Innovation in Cancer Diagnostics Is the First Step in Ensuring Equity for All Patients

In health care, we commonly see two kinds of mergers: Horizontal mergers involve competitors from the same fields, combining to benefit from economies of scale, while vertical mergers involve noncompetitors in the same supply chain, integrating to reduce costs, scale to commercialization and improve quality.

Vertical mergers help share significant risk, especially important for such sectors as biopharmaceuticals and diagnostics. Complex therapeutic and diagnostic innovations benefit from vertical mergers, leading to the development of personalized, innovative products at a lower cost.

The Federal Trade Commission has traditionally viewed the two kinds of mergers differently. The agency has appropriately blocked horizontal mergers because of the likelihood that the merged companies create monopolies or large oligopolies that are harmful to consumers. At times, the FTC has required that the companies divest certain assets to competitors in the same market as a condition of approval – for example, if the two merging firms each have a drug for the same indication.

The FTC has generally taken a more benign view of vertical mergers. For example, the FTC scrutinized vertical mergers between insurers and pharmacy benefit managers, such as Cigna and Express Scripts in 2018, but then approved them without concessions. Critics at the time – myself among them – argued that the lack of transparency in reimbursement and opacity in pricing might lead to potential monopsony when a combined entity controls or dominates the demand for goods and services as a single buyer.

While the FTC approved mega pharmacy benefit manager and insurer mergers, it has taken legal action to stop the much smaller merger of two companies whose integration will move the promise of scientific breakthroughs closer to reality.

Illumina, the largest gene-sequencing company, is trying to acquire Grail, a company it previously spun off, that develops a diagnostic that can detect dozens of cancers at an early stage with a single blood draw. The proposed merger was announced in September. The FTC attempted to block it through litigation in March but then withdrew a request for an injunction two months later, noting that the European Commission is investigating the deal.

Not only is the FTC outsourcing its competition policy to the EC, but it also wants to retain the right to re-file a suit to stop the merger after EC has completed its review. The FTC’s concerns about monopsony power or consumer harm are irrelevant in this vertical merger because of the following:

  • The multicancer screening technique that spearheaded this integration has yet to gain approval from the Food and Drug Administration by Grail or any other company. In other words, it is not yet clear whether Grail will have a product in the market.
  • The integration is genuinely needed to finance a breakthrough diagnostic to provide better, more equitable outcomes for all patients. It will facilitate a more accessible and less costly way to diagnose cancers at an early stage when they are more successfully treated. Grail estimates that the widespread use of multicancer liquid biopsies will reduce cancer deaths by one-fourth.
  • Unlike insurers and PBMs, Illumina and Grail have committed to equal and fair access to high-quality and reliable genomic sequencing for competitor companies currently in the market and future companies which may emerge.
  • Most importantly, Illumina and Grail have pledged to the primary remedy required in the past by the FTC for vertical mergers that have elicited opposition: fair and reasonable prices to all downstream competitors.

Diagnosis is the first step for a patient in finding a cure or managing their disease. Without an appropriate and timely diagnosis, the many innovative, first-in-class treatments that biopharmaceutical companies are developing will go unused. The Illumina/Grail merger promises a bold step toward the eventual success of President Joe Biden’s Cancer Moon Shot initiative.

Policymakers and regulators have every right to scrutinize mergers and mandate transparency when necessary. However, each merger must be judged on its own merit. Rather than unilaterally seeking to stop an integration, the FTC should be wise and demand concessions like the ones already offered by Illumina and Grail. Too much is at stake for patients and their loved ones.


Robert Popovian, Pharm.D., M.S., is chief science policy officer at Global Healthy Living Foundation and a senior health policy fellow at the Progressive Policy Institute.

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