Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Akorn settles FTC charges in acquisition of Hi-Tech Pharmacal, (Apr 15, 2014)

By Linda O’Brien, J.D., LL.M.

Akorn Enterprises, Inc. has agreed to settle FTC charges that its proposed $640 million acquisition of Hi-Tech Pharmacal would be anticompetitive and lead to higher prices for consumers, the FTC announced yesterday. Under the proposed settlement, Akron and Hi-Tech Pharmacal, Inc. will sell the rights and assets to three generic prescription eye medications and two generic topical anesthetics to Watson Laboratories, Inc.

According to the FTC’s complaint challenging the acquisition, (In the Matter of Akron, Inc., File No. 131-0221) the relevant markets are highly concentrated and would reduce the suppliers for generic drugs. The transaction would reduce competition in the markets for (1) generic Ciloxan drops, which are eye drops used to treat bacterial eye infections and corneal ulcers; (2) generic Quixin drops, which are eye drops used to treat bacterial eye infections; (3) generic Xylocaine jelly, a topical anesthetic prescription drug; and (4) generic EMLA cream, a topical anesthetic prescription drug.

In its analysis to aid public comment, the FTC stated that, without the divestitures, future competition would be reduced in the U.S. market for generic Ilotycin ointment, prescribed for bacterial eye infections, which is currently sold by three firms in the U.S. Hi-Tech is poised to enter the market in the near future. Akorn’s acquisition of Hi-Tech, therefore, would deprive consumers of the benefits of future competition that would come with Hi-Tech’s entry into this highly concentrated market.

To preserve competition that would be lost due to the proposed transaction, the FTC’s proposed settlement order requires the parties to sell either Akorn’s or Hi-Tech’s rights and assets to each of the five drug products to Watson and requires Akorn to assign Watson its contract for making branded and generic EMLA cream within 10 days after the deal is consummated. If the FTC finds that Watson is not an acceptable acquirer of the drugs, it can require Akorn to unwind the sales and divest the drugs to another FTC-approved buyer within six months. Finally, the proposed order requires the companies to maintain the drugs to be sold as viable, marketable, and competitive pending their divestiture, and allows the FTC to appoint a monitor to ensure that the companies comply with the order’s requirements

The Commission vote to accept the agreement containing the proposed consent order for public comment was 4-0.

Companies: Akorn Enterprises, Inc.; Hi-Tech Pharmacal, Inc.

News: Antitrust FederalTradeCommissionNews