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Congressmen urge close scrutiny of $74B Bristol-Myers, Celgene deal

Bristol-Myers Squibb Co.'s $74 billion takeover of Celgene Corp. has drawn scrutiny from two members of Congress who are urging increased regulatory oversight into the deal's possible market impacts.

Reps. Peter Welch, D-Vt., and Francis Rooney, R-Fla., asked the Federal Trade Commission and Department of Justice in a Jan. 11 letter to carefully review the deal's possible market impact on the pharmaceutical industry and any possible pressure on drug pricing that might result.

Bristol-Myers announced the cash-and-stock acquisition of Celgene on Jan. 3, which will bring together the two companies' cancer portfolios to face a crowded market together.

Welch and Rooney asked the FTC and DOJ to focus on how the deal — the largest ever in the pharmaceutical industry — will further consolidate the industry to the detriment of competition, and whether the combined company will significantly increase prescription drug prices.

In a Jan. 14 press release accompanying the letter, the congressmen noted that Celgene has "a history of anti-consumer actions" including raising the price of Revlimid — the cancer drug that Bristol-Myers executives pointed to as a key asset that made the deal appealing.

"The merger would diminish competition and reduce patient treatment options by giving ... Bristol-Myers Squibb access to several product lines that either compete with or complement its current cancer drugs, including Abraxane, Pomalyst and Revlimid," the congressmen wrote. Moreover, the letter stated that larger companies have more leverage to have their drugs placed higher on drug formulary lists.

Welch and Rooney said that in past pharma mergers, the acquiring company raised prices on prescription drugs. The letter points to Actavis PLC's 2015 purchase of Allergan PLC, which was followed by price increases for four straight years with the most recent increase hitting 9.5% on all 75 drugs in the combined company's portfolio. Also mentioned were AbbVie Inc.'s purchase of Phamacyclics and Shire PLC's acquisition of Baxalta.

The congressman asked the agencies to ensure that consumers will not pay for the megadeal in this way, suggesting they require a "hold harmless" clause to the merger placing any costs on shareholders.

While drug pricing has been a top issue for U.S. drugmakers for many months, Welch and Rooney's inquiry comes amid rising pressure from the newly seated 116th Congress. House Democrats on Jan. 14 opened an investigation into a handful of major pharmaceutical companies over drug pricing practices.