Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Settlement disposes of FTC’s anticompetitive concerns over pharmaceutical company acquisition, (Jun 20, 2014)

By Greg Hammond, J.D.

The FTC has announced that it has approved a final order settling charges that Akorn Enterprises, Inc.’s acquisition of Hi-Tech Pharmacal, Inc. for $640 million was anticompetitive. The decision comes after a public comment period over a previous proposed order and alleviates the Commission’s concern with the acquisition leading to higher prices for consumers in current and future generic drug markets (In the Matter of Akorn, Inc., Docket No. C-4452, File No. 1310221).

According to the FTC’s complaint, Akorn’s purchase of Hi-Tech, if left unchecked, would substantially lessen competition and would create a monopoly within the relevant market. Specifically, competition would be significantly reduced for generic Ciloxan drops, generic Quixin drops, generic Xylocaine jelly, and generic EMLA cream, providing Akorn with over 70 percent of the U.S. market. Akorn would then be free to unilaterally exercise market power, causing competitors to engage in coordinated interaction, and ultimately leading to customers paying higher prices for their prescription medications, the Commission alleged.

The FTC also noted that future competition for generic Ilotycin ointment would be negatively impacted by the acquisition as well. “Hi-Tech is poised to enter the market in the near future,” stated the FTC in a previous news release. “Akorn’s acquisition of Hi-Tech, would deprive consumers of the benefits of future competition that would come with Hi-Tech’s entry into this highly concentrated market.”

The final order requires Akorn and Hi-Tech to sell their rights and assets for the five generic drugs to Watson Laboratories, Inc., and further requires Akorn to transfer its contract for making branded and generic topical anesthetic cream to Watson within 10 days after the deal is completed.

The Commission approved the final order with a vote of 4-0-1.

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

News: Antitrust FederalTradeCommissionNews