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Why the Teva-Mylan merger shouldn’t be allowed to proceed

This pharmaceutical industry deal could increase prices for generic and specialty drugs

Published: July 24, 2015 12:45 PM

Opting for generic prescription drugs is a smart way for you to save big on your medication. But a potential merger in the works between two major drug companies could ultimately leave you and other consumers paying more at the pharmacy, or even making it harder to get the medication you need.

Consumers Union, the policy and advocacy arm of Consumer Reports, and a coalition of consumer groups recently called on the Federal Trade Commission to block Teva Pharmaceuticals’ hostile bid to acquire Mylan. If the Teva-Mylan merger is allowed to occur, the takeover would combine the two largest generic drug companies, creating a behemoth that could dominate the generic pharmaceutical industry.

The Teva-Mylan merger could increase prices for both generic and specialty drugs. Over the last year, more than half of all retail generic drugs experienced price increases, with generic-manufacturer consolidation playing a significant role in those price hikes. A combined Teva-Mylan would have more than double the market share of the next largest generic manufacturer, giving it little incentive to offer competitive prices.

We’re also concerned that the Teva-Mylan merger could increase generic drug shortages and reduce the competitive drive within the industry to develop new generic drugs. Consolidation within the drug manufacturing industry leads to fewer production facilities and manufacturing lines to produce needed drugs.

Of the 70 drugs that the U.S. Food and Drug Administration lists in short supply, three are made by both Mylan and Teva, while five other drugs are produced solely by Teva and four additional drugs are produced solely by Mylan. By eliminating the second largest generic drug manufacturer, the Teva-Mylan merger would make the generic market even more susceptible to drug shortages, harming consumers and public health as a whole.

Consumers need a competitive generic drug market to help make critical, often life-saving, medications more available and more affordable. While the Teva-Mylan merger might be in the companies’ self-interest, it’s strikingly clear that this deal doesn’t benefit the public interest and shouldn’t be allowed to proceed.

July 28, 2015, update: Teva has announced that it is withdrawing its bid for Mylan. The company now plans to buy the generic-drug division of Allergan.

Are you paying more or less for prescription drugs?

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This feature is part of a regular series by Consumers Union, the policy and advocacy arm of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.

Read past installments of our Policy & Action feature.






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