Senator Tammy Baldwin (D-WI) sent letters this week to companies warning of improper Orange Book listings of patents for inhalers, following up on the FTC’s focus on potential anticompetitive harm of improper listings. According to Senator Baldwin’s letters, the recipients of the letters were warned by the FTC in November regarding the listing of inhaler patents, but have not removed the patents from the Orange Book. The letters follow an investigation launched earlier this month by the Senate Committee on Health, Education, Labor, and Pensions (of which Senator Baldwin is a member) into the prices of inhalers.
FTC and DOJ Finalize 2023 Merger Guidelines
Today, the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) (collectively, the “Agencies”) jointly released the 2023 Merger Guidelines . The 2023 Merger Guidelines outline the “factors and frameworks the agencies utilize when reviewing mergers and acquisitions,” including both horizontal and vertical transactions. The 2023 Merger Guidelines finalize the draft merger guidelines that were released in July 2023 and effectively update and replace the 2010 Horizontal merger Guidelines and Vertical Merger Guidelines that were issued in 2020 and later rescinded by the FTC in 2021. The 2023 Merger Guidelines are not law, but past merger guidelines have been persuasively cited by courts, and they give insight as to how the Agencies view the competitive impact of transactions.
Given the Agencies’ focus on competition in the Life Sciences space, companies should be aware of all of the factors and frameworks outlined in the 2023 Merger Guidelines. In particular, certain components of the 2023 Merger Guidelines reflect recent enforcement trends, including the threshold for when the Agencies consider certain transactions presumptively illegal, an emphasis on elimination of potential entrants in concentrated markets, a focus on how transactions will affect access to products or services used by rivals, an examination of whether a transaction furthers an already-dominant market position or is part of a trend towards consolidation, and concerns with both cross-ownership and common ownership in firms that have competitive relationships.
Sanofi Abandons Licensing Deal With Maze Therapeutics After FTC Challenges The Proposed Transaction
On December 11, 2023, Sanofi released a statement that it will terminate its proposed $755 million licensing agreement with Maze Therapeutics (Maze) shortly after the Federal Trade Commission (FTC) issued an administrative complaint and authorized filing a complaint for preliminary injunction in the United States District Court for the District of Massachusetts to block the deal.
Under the terms of the proposed licensing agreement between Genzyme Corporation, a wholly-owned subsidiary of Sanofi, and Maze, Sanofi would acquire an exclusive license to Maze’s glycogen synthase 1 products and related technology, including its candidate MZE001, a drug in development to treat the potentially fatal genetic order Pompe disease. According to a statement by Jason Coloma, Ph.D., Maze’s CEO, the FTC’s challenge “is the first time ever the FTC has moved to block a license of a Phase 1 investigational medicine.” The challenge seems consistent, however, with revised draft merger guidelines proposed by the FTC and Department of Justice that indicate that transactions “should not entrench or extend a dominant position” by, for example, “[e]liminating a nascent competitive threat.”
Board Directors Beware: U.S. Antitrust Agencies Ramp Up Enforcement of Interlocking Directorates
The Antitrust Division of the Department of Justice (DOJ) has indicated a recent interest in enforcing Section 8 of the Clayton Act, which prohibits individuals from serving on boards of competing corporations, known as “interlocking directorates.” (See 15 U.S.C. § 19.) Assistant Attorney General Jonathan Kanter has called Section 8 an “important but underenforced” antitrust law. After DOJ announced a focus on Section 8, the agency reported that seven board members announced their resignations in response. Since then, DOJ has continued its focus on Section 8, issuing civil investigative demands and confidential investigation letters to firms, including private equity funds and investors. Life sciences companies, and companies that invest in the life sciences industry, should be on the lookout for interlocking directorates, as there is empirical evidence suggesting that the industry is particularly at risk of a Section 8 investigation.
Read the full text of this Alert on the firm website.
FTC Issues Report on Its Authority Under Section 5 of the FTC Act to Challenge Pharmaceutical Drug Price Increases
On June 24, 2019, in response to a directive from Congress, the Federal Trade Commission (FTC) issued a report to the House and Senate Appropriations Committees on the use of the FTC’s standalone authority under Section 5 of the Federal Trade Commission Act to address high pharmaceutical prices. The committees had directed the FTC to examine, in consultation with the U.S. Food and Drug Administration, Congress’ intent regarding unfair methods of competition in Section 5 and in the FTC’s standalone Section 5 authority regarding unreasonable price increases, including those that occur over multiple years, on off-patent pharmaceutical drugs and biologics. The report broke down along party lines. The FTC’s Republican majority concluded that attempts by the Commission to rein in unreasonable drug prices using Section 5 alone, untethered from accepted theories of antitrust liability under the Sherman Act, are unlikely to find success in the courts. Democratic Commissioners Rohit Chopra and Rebecca Kelly Slaughter issued a dissenting statement in which they urged the FTC to examine ways to use its enforcement tools to restrain pharmaceutical pricing. Challenging high pharmaceutical drug prices has recently been a hotly debated political topic, and the report, along with the dissenting statement, will likely factor into that debate.