This year has been another significant year for
consolidation within the biopharmaceutical industry. There has been an
estimated $208
billion in transactions ; including Bristol-Myers’ $74 billion acquisition
of Celgene in January
to AbbVie’s $63 billion acquisition of Allergan in June which allows large
biopharmaceutical companies to dominate the broader deal landscape in the
industry. There are emerging signs, however, that the government is beginning
to take a closer look at biopharmaceutical consolidation, pushing for
divestments or potentially blocking the deals in court.
Signs of greater regulatory scrutiny have been most evident
within the pending acquisition by Roche of Spark Therapeutics. Roche entered
into an agreement to purchase Spark Therapeutics in February
for $4.8 billion. Spark Therapeutics currently markets the only FDA approved
gene therapy, Luxturna, which is used to treat certain retinal eye diseases.
Roche is hoping to take advantage of other gene therapy treatments developed by
Spark, particularly their hemophilia A research which Roche believes will complements
their own hemophilia treatment, Hemlibra. Despite being a relatively small
transaction in terms of size, both the Federal Trade Commission (FTC) and the
Competition and Markets Authority (CMA) in the United Kingdom have taken note
of the transaction, with the CMA filing an ‘Initial
Enforcement Order’ to temporally block the transaction from being
completed. Just this past week, Roche extended
the deadline for shareholders of Spark Therapeutics to tender their shares to
approve Roche’s acquisition, the seventh time that Roche has pushed back the
tender offer deadline for Spark Therapeutics.
There is little official mention of what concerns the FTC
and the CMA have with Roche’s acquisition of Spark Therapeutics, but some analysts
point to the potential overlap between the two companies’ hemophilia business
and may push Roche to divest Hemlibra to obtain approval for the Spark
Therapeutics acquisition. Some feel this is an unusual step for the FTC to request,
particularly in light of the robust existing market for hemophilia products.
Analysts, however, point to the consent degree between Bristol-Myers and the
FTC that permit their acquisition of Celgene if Bristol-Myers chose to divest
rights to Otezla,
a drug to treat psoriasis, to Amgen for $13.4 billion. Otezla was considered
one of Celgene’s most profitable products, expected to generate $2.3 billion in
annual sales
by 2023. Given that Amgen already has a strong psoriasis pipeline, including
Enbrel and Amgevita, a biosimilar to AbbVie’s Humira, some were confused
as to why the FTC permitted Amgen to acquire Otezla.
AbbVie’s pending acquisition of Allergan did not raise the
degree of early scrutiny that the Bristol-Myers-Celgene transaction did, but
this trend is starting to move. In September, the FTC sent an additional ‘Request
for Additional Information’ letter to AbbVie, delaying the completion of
the transaction at least an additional thirty days. AbbVie has kept with the
early-2020 date as when the transaction will be finalized. A number of consumer
advocacy groups have requested
the FTC intervene in the pending transaction. They point specifically to
AbbVie’s manufacturing of Humira, which continues to be the best-selling
drug in the world. Humira continues to invite scrutiny due to its high price,
set at $58,612 in 2017. Allergan also markets Botox, primarily used for
cosmetic purposes. These advocacy groups are concerned that another large
biopharmaceutical tie-up will raise the prices of a greater drug portfolio,
particularly in light of Humira’s expiring patent
in 2023.
Increased biopharmaceutical consolidation continues to raise
concern among Congress. Last month, Sen. Amy Klobuchar (D-MN) and eight
senators sent a letter
to FTC Commissioner Joseph Simons requesting the FTC take greater scrutiny of
these transactions and ensure that any anti-competitive activities are
remedied. Sen. Klobuchar, along with Sens. Cory Booker (D-NJ), Kamala Harris
(D-CA), Elizabeth Warren (D-MA) and Bernie Sanders (I-VT)[sk1]
are all competing to be the 2020 Democratic presidential nominee. Given the continued
focus on the price of prescription drugs, both in Congress
and by President
Trump, the FTC may push for larger divestments and more aggressive consent
decrees to limit future price increases among acquired companies.