Trump’s FTC Appointee Eyes Task Force to Investigate Drug Prices

February 16, 2018

President Donald Trump’s nominee to lead the Federal Trade Commission said he’s “very concerned” about price increases for prescription drugs and will explore forming a task force to monitor whether higher prices are due to anti-competitive conduct.

Joe Simons, a Washington antitrust lawyer, suggested creating the task force during his nomination hearing Wednesday before the Senate Committee on Commerce, Science and Transportation. He said it would enable officials to quickly investigate why increases are occurring in real time and bring enforcement actions when appropriate.

“I’m very concerned as you just described with drug pricing,” Simons told to Senator Richard Blumenthal, a Democrat from Connecticut. “I think the pharma industry is a critical industry for our economy and for consumers. It affects people who are in very vulnerable point in their life often.”

The Trump administration has called drug prices a major policy concern, though has so far taken only limited steps to address them. The Food and Drug Administration has issued policies to get more generic competitors on the market, and the administration has suggested policies that would reduce patients’ out-of-pocket costs.

Representatives for the biotechnology and pharmaceutical trade organizations didn’t immediately return requests for comment.

The FTC has a long track record of targeting pharmaceutical companies for agreements that keep generic drugs off the market and allow branded-drug companies to maintain their market share without competition from low-cost generics. In 2015, the agency reached a $1.2 billion settlement with Teva Pharmaceutical Industries Ltd. to resolve claims that a company it acquired blocked generic drug competition.

Lax Merger Enforcement

Simons, 59, is poised to take over an agency amid criticism from some lawyers and economists about whether enforcers haven’t been aggressive enough in policing mergers. In written responses to the committee, Simons vowed to look into whether merger enforcement has been too lax.

The five-member FTC shares antitrust enforcement authority with the Justice Department. It also enforces consumer protection laws. Among its biggest cases are an antitrust lawsuit against Qualcomm Inc. over claims the chip-maker illegally maintained a monopoly for semiconductors used in smart phones. It’s also investigating the massive data breach at Equifax Inc. last year.

Data Breaches

Simons, who was previously at the law firm Paul Weiss Rifkind Wharton & Garrison LLP, said he expects data breaches at companies to be the most important consumer-protection issue for the FTC.

“They’re becoming much more significant, much more frequent,” he said. “We need to pay close attention to it.”

In addition to Simons, the Commerce Committee is considering the nominations of three other candidates for the agency: Noah Phillips, the chief counsel to Republican Senator John Cornyn of Texas; Christine Wilson, an antitrust attorney who previously worked for Delta Air Lines Inc.; and Rohit Chopra, a former assistant director at the Consumer Financial Protection Bureau. Phillips and Wilson would take the two other Republican seats on the commission, and Chopra would get one of the Democratic seats.

Simons had a stint at the FTC from 2001 to 2003, when he ran the bureau that investigates mergers and anticompetitive conduct. During his tenure, the agency blocked Libbey Inc.’s proposed purchase of Newell Rubbermaid unit Anchor Hocking.

Rambus Loss

He also sued Rambus Inc., accusing the company of undermining competition in the market for computer-memory chips by working to get secretly patented technology included in industrywide standards. The agency ultimately lost the case in federal court.

The Rambus case highlights how Simons won’t shy away from difficult cases, said Mike Knight, an antitrust lawyer at Jones Day in Washington, who worked with Simons at the FTC.

“It was cutting-edge enforcement action,” Knight said. “Understanding that that was not a slam dunk by any stretch, he nonetheless felt there was anti-competitive harm, felt the evidence showed it, and was willing to go after it.”

Simons will give more weight to economic evidence and analysis in making enforcement decisions, rather than focusing on how many players are in a market to determine effects on competition, according to lawyers who have worked with him.

When he was previously at the FTC, that emphasis on empirical evidence meant clearing deals like the sale of P&O Princess Cruises to Carnival Corp. even though there were only a handful of competitors in the industry. But Simons also challenged deals that didn’t appear problematic based just on how consolidated a market was when the economic evidence showed harm to competition, said Mike Cowie, an antitrust lawyer at Dechert LLP in Washington who worked with Simons at the commission.

“There’s a tendency to think of economic work as just defense-orientated, as providing grounds to approve mergers,” Cowie said. “Joe use economics both ways.”

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