Citing fears of vertical integration and reduced competition, anti-monopoly advocacy group American Economic Liberties Project and a small cadre of other advocacy organizations are urging federal regulators to block two recent oncology practice network deals.
The purchases in question are McKesson Corporation’s $2.5 billion bid for a controlling stake in the Florida Cancer Specialists & Research Institute’s management services organization, Core Ventures; and Cardinal Health’s $1.1 billion deal for Integrated Oncology Network.
Both deals were announced within the past month and would see a large wholesale pharmaceutical distributor and a healthcare supply and services company strengthen their positions in the “highly consolidated” oncology practice management services market, they wrote.
The letter’s cosignatories are asking the Federal Trade Commission’s commissioners to block the two deals on antitrust grounds.
“If approved, the deals would vertically integrate major players from two heavily consolidated healthcare industries, exacerbating well-documented patient harms, particularly for patients receiving cancer treatment and lessening competition in violation of antitrust laws,” the groups wrote in the letter (PDF), which was exclusively provided to Fierce Healthcare for review prior to its publication.
The letter refers to McKesson and Cardinal as drug industry middlemen and two of “The Big Three” who comprise 98% of the wholesaler market. The third, Cencora (formerly AmerisourceBergen) also plays in the oncology management services space, having picked up a minority interest in OneOncology in the spring of 2023.
Core Ventures, targeted by McKesson, is a business unit of a Fort Myers, Florida-based group practice of more than 250 physicians, 280 advanced practice providers and almost 100 Florida locations. Integrated Oncology Network, which is set to join Cardinal, is comprised of more than 50 community oncology centers, over 100 providers and other practice management and practice growth services.
Both deals would have these provider groups participating in the distributors’ oncology networks, referred to by each in the deal announcements as a growing focus for their businesses.
The groups’ wrote that oncology practice networks have previously been targeted for acquisition and consolidation, citing private equity firm TPG as the current majority owner of OneOncology following that 2023 deal.
However, “unlike other types of acquirers, wholesalers use their market power in various parts of the healthcare supply chain to more directly gain at the expense of cancer patients, who suffer from persistent drug shortages and higher prices,” they wrote. The increased market power also pressures generic drug manufacturers and potential other wholesaler competitors outside of "The Big Three," they wrote.
With this in mind, the groups wrote that the proposed deals “likely violate antitrust law” and appear to meet many of the antitrust scenarios described in federal agencies’ 2023 Merger Guidelines. It would also fall in line with the FTC’s other recent antitrust actions, such as the unravelling of Illumina and Grail’s merger and last week’s suit against pharmacy benefit managers Optum Rx, Express Scripts and Caremark.
“We respectfully request that the FTC apply the same level of scrutiny to block [the two oncology deals], both of which exceed the threshold for merger review by at least ninefold,” they wrote. “Otherwise, American cancer patients will be left to pay the life-threatening costs of ever-increasing wholesaler concentration, casualties in an intensifying ‘cancer care arms race.’”
Joining the American Economic Liberties Project as cosignatories on the letter are Just Care USA, Labor Campaign for Single Payer, Social Security Works, Pharmacists United for Truth and Transparency and Open Markets Institute (where current FTC Chair Lina Khan used to serve as legal director).
A representative for American Economic Liberties Project noted that the FTC has limited time to interject. The group believes Friday would be the deadline for the regulator's decision, reflecting a 30-day waiting period parties must observe after filing before they can consummate a deal and assuming McKesson submitted its filing upon public announcement.
Fierce Healthcare has reached out to McKesson and Cardinal Health for any comment on whether their deals warrant antitrust activity.