United States Senator Elizabeth Warren wrote a letter to the Federal Trade Commission's chair, Lina Khan, urging to investigate Novo Nordisk A/S (NYSE:NVO) proposed $16.5 billion acquisition of contract development and manufacturing organization Catalent Inc (NYSE:CTLT) thoroughly, amid growing concerns about potential antitrust violations.

Critics argue that this merger could increase Novo Nordisk's control over producing vital GLP-1 receptor agonists, drugs used to treat diabetes and obesity. This could potentially drive up prices and limit competition.

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Novo Nordisk already has a dominant 55% share of the booming GLP-1 market due to the success of its blockbuster drugs, Ozempic and Wegovy.

Catalent plays a key role in filling and packaging Novo Nordisk's GLP-1 products, but it also works with Eli Lilly And Co (NYSE:LLY), Novo Nordisk's main competitor in the GLP-1 market, primarily through its tirzepatide-based drugs, Mounjaro and Zepbound.

The concern is that if Novo Nordisk acquires Catalent, it could gain unprecedented access to Eli Lilly's production capacity, potentially allowing it to prioritize its drugs over its competitors.

The letter highlights that Novo Nordisk has faced scrutiny from the FTC. Earlier this year, the FTC warned Novo Nordisk for improperly listing patents related to its diabetes drugs in the FDA's Orange Book.

This behavior, combined with the company's current plans to acquire Catalent, raises concerns about Novo Nordisk's ability to further hinder competition.

Over recent decades, the consolidation of the U.S. pharmaceutical industry has led to fewer dominant firms and higher drug prices. From 1995 to 2015, major pharmaceutical companies dropped from 60 to just 10, as large corporations increasingly controlled healthcare services, from insurance to pharmacies.

Novo Nordisk's proposed acquisition of Catalent is considered part of this broader trend of vertical integration.

While Novo Nordisk claims it prioritizes patient access to diabetes medications, critics argue its actions suggest otherwise. The company recently discontinued Levemir, a long-acting insulin, the only option approved for use during pregnancy.

Although Novo Nordisk cited unfavorable formulary placement as the reason, the decision is seen as a way to reallocate production resources to its more profitable GLP-1 drugs.

Price Action: At last check Thursday, NVO stock was up 0.46% at $117.54, and CTLT stock was down 0.53% at $60.64.

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