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17 Consumer Groups and Unions Ask FTC to Block AbbVie's Acquisition of Allergan

By Brian Orelli, PhD - Feb 18, 2020 at 5:37PM

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The groups are worried about reduced competition if the merger goes through.

Seventeen consumer groups and unions have again voiced their opposition to AbbVie's (ABBV 0.01%) acquisition of Allergan (AGN) in a letter to the Federal Trade Commission. The organizations, which represent over 10 million subscribers and members, originally raised concerns in September that the merger would harm competition.

Since then, the FTC has requested the drugmakers divest themselves of a few products to reduce the anticompetitive nature of the deal. In the Crohn's disease and ulcerative colitis space, Allergan agreed to hand the rights to brazikumab back to AstraZeneca (AZN -0.09%) from which it had licensed the drug. Brazikumab is in mid-to-late stage clinical trials for the two diseases.

Allergan also agreed to sell its gastrointestinal medication Zenpep to Nestle. The drug, which is used by patients who don't produce enough enzymes to break down fat, protein, and carbohydrates, competes with AbbVie's Creon.

Woman drawing a big fish eating a little fish on a wall

Image source: Getty Images.

Given AbbVie's strong position in the autoimmune diseases space with Humira and Skyrizi, the groups are concerned that divesting rights to brazikumab may not do enough to support a competitive marketplace. "Based on the limited public information, we believe there are signs that AstraZeneca may lack the incentive and ability to fully restore competition," the letter states.

The groups don't seem to have much of an issue with the divestiture of Zenpep because it's already approved, but they do argue that companies shouldn't be allowed to divest themselves of drug candidates to appease antitrust regulators because "pipeline assets in the pharmaceutical industry are often unsuccessful in terms of actual product launches."

AbbVie and Allergan have said they expect their deal to close this quarter.

Brian Orelli has no position in any of the stocks mentioned. The Motley Fool recommends Nestle. The Motley Fool has a disclosure policy.

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