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Terrific column in today’s Washington Post from Steven Pearlstein:
Three things are indisputably true about the pharmaceutical industry: Over the past decade, there has been significant cross-border consolidation, involving major pharmaceutical companies and promising biotech firms. Whatever operating efficiencies that consolidation may have generated, none of it was passed on to consumers in the form of lower prices. During the same period, there has been a steady decline in the number of important new drugs flowing from company research labs.
All of which ought to raise serious questions about why the government’s antitrust regulators should approve the latest industry mega-merger in which No. 2 Pfizer proposes to buy No. 11 Wyeth in a deal valued at $68 billion. The impetus for this merger couldn’t have been clearer: In 2011, the patent will expire on Pfizer’s blockbuster cholesterol-lowering drug, Lipitor, which now accounts for a quarter of the company’s revenue, and there is little in Pfizer’s development pipeline to replace it. Unable to stop the slide in its stock price by creating new drugs, Pfizer has concluded that the next best way to keep shareholders happy is through financial engineering…
It is an industry that, when all else fails, would always rather buy a rival than compete against it. Consider Ovation Pharmaceuticals of Deerfield, Ill. Back in August 2005, Ovation bought from Merck a drug called Indocin IV, which at the time was the only approved product to treat a life-threatening heart condition in prematurely born infants. Unfortunately for Ovation, Abbott Laboratories was in the process of winning approval from the Food and Drug Administration of a product that would compete with Indocin. So in January 2006, Ovation purchased the rights for the second drug, NeoProfen. According to a complaint filed in December by the FTC, Ovation then raised the price of Indocin by nearly 1,300 percent, from $36 per vial to nearly $500. When NeoProfen eventually hit the market, it was priced at roughly the same level.
(For the record, Ovation says it has done nothing wrong and that it priced its drugs appropriately.) Ovation is not some rogue drug company. Its slimy behavior reflects the way the industry thinks, the way it behaves and the way it prefers to “compete.” Which is why it is crucial for the government to bring closer scrutiny to industry mega-mergers…
The Pfizer-Wyeth deal offers a wonderful opportunity for a new administration in Washington to signal the end of the era of anything-goes mergers, and to apply the antitrust laws in creative new ways to innovative high-tech industries that are the key to America’s economic future.
More from Ken Silverstein:
Commentary — November 17, 2015, 6:41 pm
The Clintons’ so-called charitable enterprise has served as a vehicle to launder money and to enrich family friends.
Years ago, I lived in Montana, a land of purple sunsets, clear streams, and snowflakes the size of silver dollars drifting through the cold air. There were no speed limits and you could legally drive drunk. My small apartment in Missoula had little privacy. In order to write, I rented an off-season fishing cabin on Rock Creek, a one-room place with a bed and a bureau. I lacked the budget for a desk. My idea was to remove a sliding door from a closet in my apartment and place it over a couple of hastily cobbled-together sawhorses.
Average number of bacteria living in a pound of U.S. mud:
Canadian doctors saved a baby from drowning in his own drool by using Botox on his salivary glands.
A black bear named Pedals, famous for walking upright on his hind legs through Rockaway Township, New Jersey, was reported killed by a hunter, and a hiker in California was attacked after he interrupted two bears mating. It was a “pretty good bear attack,” said the local police chief.
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"She never thanked me, never looked at me—melted away into the miserable night, in the strangest manner I ever saw. I have seen many strange things, but not one that has left a deeper impression on my memory than the dull impassive way in which that worn-out heap of misery took that piece of money, and was lost."