This month’s CLIP is a column by Andrew C. Finch & Stefan Geirhofer entitled ‘Features of Procompetitive Collaborations in the Life Sciences’ which considers the potential antitrust risk in collaborations by pharmaceutical companies in the USA.
The article notes that recent advances in biotechnology have paved the way for new business models. Increasing degrees of specialisation make it harder for typically vertically integrated pharmaceutical companies to do all of their R&D in-house. With biotech start-ups and university laboratories playing significant roles in early-stage innovation, but lacking the funding for complex clinical trials, collaborations are on the rise.
While starting from the position that such collaborations are usually pro-competitive, the article goes on to analyse the potential anti-competitive effects that can arise, such as the potential elimination of competing research efforts. It then considers potential safeguards from two broad categories:
- restrictions that limit the scope of partnerships to areas where the parties do not compete; and
- limitations as to the types of information and know-how shared between the parties.
As a case in point, the authors offer an example of a business review letter issued by the Antitrust Division in July 2020, relating to a proposed collaboration between six pharmaceutical companies to expand production of COVID-19 treatments or vaccines. The Division highlighted safeguards such as limits on information sharing and the duration of the collaboration, and a focus on manufacturing an approved treatment rather than the initial development of a treatment.
There are striking similarities between the approach in the US and the approach in Europe. We have previously written about the European Commission merger decision in Dow/DuPont (see section (v) here) which had a strong emphasis on competition in innovation and assessed competing product pipeline development efforts. The European Commission has also resurrected ‘comfort letters’ (the EU equivalent of the US business review letter) for the purpose of encouraging and assisting pharmaceutical collaborations in the COVID-19 era (see here).
As technologies continue to get more specialised and supply chains continue to get more complicated, there will undoubtedly be plenty of opportunities for future novel collaborations in the life sciences sector. Although many collaborations are likely to have pro-competitive features, it will also remain important to ensure that sufficient safeguards are in place to minimise competition / antitrust risks, whether US, EU or UK rules apply.