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Law360 (April 10, 2020, 8:55 PM EDT ) Democrats on the House antitrust subcommittee want to know why the Federal Trade Commission fast-tracked the merger of two medical device manufacturers they say may be responsible for the current ventilator shortage, a deal that had "all the hallmarks of a killer acquisition."
The demand comes in response to reports that shortly after medical device manufacturer Covidien was given the go-ahead in 2012 to buy out rival ventilator maker Newport Medical Instruments, it dropped a contract that Newport Medical had to make the life-saving machines for the government's stockpile.
"As a nation, we find ourselves experiencing a massive and unnecessary shortage of essential medical devices like ventilators. We owe it to all of the affected patients and medical professionals to understand whether this merger was indeed a 'killer' acquisition that is partly to blame for the current scarcity of ventilators during a viral pandemic," the lawmakers said in their Friday letter.
"Killer acquisitions" occur when a dominant market player buys up a burgeoning rival to fend off future competition.
The missive was signed by all eight Democrats on the U.S. House of Representatives' Subcommittee on Antitrust, Commercial and Administrative Law and by House Judiciary Committee Chairman Jerry Nadler of New York. The letter requested copies of all the agency's documents from their investigation into the merger.
The day the lawmakers sent their letter, the number of confirmed U.S. cases of COVID-19, the disease caused by the novel coronavirus, was poised to reach 500,000, and more than 18,000 people have already died from the disease across the country.
Hospitals have scrambled to scrap together enough ventilators to meet the need that health experts warn is coming, a hardship already faced in other parts of the world such as Italy, where doctors have been forced to make hard choices about which patients would receive breathing assistance. Parts of New York, which has been particularly hard-hit by the virus, have also dealt with a ventilator shortage, leaving Gov. Andrew Cuomo to go to great lengths to obtain the much-needed devices after federal requests failed to come through.
Nearly a decade ago, Newport Medical was contracted to produce low-cost ventilators for the federal government in the wake of the H1N1 outbreak, which killed 12,000 people across the United States over the course of a year.
But the contract fell apart after rival Covidien picked up Newport Medical in 2012, a deal the FTC approved within a month of its announcement, after the former found that the contract was "not sufficiently profitable," according to the lawmakers.
"It is possible that lives could be saved today had this emergency ventilator supply project continued. The FTC's expedited approval of this merger raises many questions, to which we believe Congress deserves answers," the letter said.
Covidien and the FTC did not immediately respond to requests for comment.
--Editing by Orlando Lorenzo.
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