FTC Puts Conditions on Novartis AG’s Proposed Acquisition of GlaxoSmithKline’s Oncology Drugs

Global pharmaceutical company Novartis AG has agreed to divest all assets related to its BRAF and MEK inhibitor drugs, currently in development, to Boulder, Colorado-based Array BioPharma to settle charges that Novartis’s $16 billion acquisition of GlaxoSmithKline’s portfolio of cancer-treatment drugs would likely be anticompetitive.

Physicians use BRAF and MEK inhibitors separately, and increasingly in combination, to treat melanoma. Both products are also being developed to treat a variety of other cancers. According to the complaint, the Switzerland-based Novartis and the London-based GSK are two of a small number of companies with either a BRAF or MEK inhibitor currently on the market or in development, and two of only three companies marketing or developing a BRAF/MEK combination product to treat melanoma.

If the acquisition goes forward as proposed, Novartis would likely delay or terminate development of both its BRAF and MEK inhibitors, as well as the combination product. For that reason, Novartis’s acquisition of GSK’s portfolio of cancer-treatment drugs would likely cause significant competitive harm in the U.S. markets for both the BRAF and MEK inhibitors, ultimately raising prices for consumers and depriving them of potentially superior products.

Under the terms of the proposed consent agreement, Novartis is required to provide transitional services to Array BioPharma to ensure that development of the BRAF and MEK inhibitors continues uninterrupted and that competition in BRAF and MEK inhibitor markets is not reduced.

Throughout the investigation, Commission staff cooperated with staff of the antitrust agencies in Australia, Canada, and the European Union, working closely on the analysis of the proposed transaction and potential remedies. This coordination led to compatible approaches on a global scale, and included FTC and European Commission approval of Array BioPharma as the buyer of the divested assets.

More information about the FTC’s consent agreement can be found in the analysis to aid public comment.

The Commission vote to accept the complaint and proposed consent order for public comment was 5-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through March 25, 2015, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically, or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice. 

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.  When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000 per day.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave., NW, Room CC-5422, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.