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AbbVie/Allergan merger faces renewed public opposition despite divestments

Consumer groups and public interest organisations raise new concerns

AbbVie

With the US Federal Trade Commission primed to clear AbbVie’s takeover of Allergan, an ensemble of consumer groups and public interest organisations have again voiced concerns about the merger. 

In a letter addressed to Ian Conner, director of the Bureau of Competition at the FTC, the groups took issue with Allergan’s remedial divesture of brazikumab, a pipeline IL-23 inhibitor drug.

Allergan offloaded the investigational drug to AstraZeneca in January in a bid to address any anti-competition concerns surrounding the merger.

The letter states that “this divestiture raises a number of serious concerns”, including the fact that the divesture of a pipeline product poses a risk of failure, leading to a loss of competition for consumers.

The groups also criticised AbbVie’s overly dominant position in the immunology market, which they say “uses a variety of exclusionary tactics to hamper rivals”. That includes the newly divested brazikumab, whose new owner will need a strong market position if it is to adequately compete with AbbVie.

For the groups represented in the letter, “AstraZeneca may lack the incentive and ability to fully restore competition” as well as lacking “the product portfolio in immunology to adequately compete” with AbbVie.

They also highlighted AbbVie’s use of controversial “rebate walls” around its blockbuster immunology products – including Humira and Skyrizi – which the groups say “lead to higher prescription drug prices” and prevents “rival drugs from obtaining access to payors’ formularies, resulting in reduced consumer choice”.

This is not the first public opposition to the AbbVie/Allergan merger – last September, the same groups urged the FTC to consider blocking the $63bn takeover.

The initial letter criticised the merger on the basis that it could lead to increased use of volume-based rebates or other incentives to insurers or pharmacy benefit managers.

This in turn could lead to increased drug prices in the US, which has seen soaring costs in its pharmaceutical markets over the past two decades.

AbbVie CEO Gonzalez defended the Allergan takeover back in June last year, after some shareholders and analysts said the move saddled AbbVie with more debt without adding much to its pipeline.

Gonzalez maintained that AbbVie has already done plenty of pipeline-building deals, so the Allergan takeover is a different purpose of allowing it to gain “critical mass’ in its growth platform.

Given the hurdles Bristol-Myers Squibb and Celgene were required to jump over, it seems probable that the renewed public opposition could hurt AbbVie/Allergan’s chances with the FTC.

Article by
Lucy Parsons

20th February 2020

From: Marketing

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