[Federal Register Volume 79, Number 132 (Thursday, July 10, 2014)]
[Notices]
[Pages 39388-39390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16147]


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FEDERAL TRADE COMMISSION

[File No. 141 0098]


Actavis plc and Forest Laboratories; Analysis of Proposed Consent 
Order 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 of Agreement Containing Consent Order to Aid 
Public Comment describes both the allegations in the draft complaint 
and the terms of the consent order--embodied in the consent agreement--
that would settle these allegations.

DATES: Comments must be received on or before July 30, 2014.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/actavisdivestapp online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Actavis plc and Forest 
Laboratories--Consent Agreement; File No. 141 0098'' on your comment 
and file your comment online at https://ftcpublic.commentworks.com/ftc/actavisdivestapp by following the instructions on the web-based form. 
If you prefer to file your comment on paper, 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: Christine Tasso, Bureau of 
Competition, (202-326-2232), 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 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 June 30, 2014), 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 July 30, 2014. 
Write ``Actavis plc and Forest Laboratories--Consent Agreement; File 
No. 141 0098'' 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/actavisdivestapp 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 plc and Forest 
Laboratories--Consent Agreement; File No. 141 0098'' 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

[[Page 39389]]

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 July 30, 2014. 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 Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Actavis plc (``Actavis'') that is designed to remedy 
the anticompetitive effects in three current generic pharmaceutical 
markets and two future markets resulting from Actavis' acquisition of 
Forest Laboratories, Inc. (``Forest''). Under the terms of the proposed 
Consent Agreement, the parties are required to: (1) Return all of 
Forest's rights and assets related to generic diltiazem hydrochloride 
(AB4) to Valeant Pharmaceuticals International, Inc. (``Valeant''), (2) 
divest all of Actavis' rights and assets to generic ursodiol and 
generic lamotrigine ODT to Impax Laboratories, Inc. (``Impax''), and 
(3) divest all of Forest's rights and assets to generic propranolol 
hydrochloride to Catalent Pharma Solutions, Inc. (``Catalent'').
    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, in order 
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 an Agreement and Plan of Merger dated February 17, 
2014, Actavis plans to acquire, 100% of the voting securities of Forest 
for a total value of approximately $25 billion (the ``Proposed 
Acquisition''). The Commission alleges in its Complaint 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 three current relevant product markets: (1) Generic 
diltiazem hydrochloride extended release capsules (AB4) (generic 
Tiazac) (``generic diltiazem hydrochloride (AB4)''; (2) generic 
ursodiol tablets (``generic ursodiol''); and (3) generic propranolol 
hydrochloride extended release capsules (``generic propranolol 
hydrochloride''), and the future relevant market of lamotrigine orally 
disintegrating tablets (``ODT'') and its generic equivalent. The 
proposed Consent Agreement will remedy the alleged violations by 
preserving the competition that would otherwise be eliminated by the 
Proposed Acquisition.

The Products and Structure of the Markets

    The Proposed Acquisition would reduce the number of suppliers in 
three current relevant markets, each of which has only a limited number 
of market participants. It would also likely delay the introduction of 
generic competition against Lamictal ODT, the branded lamotrigine 
orally disintegrating tablets marketed by Forest.
    Generic versions of drugs are usually launched after a branded 
product's patents expire, or a generic supplier successfully challenges 
such patents in court or reaches a legal settlement with the branded 
manufacturer. When only one generic product is available, the price for 
the 2 branded product acts as a ceiling above which the generic 
manufacturer cannot price its product. During this period, the branded 
product competes directly with the generic. Once multiple generic 
suppliers enter a market, the branded drug manufacturer usually ceases 
to provide any competitive constraint on the prices for generic 
versions of the drug. Rather, the generic suppliers compete only 
against each other. In generic 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 would likely have a direct and substantial 
anticompetitive effect on pricing.
    The Proposed Acquisition would reduce current competition in 
markets for three currently marketed generic prescription drugs--
generic diltiazem hydrochloride (AB4), which is used to treat 
hypertension and chronic stable angina, generic ursodiol, which is used 
to treat primary biliary cirrhosis of the liver, and generic 
propranolol hydrochloride, an extended release drug indicated for the 
treatment of hypertension. The structure of these markets is as 
follows:
     The generic diltiazem hydrochloride (AB4) market currently 
has three suppliers: Actavis, Forest, and Sun Pharmaceutical 
Industries, Ltd. The Proposed Acquisition would reduce the number of 
suppliers in this market from three to two.
     The generic ursodiol market currently has four suppliers: 
Actavis, Forest, which distributes its product through Prasco 
Laboratories, Glenmark Pharmaceuticals, Ltd., and Par Pharmaceutical 
Companies. The Proposed Acquisition would reduce the number of 
suppliers in this market from four to three.
     The generic propranolol hydrochloride market currently has 
four suppliers: Actavis, Forest, which distributes its product through 
Breckenridge Pharmaceutical, LLC, Rouses Point Pharmaceuticals, and 
Upsher-Smith Laboratories. The Proposed Acquisition would reduce the 
number of suppliers in this market from four to three.
    In addition to reducing current competition in three generic 
prescription markets, the proposed transaction would significantly 
reduce competition in the future market of lamotrigine orally 
disintegrating tablets:
     Lamictal ODT is a lamotrigine orally disintegrating tablet 
indicated for seizures. Forest currently manufactures Lamictal ODT for 
GlaxoSmithKline plc (``GSK''). GSK owns the New Drug Application for 
Lamictal ODT and markets the product. Actavis holds the only approved 
Abbreviated New Drug Application to market generic lamotrigine ODT. 
Thus, Actavis appears likely to be the first generic entrant and would 
be the sole competitor to Forest/GSK's branded Lamictal ODT product for 
a significant period of time. The Acquisition would likely delay or 
preclude the entry of Actavis' generic product.

Entry

    Entry into the markets for the Products would not be timely, 
likely, or sufficient in magnitude, character, and scope to deter or 
counteract the anticompetitive effects of the acquisition. The 
combination of drug development times and regulatory requirements, 
including U.S. Food and Drug Administration (``FDA'') approval, is 
costly and lengthy. Industry participants also note that expertise and 
facilities associated with manufacturing extended release products and 
orally disintegrating tablets is sufficiently specialized that a 
relatively small number of firms participate in such markets.

Effects

    The Proposed Acquisition would likely cause significant 
anticompetitive

[[Page 39390]]

harm to consumers in the relevant generic pharmaceutical markets by 
eliminating current and/or future competition in concentrated existing 
generic markets or in future generic markets. In generic 
pharmaceuticals markets, price is heavily influenced by the number of 
participants with sufficient supply. Market participants consistently 
characterize generic drug markets as commodity markets in which the 
number of generic suppliers has a direct impact on pricing. Customers 
and competitors alike have confirmed that the prices of the generic 
pharmaceutical products at issue continue to decrease with new entry 
even after a number of suppliers have entered these generic markets. 
Further, customers generally believe that having at least four 
suppliers in a generic pharmaceutical market produces more competitive 
prices than if fewer suppliers are available to them.
    The evidence shows that anticompetitive effects are likely to 
result from the Proposed Acquisition due to a decrease in the number of 
independent competitors in the markets at issue. In each of the current 
generic prescription markets, industry participants have indicated that 
the presence of Forest as a competitor has allowed them to negotiate 
lower prices from other suppliers, including Actavis, and has allowed 
them to locate additional supply in times of product shortages from 
their existing suppliers.
    The evidence also shows that the Proposed Acquisition would 
eliminate significant future competition between Actavis and Forest in 
the market for lamotrigine orally disintegrating tablets because, 
absent the Proposed Acquisition, Actavis likely would have been the 
first generic supplier to enter the market.
    By eliminating the significant current and future competition 
between the parties, the Proposed Acquisition will likely cause U.S. 
consumers to pay significantly higher prices for these generic drugs, 
absent a remedy.

The Consent Agreement

    The proposed Consent Agreement effectively remedies the Proposed 
Acquisition's anticompetitive effects in each of the relevant product 
markets. Pursuant to the Consent Agreement, the parties are required to 
return all of Forest's rights and assets related to generic diltiazem 
hydrochloride (AB4) to Valeant, divest all of Actavis' rights and 
assets to generic ursodiol and generic lamotrigine ODT to Impax, and 
provide all of Forest's rights and assets to 4 generic propranolol 
hydrochloride to Catalent. The parties must accomplish these 
divestitures and relinquish their rights no later than ten days after 
the Proposed Acquisition is consummated.
    The Commission's goal in evaluating possible purchasers of divested 
assets is to maintain the competitive environment that existed prior to 
the Proposed Acquisition. If the Commission determines that Valeant, 
Impax, or Catalent is not an acceptable acquirer, or that the manner of 
the divestiture is not acceptable, the proposed D&O requires the 
parties to unwind the sale and then divest the products within six 
months of the date the D&O becomes final to another Commission-approved 
acquirer or acquirers. The proposed D&O further allows the Commission 
to appoint a trustee in the event the parties fail to divest the 
products.
    The proposed Consent Agreement contains several provisions to help 
ensure that the divestitures are successful. With regard to generic 
diltiazem hydrochloride (AB4), the proposed Consent Agreement requires 
that Forest transfer to Valeant all confidential business information 
and requires that Actavis and Forest take all actions that are 
necessary to maintain the full viability and marketability of the 
product until Valeant commences the distribution, marketing, and sale 
of the product. With regard to generic ursodiol, generic lamotrigine 
ODT, and generic propranolol hydrochloride (termed ``Contract 
Manufacture Products'' in the Consent Agreement), the proposed Consent 
Agreement requires Actavis and Forest to manufacture and supply generic 
ursodiol and generic lamotrigine ODT to Impax and generic propranolol 
to Catalent following the divestiture while they seek the necessary FDA 
approval.
    The Commission has agreed to appoint Frank Civille to act as an 
interim monitor to assure that Actavis and Forest expeditiously comply 
with all of their obligations and perform all of their responsibilities 
pursuant to the Consent Agreement. In order to ensure that the 
Commission remains informed about the status of the transfer of rights 
and assets, the Consent Agreement requires Actavis and Forest to file 
reports with the interim monitor who will report in writing to the 
Commission concerning performance by the parties of their obligations 
under the Consent Agreement.
    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. 2014-16147 Filed 7-9-14; 8:45 am]
BILLING CODE 6750-01-P