[Federal Register Volume 81, Number 220 (Tuesday, November 15, 2016)]
[Notices]
[Pages 80056-80058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27440]


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FEDERAL TRADE COMMISSION

[File No. 151 0236]


Valeant Pharmaceuticals International, 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 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 December 7, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/valeantparagonpelicanconsent 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 Valeant Pharmaceuticals International, Inc., File No. 1510236'' on 
your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/valeantparagonpelicanconsent by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, write ``In the Matter of Valeant Pharmaceuticals 
International, Inc., File No. 1510236'' 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: Charles Harwood, FTC Northwest 
Regional Office, 915 Second Ave., Room 2896, Seattle, WA 98174 (206-
220-4480).

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 November 7, 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 December 7, 
2016. Write ``In the Matter of Valeant Pharmaceuticals International, 
Inc., File No. 1510236'' 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

[[Page 80057]]

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/valeantparagonpelicanconsent 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 Valeant 
Pharmaceuticals International, Inc., File No. 1510236'' 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. 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 December 7, 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 Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted for 
public comment an Agreement Containing Consent Order (``Consent 
Order'') with Valeant Pharmaceuticals International, Inc. (``Valeant'') 
to remedy the alleged anticompetitive effects resulting from Valeant's 
acquisition of Paragon Holdings I, Inc., including wholly-owned 
subsidiaries Paragon Vision Sciences, Inc. and CRT Technology, Inc. 
(``Paragon'').
    The Complaint alleges that the acquisition violated 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 markets for polymer discs, or ``buttons,'' used to 
make three different types of rigid gas permeable (``GP'') contact 
lenses: Orthokeratology contact lenses, large-diameter scleral contact 
lenses, and general vision correction contact lenses. The Consent Order 
would remedy the alleged violations by restoring competition in these 
GP button markets.
    Under the terms of the Consent Order, Valeant is required to divest 
Paragon in its entirety, including the assets of Pelican Products LLC 
(``Pelican''), a manufacturer of contact lens packaging.
    The proposed Consent Order has been placed on the public record for 
30 days to solicit comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will again review the proposed Consent Order and 
any comments received, and decide whether the Consent Order should be 
withdrawn, modified, or made final.

1. The Parties

    Valeant is a Canadian conglomerate that develops and markets 
prescription and non-prescription pharmaceutical products. Through its 
subsidiary Bausch + Lomb, Valeant is a leading producer of GP buttons 
used to make GP contact lenses. Prior to its acquisition by Valeant in 
May 2015, Paragon was a United States corporation with its principal 
place of business in Arizona. Paragon produces GP buttons used to make 
GP contact lenses and also produces finished GP lenses.
    After the Paragon acquisition, Valeant also purchased Pelican, a 
manufacturer of contact lens packaging, and the only producer of FDA-
approved vials for wet-shipping finished orthokeratology lenses. 
Pelican became a subsidiary of Paragon. This acquisition ensured 
Valeant's access to the vials, after Pelican's owner announced plans to 
exit the market.

2. The Relevant Market

    Both parties engage in developing, manufacturing, and selling GP 
buttons in the United States. The relevant product markets in which to 
analyze the effects of the acquisition are the manufacture and sale of 
FDA-approved GP buttons for: Orthokeratology GP lenses, which are worn 
to reshape the cornea; large-diameter scleral GP lenses, which cover 
the white of the eye and are used post-surgery, for transplants, and to 
treat eye disease; and general vision correction GP lenses. Each type 
of GP lens requires a GP button with parameters unique to that lens 
type.
    GP lenses are used, and in some cases are medically necessary, to 
address a variety of vision problems, including dry eyes, abnormal 
curvatures of the eye, corneal disease, post-eye surgery complications, 
and eye trauma. Optical labs use GP buttons to make GP contact lenses 
to fulfill prescriptions from eye care professionals. Prescriptions 
typically specify a particular product and brand of button, and eye 
care professionals invest significant capital in fitting equipment for 
the brands they prescribe.
    The FDA requires that GP lenses must be made from FDA-approved GP 
buttons. Thus, there are no alternatives to FDA-approved GP buttons for 
making each of the types of GP lenses and the relevant geographic 
market is the United States.
    Prior to the acquisition, Valeant and Paragon independently 
produced buttons for all three types of GP lenses. In the market for 
orthokeratology GP buttons, the combination of Valeant and Paragon was 
a merger to monopoly. In the market for scleral GP buttons, the 
combined company accounted for 70-80 percent of the market. In the 
market for general vision correction GP buttons, the combined company's 
market share was approximately 65-75 percent.

3. Effects of Acquisitions

    The acquisition likely caused significant competitive harm in the 
relevant markets. Specifically, the acquisition of Paragon eliminated 
actual, direct, and substantial competition between Valeant and Paragon 
in the relevant markets for GP buttons and allowed Valeant to 
unilaterally exercise market power. For instance, following the 
acquisition, Valeant increased prices in all three GP button markets.
    Prior to the acquisition, Valeant and Paragon also competed on 
innovation, with the incentive to develop new GP lens buttons and 
improve button materials by investing in research, development, and 
adoption. This innovation led to broader product lines, improvements to 
button materials, and marketing and education funding for optical labs. 
The acquisition also eliminated this innovation competition between 
Valeant and Paragon.

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4. Entry and Efficiencies

    Entry into the relevant market has not been, and would not be, 
timely, likely, or sufficient to deter or counteract the 
anticompetitive effects of the acquisition. Optical labs have limited 
short-term ability to switch from Valeant and Paragon, which supply the 
majority of their GP scleral buttons and GP general vision correction 
buttons, and 100 percent of their GP orthokeratology buttons. Optical 
labs might try to persuade eye care professionals to switch to a 
different material and brand, but ultimately the decision is made by 
the eye care professional, for whom such a change is costly and time-
consuming.
    Considerable entry barriers also arise from the FDA approval 
process. For GP orthokeratology buttons, the FDA premarket approval 
process takes several years because finished orthokeratology lenses 
worn overnight are Class III medical devices. For GP scleral and 
general vision buttons, the FDA premarket notification process likely 
requires at least one year, as the finished lenses incorporating such 
buttons are Class II medical devices.
    We did not find any evidence of efficiencies that would outweigh 
the competitive concerns arising from the Paragon acquisition.

5. Consent Order

    The proposed Consent Order requires Valeant to divest Paragon in 
its entirety no later than ten (10) days after the order date, to 
remedy the concerns raised by the acquisition and restore competition 
in the relevant markets by instituting Paragon as an independent, 
viable competitor to Valeant. The proposed Consent Order also requires 
Valeant to divest Pelican with Paragon to ensure continued access to 
FDA-approved vials for shipping its finished lenses.
    The proposed Consent Order requires that Valeant must divest 
Paragon and Pelican to Paragon Companies LLC in an upfront transaction. 
Paragon Companies LLC is a newly created entity owned by Joe Sicari. 
Mr. Sicari was the president of Paragon prior to its acquisition by 
Valeant in May 2015.
    The Commission may, at any time, appoint a Monitor with the power 
and authority to ensure that Valeant fulfills all obligations and 
responsibilities under the Consent Order and Divestiture Agreement.
    The Consent Order will remain in effect for ten (10) years, and 
contains standard compliance and reporting requirements.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-27440 Filed 11-14-16; 8:45 am]
BILLING CODE 6750-01-P