In a letter to the Federal Trade Commission (FTC), The American Antitrust Institute (AAI), a non-profit organization, outlined the competitive concerns raised by the proposed merger of generic pharmaceutical makers Teva and Allergan.
The AAI letter, based on publicly available information, evaluates the likely competitive effects of the proposed merger of Teva and Allergan and its implications for consumer welfare.
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AAI claim that “the 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 letter, 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.”
It is expected that Teva will be required to divest itself of some Allergan products in order to obtain approval for the merger, but the American Antitrust Institute claims that “that remedy is insufficient to fully restore competition lost by the proposed merger.”
The letter was written by Professor Bill Comanor, from Department of Economics, University of California, and professor at the Department of Health Policy and Management, University of California, Los Angeles, and AAI President Diana Moss.
Teva send in response, “As even the AAI letter acknowledges, the generic pharmaceutical industry is unconcentrated. Teva’s acquisition of the generic assets of Allergan will enable the combined company to compete more effectively by lowering its costs and engaging in even more innovative product development, benefiting consumers of generic drugs worldwide. We are working cooperatively with the Federal Trade Commission, which has significant experience with the pharmaceutical industry and is well-equipped to protect the interests of consumers through appropriately crafted remedies.”
