Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: FTC conditions Prestige Brands’ acquisition of Insight Pharmaceuticals on divestiture of motion sickness drug, (Sep 2, 2014)

By Linda O’Brien, J.D., LL.M.

Pharmaceutical company Prestige Brands Holdings, Inc., the maker of Dramamine, has agreed to divest assets and marketing rights for the over-the-counter motion sickness drug Bonine to settle FTC charges that Prestige’s proposed acquisition of Insight Pharmaceuticals Corporation would likely be anticompetitive, the FTC announced on August 28 (FTC v. Prestige Brands Holdings, Inc., File No. 141-0159).

In its complaint, the FTC alleged that Prestige’s Dramamine, the best-selling branded product in the market for over-the-counter motion-sickness drugs, and Insight’s Bonine are the only two branded products with significant sales. Absent a remedy, the acquisition would eliminate the close competition between Dramamine and Bonine, likely leading to higher prices for consumers.

Entry into the manufacture and sale of over-the-counter motion sickness medications would not be timely, likely, or sufficient in magnitude, character, and scope to deter or counteract the anticompetitive effects of the acquisition. The high up-front costs associated with establishing a reputable and competitive brand are significant when compared to the limited sales available in the United States, according to FTC analysis of the consent agreement.

Prestige proposed to acquire Insight for $750 million, under an agreement dated April 25, 2014. Under the terms of the proposed settlement with the FTC, Prestige is required to divest Bonine to Wellspring Pharmaceuticals within 10 days after the acquisition takes place. Based in Sarasota, Florida, Wellspring produces a range of over-the-counter medications and markets them in the United States and Canada.

The FTC will publish the consent agreement package in the Federal Register shortly and the agreement will be subject to public comment through September 29, 2014. Interested parties may submit written comments electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.

The Commission vote to accept the proposed consent order for public comment was 5-0.

Companies: Prestige Brands Holdings, Inc.; Insight Pharmaceuticals Corporation

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