California Attorney General Xavier Becerra sent a letter to the acting secretary of the Federal Trade Commission arguing the agency didn't follow "best practices" when it approved AbbVie's $63 billion acquisition of Allergan.
Mr. Becerra urged the FTC to study the extent to which product divestitures relieve anticompetition concerns in pharmaceutical mergers, STAT reported. He said the agency disregarded its own rules when it approved the acquisition.
Lawmakers and consumer groups have expressed concern about AbbVie's takeover of Allergan, worried it could contribute to rising drug prices.
Before approving the deal, the FTC allowed Allergan to divest an unapproved pipeline drug as an effort to ease antitrust concerns, but Mr. Becerra argues that the move fails to ensure the market remains competitive. Allergan should have been required to divest a drug that was already on the market, he argued.
The FTC also allowed Allergan to sell two drugs to Nestle, even though Nestle isn't a pharmaceutical company, so that move didn't increase competition in the pharmaceutical industry.
Mr. Becerra advocated in the letter for the need for more consistent and stringent standards from the FTC when approving pharmaceutical mergers, STAT reported.
"It is widely recognized that pharmaceutical mergers that burden the public in the form of higher prices, fewer drug choices, drug shortages or other anticompetitive effects, must not be allowed. This raises the question of whether, and to what extent, mergers that are approved subject to divestitures restore the lost competition from those mergers," Mr. Becerra wrote.
He suggested the FTC gather and analyze more historical sales data for drugs divested in previous mergers to see if those divestitures actually affected competition. He also suggested the agency do a better job of identifying qualified buyers and said it should study the interplay between drugmakers and pharmacy benefit managers, according to STAT. AbbVie has been accused of unfairly paying rebates to pharmacy benefit managers to block rivals.
An FTC spokesperson declined to comment to STAT.
When the deal was approved, one FTC commissioner, Rohit Chopra, wrote a dissenting opinion, saying the steps the agency took to allay antitrust concerns were "narrow, flawed and ineffective," STAT reported. He also said the approval was an "unfortunate decision" that led to a "troubling outcome."
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