Ab­b­Vie-Al­ler­gan com­plete, but crit­ics con­tin­ue to raise an­ti-com­pet­i­tive con­cerns

The Ab­b­vie-Al­ler­gan mega-merg­er may now be com­plete, but its crit­ics haven’t had their last say.

In a 7-page let­ter to the Fed­er­al Trade Com­mis­sion, Cal­i­for­nia At­tor­ney Gen­er­al Xavier Be­cer­ra called in­to ques­tion the reme­dies the fed­er­al agency im­posed to solve the an­ti-trust con­cerns in­trin­sic in the $63 bil­lion deal.

Xavier Be­cer­ra

He said the agency did not fol­low its own “best prac­tices” when it comes to the merg­er. Yet even these prac­tices — now com­mon­place in some form or an­oth­er — have con­sis­tent­ly failed to cur­tail an­ti-com­pet­i­tive and price-rais­ing po­ten­tial, Be­cer­ra ar­gued, and should be stud­ied thor­ough­ly in an ef­fort to come up with new fix­es.

“It is wide­ly rec­og­nized that phar­ma­ceu­ti­cal merg­ers that bur­den the pub­lic in the form of high­er prices, few­er drug choic­es, drug short­ages, or oth­er an­ti­com­pet­i­tive ef­fects, must not be al­lowed,” he wrote. “This rais­es the ques­tion of whether, and to what ex­tent, merg­ers that are ap­proved sub­ject to di­vesti­tures re­store the lost com­pe­ti­tion from those merg­ers.”

Di­vesti­tures, in which one com­pa­ny sells off as­sets that would com­pete with oth­er as­sets in the merged com­pa­ny, have be­come the com­mon rem­e­dy for mo­nop­oly con­cerns that have emerged out of an in­creas­ing­ly con­sol­i­dat­ing phar­ma­ceu­ti­cal in­dus­try. Af­ter Bris­tol My­ers Squibb bought Cel­gene, for in­stance, the FTC con­di­tioned ap­proval of the deal on Bris­tol My­ers di­vest­ing Ote­zla, Cel­gene’s an­ti-in­flam­ma­to­ry drug, be­cause Bris­tol My­ers had their own an­ti-in­flam­ma­to­ry drug in the works, al­beit one that used a very dif­fer­ent mech­a­nism. Am­gen bought it for $13.4 bil­lion.

As the FTC re­viewed the Al­ler­gan-Ab­b­Vie deal, though, con­sumer ad­vo­cates ques­tioned both the gen­er­al wis­dom of di­vesti­tures in phar­ma merg­ers and specif­i­cal­ly how they were be­ing ap­plied to this deal. Those were most no­tably put in a sting­ing dis­sent from the FTC rul­ing clear­ing the merg­er, in which com­mis­sion­er Ro­hit Chopra called the pol­i­cy to have com­pa­nies di­vest over­lap­ping drugs “nar­row, flawed, and in­ef­fec­tive.” “It miss­es the big pic­ture,” he wrote, “al­low­ing phar­ma­ceu­ti­cal com­pa­nies to fur­ther ex­ploit their dom­i­nance, block new en­trants, and harm pa­tients in need of life-sav­ing drugs.”

To con­sum­mate the deal, the FTC made Al­ler­gan sell off an ex­per­i­men­tal an­ti-in­flam­ma­to­ry com­pound called brazikum­ab that might com­pete with Ab­b­Vie’s ap­proved Skyrizi. This, Be­cer­ra said, was against FTC guide­lines that call for com­pa­nies to sell off on-mar­ket prod­ucts be­cause ex­per­i­men­tal drugs have a “high rate of fail­ure.” Prod­ucts are al­so sup­posed to be sold to an ex­pe­ri­enced com­pa­ny ready to com­pete. The FTC, though, al­lowed Ab­b­Vie to di­vest the pan­cre­at­ic en­zyme Zen­Pep to Nestlé, “mak­er of choco­lates, bot­tled wa­ter and ba­by food.”

More broad­ly, Be­cer­ra said, there is lit­tle ev­i­dence that di­vesti­tures have been a suc­cess­ful tac­tic. He cit­ed FTC stud­ies showed di­vesti­tures had a 35% fail­ure rate, even when suc­cess is de­fined by the “ex­treme­ly broad and gen­er­ous de­f­i­n­i­tion” of one post-merg­er sale or, for pipeline drugs, sim­ply that the prod­uct was trans­ferred. He al­so cit­ed stud­ies sug­gest­ing the di­vesti­tures don’t pre­vent price in­creas­es.

The at­tor­ney gen­er­al called for a study that would an­a­lyze how well-di­vest­ed on-mar­ket drugs were sold and if pipeline drugs were brought to mar­ket; mea­sures that could be tak­en to guard against the “op­por­tunis­tic se­lec­tion” of di­vesti­ture buy­ers that are less like­ly to ef­fec­tive­ly de­vel­op or mar­ket drugs, such as — in Be­cer­ra’s view — Nestlé; and the role of phar­ma­cy ben­e­fit man­agers who, by cre­at­ing tiered for­mu­las, can block even the best di­vesti­tures from com­pet­ing.

Ul­ti­mate­ly, he of­fered, the FTC might have to do for phar­ma what they of­ten do for oth­er in­dus­tries: im­pose lim­its on what com­pa­nies can do af­ter the merg­er to en­sure the po­ten­tial suc­cess of the di­vest­ed and now ri­val prod­uct.

“Such a rem­e­dy could be es­sen­tial for the suc­cess of drug di­vesti­tures like Brazikum­ab, which is a pipeline drug that, once and if it gets to mar­ket, would need to com­pete against Ab­b­Vie’s in­cum­bent drug for PBM for­mu­la­ry ac­cess,” he wrote.

Vac­cine doc­u­ments, young lead­ers and mar­ket tur­moil: End­points' 10 biggest sto­ries of 2022

It’s been a volatile year in the world of biopharma. Market declines reset M&A valuations, and may be beginning to tempt bigger buyers back into dealmaking. Russia’s war in Ukraine disrupted drug sales and clinical trials. A new generation of young biotech leaders emerged in the Endpoints 20(+1) Under 40. And as capital runs dry in a tough environment for raising new funds, companies big and small are taking a look at their headcounts and operations for ways to make it through lean times.

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Tom Riga, Spectrum Pharmaceuticals CEO

Spec­trum im­plodes af­ter a harsh pub­lic slap­down and now a CRL from Richard Paz­dur

The FDA has gone out of its way several times to flatten any expectations for Spectrum’s lung cancer drug poziotinib, including slamming the regulatory door in the biotech’s face four years ago when the their executive crew came calling for a breakthrough drug designation and encouragement from the oncology wing of the FDA.

That stinging early rebuke pointed straight down the path to a corrosive in-house agency review of Spectrum’s attempt to land an accelerated approval for the oral EGFR TKI and a public whipping that included a classic takedown by none other than Richard Pazdur, who slammed the company for “poor drug development” that led to confusion over the dose needed for a slice of NSCLC patients harboring HER2 exon 20 insertion mutations.

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Albert Bourla, Pfizer CEO (John Thys/POOL/AFP via Getty Images)

Pfiz­er CEO un­der fire from UK watch­dog over vac­cine com­ments — re­port

Pfizer CEO Albert Bourla told the BBC last December that he had “no doubt in my mind that the benefits, completely, are in favor” of vaccinating 5- to 11-year-olds for Covid-19. Almost a year later, those comments have reportedly landed him in trouble with a UK pharma watchdog.

Children’s advocacy group UsForThem filed a complaint with the UK’s Prescription Medicines Code of Practice Authority (PMCPA) last year accusing Bourla of making “disgracefully misleading” statements during the BBC interview, including one that “Covid in schools is thriving.” At the time, UK regulators had not yet cleared the vaccine for the 5 to 11 age group, though the vaccine did have a positive opinion from the EMA’s human medicines committee.

Big Phar­ma's Twit­ter ex­o­dus; Mer­ck wa­gers $1.35B on buy­out; $3.5M gene ther­a­py; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

As you start planning for #JPM23, we hope you will consider joining Endpoints News for our live and virtual events. For those who are celebrating Thanksgiving, we hope you are enjoying the long weekend with loved ones. And if you’re not — we’ll see you next week!

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Sanofi's new headquarters, La Maison Sanofi, in Paris (Credit: Luc Boegly)

Sanofi wel­comes 500 staffers to new Paris HQ af­ter €30M ren­o­va­tion

When Paul Hudson took the helm at Sanofi back in 2019, he promised to reinvent the pharma giant — including its Paris headquarters. This week, the company set up shop in new “state-of-the-art” digs.

La Maison Sanofi, as the new HQ is called, is officially open for business, Hudson announced on Monday. The 9,000-square-meter (just under 97,000-square-foot) space accommodates 500 employees across the company’s government and global support functions teams, including finance, HR, legal and corporate affairs — and it was built with environmental sustainability and hybrid work in mind.

Sta­da to place $50M+ in­vest­ment in a new fa­cil­i­ty in Ro­ma­nia

While Romania may conjure up images of vast mountain ranges and tales of medieval kings, one generic manufacturer has broken ground on a new facility there.

German pharma company Stada said Monday that it has placed a €50 million ($51.9 million) investment into a 100,000 square-meter (1.08 million square-foot) site in Turda, Romania, a city in the Southeast of the country. According to a Stada spokesperson in an email to Endpoints News, the company has developed only 281,500 square feet of the site so far.

Rachael Rollins (Charles Krupa/AP Images)

US seeks jail time for co-CEO of New Eng­land com­pound­ing cen­ter af­ter dead­ly 2012 fun­gal out­break

The US attorney for the district of Massachusetts late last week called on the state’s district court to sentence the former co-owner of the now-defunct New England Compounding Center to 18 months of jail time for his role in the center’s quality deviations that led to more than 100 people dead from a fungal meningitis outbreak.

Gregory Conigliaro was convicted of conspiring with more than a dozen others at NECC to deceive the FDA and misrepresent the fact that the center was only dispensing drugs pursuant to patient-specific prescriptions.

FDA tells Catal­ent to fix is­sues at two man­u­fac­tur­ing sites on its own

The CDMO Catalent will have to fix issues at two manufacturing plants in the US and Europe that were subject to inspections by the FDA this summer, giving the company room to correct the issues without facing further regulatory action.

The FDA gave Catalent a “voluntary action indicated” response to two inspections at the contract manufacturer’s site in Bloomington, IN, and Brussels, Belgium. Fixing the issues on its own is a preferable outcome to facing an “official action indicated” response, meaning that an official warning would be sent out or a sit-down with the FDA would be required.

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Merck targets vaccine-hesitant parents in its latest 'Why Vaccines' campaign. (Image: Shutterstock)

Mer­ck­'s lat­est 'Why Vac­ci­nes' cam­paign seeks to bet­ter in­form vac­cine-hes­i­tant moms

From Hollywood couple endorsements to targeted equity efforts, Merck has been pushing the value of vaccinations, especially since the Covid-19 pandemic disruption. Now the pharma is turning to a new target — vaccine-hesitant parents, and moms in particular.

Merck’s “Why Vaccines” latest social media and digital campaign spotlights real-life new moms who have questions about vaccinating their children.

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