FTC Oversight of Pharmaceutical Sector 'Minimal' Over Last 20-Plus Years

— The agency pursued a handful of actions per year, allowed 61 of 62 mergers it challenged

A photo of the Federal Trade Commission Building on Pennsylvania Avenue in Washington, DC.

The Federal Trade Commission (FTC) pursued about one merger action and three enforcement actions per year in the pharmaceutical industry over the last two decades, accounting for only a sliver of the alleged misconduct in the sector, a study of publicly available documents showed.

From 2000 to 2022, the FTC initiated or completed a total of 85 actions in the pharmaceutical sector, including 62 challenges of mergers, 22 enforcement actions against allegedly unlawful business practices, and one rule related to pharmaceuticals, reported Aaron Kesselheim, MD, JD, MPH, of Brigham and Women's Hospital and Harvard ľֱ School in Boston, and colleagues.

Of the 62 mergers the FTC challenged, 61 were given the greenlight after settlements, and one was abandoned. The 22 enforcement actions led primarily to settlements, as well as one FTC order and one judgment in the agency's favor, they noted in .

"The FTC's regulatory power is formidable," the authors noted. As the agency in charge of protecting U.S. consumers and promoting competition, the FTC can collect substantial monetary payments and can release binding orders targeting companies engaged in unfair practices. It can also block mergers it deems anticompetitive.

Yet a review of the breadth and type of actions taken by the agency suggests it hasn't exercised its full potential in this sector, Kesselheim told ľֱ, noting that it's "remarkable" how few mergers the agency challenged, given their numbers.

"The forces of competition depend on there being a fair playing field, and that's what the FTC is supposed to enforce," he added.

One reason for the minimal oversight by the FTC may be resource constraints, he explained. The political environment and culture under different administrations is another. However, under the Biden administration, the agency has taken a "much more active posture on enforcement," Kesselheim said.

In , Amy Kapczynski, JD, of Yale Law School in New Haven, Connecticut, noted that the FTC and the Department of Justice's Antitrust Division issued in 2023, giving the agency more latitude to scrutinize mergers.

Previously, in June 2022, the agency announced . And in November 2023, the agency issued warnings to drug companies to remove improperly listed patents in .

Still, the agency faces "an increasingly hostile Supreme Court, which is and divesting it from agencies and even Congress," Kapczynski pointed out.

"If the FTC is to play a larger role in pursuing unfair and anticompetitive conduct in the pharmaceutical industry, it requires not just concerted leadership, but also more authority and funding from Congress, particularly if courts broadly weaken regulatory agencies, as they appear to be poised to do," she wrote.

Kesselheim and colleagues also stressed that "important tools remain untested," highlighting the importance of rulemaking, which Kesselheim characterized as a useful deterrent, because it clarifies expectations for what companies can and can't do upfront.

Mergers Under the Microscope

In 58 of the 61 allowed mergers, divestment of certain drugs to a third-party competitor was a condition of the settlement. Divestiture requirements might involve supplying the drug until the competitor is able to produce it, or helping a competitor through the FDA approval process.

In all, 332 drugs were required to be divested, including 38 approved brand-name drugs, 184 approved generic drugs, 15 investigational drugs, and 95 generic drugs in the development phase. The median number of drugs divested as part of a settlement was 3 (interquartile range 1-5; full range 0-79). The number of divestitures per year fell from 18 in 2000-2017 to 4.3 in 2017-2023.

Seven settlements called for additional conditions outside of divestiture, such as limiting the future purchase of certain drugs without the FTC's prior approval.

Enforcement Actions, Rulemaking

With regard to the 22 enforcement actions, defendants in all cases were corporations, with two exceptions: Martin Shkreli and Kevin Mulleady, pharmaceutical executives sued for anticompetitive monopolization of pyrimethamine (Daraprim), a medication that treats toxoplasmosis.

The misconduct involved in these enforcement actions spanned four categories, which were not mutually exclusive. In total, the authors identified 11 settlements of patent litigation, six actions related to unilateral delays, four noncompete agreements, and three cases of monopolization.

Five of 11 patent settlement-related cases involved brand-name manufacturers that struck deals, including "ostensibly unrelated but excessively one-sided" licensing agreements, which favored the generic manufacturer; in four cases, brand-name manufacturers offered payments in lump sums, revenue sharing deals, or by other means; and in another four cases, the brand-name manufacturer agreed not to launch an authorized generic (so-called "pay-to-delay" deals).

Fourteen of the 22 actions involved complaints filed in federal district court, and eight were internal adjudications. One of the 22 actions is ongoing (as of February), and the other 21 were tied to 29 outcomes: 23 settlements, four court judgments, one final FTC order, and one withdrawal by the FTC.

Of the four court judgments, the FTC succeeded in just one: the case against Shkreli. The agency lost two cases after "failing to convince courts that the companies were engaging in unlawful behavior," and lost another because the court determined that the agency couldn't address past misconduct.

The agency withdrew one case related to alleged anticompetitive conduct by AbbVie, after a Supreme Court ruling in a different case made it clear that the agency would not obtain a monetary penalty.

Ten outcomes -- nine of 23 settlements and one judgment -- involved a monetary payment, which, in all, amounted to $1.6 billion. Its largest payment of $1.2 billion came from Cephalon and was tied to an anticompetitive settlement of patent litigation that delayed generic competition of modafinil (Provigil).

As for rulemaking, the FTC issued one notice-and-comment rule in 2013 "deeming certain patent rights to be reportable assets for antitrust review," Kesselheim and team noted. Industry sued, but the courts sided with the agency.

For this study, legal actions from 2000 to 2022 were assessed following a manual review of search results from FTC's online Legal Library, as well as a 2023 FTC report on pharmaceutical actions. The alleged misconduct, type of legal action taken, timing, and outcomes were collected from press releases, complaints, orders, and other legal documents.

A strength of the study was its use of a "relatively novel dataset," Kesselheim noted.

A limitation of the study was that it relied on publicly available information. Since the FTC may work quietly on an action for long periods before announcing it, there may be actions that the study authors did not capture in their review.

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    Shannon Firth has been reporting on health policy as ľֱ's Washington correspondent since 2014. She is also a member of the site's Enterprise & Investigative Reporting team.


This study was funded by Arnold Ventures.

Kesselheim reported receiving personal fees from the Federal Trade Commission by serving as an outside expert in two merger cases in 2023, as well as for a class of state Attorneys General and payers in a case involving generic drug price fixing.

Kapczynski reported no conflicts of interest.

Primary Source


Daval CJR, et al "Federal Trade Commission actions on prescription drugs, 2000-2022" JAMA 2024; DOI: 10.1001/jama.2024.5737.

Secondary Source


Kapczynski A "Federal Trade Commission oversight of the pharmaceutical industry" JAMA 2024; DOI: 10.1001/jama.2024.1509.