Federal Register, Volume 81 Issue 37 (Thursday, February 25, 2016)

[Federal Register Volume 81, Number 37 (Thursday, February 25, 2016)]
[Notices]
[Pages 9467-9469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04040]

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FEDERAL TRADE COMMISSION

[File No. 151-0202]

Lupin Ltd., Gavis Pharmaceuticals LLC, and Novel Laboratories,
Inc.; Analysis 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 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 March 22, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/lupingavisnovelconsent online or on
paper, by following the instructions in the Request for Comment part of
the SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of
Lupin Ltd., Gavis Pharmaceuticals LLC, and Novel Laboratories, Inc.--
Consent Agreement; File No. 151-0202'' on your comment and file your
comment online at https://ftcpublic.commentworks.com/ftc/lupingavisnovelconsent by following the instructions on the web-based
form. If you prefer to file your comment on paper, write ``In the
Matter of Lupin Ltd., Gavis Pharmaceuticals LLC, and Novel
Laboratories, Inc.--Consent Agreement; File No. 151-0202'' on your
comment and on the envelope, and mail your comment to the following
address: Federal Trade Commission, Office of the Secretary, 600
Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580,
or deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Constitution Center, 400 7th
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Kari Wallace, (202-326-3085), 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 February 19, 2016), on the World Wide Web,
at http://www.ftc.gov/os/actions.shtm.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before March 22, 2016.
Write ``In the Matter of Lupin Ltd., Gavis Pharmaceuticals LLC, and
Novel Laboratories, Inc.--Consent Agreement; File No. 151-0202'' 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

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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/lupingavisnovelconsent 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 ``In the Matter of Lupin
Ltd., Gavis Pharmaceuticals LLC, and Novel Laboratories, Inc.--Consent
Agreement; File No. 151-0202'' on your comment and on the envelope, and
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610
(Annex D), Washington, DC 20580, or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024. 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 March 22, 2016. 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 Orders To Aid Public Comment

The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') from Lupin Ltd. (``Lupin'') and Gavis Pharmaceuticals LLC
and Novel Laboratories, Inc. (collectively ``Gavis'') that is designed
to remedy the anticompetitive effects resulting from Lupin's
acquisition of Gavis. Under the terms of the proposed Consent
Agreement, the parties are required to divest all of Gavis's rights and
assets related to generic doxycycline monohydrate capsules and generic
mesalamine extended release (``ER'') capsules to G&W Laboratories
(``G&W'').
The proposed Consent Agreement has been placed on the public record
for thirty days for receipt of comments from interested persons.
Comments received during this period will become part of the public
record. After thirty days, the Commission will again evaluate the
proposed Consent Agreement, along with the comments received, to make a
final decision as to whether it should withdraw from the proposed
Consent Agreement or make final the Decision and Order (``Order'').
Pursuant to Purchase and Sale Agreements dated July 23, 2015, Lupin
plans to acquire Gavis Pharmaceuticals LLC and Novel Laboratories, Inc.
for approximately $850 million (the ``Proposed Acquisitions''). Gavis
and Novel are related companies. Novel researches, develops and
manufactures generic pharmaceutical products, which Gavis markets and
sells. The Commission alleges in its Complaint that the Proposed
Acquisitions, 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 current
competition in the market for generic doxycycline monohydrate capsules
and future competition in the market for generic mesalamine ER capsules
in the United States. The proposed Consent Agreement will remedy the
alleged violations by preserving the competition that otherwise would
be eliminated by the Proposed Acquisitions.

I. The Products and Structure of the Markets

The Proposed Acquisitions would reduce the number of current
suppliers in the market for generic doxycycline monohydrate capsules
and reduce the number of future suppliers in the market for generic
mesalamine ER capsules.
Generic doxycycline is an antibiotic used for treating a variety of
different bacterial infections, including respiratory infections,
urinary tract infections, severe acne, skin and skin structure
infections, Lyme disease, and anthrax. Generic doxycycline monohydrate
is available in four strengths: 50 mg, 75 mg, 100 mg, and 150 mg. Gavis
and Lupin both market three of the four strengths, 50 mg, 75 mg, and
100 mg. Both Lupin and Gavis are recent entrants into the generic
doxycycline monohydrate market; Lupin launched its product in March
2014, while Gavis launched its product at the end of July 2015. Endo
International plc, Allergan, Inc., and Sun Pharmaceutical Industries
Ltd. also offer generic doxycycline monohydrate products in the United
States. All five companies offer the 100 mg strength, but only four
companies offer the 50 mg and 75 mg strengths.
Mesalamine ER capsules are used to treat ulcerative colitis.
Valeant Pharmaceuticals markets Apriso, the branded version of the
product, which is available in a 375 mg formulation. No generic version
of mesalamine ER capsules is currently available in the United States.
Lupin and Gavis are developing generic mesalamine ER capsules products,
and are two of a limited number of suppliers capable of entering the
market in the near future.

II. Entry

Entry into the two relevant markets would not be timely, likely, or
sufficient in magnitude, character, and scope to deter or counteract
the anticompetitive effects of the Proposed Acquisitions. The
combination of drug development times and regulatory requirements,
including approval by the United States Food and Drug Administration
(``FDA''), is costly and lengthy.

III. Effects

The Proposed Acquisitions likely would cause significant
anticompetitive harm to consumers by eliminating current competition
between Lupin and Gavis in the market for generic doxycycline
monohydrate capsules. Market participants characterize generic

[[Page 9469]]

doxycycline monohydrate capsules as commodity products. As the number
of suppliers offering a therapeutically equivalent drug increases, the
price for that drug generally decreases due to the direct competition
between the existing suppliers and each additional supplier. The
Proposed Acquisitions would combine two of only four companies offering
the 50 mg and 75 mg strengths of generic doxycycline monohydrate
capsules, likely leading consumers to pay higher prices.
In addition, the Proposed Acquisitions likely would cause
significant anticompetitive harm to consumers by eliminating future
generic competition that would otherwise have occurred in the
mesalamine ER capsule market if Lupin and Gavis remained independent.
The evidence shows that anticompetitive effects are likely to result
from the Proposed Acquisitions due to the elimination of an additional
independent entrant in the market for generic mesalamine ER. Customers
and competitors expect that the price of this pharmaceutical product
will decrease with new entry by Lupin and Gavis. Thus, absent a remedy,
the Proposed Acquisitions will likely cause U.S. consumers to pay
significantly higher prices for generic mesalamine ER.

IV. The Consent Agreement

The proposed Consent Agreement effectively remedies the competitive
concerns raised by the acquisitions in the markets at issue by
requiring Gavis to divest all its rights and assets relating to
doxycycline monohydrate capsules and mesalamine ER to G&W. Founded in
1919, G&W is a privately held, family-owned, generic pharmaceutical
company. G&W develops, manufactures, sells, and distributes generic
pharmaceuticals and over-the-counter products within the United States.
The Commission's goal in evaluating possible purchasers of divested
assets is to maintain the competitive environment that existed prior to
the Proposed Acquisitions. If the Commission determines that G&W is not
an acceptable acquirer, or that the manner of the divestitures is not
acceptable, the proposed Order requires the parties to unwind the sale
of rights to G&W and then divest the products to a Commission-approved
acquirer within six months of the date the Order becomes final. The
proposed Order further allows the Commission to appoint a trustee in
the event the parties fail to divest the products as required.
The proposed Consent Agreement and Order contain several provisions
to help ensure that the divestitures are successful. The proposed D&O
requires that Lupin supply G&W with generic doxycycline monohydrate
capsules for two years while Lupin transfers the manufacturing
technology to G&W's facility. To ensure the success of the generic
doxycycline monohydrate capsules divestiture, the proposed D&O requires
Lupin to provide transitional services to assist G&W in establishing
its manufacturing capabilities and securing all of the necessary FDA
approvals. These transitional services include technical assistance to
manufacture the product in substantially the same manner and quality
employed or achieved by Gavis, and advice and training from
knowledgeable employees of the parties.
To assist G&W with completing the regulatory work and setting up
and validating the manufacturing for the generic mesalamine ER product,
G&W will enter into a consulting agreement with Gavis's current CEO,
Dr. Veerappan Subramanian, who will not be employed by Lupin post-
transaction. Dr. Subramanian is the founder of Gavis and has previously
served as the chief scientist for the company. He has been involved
with the development and manufacturing of the generic mesalamine ER
product since the company started the formulation. G&W will also
inherit Gavis's ongoing patent litigation related to mesalamine ER. G&W
intends to retain Gavis's current counsel to continue the litigation.
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. 2016-04040 Filed 2-24-16; 8:45 am]
BILLING CODE 6750-01-P