Legal Risk in a Rumored AstraZeneca-BMS Deal: Q&A with Ron Lanton

In a conversation with Pharmaceutical Executive, Ron Lanton, Senior Partner & Global Strategist at Lanton, Lanton & Sosa Law PLLC, addresses the rumored potential merger between AstraZeneca and Bristol Myers Squibb, a deal that remains unconfirmed and was denied by a source as recently as yesterday. Despite no talks being verified, Lanton says the scenario is worth examining on its legal merits: if such a merger were to happen, what antitrust risks would it face, and how would regulators respond?

In the conversation, Lanton emphasizes that scrutiny would center on specific therapeutic overlaps rather than the companies' overall size. While a deal of this scale would easily trigger a Hart-Scott-Rodino filing, he says the real question is whether it would reduce competition in particular areas of patient care.

Lanton also outlined how divestitures could become the price of clearing review, and warns that the scope of required divestitures could ultimately undermine the strategic logic of the deal.

Finally, Lanton addresses the differing disclosure obligations the two companies would face, noting that Bristol Myers Squibb can generally keep early talks confidential under United States rules, while AstraZeneca faces stricter United Kingdom requirements around prompt disclosure of inside information.

A transcript of Lanton's conversation with Pharmaceutical Executive can be found below.

Pharmaceutical Executive: From an antitrust standpoint, what is the FTC’s threshold for concern if AstraZeneca and Bristol Myers Squibb pursue a merger?
Ron Lanton: There are really two different thresholds to understand.

The first is the filing threshold under the Hart Scott Rodino Antitrust Improvements Act, usually called the HSR Act. That law requires companies involved in sufficiently large transactions to notify the Federal Trade Commission and the Department of Justice before closing. A transaction of this size would easily trigger that filing requirement.

That does not mean the government believes the merger is illegal, rather it simply means the deal is large enough that the regulators get an opportunity to review it before it closes. The more important question is whether combining the two companies would reduce competition in a meaningful way. The FTC would look at where AstraZeneca and Bristol Myers Squibb compete directly, where their drug pipelines may compete in the future, and whether the combined company would have too much control in particular areas of treatment.

One tool regulators use is called the Herfindahl Hirschman Index, or HHI. It is a way of measuring how concentrated a market is. In simple terms, the FTC looks at how much of a market is controlled by the largest companies and how much more concentrated that market would become after the merger.

If a market is already concentrated and the merger would make it noticeably more concentrated, that creates a presumption that the deal could harm competition. That does not automatically block the transaction, but it puts the companies in a position where they may need to prove that the merger would not reduce competition or harm patients and purchasers.

In pharmaceuticals, the FTC would not simply look at the companies and say they are both large drug manufacturers. It would break the businesses into much smaller pieces. Regulators could examine whether the companies compete in a particular cancer, at a particular stage of treatment, through similar drug mechanisms, or through pipeline products that could become future alternatives.

That is where the real antitrust risk would arise. The concern would not just be the overall size of the combined company, it would be whether the deal removes an important current or future competitor in a specific area of patient care.

Given the scale of these companies and the depth of their oncology portfolios, if they perused a merger I would expect a lengthy review and a formal request for extensive additional information from the FTC.

PE: Who would benefit the most if the merger materialized?
Lanton: The clearest immediate beneficiaries from a potential merger would likely be Bristol Myers Squibb shareholders. If AstraZeneca were the buyer, they would probably receive a meaningful premium.

Bristol Myers Squibb would also gain a stronger platform for navigating upcoming patent losses involving major products such as Opdivo and Eliquis. AstraZeneca, meanwhile, would gain greater scale in the United States and a broader portfolio in oncology, cardiovascular medicine, and cell therapy.

The benefits for AstraZeneca and patients are less certain. AstraZeneca would assume significant integration, regulatory, and patent risk, while patient benefits would depend on whether the combined company invests in more research rather than eliminating overlapping programs. So, Bristol Myers Squibb shareholders would likely benefit first and most clearly, while the strategic value for AstraZeneca would take longer to prove.

PE: How does the FTC typically approach therapeutic overlap in pharmaceutical mergers, and what divestitures would be the price for a deal like this to clear review?
Lanton: The FTC would not simply look at AstraZeneca and Bristol Myers Squibb as two large companies with oncology businesses. Instead, it would identify the areas where their drugs are competing today, as well as the pipeline products that could become competitors tomorrow.

That could create several problems here. Bristol Myers Squibb and AstraZeneca market the only two commercial CTLA 4 cancer treatments, Yervoy and Imjudo. Opdivo and Imfinzi also compete in some of the same treatment areas. There are potential future conflicts as well. AstraZeneca is advancing a cell therapy for multiple myeloma that could compete with Bristol Myers Squibb’s Abecma, while a Bristol Myers Squibb antibody drug conjugate could become a rival to AstraZeneca’s Datroway in breast and lung cancer.

The Bristol Myers Squibb acquisition of Celgene shows how significant the remedy can become. The FTC required the sale of Celgene’s entire Otezla business to Amgen for $13.4 billion, including the intellectual property, regulatory approvals, contracts, and inventory needed to preserve an independent competitor.

For this deal, the price of admission could therefore be the sale of a major drug franchise or an advanced pipeline program, along with the research, data, manufacturing rights, and personnel needed to keep it competitive. A promise to stop one trial or give up one indication may not be enough when the same drugs and research programs extend across several cancers.

The larger problem is that there may not be one clean divestiture that resolves all of the overlap. If the FTC believes the competing programs are too connected, the required divestitures could become so extensive that they undermine the strategic reason for doing the merger in the first place.

PE: Which regulator would pose the highest hurdle for the merger?
Lanton: On pure competition law, I would place the FTC first, although only by a narrow margin. The United States represents a substantial portion of the commercial value of both portfolios, and the FTC would have multiple theories available involving current product competition, pipeline competition, portfolio leverage, and the possible elimination of independent research programs. The current FTC has also confirmed that the 2023 Merger Guidelines remain the framework for its merger review.

The European Commission would be a very close second and could be the more difficult regulator on pipeline and innovation issues. The Commission expressly examines marketed products, advanced pipeline products, and whether a merger could eliminate or weaken future innovation competition. It has also shown that it will consider overlapping research programs even before a product is ready for commercialization.

The CMA should not be underestimated, but the most visible United Kingdom concern could be the strategic future of AstraZeneca as a major British company rather than a distinct competition issue. If the transaction involved moving control, headquarters, research investment, or major employment away from the United Kingdom, the political scrutiny could become as important as the formal CMA review.

My ranking would therefore be the FTC first, the European Commission a very close second, and the CMA third on pure competition analysis. The European Commission could move into first place if the principal concerns involve early pipeline programs and the loss of innovation competition.

PE: What legal obligations do both companies have around disclosure if actual credible merger discussions begin?
Lanton: The United States and United Kingdom apply different disclosure standards.

Bristol Myers Squibb can generally keep preliminary discussions confidential until there is a definitive agreement, provided its public statements remain accurate and it does not selectively share material information with investors or analysts. Once a material agreement is signed, it would generally need to file a Form 8 K within four business days.

AstraZeneca faces a stricter standard, as United Kingdom rules generally require prompt disclosure of inside information, although disclosure may be delayed while negotiations remain confidential and the delay would not mislead investors. If a rumor becomes accurate, confidentiality is lost, or the share price moves unusually, the United Kingdom Takeover Code may require an announcement.

The rumor itself does not automatically create liability. The risk comes from what executives or directors do with the information. Trading, tipping others, leaking information to move the market, selectively briefing investors, or issuing a misleading denial could create legal exposure.

In practical terms, both boards must tightly control information and monitor the market. Bristol Myers Squibb may have more room to remain silent, while AstraZeneca could be forced to respond much earlier under United Kingdom rules.