The Federal Trade Commission scored its first victory earlier this week in its drive to block deals with a drug company: Sanofi (SNY) It peaked at $735 million on Monday. Signed license agreement with Maze Therapeutics.
This was a victory for FTC Chair Lina Khan. The FTC chairman is making good on his threat to scrutinize small transactions, which the agency believes is necessary to slow the growth of monopolies in the pharmaceutical industry.
But the victory was more than a move to block Sanofi’s ability to scale. pompe disease therapy market. The collapse of this agreement is the latest example of how the pharmaceutical industry is battling the U.S. government on a number of fronts, including: Obtain a drug license, developed with federal funding. FTC scrutiny of transactions. and Medicare drug price negotiations.
White House
The Biden administration’s announcement of drug approvals to reduce drug costs in the United States is an attempt to find ways to make drugs cheaper than what companies currently make.
The so-called “right to march” was established by the Bayh-Dole Act of 1980. government allows Enforcing intellectual property rights with respect to federally funded or government-developed patents. The latest example of such government research being used in a commercial product is his NIH research that ultimately led to the Moderna (MRNA) COVID-19 vaccine (Moderna). ultimately paid the rights to the governmentAfter losing a legal battle.
“Government is flexing muscles that it hasn’t really flexed in the past,” said Robin Feldman, a professor and director of the Innovation Center at the University of California, San Francisco School of Law.
Michael Carrier, a professor at Rutgers University School of Law, said if the government were able to join the demonstrations, “this would be heard all over the world. “This is a country with a strong That’s often the biggest market. ”
The main reason for concern is that this is the first time the government has used rising drug costs as a reason to trigger a right of entry. This is a major change from the previous government’s stance.
And again, industry organizations PhRMAnot exciting.
“If government bureaucrats were allowed to strip patent protection at any time, there would be no incentive for biopharmaceutical manufacturers to collaborate with governments and universities, and promising new technologies would sit on shelves without any benefit.・It’s a return to the pre-dole era. That’s one thing,” the group said in a statement.
But globally, the White House’s announcement was welcome news.
Shortly after being asked for comment by Yahoo Finance, WHO Director-General Dr. Tedros said: Posted in X He welcomed the announcement and said the government should use all legal tools to promote widespread access to medicines.
FTC investigation
The FTC’s track record of blocking trades isn’t very good. The company previously tried unsuccessfully to block Amgen’s (AMGN) $28 billion acquisition of Horizon Therapeutics and Pfizer’s (PFE) $43 billion acquisition of Seagen. (Pfizer received approval this week and is expected to close the deal on Thursday.)
“Ultimately, (Kern) is losing all of these lawsuits,” said Craig Garthwaite, director of health care at Northwestern University’s Kellogg School of Management. “I’m not doing anything,” he said.
But the closing of the Sanofi-Mays deal vindicates the FTC’s strategy to focus on acquisitions of smaller, early-stage companies by big drug companies, a long-standing growth strategy in the industry.
Smaller companies are more nimble and can do early-stage research. Don’t be burdened by the bureaucracy of large corporations. These companies provide opportunities for large companies to strengthen their pipelines. Pfizer, for example, has acquired three companies in the past year, including Seagen, to offset an expected $17 billion loss from patent expirations by 2030.
Critics say such deals show that big drug companies are doing less research and development and therefore shouldn’t charge higher prices for their drugs.
However, Garthwaite said, “The infrastructure to actually move a drug from Phase 2 to Phase 3… to run a clinical trial properly… is a very expensive fixed cost structure. We have 40 companies… I don’t want you to spend that money,” Garthwaite told Yahoo Finance.
medicare
Medicare officials target 10 drugs They say they plan to begin price negotiations sometime next year. There are already concerns about the impact on profits.
Analysts were hardly surprised by the first drug targeted. Look at the stock price movements on the day of the announcement. The industry is waiting for negotiations, and investors are waiting to see how much lower prices the government will ultimately demand.
Companies are fighting back with nearly a dozen lawsuits calling the process unconstitutional.
In the wake of drug price negotiations, companies said they are already reconsidering deals that could be placed on the target list and predicting which blockbuster products may be placed on the list in the future. There is.
For example, Novo Nordisk (NVO), which surprisingly made the list for one of its insulin products, will be in trouble if its blockbuster weight loss and diabetes drugs Wigoby and Ozempic become eligible for Medicare coverage. We are also paying attention to the impact.
Next?
All of these government actions “send a message to the pharmaceutical industry: get your house in order, or you’re in trouble,” said Feldman of the University of California School of Law.
But experts told Yahoo Finance that long-term success on these three fronts is unlikely.
Garthwaite said the efforts of policymakers were short-sighted and criticized the Biden administration’s efforts as “reckless.”
“The only time you don’t really have access is if the product doesn’t exist. It’s kind of a luxury to be able to discuss the existing price of the product,” he said.
James Love, director of Knowledge Ecology International and an intellectual property expert at Rutgers Carrier, warns that this approach may not have the desired effect.
“It’s like a three-front war and they could lose dramatically. But I just want to focus on the modest nature of these (efforts),” Carrier said.
Furthermore, the Biden administration’s strategy could easily be canceled by a future administration.
But in the end, the legal system may decide the winner. Feldman, of the University of California School of Law, predicts that the patent battle, like the Medicare case, could lead to a larger legal battle.
“If they (the U.S. government) make a decision that actually hurts, I would expect it to go all the way to the Supreme Court,” she said.
Anjalee Khemlani is a senior health reporter at Yahoo Finance, covering all areas of pharma, insurance, care services, digital health, PBM, and health policy and politics.Follow Anjali on all her social media platforms @AjKhem.
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