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FTC urged to review Pfizer-Wyeth merger

February 4, 2009
Chairman William Evan Kovacic
Federal Trade Commission
600 Pennsylvania Avenue NW
Washington, DC 20580
Dear Mr. Chairman:
On behalf of Consumers Union, the independent, non-profit publisher of Consumer Reports, we urge you to review carefully the competitive and innovation consequences of the proposed Pfizer-Wyeth pharmaceutical company mergers.
Our members consistently tell us that high and ever-rising healthcare costs are a major household fear, and high brand name prescription drug prices are a particular concern. Study after study shows that many Americans fail to fill prescriptions and injure their health because of the unaffordable high cost of many brand drugs. At the same time, consumers look to the pharmaceutical industry in the hope for cures to crippling and deadly diseases.
Setting aside the issue of the financing of this job-reducing merger by TARP-assisted banks, we urge the Federal Trade Commission to review this proposed merger and its impact on
–long-run competition in the pharmaceutical industry and its likely impact on drug prices;
–innovation and the development of new, breakthrough drugs. In recent years, the FDA has seen fewer new molecular entities being submitted and has designated fewer drugs as truly breakthrough products. Does this merger change, for better or worse, the recent trend line? The merger will result in thousands of employee lay-offs. What percent of those lay-offs are in research and development, and are those lay-offs strictly in areas where the two companies were duplicating research, or are new and unique lines of research being terminated?
These questions may be larger than this proposed merger. Some analysts have speculated that because of the end of patent protection for many widely-prescribed drugs, such as Pfizer’s Lipitor in late 2011, that “Big Pharma” (despite years of record profits) is in trouble and that we can expect major consolidations in the industry. Others have noted that the older companies increasingly fail to invent new products and instead just buy up smaller, start-up, biologic companies. At the same time these questions arise, we are faced with continual abuses of good public policy by many in the industry. For example, Pfizer has just paid $2.3 billion in penalties for off-label promotions. Others firms use payments to buy delays in the entry of competitive generic drugs into the market.
We hope that you will consider a major study of the entire pharmaceutical industry. Why are prices for consumers so high, why has the breakthrough drug research pipeline slowed down, and what policies should we pursue as a nation to encourage the more rapid discovery of affordable medicines? Is this merger, and possible future mergers like it, good or bad for the goal of affordable, new, life-saving drugs?
Thank you for your consideration of these views.
William Vaughan
Health Policy Analyst
Consumers Union