2016 A Profile of Bio-pharma Consolidation Activity 35
With increasing bio-pharmaceutical consolidation come questions about whether and why the business model has changed for bio-pharma, and how such a change impacts access, cost, quality, and innovation in the health and medical realm. Particularly timely is the question of whether bio- pharmaceutical consolidation is enabling massive hikes in cost of both prescription and generic drugs for health care consumers, health payors, and the federal and state governments alike. Since 2008, prices for brand drugs have increased a whopping 127 percent as compared to an 11 percent consumer price index increase. 6 Rapidly escalating prices for prescription drugs such as Turing Pharmaceuticals’ toxoplasmosis drug Daraprim (pyrimethamine) and Valeant Pharmaceuticals’ heart drugs Isuprel (isoproterenol hydrochloride) and Nitropress (nitroprusside sodium) have prompted widespread concern that mergers and acquisitions are facilitating such rent-seeking behaviors in the marketplace. 7 Congress is currently investigating these drug-pricing scenarios, and the industry players involved, 8 as many policymakers and presidential candidates call for changes in the laws to address the problem. 9 Aside from the direct impact on medicine, health care, and drug costs specifically, there are also important related questions about oversight of this consolidation, and the level of control held by the federal government over the scope and terms of these business deals. In an effort to examine the role of the federal government, and specifically the Federal Trade Commission (FTC), in such oversight, this article will explore bio-pharmaceutical consolidation by reviewing select FTC actions and characterizing the features and outcomes of the resulting mergers and acquisitions. The article first briefly discusses several underlying drivers for bio-pharmaceutical consolidation identified in the literature, as well as the associated impacts. It
6. See Jonathan D. Rockoff & Ed Silverman, Pharmaceutical Companies Buy Rivals’ Drugs, Then Jack Up the Prices, WALL STREET J. (Apr. 26, 2015, 9:00 PM), http://www.wsj.com/articles/pharmaceutical-companies-buy-rivals-drugs-then-jack-up-the- prices-1430096431 (discussing the price increase in Daraprim); see also Steve Sternberg, Senators Question Pricing of Generic Drugs, U.S. NEWS (Dec. 9, 2015, 2: 39 PM), http://www.usnews.com/news/articles/2015/12/09/senators-question-pricing-of-generic- drugs (discussing the price hikes in Valeant’s drugs, Isuprel and Nitropress). 7. James Surowiecki, Taking on the Drug Profiteers, THE NEW YORKER, Oct. 12, 2015, at 40, available at http://www.newyorker.com/magazine/2015/10/12/taking-on-the- drug-profiteers. 8. See Nathan Bomey, Matin Shkreli Pleads the Fifth, Then Tweets About “Imbeciles” in Congress, USA TODAY (Feb. 4, 2016, 6: 30 PM), http://www.usatoday.com/story/ money/2016/02/04/martin-shkreli-congressional-testimony-turing-pharmaceuticals-valeant- fda-drug-prices/79808004/ (noting the Congressional hearing regarding the price hike in Daraprim and the questions asked to Martin Shkreli, the CEO of Turing Pharmaceuticals). 9. Jonathan Cohn, Donald Trump Reportedly Says He’s with Hillary Clinton, Bernie Sanders on Drug Pricing, HUFFINGTON POST (Jan. 26, 2016, 1: 28 PM), http://www.huffington post.com/entry/trump-drug-prices-hillary-bernie_us_56a7ac37e4b0172c65943f0b.