Pharma vs. the FTC

Dec 08, 2023

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Driving The Day

Federal Trade Commission Chair Lina Khan speaks

Under FTC Chair Lina Khan, the agency has taken a harder look at mergers and acquisitions in the health care market. | Michael M. Santiago/Getty Images

MERGER CRACKDOWN RUFFLES FEATHERS — The Federal Trade Commission and the Justice Department are signaling a more aggressive stance on mergers, and the pharmaceutical industry is taking issue with it, Ben reports.

Pharmaceutical and life sciences companies have teamed up to form the Partnership for the U.S. Life Science Ecosystem to push back against the changes, arguing they would stifle innovation. The group includes drugmakers like Merck, AbbVie and Amgen, which have faced antitrust scrutiny, and state trade associations that represent smaller firms.

They contend that given the overwhelming majority of drug development attempts fail and are costly, mergers and acquisitions are key to getting new treatments across the finish line.

“The heart of our industry is mergers and acquisitions,” Joseph Panetta, CEO of life science association Biocom California, told Pulse. “What we’re seeing is government threatening basically to make it almost impossible to be successful.”

John Conrad, CEO of the Illinois Biotechnology Innovation Organization, told Pulse that the FTC’s signal has created a “chilling effect,” with the number of mergers and acquisitions in the sector falling, according to some estimates.

The background: The FTC and the DOJ released new proposed merger guidelines this summer, warning that consolidation threatens competition and free markets.

The guidance, aimed to prevent coordination, excessive concentration and stifling new entrants from joining the market, came after the two agencies withdrew guidance documents on health care antitrust, with the FTC saying they were “outdated.” When it did so, the FTC said the health care market has changed substantially in the past several decades, so the agency will use general antitrust principles.

The FTC and the DOJ declined to comment.

Antitrust enforcement under the Biden administration: In the pharmaceutical sector, the FTC has focused on bundled discounts for products, which it argues could cement market dominance. In September, Amgen settled with the FTC related to its $27.8 billion acquisition of Horizon Therapeutics, which prevented the company from bundling its products with certain Horizon medications.

The FTC under Chair Lina Khan has also taken an aggressive stance against hospital mergers and, in an ongoing legal battle, challenged genetic-sequencing firm Illumina’s takeover of cancer-test developer Grail. The European Commission ordered Illumina to sell the company.

What’s next: The agencies are crafting the final proposal. The guidance isn’t the last word; courts have the final say when the FTC and DOJ challenge mergers.

WELCOME TO FRIDAY PULSE. NIH fellows have voted to unionize, a first for federal research fellows. Reach us at bleonard@politico.com or ccirruzzo@politico.com. Follow along @_BenLeonard_ and @ChelseaCirruzzo.

TODAY ON OUR PULSE CHECK PODCAST, host Katherine Ellen Foley talks with POLITICO White House Correspondent Adam Cancryn, who explains why the White House says it can use "march-in rights" to seize patents for certain drugs partly developed with federal funds and how the move could give the president another tool in his effort to lower drug prices.

Listen to today's Pulse Check podcast

A message from PhRMA:

PBMs decide if medicines get covered and what you pay, regardless of what your doctor prescribes. PBMs say they want patients to pay less, yet they often deny or limit coverage of lower-cost generics and biosimilars. Instead PBMs cover medicines with higher prices so they make more money. Learn more.

In Congress

A soldier salutes the flag

The National Defense Authorization Act is on track to pass in the Senate and House. | John Moore/Getty Images

NDAA CHECK-UP — The House and Senate Armed Services committees unveiled a compromise defense policy bill, and several health policies face the chopping block, Ben reports.

The National Defense Authorization Act, unveiled late Wednesday, doesn’t include a GOP proposal to prohibit the Pentagon’s abortion travel policy, which had threatened to tank it, POLITICO’s Connor O’Brien and Joe Gould report. The Senate had avoided the abortion issue that sparked Sen. Tommy Tuberville’s (R-Ala.) blockade on military promotions in debating its version of the bill.

Outside of abortion, negotiators agreed to a deal involving several health policy issues.

What made the cut: The deal would extend health care benefits for surviving family members of reserve members from six months to three years, ensure naloxone access for troops and track illegal fentanyl.

It also would require the study of health conditions that might have arisen among troops after receiving their first dose of a Covid-19 vaccine, alternatives to opioids for pain treatment and the use of psychedelics to treat traumatic brain injury and post-traumatic stress.

The deal would also require a board to review discharges and dismissals for troops who refused to get the Covid vaccine.

What got axed: The deal didn’t include House Republican-supported language barring coverage of gender-affirming care for troops or a prohibition on Covid-related mask mandates in military facilities.

It also nixed a pilot program on medical marijuana use for veterans, a report on telemental health care given to service members and Senate-passed provisions targeting fentanyl trafficking. The compromise didn’t include artificial insemination and assisted reproductive technology as mandatory health care services for troops and dependents.

What’s next: The bill is on track to pass both houses with bipartisan support.

FIRST IN PULSE: DEMS PUSH BIDEN ON CONTRACEPTION — House Oversight and Accountability Committee Democrats are pushing the Biden administration to go further to facilitate access to no-cost contraception.

“As Republicans fight for a nationwide criminal abortion ban, the Biden-Harris Administration has taken bold steps to guarantee women’s access to contraception,” ranking member Rep. Jamie Raskin (D-Md.) said in a statement. “The Administration can build on its success to break down remaining financial barriers for women seeking access to the reproductive care they need.”

In an analysis obtained by Pulse, they argued that HHS and the Treasury and Labor departments should change guidance to clarify that FDA-approved contraceptives without an equivalent should be covered sans-cost-sharing in all plans or formularies. They said it would enable insurers and pharmacy benefit managers —which negotiate prescription drug prices for health insurers — to prioritize generics whenever possible.

Oversight Democrats also pushed for the administration to facilitate automatic exceptions to ensure patients don’t have to pay for the contraceptives out of pocket since some are allergic to certain ingredients in generics.

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Abortion

UNPRECEDENTED ABORTION CASE — A woman who sued Texas to allow her to have an abortion because her fetus has a fatal disorder was granted permission by a Texas judge Thursday to terminate her pregnancy.

Shortly after, state Attorney General Ken Paxton, whose office argued in court that the woman’s case didn't meet the criteria for a medical exemption, warned the hospitals and doctors involved in her care that the judge’s order “will not insulate you” from civil and criminal liabilities, arguing that private citizens could still bring lawsuits and local prosecutors could still bring charges. “This includes first degree felony prosecutions,” Paxton wrote.

The lawsuit is believed to be the first of its kind since the Supreme Court overturned Roe v. Wade. The decision applies to the woman in that case only, and her attorneys cautioned against broader impacts, saying it would be infeasible for larger numbers of women to turn to the courts.

A message from PhRMA:

Around the Agencies

PHISHING SETTLEMENT — A Louisiana medical group hit by a phishing attack will pay $480,000 to the government and implement a corrective action plan, HHS said Thursday in a statement, Chelsea reports.

Lafourche Medical Group, which specializes in emergency and occupational medicine and lab testing, was attacked in 2021, exposing the personal health information of more than 34,000 patients.

Why it matters: While this is the first settlement HHS has resolved involving a phishing attack, the department has been cracking down on a number of health privacy violations in recent years.

The HHS Office for Civil Rights says more than 89 million people have been impacted by large health breaches this year — compared with 55 million in 2022. On Wednesday, HHS said it plans to propose new cybersecurity regulations for hospitals.

Lafourche failed to adequately assess the risk of such attacks and had no policy in place to safeguard health information, according to HHS. The group didn’t respond to a request for comment.

Public Health

MPOX UPDATE — The Centers for Disease Control and Prevention raised its warning level for travelers to the Democratic Republic of the Congo because of an ongoing outbreak of mpox, POLITICO’s Evan Peng reports.

The current outbreak has included the first recorded transmission through sexual contact of the mpox strain involved, which is significantly more deadly than the strain causing the worldwide outbreak that began last year, deepening officials’ concern.

The new threat comes as the first mpox outbreak to hit the U.S., which has infected more than 31,000 people and killed over 50, has largely gone dormant.

At the White House

NALOXONE IN PUBLIC HOUSING — The Biden administration is calling for overdose reversal medications to be as readily accessible as fire extinguishers in public housing.

In a letter Friday, the White House and other agencies called on public health departments to work with housing providers to ensure access to such medications and to clarify that applicants and residents shouldn’t be denied or lose housing over having or using naloxone. Earlier this year, the FDA approved naloxone to be offered over the counter.

Names in the News

A message from PhRMA:

Adeola Adesina will be director of strategic planning for Sen. Laphonza Butler (D-Calif.). She previously was chief of staff in the Office of Intergovernmental and External Affairs at HHS.

WHAT WE'RE READING

NPR reports on mental health workers saying they can't meet demand.

Healthcare Dive reports on new data estimating travel between states for abortion has doubled since 2020.

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