[Federal Register Volume 80, Number 168 (Monday, August 31, 2015)]
[Notices]
[Pages 52475-52478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21513]


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FEDERAL TRADE COMMISSION

[File No. 151 0074]


Pfizer Inc. and Hospira, Inc.; Analysis of Proposed 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 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 September 23, 2015.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/pfizerhospiraconsent online or on paper, 
by following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Pfizer Hospira 
Consent, File No. 151 0074'' on your comment and file your comment 
online at https://ftcpublic.commentworks.com/ftc/pfizerhospiraconsent 
by following the instructions on the web-based form. If you prefer to 
file your comment on paper, write ``Pfizer Hospira Consent, File No. 
151 0074'' 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 A. Wallace, Bureau of 
Competition, (202-326-3085), 600 Pennsylvania Avenue NW., Washington, 
DC 20580.

[[Page 52476]]


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 orders to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, have 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 August 24, 2015), 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 September 23, 
2015. Write ``Pfizer Hospira Consent, File No. 151 0074'' 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/pfizerhospiraconsent 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 ``Pfizer Hospira Consent, 
File No. 151 0074'' 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 September 23, 2015. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see 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 Pfizer Inc. (``Pfizer'') and Hospira, Inc. 
(``Hospira'') that is designed to remedy the anticompetitive effects 
resulting from Pfizer's acquisition of Hospira. Under the terms of the 
proposed Consent Agreement, the parties are required to divest all of 
Pfizer's rights and assets related to generic acetylcysteine inhalation 
solution and all Hospira's rights and assets related to clindamycin 
phosphate injection, voriconazole injection, and melphalan 
hydrochloride injection to Alvogen Group, Inc. (``Alvogen'').
    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 an Agreement and Plan of Merger executed on February 5, 
2015, Pfizer proposes to acquire Hospira for approximately $16 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 
current competition in the markets for generic acetylcysteine 
inhalation solution and clindamycin phosphate injection and future 
competition in the markets for voriconazole injection and melphalan 
hydrochloride injection 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 
Acquisition.

I. The Products and Structure of the Markets

    The Proposed Acquisition would reduce the number of current 
suppliers in the markets for generic acetylcysteine inhalation solution 
and clindamycin phosphate injection, and reduce the number of future 
suppliers in the markets for voriconazole injection and melphalan 
hydrochloride injection.
    Generic acetylcysteine inhalation solution is a mucolytic therapy 
used to treat certain respiratory disorders. Acetylcysteine liquefies 
mucus in the lungs, which then can be coughed or suctioned out. 
Patients inhale the solution through a nebulizer mask, facemask, 
mouthpiece, tent, or intermittent positive pressure-breathing machine. 
Only three companies--Fresenius Kabi, partnered with Gland Pharma Ltd. 
and Pfizer; Hospira; and

[[Page 52477]]

American Regent, Inc.--supply generic acetylcysteine inhalation 
solution in the United States. The branded version of this product, 
Mucomyst, is no longer available. Fresenius/Gland/Pfizer is the market 
leader with an approximately 69% share and Hospira has an approximately 
22% share.
    Clindamycin phosphate injection is an antibiotic used to treat 
lung, skin, blood, bone, joint, and gynecological infections in 
hospitals. Currently, only four companies supply the product in the 
United States: Pfizer, Hospira, Sagent Pharmaceuticals, and Fresenius 
Kabi. While Pfizer's clindamycin phosphate product is a branded 
version, the price of Pfizer's product is competitive with the generic 
products. Customers, therefore, play the branded and the generic 
products against each other to negotiate prices. Pfizer and Hospira 
have a combined approximate market share of more than 80%.
    Voriconazole injection is an antifungal medication used to treat 
significant fungal infections in hospitals. Pfizer currently sells its 
Vfend brand voriconazole injection product priced competitively with 
the only generic version in the United States, which is offered by 
Sandoz. Hospira is one of a limited number of suppliers capable of 
entering the voriconazole injection market in the near future.
    Melphalan hydrochloride injection is a chemotherapy agent used to 
treat multiple myeloma and ovarian cancer. There are currently two 
melphalan hydrochloride injection products available in the United 
States: The branded version, which was originally developed and 
marketed by Glaxo Smith Kline and is now supplied by ApoPharma USA, 
Inc. (``ApoPharma''), and the generic version, sold by Mylan N.V. 
(``Mylan''). ApoPharma prices its branded version of the product 
competitively with the generic version offered by Mylan. Pfizer and 
Hospira are developing melphalan hydrochloride injection products, and 
are two of a limited number of suppliers capable of entering the market 
in the near future.

II. Entry

    Entry into the four markets described earlier would not be timely, 
likely, or sufficient in magnitude, character, and scope to deter or 
counteract the anticompetitive effects of the Proposed Acquisition. 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

    In markets for pharmaceutical products used primarily in hospitals, 
like the products here, branded drug manufacturers are typically unable 
to command a premium price for their products because of the 
reimbursement structure for drugs administered in hospitals. Hospitals 
typically would not be reimbursed for using a premium-priced branded 
injectable product, when lower-priced therapeutically equivalent 
products are available. As a result, brand manufacturers of sterile 
injectable or inhalation products may lower their prices and compete 
directly with generic manufacturers' products. Customers tend to 
gravitate to the lowest-priced product, regardless of whether the drug 
was approved by the FDA as a brand or a generic product.
    Like true generic pharmaceutical markets, these multi-source 
pharmaceutical products generally are commodities, and prices often are 
inversely correlated with the number of competitors in each market. As 
the number of suppliers offering a therapeutically equivalent drug 
increases, the price for that drug decreases due to the direct 
competition between the existing suppliers and each additional 
supplier. The Proposed Acquisition would eliminate the current 
competition between two of the three competitors in the market for 
generic acetylcysteine inhalation solution, resulting in a duopoly and 
likely price increases. Similarly, in the market for clindamycin 
phosphate solution, the Proposed Acquisition would eliminate 
competition between two of only four current competitors, leading to 
higher prices.
    In addition, the Proposed Acquisition likely would cause 
significant anticompetitive harm to consumers by eliminating future 
competition that would otherwise have occurred if Pfizer and Hospira 
remained independent. The evidence shows that anticompetitive effects 
are likely to result from the Proposed Acquisition due to the 
elimination of an additional independent entrant in the currently 
concentrated markets for voriconazole injection and melphalan 
hydrochloride injection, which would have enabled customers to 
negotiate lower prices. Customers and competitors have observed--and 
pricing data confirms--that the price of these pharmaceutical products 
decreases with new entry even after several other suppliers have 
entered the market. Thus, absent a remedy, the Proposed Acquisition 
will likely cause U.S. consumers to pay significantly higher prices for 
voriconazole injection and melphalan hydrochloride injection.

IV. The Consent Agreement

    The proposed Consent Agreement effectively remedies the competitive 
concerns raised by the acquisition in all four markets at issue by 
requiring Pfizer to divest all its rights to generic acetylcysteine 
inhalation solution and Hospira to divest all of its rights and assets 
related to clindamycin phosphate injection, voriconazole injection, and 
melphalan hydrochloride injection to Alvogen. Alvogen is a private, 
global pharmaceutical corporation that develops, manufacturers, sells, 
and distributes generic pharmaceuticals in the United States and in 33 
other countries around the world. 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 Alvogen 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 Alvogen 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. Alvogen will 
acquire Pfizer's acetylcysteine inhalation ANDA and stream of revenue 
associated with the product and will assume Pfizer's role in the 
contractual relationships with the third parties. Pfizer/Hospira will 
supply Alvogen with the clindamycin phosphate injection products for 
three years while the company transfers the manufacturing technology to 
Alvogen or its designee. Similarly, Pfizer/Hospira will transfer the 
third-party development and contract manufacturing agreements for 
voriconazole injection and melphalan hydrochloride injection to 
Alvogen. The proposed Order also requires Pfizer and Hospira to provide 
transitional services to Alvogen to assist it in establishing its 
manufacturing capabilities and securing all of the necessary FDA 
approvals. These transitional services include technical assistance to 
manufacture clindamycin in substantially the same manner and quality 
employed or

[[Page 52478]]

achieved by Hospira, and advice and training from knowledgeable 
employees of the parties.
    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. 2015-21513 Filed 8-28-15; 8:45 am]
BILLING CODE 6750-01-P