[Ip-health] STAT News: With a new slate of appointees, Trump’s FTC expected to take tough stand on drug industry

[Thiru Balasubramaniam]

https://www.statnews.com/2018/04/23/ftc-ready-to-take-on-drug-prices/

POLITICS

With a new slate of appointees, Trump’s FTC expected to take tough stand on
drug industry

By ERIN MERSHON @eemershon

APRIL 23, 2018

WASHINGTON — They are little-known lawyers and professionals — with almost
no experience in health care. And yet they are poised to play an outsized
role in the federal effort to bring down high prescription drug prices.

The five men and women are in line to take charge of the Federal Trade
Commission — a role that will let them decide whether to investigate
companies over potentially anti-competitive tactics, whether to block
mergers or acquisitions, and whether to demand more information about
secretive business practices.

President Trump is the first president to have the opportunity to nominate
a full slate to the agency in one fell swoop since the agency was created.
And the nominees he has selected are already signaling that they want to
take special aim at pharmaceutical companies.

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“They see drug prices as a particularly big issue and agenda item for them
to be focused on,” said Mike Knight, a Jones Day antitrust lawyer who
previously worked with two of the Republican nominees.

The incoming FTC commissioners will likely focus on “very aggressive review
of both mergers involving pharmaceutical companies and drug price changes,
and particularly conduct by branded pharmaceutical manufacturers that has
the effect of delaying or hindering generic entry,” Knight said. “Whenever
you see that, you’re going to see the FTC taking a strong look at that.”


The clearest indication of the group’s interest in the issue came during a
February confirmation hearing for four of the five nominees. There, all
four vowed that drug pricing would be a chief priority if they are
confirmed.

Joe Simons, a former partner at Paul Weiss who is in line to be the panel’s
chairman, even suggested he would create a “drug pricing monitoring task
force” to monitor prices in real time so the agency could either “act as
quickly as possible” or alert other agencies and regulators if the price
increases are out of the FTC’s jurisdiction.

“I’m very concerned … with drug pricing,” Simons said. “It affects people
who are in a very vulnerable point in their life, often. I’m very
interested in dealing with that.”

Even though none of the nominees has an extensive background in health
care, Simons has a telling history of antitrust actions in the
pharmaceutical space. During a stint at the FTC in the early 2000s, he
brought a significant case against Bristol Meyers-Squibb in which the
agency accused the company of abusing federal regulations in order to block
the entry of generics. In a separate case, the commission required Pfizer
and Amgen to divest substantial product portfolios before proceeding with
their respective attempts to acquire Pharmacia Corporation and Immunex.

The commission’s decision “will remedy competition lost immediately in that
market” and “will encourage competition in the future” Simons said in a
statement at the time.

Michael Cowie, a Dechert antitrust attorney who worked with Simons, added
that he expects him to be especially driven by empirical data.

“When folks complain about drug pricing, he’s going to want to see what the
data shows,” Cowie said. “The FTC has always had a strong team of
economists, but Joe, as a chair, will I think encourage staff and other
leaders to really be empirical. That’s his nature. In some cases that might
mean more enforcement, in some cases less, but he’ll be a truth seeker.”

The other FTC nominees are Christine Wilson, who comes most recently from
Delta Airlines, before which she was in private practice; Noah Phillips,
who was most recently chief counsel for Senate Majority Whip John Cornyn of
Texas; Rohit Chopra, the only nominee without a law degree, who was
recently an assistant director at the Consumer Financial Protection Bureau;
and Rebecca Kelly Slaughter, who was a former counsel to Sen. Chuck Schumer
(D-N.Y.) and is one of two Democratic nominees, along with Chopra.

Wilson, according to Knight and Cowie, is a big believer in the benefit of
free markets. She might be more open than others to arguments about the
benefits of a given merger or acquisition.

It’s harder to discern what either Chopra, whose background is more
consumer-focused, or the two congressional staffers will do on drug prices
if they are confirmed. But those who watch the FTC closely say they have a
number of tools they could use.

“The FTC has its finger on the pulse of anticompetitive conduct in the
pharmaceutical industry,” said Michael Carrier, Rutgers University School
of Law professor who focuses on antitrust issues. “They can target
anticompetitive conduct. They can say, ‘Look, we have nothing against
patents or innovation, but when you cross the line and violate the
antitrust laws, then we have something to say.'”

The agency is currently battling Shire Pharmaceuticals in federal court
over allegations that the drug maker abused the Food and Drug
Administration’s “citizen petition” process to delay competition from
generic competitors with “sham” petitions — a case that could ultimately
have major repercussions for that FDA process.

The agency may also issue guidance or even further work to investigate how
pharmacy benefit managers are affecting drug prices, after the issue was a
key focus at a November workshop. If it chooses to do so, the agency can
sometimes subpoena private and sensitive business information, Carrier said.

The FTC could also expand its litigation into either the abuses of the
so-called REMS system, or into the practice of “product hopping,” in which
companies withdraw from the market a drug that is about to lose its patent
protection and release instead a new, slightly different, patent-protected
version of the same active ingredient. The agency has never filed cases
against companies engaging in either behavior, but it has filed amicus
briefs in both areas.

Cowie said the FTC may also be more skeptical about pharmaceutical company
mergers and acquisitions than in the past, after a February 2017 report
that showed that divestitures often fail to offset the anticompetitive
aspects of a deal.

“In the past, a lot of drug manufacturer and generic manufacturer deals
have gotten done with divestitures. Often in these big strategic pharma
deals, the way Wall Street sees it and the way folks like me see it, it’s
going to get investigated, but there’s a way to fix it,” he said. “Now,
there’s going to be more attention on the fixes.”

Patient advocacy groups are also hoping the agency renews its work on
pay-for-delay settlements to make it as clear as possible that those
settlements aren’t appropriate. Though the FTC has been bringing cases
against those deals for decades — and the number of such deals has fallen
dramatically since a definitive 2013 Supreme Court case on the same subject
— there are other ways for companies to effectively keep their competitors
out of the game.

Just last week, the consumer group Patients for Affordable Drugs called on
the agency to investigate several AbbVie actions that have delayed the
entry of a competitor to its drug Humira.

“Here it is, the most expensive, largest selling drug in the world and it
just keeps going up in price. They’re going to hold on to their monopoly as
long as they can,” the group’s president David Mitchell said. “We’re asking
FTC to look at whether [the company’s action] violates the antitrust laws.”

At the end of the day, however, the FTC’s broad interest in the
pharmaceutical industry may be constrained by its limited staff and
resources. The commission has a broad jurisdiction over other major
industries — like technology companies — that are increasingly in
Washington’s crosshairs, too. And even within the pharmaceutical space,
there may not be enough time, staff, or money to tackle each and every
issue, according to Michael Kades, a longtime FTC staffer now with the
Washington Center for Equitable Growth.

Kades said there’s also a broader strategic question for the agency.

“Do you use your enforcement power to make sure there aren’t new
compensation schemes that have the same impact a pay-for-delay deal? Or do
you look at other conduct more closely, like product hopping or abusive
citizen petitions?” he said. “They’re going to have make some choices.”



-- 
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org