FTC’s Surrender To EU Degrades U.S. Law And Delays Cancer Detection

While President Biden pledges to fund scientific breakthroughs that will “end cancer as we know it,” his appointees on the Federal Trade Commission (FTC) are making unprecedented concessions to European regulators that will hamper early cancer detection.

Every year, 600,000 Americans – roughly the same number felled by the coronavirus – are killed by cancer. If there were a way to screen healthy people for incipient cancers, tens of thousands of lives could be saved each year. Biotech company Grail has invented such a liquid biopsy test, one that promises to effectively screen for more than 50 types of cancer. Another biotech company, Illumina, which once owned Grail, now wants to reacquire this laboratory in order to use Illumina’s expertise in commercial and regulatory practice to expedite the delivery of this life-saving technology.

Even the FTC sees the need for alacrity. “The vast majority of cancers, which account for about 80 percent of cancer deaths, are only detected after patients exhibit symptoms,” acknowledged FTC Acting Chairwoman Rebecca Kelly Slaughter.

But do not expect the Grail test at your doctor’s office anytime soon. The FTC is holding up this merger. Why? Illumina is the only provider of DNA sequencing that enables multi-cancer early detection – or MCED – tests. Citing this fact, Ms. Slaughter and the FTC maintain that there is a danger that the merger would allow Illumina to dominate the market for early cancer detection, thereby inflicting monopolistic prices and curtailing innovation. “If this acquisition is consummated,” Ms. Slaughter said, “it would likely reduce innovation in this critical area of healthcare, diminish the quality of MCED tests, and make them more expensive.”

The FTC’s case is worthy of Lewis Carroll’s White Queen, who believed six impossible things before breakfast. Here are just three.

First, competition is on its way regardless of the merger. Other companies are already developing tests like the Grail version, and these will be on the market pending FDA approval.

Second, the proposed deal would be a vertical merger, long held by courts to combine the strengths of two different operations often for the benefit of consumers, and never to their detriment.

Third, Illumina has posted an offer on its website to any U.S.-based oncology customer. It will provide a 12-year contract guaranteeing equal access to this new technology, uninterrupted supply, and no price increases. Illumina even promised to reduce sequencing costs for its most prolific technology by more than 40 percent by 2025.

This should take off the table all of Ms. Slaughter’s “pre-crime” visions of future harms to American consumers. Rather than take Illumina’s pledges as a win, however, the FTC doubled down and turned to Europe to use European regulators to stop this American merger in a U.S. court. This move began in April, when France submitted a referral to the European Commission (the executive branch of the EU in Luxembourg) to examine a merger that – even though it doesn’t have an EU dimension – affects trade and could somehow threaten competition in the EU. On May 21, the FTC piggybacked on this action within the EU by filing a motion with the U.S. District Court in San Diego to stop the finalization of the Illumina/Grail merger.

In short, the FTC is subjecting U.S. antitrust law to referrals that can be made by any one of about thirty members and associated members of the European Commission (EC). The EC has proven for some reason equally flexible in acting against Illumina. The EC changed its standards in the Illumina case, accepting a referral before a deal has closed, and one that is well below its traditional threshold.

If Illumina’s filing of a protest is brushed aside by a U.S. court, the FTC’s action will mean that no U.S. executive can proceed on a merger without worrying that it will be stopped by any one of the member states of the EC willing to make a referral. This gives the European Union veto power over American mergers of any size, while subjecting U.S. laws and courts to foreign standards in antitrust law.

If the FTC’s actions are allowed to stand, the results would be to freeze business and innovation in place. The FTC’s new standard on a vertical merger, long held to be benign, if not beneficial, to consumers, would have ripple effects throughout the entrepreneurial ecosystem. Short-circuiting U.S. businesses’ access to U.S. judicial process with EU law would allow the FTC to circumvent American due process. And the FTC would hand Luxembourg the means to stop any U.S. merger, including in the critical space, defense and technology sectors, by simply raising a hand.

For Americans, the FTC’s actions mean years of delays and pointless legal wrangling while tens of thousands – perhaps ultimately millions – of people with early cancers go undiagnosed. Regulators are changing American law beyond recognition, while cancer remains as we know it.

Merrick “Mac” Carey is CEO of the Lexington Institute in Arlington, Virginia.