Study Finds FTC Drug Divestiture Policy Fails to Foster Competition as 81% of Divested Drugs Fail

New study finds 81% of drugs divested in FTC-mandated pharma mergers fail. Experts call for "Crown Jewel" remedies to protect market competition.

By: AXL Media

Published: Apr 10, 2026, 4:00 AM EDT

Source: Information for this report was sourced from University of California, Berkeley Haas School of Business

The Paradox of Antitrust Remedies in Pharma

In early 2026, the pharmaceutical sector witnessed a flurry of high-stakes consolidations, including Novartis’s $11 billion acquisition of Avidity Biosciences and major moves by Merck and GSK. While the Federal Trade Commission (FTC) typically intervenes in these mergers to prevent monopolies, its primary tool—mandating the divestiture of "pipeline" drugs to third parties—is under intense scrutiny. A longitudinal study co-authored by Yaniv Konchitchki of UC Berkeley Haas and Robin Feldman of UC Law suggests that this remedy, intended to preserve competition, is failing at an alarming rate. By forcing companies to offload drugs still in development, the regulator may be inadvertently clearing the path for established giants to maintain their market stronghold.

Data Reveals a Dramatic Failure Rate for Divested Assets

The research examined 75 pipeline drugs divested over a 13-year period and uncovered a "survival rate" that raises serious questions about the FTC’s strategic efficacy. According to the study, 81% of divested drugs failed to achieve the triple-crown of FDA approval, successful market entry, and at least a 1% market share. Even more striking, 50% of the offloaded drugs never received regulatory approval at all. This suggests that the assets being divested are often the weakest links in a company’s portfolio, or that the third-party buyers lack the specialized infrastructure and capital necessary to bring complex new therapies to the finish line.

Generic Competition Faces the Steepest Hurdles

The consequences of this policy failure are felt most acutely by consumers who rely on generic alternatives to drive down prescription costs. Generics accounted for 70 of the 75 drugs analyzed in the study, yet only 14% of these managed a successful market entry after being divested. In contrast, brand-name drugs saw a much higher success rate of 75% to 80%. This disparity suggests that the current divestiture process disproportionately handicaps the very products intended to provide price relief, as smaller generic firms struggle to replicate the manufacturing and distribution capabilities of the original merging entities.