Congresswoman Katie Porter (CA-45) today released a report documenting the devastating effects of Big Pharma’s mergers and acquisitions. It includes a case study of the 2002 takeover of Immunex, a small biotechnology firm, by Amgen, which at the time was the largest biotechnology company in the world. Through first-hand accounts, the report highlights how such consolidations curb scientific innovation at the expense of patients.

“What we learned from the Immunex/Amgen researchers we spoke with was deeply upsetting: this incredible collaborative culture, focused on innovative new ideas to treat chronically ill patients, was completely gutted. Research that could have led to new treatments or cures was dropped because it was too risky, and therefore, too ‘expensive,’” Porter said. “The statistics from researchers show a similar story, but hearing this from scientists on the ground helps people understand what’s going on. That’s why we wanted to present this as a staff report for the public.”

“Competition is central to capitalism,” Porter continued. “As our report shows, Big Pharma has little incentive to invest in new, critically needed drugs. Instead, pharmaceutical giants are free to devote their resources to acquiring smaller companies that might otherwise force them to compete. Lives are on the line; it’s clear the federal government needs to reform how it evaluates health care merges and patent abuses.” 

During Porter’s questioning in an October 2020 Oversight Committee hearing, the current CEO of Amgen, Robert Bradway, downplayed the role of small firm Immunex in the development of Enbrel, a lifesaving drug. This depiction prompted a former Immunex, and later Amgen, Principal Scientist to contact Porter’s office to provide clarification on Bradway’s testimony and the transformation he watched the company undergo after the acquisition. Porter’s office proceeded to interview the scientist, Laurent Galibert, and several other former employees of Immunex/Amgen.

The report’s key findings include:

• Big pharmaceutical companies are not responsible for most major breakthroughs in new drugs. Rather, innovation is driven in small firms, which are often spun off of taxpayer-funded academic research. These small labs are then purchased by giant firms after they’ve assumed the risk needed to develop a blockbuster drug.

• Instead of producing lifesaving drugs for diseases with few or no cures, large pharmaceutical companies often focus on small, incremental changes to existing drugs in order to kill off generic threats to their government-granted monopoly patents.
  
  
• Mergers in the pharmaceutical industry have had an overall negative effect on innovation, taking what little competition existed in the industry and completely destroying it. 

The report makes clear the need for comprehensive, urgent reform. Congresswoman Porter specifically recommends:

• Removing incentives that prioritize investors and Wall Street over patients. Companies should not tie bonuses to financial metrics, but instead link bonuses to either 1) measures of health outcomes such as reduced mortality, or 2) revenue reinvested for research and development of new drugs. If companies will not take these actions on their own, legislators should consider tying requirements for this to merger conditions, patent exclusivity, or some other mechanism.
  

• Reevaluating the standards used by the Federal Trade Commission (FTC) for healthcare mergers. The FTC should incorporate into merger review previous anticompetitive conduct as part of the assessment as part of whether or not the merger should be considered anticompetitive behavior.
  
  
• Altering the presumption that most mergers and acquisitions are legal unless contested by an individual or group. Legislation can and should be passed to require health care companies to demonstrate that any merger or acquisition is more likely than not to result in improved health care quality and cost for consumers.
  
  
• Lowering the cost of prescription drugs. Congress should pass legislation that reins in skyrocketing costs. This can begin with drug price negotiation legislation, such as the Elijah E. Cummings Lower Drug Costs Now Act, but must extend to include a larger class of drugs and cover all payers and the uninsured. 

• Preventing anti-competitive abuses of the drug patenting system. Congress should pass legislation, such as the Preserve Access to Affordable Generics and Biosimilars Act, the Affordable Prescriptions for Patients Through Promoting Competition Act, and the Stop STALLING Act, to stop abuses of the regulatory process.

Congresswoman Porter has been a tireless advocate for getting Americans the healthcare they need. In addition to introducing House-passed legislation that would protect patients from unnecessary pharmaceutical price hikes, she has confronted Big Pharma CEOs directly about the skyrocketing costs of prescription drugs. She also backed the Protecting Americans with Preexisting Conditions Act of 2019, which included her amendment to prohibit administrative actions that would strip patients of comprehensive care.

Read the full report HERE.

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