PHARMACEUTICALS: FTC Widens ‘Anticompetitive’ Probe
As politicians and consumers decry rising prescription drug prices, the federal government is stepping up its investigation of some large drugmakers due to concerns over "spiraling drug-price inflation and possible anticompetitive practices" that may quash generic rivals. Today's Wall Street Journal reports that the FTC is focusing on questionable behavior -- such as cash payments, exclusive licenses and attempts to discredit generics -- to prolong the life of soon-to-expire patents. The probes could result in "fines or forced divestitures" for some of the companies, which need to stay on the FTC's good side to gain approval for mergers in the works. Some critics charge the FTC's "get-tough strategy" could "chill innovation" and note that many generic drugmakers are themselves setting prices higher and resorting to aggressive tactics. Nevertheless, the FTC's scrutiny covers several top- selling drugs, which together are worth $5 billion annually.
- A deal forged between Eli Lilly & Co. and Sepracor Inc. that would effectively extend Lilly's monopoly over Prozac for another 15 years has raised concern at the FTC because the agreement "eliminates a potential rival." The FTC has requested information from the two companies and is "expected to issue subpoenas soon to third parties."
- The agency is taking a closer look at DuPont's allegedly misleading claim that generic forms of its blood-thinner Coumadin "are not equivalent and may pose risks to patients." A federal district judge in December ruled that DuPont's practices "could form part of an unlawful multifaceted effort to hinder competition," and FTC attorney Richard Feinstein recently cited the ruling as an "indication of potential antitrust violations."
- Abbott Laboratories is being probed for deals with "would-be generic rivals" Ivax Corp. and Novartis AG "to delay the launch of their products" -- agreements the FTC suspects could enable Abbott to fix the price of its hypertension drug Hytrin.
- In a similar case, the FTC is also taking a closer look at Hoechst AG's deal with Andrx Corp., under which Hoechst is paying Andrx $40 million each year it withholds its generic version of Hoechst's heart drug Cardizem. Hoechst is especially "vulnerable to FTC demands" as it "must win FTC approval" for its planned merger with Rhone-Poulenc SA (King Jr., 3/9).