OPINION:
Activist commissioners at the Federal Trade Commission voted earlier this month to overturn the ruling of its own chief administrative law judge in the life-and-death case of Illumina and GRAIL.
The FTC’s action was unfortunately unsurprising since commissioners can overrule verdicts in the very cases they choose to prosecute, regardless of the merits of the judge’s thoughtful and reasoned decision. That the ruling was released on the same day that President Biden unveiled the National Cancer Plan as part of his administration’s Cancer Moonshot, focusing in large part on the very multi-cancer detection tests at issue in this case, is a particularly bitter pill for cancer patients.
The fundamental unfairness of allowing commissioners to overturn the exact cases they vote to bring is obvious. What is less obvious is how many people lose on this verdict, with the only winners being in-house counsel at the FTC. In this case, cancer patients lose, companies lose, and American innovation loses. This shouldn’t become the new normal, and federal courts are unlikely to be swayed by aggressive new theories argued by an out-of-control FTC, especially when those theories are at loggerheads with the government approach behind the Cancer Moonshot.
Illumina develops, manufactures and markets life science tools and systems for large-scale analysis of genetic variation and function. Six years ago, Illumina spun off GRAIL to form a separate company, allowing it to innovate and seek the needed outside investments to finance its research and take big risks. GRAIL exceeded expectations by building a multi-cancer early detection, or MCED, test capable of detecting over 50 types of cancer in the earliest stages. The test, called Galleri, will revolutionize cancer detection, and by increasing earlier detection and, therefore, early interventions, more lives can be saved. Fully leveraging and supporting these remarkable advances in technology will give the Moonshot and the newly created ARPA-H the potential to win the war on cancer.
Illumina’s reacquisition of GRAIL will help bring these lifesaving cancer tests to market faster and to more Americans than GRAIL alone can reach. Importantly, Illumina has guaranteed that its products and support will be available to other oncology companies on the same terms and at the same price as GRAIL, which should relieve any concerns about consolidation.
For all these reasons, we are baffled by the FTC’s rationale. The stated purpose of the FTC’s intervention is that the merger would “diminish innovation,” which is absurd. This is an attempt by activist commissioners to block the merger for no other reason than theoretical concerns about market consolidation. The entrepreneurs and innovators at GRAIL are focused on the science; they are not a distribution or market access company. Illumina has the needed capabilities and expertise to help maximize patient access.
Importantly, the FTC’s claims have been shown to be baseless: The commission challenged the deal nearly two years ago, citing the imminent launch of MCED tests that would compete with Galleri. Since that time, no other MCED tests have been launched. The FTC’s own chief administrative law judge found that “most of the companies who are pursuing the goal of creating an MCED test do not expect to launch a screening test for more than one cancer type for many years” and found no evidence “to prove that the MCED tests under development will be close substitutes to Galleri” or “that it is likely that a better-quality test is on the horizon in any reasonable timeframe.” In short, there is no competition to be affected by this merger, only the timeliness with which patients can access early cancer screening.
Biotech is a uniquely risky venture. The vast majority of investments fail, primarily due to inherent scientific challenges and exploration of the unknown. If government overreach is now one more hurdle for investors to consider, it will only harm innovative companies’ access to capital, reducing the tools researchers and innovators need to find the next treatment, diagnostic test or cure.
Even now, activist investors have sought to stage a corporate coup at Illumina over the acquisition. Why? Because despite the merger being pro-competitive and having substantial long-term value, the interminable fight with regulators that has invoked specious and unprecedented legal arguments has extracted costs and spooked the investment community. Today, the harm is to Galleri and cancer patients, but if this merger is killed, the chilling effect on future medical innovation will be incalculable.
The United States has been the world leader in life sciences, and the Illumina-GRAIL deal is a prime example — GRAIL was born from Illumina in California, where Illumina was also founded and remains to this day. When the FTC uses its power to hamper American innovation, it only emboldens foreign actors, many of whom do not share our country’s values.
The FTC’s theory of harm is speculative and misguided and has already been rejected by the FTC’s internal courts. Principles of fairness, competition, saving lives, and preserving American innovation suggest that appellate jurists should follow the wisdom of the career administrative judge and reject the politics of the FTC.
• Former Sen. Richard Burr, North Carolina Republican, and former Rep. Jim Greenwood, Pennsylvania Republican, work for DLA Piper. Greenwood lobbies on behalf of Illumina.
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