Submitted to the Federal Trade Commission o ~ / " the Pfizer - Wyeth and Merck - Schering Plough Mergers

Introduction We are both former Directors ofthe Bureau ofEconomics at the Federal Trade Commission, and have studied, lectured and written on the economics of the pharmaceutical industry for many years. As such, we feel obliged to submit these comments to the Commission because, in our judgment, both the Pfizer-Wyeth and Merck-Schering Plough mergers will further retard the rate of pharmaceutical innovation and impose substantial consumer harm. This is an important matter, and we urge the Federal Trade Commission to consider these issues more fully. Pharmaceutical innovation is critically important for continued improvements in public health. l And for many decades, the major pharmaceutical companies have played an essential role in sustaining a rapid pace ofpharmaceutical innovation. Society has benefited greatly from their efforts. In recent years, however, the productivity of the innovation process has declined. The leading companies have spent increasing amounts on research and development without showing a corresponding increase in the number ofnew products introduced. Some companies have responded by seeking refuge in the greater scale achieved