Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Actavis settles FTC charges that its proposed $8.5 billion acquisition of Warner Chilcott would be anticompetitive, (Sep 27, 2013)

The FTC announced today that international drug manufacturer Actavis, Inc. has agreed to sell all rights and assets to four generic pharmaceuticals—three oral contraceptives and an osteoporosis treatment—to settle FTC charges that its proposed $8.5 billion acquisition of drug-maker Warner Chilcott plc would be anticompetitive. As part of the proposed settlement, Actavis is seeking FTC approval to sell the rights and assets for each drug to New Jersey-based Amneal Pharmaceuticals L.L.C.

The FTC’s proposed order is designed to preserve competition in each of the following pharmaceutical markets:

• Generic Femcon FE, a chewable oral contraceptive tablet that contains progestin and estrogen;

• Loestrin 24 FE and its generic equivalents, which are low-dose progestin/estrogen combination oral contraceptives;

• Lo Loestrin FE and its generic equivalents, which are also progestin/estrogen combination oral contraceptives; and

• Atelvia and its generic equivalents, which are delayed-release tablets used to treat post-menopausal osteoporosis.

According to the FTC’s complaint, Actavis and Warner Chilcott are the only two significant manufacturers of generic Femcon FE, and the proposed acquisition would eliminate current competition between them in the market for this drug. For pharmaceutical products, the price generally decreases as the number of generic competitors increases. Accordingly, the reduction in the number of suppliers likely would have a direct and substantial effect on pricing.

In the other three markets, Warner Chilcott sells the branded drugs, but no company currently sells a generic version of Loestrin 24 FE, Lo Loestrin FE, or Atelvia. According to the FTC’s complaint, Actavis is likely to be the first generic supplier to compete with Warner Chilcott’s branded versions of these three drugs. Thus, the proposed acquisition would likely result in higher prices for U.S. consumers, because the merged firm would have the ability to delay the entry of Actavis’s generic product in each of these markets.

The proposed consent order requires Actavis to sell to Amneal all of Actavis’s rights and assets related to its generic versions of Femcon FE, Loestrin 24 FE, Lo Loestrin FE, and Atelvia. It also requires Actavis to enter into an agreement to supply generic versions of Femcon FE and Loestrin 24 FE to Amneal for two years, after which Amneal may extend the agreement for two more years. With 65 other generic products already on the market, the FTC believes Amneal has the expertise to replicate the competition for the four drugs that otherwise would have been lost through the proposed acquisition.

Finally, the proposed order requires Actavis to relinquish its claim to first filer marketing exclusivity for generic Lo Loestrin FE and Atelvia products to preserve the incentives of the companies currently leading the patent litigations against Warner Chilcott related to those products.

The Commission vote to accept the consent agreement containing the proposed consent order for public comment was 4-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through October 28, 2013, after which the Commission will decide whether to make the proposed consent order final.

Companies: Actavis, Inc.; Warner Chilcott plc; Amneal Pharmaceuticals L.L.C.

News: Antitrust FederalTradeCommissionNews