US: Regulator asked to nix Teva-Allergan generics merger

The American Antitrust Institute has written to the US Federal Trade Commission arguing that the merger will harm competition in generic drugs.

The American Antitrust Institute, a non-profit organization with a mission “to advance the role of competition in the economy, protect consumers, and sustain the vitality of the antitrust laws”, has written to the US Federal Trade Commission about the forthcoming acquisition by Teva Pharmaceutical Industries of the generic drugs operation of Allergan plc for $40.5 billion.

The twelve-page letter, which is addressed to FTC Chairwoman Edith Ramirez, opens by stating that, “The proposed merger joins the largest generic pharmaceutical company in the world, Teva Pharmaceuticals, with Allergan, an important rival and currently number three in worldwide generic sales.”

The American Antitrust Institute argues in the letter that the merger will damage competition in the generic drug market. ”Potentially adverse effects could be large,” the letter says, “since generic sellers introduce a critical measure of competition into pharmaceutical markets and play an important competitive role in making prescription drugs affordable.

Any limitation or diminution of the competitive influence of generic pharmaceutical firms could therefore have substantial adverse consequences. Moreover, crafting relief that will adequately protect consumer interests is inherently difficult.” The general drift of the letter is that the diminution in competition will lead to higher prices for generic drugs.

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