co. Ltd, a Korean manufacturer and distributor of medical devices for endoscopic and urologic procedures, from Synergy Innovation.20 The FTC reported that the parties “abandoned their proposed transaction in response to investigations by FTC staff and [its] overseas enforcement partners,” noting that the “FTC will not hesitate to take action in enforcing the antitrust laws to protect patients and doctors.”21
Cooper/Cook. In August 2023, the FTC announced that the CooperCompanies, a medical device manufacturer, had terminated its proposed $875 million acquisition of reproductive health business Cook Medical Holdings after a lengthy FTC investigation, noting that the “FTC is committed to protecting patients from higher costs and preserving the incentive to innovate.”22 In a retooled transaction, CooperCompanies purchased $300 million in Cook Medical assets, which did “not include any of the fertility products contemplated in the original deal announced on February 7, 2022.”23
1 See Opinion of the Comm’n, Dk. No. 9401, Illumina, Inc. (April 3, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/d09401commissionfinalopinion.pdf.
2 Press Release, Fed. Trade Comm’n, FTC Orders Illumina to Divest Cancer Detection Test Maker GRAIL to Protect Competition in Life-Saving Technology Market (Apr. 3, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/04/ftc-orders-illumina-divest-cancer-detection-test-maker-grail-protect-competition-life-saving.
3 See Decision and Order, Dk. No. 9401, Illumina, Inc. (April 24, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/d09401commissionordergrantingstay.pdf.
4 Illumina, Inc. v. FTC, slip op. at 18-19, No. 23-60167 (5th Cir. Dec. 15, 2023).
5 Illumina, Inc. v. FTC, slip op. at 22-34, No. 23-60167 (5th Cir. Dec. 15, 2023) (“such agreements should be addressed at the liability—not remedy—stage of the Section 7 proceedings.”).
6 Press Release, Illumina, Illumina Announces Decision to Divest GRAIL (Dec. 17, 2023), available at https://investor.illumina.com/news/press-release-details/2023/Illumina-Announces-Decision-to-Divest-GRAIL/default.aspx; Press Release, Fed. Trade Comm’n, Statement Regarding Illumina’s Decision to Divest Grail (Dec. 18, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/12/statement-regarding-illuminas-decision-divest-grail.
7 Complaint, Dkt. 1, FTC v. Sanofi, No. 1:23-cv-13046 (D. Mass. Dec. 11, 2023).
8 See id. at ¶¶ 19-21.
9 Press Release, Fed. Trade Comm’n, Statement Regarding the Termination of Sanofi’s Proposed Acquisition of Maze Therapeutics’ Pompe Disease Drug (Dec. 13, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/12/statement-regarding-termination-sanofis-proposed-acquisition-maze-therapeutics-pompe-disease-drug; Press Release, Sanofi, Statement on FTC challenge to proposed license agreement with Maze Therapeutics (Dec. 11, 2023), available at https://www.sanofi.com/en/media-room/press-releases/2023/2023-12-11-21-08-20-2794272.
10 See Complaint at 5, FTC v. Amgen, Inc. and Horizon Therapeutics, No. 23-CV-03053 (N.D. Ill. May 16, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/2310037amgenhorizoncomplainttropi.pdf .
11 Press Release, Biopharmaceutical Giant Amgen to Settle FTC and State Challenges to its Horizon Therapeutics Acquisition (Sept. 1, 2023) (“The Federal Trade Commission reached a proposed consent order with Amgen Inc. to address the potential competitive harm that would result from Amgen’s $27.8 billion acquisition of Horizon Therapeutics plc. As part of a nationwide settlement of their challenge to the acquisition, the FTC and attorneys general from six states – California, Illinois, Minnesota, New York, Washington, and Wisconsin – also will dismiss the related federal court preliminary injunction action.”), available at https://www.ftc.gov/news-events/news/press-releases/2023/09/biopharmaceutical-giant-amgen-settle-ftc-state-challenges-its-horizon-therapeutics-acquisition; Decision at 5, Amgen Inc., FTC File No. 231-0037 (Sept. 1, 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/d09414amgenhorizondecisionandorderpublic.pdf.
12 Decision at 5-9, Amgen Inc., FTC File No. 231-0037 (Sept. 1, 2023).
13 See id. at 6-9.
14 Press Release, Fed. Trade Comm’n, FTC Sues to Block IQVIA’s Acquisition of Propel Media to Prevent Increased Concentration in Health Care Programmatic Advertising (July 17, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-sues-block-iqvias-acquisition-propel-media-prevent-increased-concentration-health-care.
15 Complaint at 3, FTC v. IQVIA Holdings, No. 1:23-cv-06188-ER (S.D.N.Y. July 18, 2023), available at https://www.courtlistener.com/docket/67616414/1/federal-trade-commission-v-iqvia-holdings-inc/.
16 Id.at 3-6.
17 Order, Dkt. 324, FTC v. IQVIA Holdings, No. 1:23-cv-06188-ER (S.D.N.Y. Dec. 29, 2023).
18 Blog post, DeepIntent, An Open Letter to DeepIntent Clients and Partners on the IQVIA Acquisition (2nd and Final Update) (Jan. 4, 2024), available at https://www.deepintent.com/an-open-letter-to-deepintent-clients-and-partners-on-the-iqvia-acquisition-2nd-and-final-update/ (“after carefully weighing our options, DeepIntent and IQVIA have mutually agreed to abandon the proposed merger.”); Press Release, Fed. Trade Comm’n, Statement on FTC Win Securing Temporary Block of IQVIA’s Acquisition of Propel Media (Jan. 3, 2024), available at https://www.ftc.gov/news-events/news/press-releases/2024/01/StatementonFTCWinSecuringTemporaryBlockofIQVIA%E2%80%99sAcquisitionofPropelMedia.
19 Op. & Order at 61-72, 83-101, Dkt. 327, FTC v. IQVIA Holdings, No. 1:23-cv-06188-ER (S.D.N.Y. Jan. 8, 2023).
20 Press Release, Fed. Trade Comm’n, Statement Regarding the Termination of Boston Scientific Corporation’s Attempted Acquisition of a Majority Stake in M.I. Tech Co., Ltd. (May 24, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/05/statement-regarding-termination-boston-scientific-corporations-attempted-acquisition-mi-tech.
21 Id.
22 Press Release, Fed. Trade Comm’n, Statement Regarding Termination of CooperCompanies’ Attempted Acquisition of Cook Medical’s Reproductive Health Business (August 1, 2023), available at https://www.ftc.gov/news-events/news/press-releases/2023/08/statement-regarding-termination-coopercompanies-attempted-acquisition-cook-medicals-reproductive (“Following a full-phase investigation by FTC staff, CooperCompanies’ decision to abandon this proposed acquisition ensures that critical reproductive health markets remain competitive. The FTC is committed to protecting patients from higher costs and preserving the incentive to innovate. This deal termination protects competition and is a win for patients.”).
23 Press Release, CooperCompanies, CooperCompanies Expands CooperSurgical’s Medical Device Portfolio with Acquisition of Select Cook Medical® Assets (Nov. 1, 2023), available at https://investor.coopercos.com/news-releases/news-release-details/coopercompanies-expands-coopersurgicals-medical-device-portfolio.
