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PPI Paper Examines Antitrust Role in Biotech Innovation

  • June 30, 2021

A new paper released today by the Progressive Policy Institute examines two key questions facing the biotech industry in America and the European Union (EU): Is it pro-innovation for European antitrust regulators to have the power to block a deal involving two American biotech companies that do no substantial business in Europe? And, under what conditions is vertical integration a socially beneficial strategy for accelerating innovation?

The paper, titled “Biotech Innovation: Two Important Questions,” is authored by Dr. Michael Mandel and Alec Stapp.

“There is little evidence that most vertical acquisitions are anti-competitive. If our shared goal is to support innovation and scaled production of potentially-lifesaving drugs and medical products, the U.S. and E.U. governments should work to advance integrated development — not regulatory imperialism,” said report authors Dr. Michael Mandel and Alec Stapp.

The paper examines the proposed purchase of cancer-diagnostic developer Grail by gene-sequencing leader Illumina. The Federal Trade Commission (FTC) recently intervened to stop the acquisition, worried that Illumina would block potential competitors of Grail from using its gene sequencers. The FTC ultimately dropped its case, instead allowing the European Commission to take the first swing at blocking the acquisition. The EU will rule by late July on the merger.

The paper concludes that excessive antitrust focus on blocking vertical integration in the biosciences could impede the development of important new products and treatments (though so-called “killer acquisitions” are an important exception that warrant increased scrutiny from regulators). The paper also broadens the scope of the issue, extending beyond the Grail and Illumina case and into the larger climate of regulation, innovation, and integration in the EU and U.S.

Read the full paper here:

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.

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