Pharma Mega Mergers Hurt Consumers

July 17, 2019 by  
Filed under Healthcare, Issues, Recent Blog Posts

It’s big money for Big Pharma and nothing for consumers as Katy Milani of the Roosevelt Institute explains in this article:

Consolidation in the pharmaceutical industry has troubling consequences. The number of mergers and acquisitions involving one of the top 25 firms more than doubled from 29 in 2006 to 61 in 2015, in part due to lax merger review. Between 1995 and 2015, 60 pharmaceutical companies merged into 10. There is little sign that the rise of mergers slowed in recent years.

Such consolidation has downstream effects on patients. Because internal research and development is expensive, yields inconsistent returns, and is often time-consuming, the biggest pharmaceutical firms are increasingly electing to access R&D by acquiring smaller firms. According to a recent study, “killer acquisitions,” in which one company purchases another to suppress research and the development of rival drugs, account for approximately 6% of all the mergers and acquisitions in the pharmaceutical industry. The same study found that eliminating killer acquisitions would raise the industry’s aggregate drug development by 4% a year.

While these trends in pharma may not be surprising, they should be alarming. AbbVie will spend $67 billion “to bypass the risky process of research and development by buying a portfolio of popular products as it faces the loss of patent protection for Humira,” as the New York Times astutely notes. This spending comes with a trade-off, since corporate resources could be used toward innovation, research and development, or lowering drug costs.

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