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AbbVie/Allergan's merger faces public opposition

Advocacy groups and unions in the US express concerns

AbbVie

The Federal Trade Commission has been urged by advocacy groups and unions to consider blocking the $63bn merger between AbbVie and Allergan. 

The group, which included Public Citizen and the American Federation of Teachers, said in a letter to the FTC, “we request that the Commission investigate this proposed merger thoroughly and take all necessary action, includ(ing) blocking the merger, to prevent further harm to consumers,” according to Reuters.

The merger, noted in the letter, will make AbbVie/Allergan the fourth largest pharmaceutical company. The letter expresses concerns that the merger could lead to increased use of volume-based rebates or other incentives to insurers or pharmacy benefit managers.

Drugmakers have blamed high pricing on rebates demanded by PBMs for inclusion in formularies, while PBMs have insisted this is not the case and that all inclusion decisions are based on net price.

However, there is still concerns that the merger could lead to the new AbbVie/Allergan having too large of a market share in certain therapy areas, and could cause high drugs prices to continue.

Since the announcement of the merger, analysts have been split between thinking the move is smart, or a dangerous mistake.

AbbVie defended its position, saying that Allergan adds $16bn in annual revenues that will help the company preserve the bottom line as it prepares for the upcoming loss of US patent protection for its $20bn immunology blockbuster Humira.

However, on the flip side there are those who have argued that the deal is mounting AbbVie with more debt and doing little to add to its pipeline of new therapies. Allergan’s biggest product, Botox, is also facing tougher competition in the market from new migraine drugs and rivals in its medical aesthetics indications.

AbbVie’s chief executive Richard Gonzalez said that Abbvie has already done plenty pipeline-building deals and has a new generation of project due to readout between 2020 and 2022, so the Allergan deal has a different purpose – allowing it to gain “critical mass” in its growth platform.

Potential push-back from the FTC could create problems however, especially in light of the regulatory difficulties experienced by Bristol-Myers Squibb in its $73bn takeover of Celgene. AbbVie was quizzed about any potential issues that might emerge from the FTC and its counterparts around the world.

AbbVie’s chief legal officer Laura Schumacher told analysts “we don't anticipate any significant issues with the FTC approval process”, but added there are “a few small product overlaps that we've agreed to divest promptly”.

Article by
Lucy Parsons

13th September 2019

From: Regulatory

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