[Federal Register Volume 78, Number 211 (Thursday, October 31, 2013)]
[Notices]
[Pages 65313-65315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-25847]
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FEDERAL TRADE COMMISSION
[File No. 131 0152]
Actavis, Inc. a corporation, and Warner Chilott PLC; Analysis of
Agreement Containing Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent orders--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before November 12, 2013.
ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/activiswarnerconsent online or on paper,
by following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Actavis Warner, File
No. 131 0152'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/actaviswarnerconsent following the
instructions on the web-based form. If you prefer to file your comment
on paper, mail or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex
D), 600 Pennsylvania Avenue NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Keri Wallace (202-326-3085), FTC,
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC
20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for September 27, 2013), on the World Wide Web,
at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained
from the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue
NW., Washington, DC 20580, either in person or by calling (202) 326-
2222.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before November 12,
2013. Write ``Actavis Warner, File No. 131 0152'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which . . . is privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/actaviswarnerconsent by following the instructions on the web-based
form. If this Notice appears at http://www.regulations.gov/#!home you
also may file a comment through that Web site.
If you file your comment on paper, write ``Actavis Warner, File No.
131 0152'' on your comment and on the envelope, and mail or deliver it
to the following address: Federal Trade Commission, Office of the
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW.,
Washington, DC 20580. If possible, submit your paper comment to the
Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before November 12, 2013. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to
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final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') from Actavis, Inc. (``Actavis'') and Warner Chilcott plc
(``Warner Chilcott'') that is designed to remedy the anticompetitive
effects of Actavis's proposed acquisition of Warner Chilcott. Under the
terms of the proposed Consent Agreement, Actavis would be required to
divest to Amneal Pharmaceuticals L.L.C. (``Amneal'') all of Actavis's
rights and assets relating to generic versions of the drugs Femcon FE,
Loestrin 24 FE, Lo Loestrin FE, and Atelvia. Actavis will also enter
into an agreement to supply generic versions of the Femcon FE and
Loestrin 24 FE products to Amneal for a period of two years, which
Amneal has the option to extend for up to two additional one-year terms
if it chooses.
The proposed Consent Agreement has been placed on the public record
for thirty days for receipt of comments by interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will again review the proposed
Consent Agreement and the comments received, and will decide whether it
should withdraw from the proposed Consent Agreement, modify it, or make
final the Decision and Order (``Order'').
Pursuant to a Transaction Agreement dated May 19, 2013, Actavis
proposes to acquire Warner Chilcott in a transaction valued at
approximately $8.5 billion (``Proposed Acquisition''). The Commission's
Complaint alleges that the Proposed Acquisition, if consummated, would
violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.
45, by lessening competition in the U.S. markets for (1) Generic Femcon
FE, (2) Loestrin 24 FE and its generic equivalents, (3) Lo Loestrin FE
and its generic equivalents, and (4) Atelvia and its generic
equivalents. The proposed Consent Agreement will remedy the alleged
violations by replacing the competition that would otherwise be
eliminated by the Proposed Acquisition.
The Impact of Generics in Pharmaceutical Markets
In human pharmaceutical product markets, price generally decreases
as the number of generic competitors increases. Accordingly, the
reduction in the number of suppliers within each relevant market has a
direct and substantial effect on pricing. When the first generic
version of a drug enters the market, it typically competes by selling
at a discount to the branded drug. At that point, the brand typically
loses most of its sales to the generic version. During the period in
which only one generic product is available, the price for the branded
product acts as a ceiling above which the generic manufacturer cannot
price its product. In most cases, once additional generic versions of
the drug enter the market, competition among the generic competitors
drives generic pricing down further. Prices continue to decrease
incrementally with the entry of the second, third, fourth, and even
fifth generic oral pharmaceutical competitor.
Generic drugs are typically launched upon the expiration of the
branded product's patents. If the generic company intends to launch its
product before the expiration of the branded product's patents, it must
notify the FDA and certify that its product does not infringe the
branded company's patent or that the branded company's patents are
invalid. This is referred to as a Paragraph IV certification. A
Paragraph IV certification typically leads to patent infringement
litigation between the generic company and branded company. The first
company to file a Paragraph IV ANDA has the right to market its generic
drug exclusively for a period of 180 days if it is successful in its
litigation against the branded drug manufacturer.\2\ No other firm,
even those that subsequently submit Paragraph IV ANDAs, may enter the
generic market until after the conclusion of this marketing exclusivity
period. The prospect of earning higher profits as the only firm
marketing a generic version of a drug for 180 days provides an
incentive to defend against the patent infringement claims brought by
the brand drug manufacturer. Thus, the firm with exclusivity usually
takes the leading role, and invests the greatest resources, in these
cases.
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\2\ Uncertainty occasionally exists regarding whether a
Paragraph IV ANDA has been filed properly, which creates uncertainty
about whether a company is eligible to receive marketing exclusivity
rights from the FDA. In addition, the FDA sometimes determines that
more than one company is eligible for market exclusivity rights
based on the timing of their filings.
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The Proposed Acquisition Would Reduce the Number of Suppliers in the
Four Relevant Markets
Femcon FE is a chewable oral contraceptive tablet that contains
progestin and estrogen. Warner Chilcott manufactures and markets the
branded version of the drug. Only two companies--Warner Chilcott (via
an authorized generic it supplies to Lupin Ltd.\3\) and Actavis--
currently sell significant volumes of generic Femcon FE in the United
States. Teva Pharmaceutical Industries Ltd. (``Teva'') also has
approval from the FDA to sell generic Femcon FE, but it has made only
de minimis sales of this product since 2011. In 2012, Actavis had
approximately 70 percent of generic sales, while Warner Chilcott had
approximately 30 percent. Therefore, the proposed acquisition combines
two of the three firms approved to supply generic Femcon FE, and the
only two significant suppliers of this drug today.
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\3\ Branded pharmaceutical companies, such as Warner Chilcott,
manufacture authorized generic products for sale under a non-brand
label at generic prices. In this case, Warner Chilcott has
contracted with Lupin to market the authorized generic version of
Femcon FE, though in other markets a branded drug company may market
its own generic product.
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Loestrin 24 FE is a low-dose progestin/estrogen combination oral
contraceptive product. Warner Chilcott manufactures and markets the
branded version of the drug. No companies currently market a generic
version of Loestrin 24 FE. Actavis is likely to be the first generic
supplier to compete against Warner Chilcott and no other firm is likely
to enter the market for generic Loestrin 24 FE in time to prevent the
anticompetitive effects from the Proposed Acquisition.
Lo Loestrin FE is another low-dose progestin/estrogen combination
oral contraceptive product. Warner Chilcott manufactures and markets
the branded version of the drug. No companies currently market a
generic version of Lo Loestrin FE, but Lupin and Actavis each plan to
launch a generic product. Both companies are currently engaged in
patent litigation with the brand drug manufacturer, but it remains
uncertain which firm would receive marketing exclusivity rights from
the FDA if it succeeded in defending against Warner Chilcott's claims.
Thus, absent the acquisition, Actavis may be the first and only generic
competitor to the Warner Chilcott branded product for a period of 180
days.
Atelvia is a delayed-release tablet containing risedronate sodium
that is used to treat postmenopausal osteoporosis. Warner Chilcott
markets the branded version of the drug. No generic version of the
product is currently available in the United States. Actavis, Teva, and
Ranbaxy Laboratories Limited all plan to market generic versions of
Atelvia, and all three companies are currently engaged in patent
litigation with Warner Chilcott. However, uncertainty remains about
which one will have marketing exclusivity rights if successful in the
litigation. Thus, absent the acquisition, Actavis may be the first and
only generic competitor to Warner Chilcott's
[[Page 65315]]
branded product for a period of 180 days.
Entry Into the Relevant Markets
Entry Into the markets for generic Femcon FE, Lo Loestrin 24 and
its generic equivalents, Loestrin 24 FE and its generic equivalents,
and Atelvia and its generic equivalents would not be timely, likely, or
sufficient in magnitude, character, and scope to deter or counteract
the anticompetitive effects of the acquisition. De novo entry would not
take place in a timely manner because the combination of drug
development times and FDA approval requirements would delay entry by at
least two years. Even companies for which the FDA approval process is
well underway face additional barriers, including Hatch-Waxman
regulatory exclusivity and pending patent litigation, that prevent them
from entering these markets in time to deter the price increases that
would occur after consummation of the Proposed Acquisition.
The Anticompetitive Effects of the Acquisition
The Proposed Acquisition would cause significant anticompetitive
harm to consumers in the U.S. markets for generic Femcon FE, Lo
Loestrin 24 and its generic equivalents, Lo Loestrin FE and its generic
equivalents, and Atelvia and its generic equivalents. The Proposed
Acquisition would eliminate the current competition between the only
two significant suppliers of generic Femcon FE, leading to
significantly higher prices for this drug. The acquisition may also
delay the onset of beneficial generic competition in the markets for
Loestrin 24 FE, Lo Loestrin FE, and Atelvia. Evidence, including
information regarding the status of the FDA approval process for
potential suppliers of generic Loestrin 24 FE, suggests that Actavis
will be the first generic supplier to compete against Warner Chilcott's
branded product. Moreover, no other generic supplier is likely to enter
the market for a significant period of time. Thus, the combined firm
would likely delay the entry of Actavis's generic version of Loestrin
24 FE or, at a minimum, cause Actavis's generic drug to compete less
vigorously against Warner Chilcott's branded product, resulting in
higher prices for consumers. Similarly, in the markets for Lo Loestrin
FE and Atelvia, Actavis may be the first and only generic competitor to
Warner Chilcott's branded products for a significant period absent the
Proposed Acquisition. By eliminating this potential competition between
Warner Chilcott and Actavis in each of these markets, the Proposed
Acquisition would harm U.S. consumers by substantially increasing the
likelihood of higher post-acquisition prices for Lo Loestrin FE and
Atelvia.
The Proposed Consent Agreement
The proposed Consent Agreement effectively remedies the Proposed
Acquisition's anticompetitive effects in the relevant markets by
requiring Actavis to divest to Amneal certain rights and assets related
to generic Femcon FE, generic Loestrin 24 FE, generic Lo Loestrin FE,
and generic Atelvia no later than ten days after consummating the
acquisition. In addition, the Consent Agreement requires Actavis to
enter into a supply agreement to provide Amneal with generic versions
of the Femcon FE and Loestrin 24 FE products to sell in the United
States for up to four years. Amneal is a New Jersey-based generic
pharmaceutical company that currently markets 65 products and maintains
an active product development pipeline. With its experience in generic
markets, Amneal is well positioned to replicate the competition that
would otherwise be lost as a result of the Proposed Acquisition.
If the Commission determines that Amneal is not an acceptable
acquirer of the assets to be divested, or that the manner of the
divestitures is not acceptable, Actavis must unwind the sale to Amneal
and divest the products within six months of the date the Order becomes
final, to a Commission-approved acquirer. If Actavis fails to divest
the products as required, the Commission may appoint a trustee to
divest the products.
The proposed Consent Agreement contains several provisions to help
ensure that the divestitures are successful. The Order requires Actavis
to maintain the economic viability, marketability, and competitiveness
of the divestiture products until such time as they are transferred to
Amneal or another Commission-approved acquirer. Actavis must also
transfer the manufacturing technology for the divestiture products to
Amneal and supply Amneal with the generic Femcon FE and Loestrin 24 FE
products during the transition period. In addition, the Consent
Agreement requires Actavis to relinquish any claim to marketing
exclusivity for generic Lo Loestrin FE and Atelvia products to ensure
that the incentives of the companies currently leading the patent
litigations relating to those products do not change.
The purpose of this analysis is to facilitate public comment on the
proposed Consent Agreement, and it is not intended to constitute an
official interpretation of the proposed Order or to modify its terms in
any way.
By direction of the Commission.
Donald S. Clark
Secretary.
[FR Doc. 2013-25847 Filed 10-30-13; 8:45 am]
BILLING CODE 6750-01-P