A group of unions and consumer organizations have banded together in opposition to the $63 billion merger citing concerns that it will create a monopoly and harm competition.
As Allergan and AbbVie continue to move forward with their unification, a group of unions and consumer organizations have banded together in opposition to the $63 billion merger citing concerns that it will create a monopoly and harm competition.
Even with AbbVie’s and Allergan’s recent move to divest two assets, one to AstraZeneca and one to Nestle, the consumer groups are still concerned about potential monopolies. In a letter sent to the Federal Trade Commission, the group said the companies’ divestiture of brazikumab, an investigational IL-23 inhibitor currently in Phase IIb/II development for Crohn’s Disease and in Phase II development for ulcerative colitis, does not do very much to ease competitive concerns. In the letter, the organizations argue that because brazikumab is investigational, there is still a chance the medication will not succeed in clinical trials and, if that does happen, then the divestiture will be meaningless.
“… the immunology product space is dominated by AbbVie which uses a variety of exclusionary tactics to hamper rivals. Current AbbVie rivals face daunting obstacles to competition from these exclusionary contracting practices and have had difficulty overcoming these obstacles. Any acquirer of brazikumab will need a strong market position, including a strong immunology product portfolio, to effectively restore competition. Based on the limited public information, we believe there are signs that AstraZeneca may lack the incentive and ability to fully restore competition,” the organizations argue in their letter. Groups that signed the letter include American Federation of State, County, & Municipal Employees, Public Citizen, Service Employees International Union, Doctors for America, Prescription Justice and more.
Furthermore, the groups argue that any buyer of brazikumab (assuming AstraZeneca sells it off) “faces a daunting task in bringing the product to the market and fully restoring competition.”
Additionally, the consumer groups and unions argue that AbbVie’s use of rebate walls, the practice of using volume-based rebates to favor one drug over competing products in insurance formularies. They argue that the company’s use of rebate walls has been at the center of keeping Humira as the top-selling medication at the expense of other drugs in its class, including Eli Lilly’s Taltz and Novartis’ Cosentyx. The group also argues that AbbVie has used the rebate wall to benefit Skyrizi (risankizumab-rzaa), which was approved last year for severe plaque psoriasis. Skyrizi has been seen as a successor to Humira, which will lose patent protection in the United States in 2023. The consumer groups argue that AbbVie has already used rebate walls to compel insurance companies to put Skyrizi in a preferred position in formularies. That preferred position would stifle the competition of brazikumab, which was kicked back to AstraZeneca earlier this month.
“Largely because of AbbVie’s rebate strategy, Skyrizi, which launched in May of 2019, has been a huge commercial success. Skyrizi now holds the largest position in the psoriasis market, garnering about a 25% share of second and third-line prescriptions and is the market share leader for new and switching patients seeking treatment for psoriasis as it has been placed in a preferred formulary position along-side Humira,” the groups said in the letter.
The group also argues that AbbVie should be prohibited from using these practices to stifle competition.
The 10-page letter focuses primarily on the divestiture of brazikumab and makes no mention of the sale of Zenpep (pancrelipase), a treatment for exocrine pancreatic insufficiency due to cystic fibrosis and other conditions, to Nestle. As part of the same deal with Nestle, AbbVie sold Viokace, another pancreatic enzyme preparation, to the company.
Selling off assets to meet regulatory demands ahead of the merger of companies of significant size is not uncommon. Before merging with Bristol-Myers Squibb, Celgene sold off its psoriasis and psoriatic arthritis drug Otezla to Amgen for $13.4 billion.
AbbVie and Allergan anticipate finalizing the $63 billion merger this quarter. The Federal Trade Commission has not yet given its final approval, but the European Union blessed the merger. In January, AbbVie and Allergan announced plans for a new, stand-alone company called Allergan Aesthetics that will include Allergan’s blockbuster aesthetics treatment Botox as a tent pole.
