Seven U.S. senators have asked the Justice Department and Federal Trade Commission to review the proposed acquisition of Botox maker Allergan Inc. by a Canadian company, saying the deal could increase consumer pricing and curtail the development of new drugs.
Valeant Pharmaceuticals International Inc. has offered about $53 billion in cash and stock for Allergan and said it would reduce the amount of money the Irvine company spends on research and development of new drugs.
Sen. Dianne Feinstein (D-Calif.) and six other senators said they want the two agencies to investigate whether the merger would have a negative effect on U.S. consumers. The letter was also signed by Sen. Chris Coons (D-Del.), Sen. Bob Casey (D-Pa.), Sen. Mazie Hirono (D-Hawaii), Sen. Robert Menendez (D-N.J.), Sen. Brian Schatz (D-Hawaii) and Sen. Sheldon Whitehouse (D-R.I.).
"We are concerned about a growing trend in the pharmaceutical industry whereby companies make acquisitions, eliminate drug pipelines, slash R&D budgets and arbitrage location headquarters in order to lower effective tax rates," the senators wrote. "While these actions might generate short-term stock price increases, they may endanger valuable drug research and thereby undermine an innovative pharmaceutical marketplace and the delivery of effective treatments to patients."
Officials with the FTC and Justice Department could not be reached for comment. A spokeswoman for Valeant did not immediately respond to a request for comment.
Allergan's board has twice rejected buyout offers from Valeant, which is based near Montreal, saying the offer price was too low and undervalued the company's prospects for future growth. Valeant has said Allergan shareholders would benefit from the merger, noting that most R&D spending does not produce significant results.