US regulator asked to nix Teva-Allergan generics merger

Teva
Teva

The American Antitrust Institute has written to the US Federal Trade Commissionarguing that the merger will harm competition in generic drugs.

The American Antitrust Institute, a non-profit organization with a mission "to advance the role of competition in the economy, protect consumers, and sustain the vitality of the antitrust laws", has written to the US Federal Trade Commission (FTC) about the forthcoming acquisition by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) of the generic drugs operation of Allergan plc for $40.5 billion.

The twelve-page letter, which is addressed to FTC Chairwoman Edith Ramirez, opens by stating that, "The proposed merger joins the largest generic pharmaceutical company in the world, Teva Pharmaceuticals, with Allergan, an important rival and currently number three in worldwide generic sales."

The American Antitrust Institute argues in the letter that the merger will damage competition in the generic drug market. ”Potentially adverse effects could be large," the letter says, "since generic sellers introduce a critical measure of competition into pharmaceutical markets and play an important competitive role in making prescription drugs affordable. Any limitation or diminution of the competitive influence of generic pharmaceutical firms could therefore have substantial adverse consequences. Moreover, crafting relief that will adequately protect consumer interests is inherently difficult." The general drift of the letter is that the diminution in competition will lead to higher prices for generic drugs.

It is expected that Teva will be required to divest itself of some Allergan products in order to obtain approval for the merger, but the American Antitrust Institute claims that "that remedy is insufficient to fully restore competition lost by the proposed merger."

The letter is signed by American Antitrust Institute president Diana L. Moss and by William Comanor, an economics professor at the University of California, Santa Barbara and professor at the Department of Health Policy and Management, University of California, Los Angeles. Professor Comanor is formerly Director of the Bureau of Economics, Federal Trade Commission.

Teva send in response, "As even the AAI letter acknowledges, the generic pharmaceutical industry is unconcentrated. Teva’s acquisition of the generic assets of Allergan will enable the combined company to compete more effectively by lowering its costs and engaging in even more innovative product development, benefiting consumers of generic drugs worldwide. We are working cooperatively with the Federal Trade Commission, which has significant experience with the pharmaceutical industry and is well-equipped to protect the interests of consumers through appropriately crafted remedies."

Published by Globes [online], Israel business news - www.globes-online.com - on January 31, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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