[Federal Register Volume 83, Number 87 (Friday, May 4, 2018)]
[Notices]
[Pages 19764-19767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09546]


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FEDERAL TRADE COMMISSION

[File No. 181 0017]


Amneal Holdings, LLC, and Impax 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 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 May 29, 2018.

ADDRESSES: Interested parties may file a comment 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 
Amneal Holdings, LLC, and Impax Laboratories, Inc.; File No. 181 0017'' 
on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/amnealimpaxdivest by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``In the Matter of Amneal Holdings, LLC, and Impax 
Laboratories, Inc.; File No. 181 0017'' 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 consent orders to divest and providing for other relief to 
resolve the allegations in the complaint, 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 April 27, 2018), on the World Wide Web, at https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before May 29, 2018. 
Write ``In the Matter of Amneal Holdings, LLC, and Impax Laboratories, 
Inc.; File No. 181 0017'' 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 website, at https://www.ftc.gov/policy/public-comments.
    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/amnealimpaxdivest 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 website.
    If you prefer to file your comment on paper, write ``In the Matter 
of Amneal Holdings, LLC, and Impax Laboratories, Inc.; File No. 181 
0017'' 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.
    Because your comment will be placed on the publicly accessible FTC 
website at https://www.ftc.gov, you are solely responsible for making 
sure that your comment does not include any sensitive or confidential 
information. In particular, your comment should not include any 
sensitive personal information, such as your or anyone else'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, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
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)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). 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). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the public FTC website--as legally required by FTC Rule 
4.9(b)--we cannot redact or remove your comment from the FTC website, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC website at http://www.ftc.gov to read this Notice and 
the news release describing it. The FTC Act

[[Page 19765]]

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 May 29, 2018. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

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 Amneal Holdings, LLC, Amneal Pharmaceuticals LLC 
(collectively, ``Amneal''), Impax Laboratories, Inc., and Impax 
Laboratories, LLC (collectively, ``Impax'') that is designed to remedy 
the anticompetitive effects resulting from Amneal's acquisition of 
equity interests of Impax. Under the terms of the proposed Consent 
Agreement, the parties are required to divest all of Impax's rights and 
assets related to the following seven products to ANI Pharmaceuticals, 
Inc. (``ANI''): Generic desipramine hydrochloride tablets; generic 
felbamate tablets; generic aspirin and dipyridamole extended release 
(``ER'') capsules; generic diclofenac sodium and misoprostol delayed 
release (``DR'') tablets; generic ezetimibe and simvastatin immediate 
release (``IR'') tablets; generic erythromycin tablets; and generic 
methylphenidate hydrochloride ER tablets. Pursuant to the Consent 
Agreement, the parties also are required to divest all of Impax's 
rights and assets related to generic azelastine nasal spray and generic 
olopatadine hydrochloride nasal spray to Perrigo Company plc 
(``Perrigo''), and to divest all of Impax's rights and assets related 
to generic fluocinonide-E cream 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, modify it, or make final the Decision and Order 
(``Order'').
    Pursuant to agreements dated October 17, 2017, Amneal proposes to 
acquire the equity interests of Impax in a series of transactions 
valued at approximately $1.45 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 
following three U.S. markets: (1) Generic desipramine hydrochloride 
tablets; (2) generic ezetimibe and simvastatin IR tablets; and (3) 
generic felbamate tablets. The Commission also alleges that the 
Proposed Acquisition would violate the aforementioned statutes by 
lessening future competition in the following seven U.S. markets: (1) 
Generic aspirin and dipyridamole ER capsules; (2) generic azelastine 
nasal spray; (3) generic diclofenac sodium and misoprostol DR tablets; 
(4) generic erythromycin tablets; (5) generic fluocinonide-E cream; (6) 
generic methylphenidate hydrochloride ER tablets; and (7) generic 
olopatadine hydrochloride nasal spray. 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

    In human pharmaceutical markets, price generally decreases as the 
number of generic competitors increases. Prices continue to decrease 
incrementally with the entry of the second, third, fourth, and even 
fifth generic oral pharmaceutical competitor. Accordingly, the 
reduction in the number of suppliers within each relevant market has a 
direct and substantial effect on pricing.
    The Proposed Acquisition would reduce current competition in the 
markets for three products: (1) Generic desipramine hydrochloride 
tablets; (2) generic ezetimibe and simvastatin IR tablets; and (3) 
generic felbamate tablets.
    Desipramine hydrochloride, a tricyclic antidepressant, is sold by 
only three companies, other than Amneal and Impax, in the United 
States: Heritage Pharmaceuticals, Inc., Sandoz (a subsidiary of 
Novartis AG), and Teva Pharmaceutical Industries Ltd. (``Teva'').
    Ezetimibe and simvastatin is used to improve cholesterol and lower 
triglycerides. Only four companies currently sell generic ezetimibe and 
simvastatin IR tablets in the United States: Amneal, Impax, Dr. Reddy's 
Laboratories, and Teva.
    Felbamate is an anticonvulsant used in the treatment of epilepsy. 
For generic felbamate tablets, Alvogen, and Wallace Pharmaceuticals, 
Inc. (``Wallace'') are the only two companies in addition to Amneal and 
Impax that sell the product in the United States.
    The Proposed Acquisition also would reduce future competition in 
seven markets in which Amneal or Impax is a current competitor and the 
other is likely to enter the market: (1) Generic aspirin and 
dipyridamole ER capsules; (2) generic azelastine nasal spray; (3) 
generic diclofenac sodium and misoprostol DR tablets; (4) generic 
erythromycin tablets; (5) generic fluocinonide-E cream; (6) generic 
methylphenidate hydrochloride ER tablets; and (7) generic olopatadine 
hydrochloride nasal spray.
    Aspirin and dipyridamole is an antiplatelet therapy used to reduce 
the risk of stroke. Amneal is the only company currently selling 
generic aspirin and dipyridamole ER capsules in the United States, and 
Impax is one of only a limited number of suppliers capable of entering 
the market in the near future.
    Azelastine nasal spray is used to treat seasonal allergies. Impax 
partners with Perrigo to sell generic azelastine nasal spray. In 
addition, Wallace and Apotex Inc. also sell the product. Amneal, one of 
a limited number of suppliers capable of entering the market for 
generic azelastine nasal spray in the near future, already has 
tentative approval from the United States Food and Drug Administration 
(``FDA'').
    Diclofenac sodium and misoprostol is used to provide pain relief 
while minimizing gastrointestinal side effects. Four companies--Amneal, 
Teva, Sandoz, and Exela Pharma Sciences LLC (``Exela'')--have approved 
ANDAs to sell generic diclofenac sodium and misoprostol DR tablets in 
the United States. In addition, Greenstone LLC, a Pfizer subsidiary, 
sells an authorized generic version. Sandoz does not sell its product 
directly to customers and supplies only to a private labeler. The Exela 
product, marketed by both Eagle Pharmaceuticals, Inc. and Dash 
Pharmaceuticals LLC, has limited sales. Impax, partnered with Micro 
Labs Limited, is one of only a few suppliers capable of entering the 
market for generic diclofenac sodium and misoprostol DR tablets in the 
near future.
    Erythromycin is an antibiotic that had only one supplier, Arbor 
Pharmaceuticals, LLC, before the FDA approved Amneal's ANDA for generic 
erythromycin tablets in March of 2018. Amneal is the only supplier of 
generic erythromycin tablets in the United States. Impax is one of only 
a few

[[Page 19766]]

suppliers capable of entering the market for generic erythromycin in 
the near future.
    Fluocinonide-E cream, a topical corticosteroid used to reduce 
swelling, redness, itching, and allergic reactions, is sold in generic 
form by Impax, Alvogen, Sun Pharmaceutical Industries Ltd., and Teva in 
the United States. Amneal is one of very few suppliers capable of 
entering the market for generic fluocinonide-E cream in the near 
future.
    Methylphenidate hydrochloride is a central nervous system stimulant 
used to treat attention-deficit disorder and attention-deficit/
hyperactivity disorder. Only four companies currently sell generic 
methylphenidate hydrochloride ER tablets in the United States: Amneal, 
Mylan N.V., Teva, and Trigen Labs. Impax is one of only a limited 
number of suppliers capable of entering the market for generic 
methylphenidate hydrochloride ER tablets in the near future.
    Olopatadine hydrochloride nasal spray is used to treat seasonal 
allergies. Generic olopatadine hydrochloride nasal spray is sold in the 
United States by Sandoz, Apotex, and Impax partnered with Perrigo. 
Amneal is one of very few suppliers capable of entering the market in 
the near future.

II. Entry

    Entry into the ten markets at issue 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 FDA, is costly and lengthy.

III. Competitive Effects

    The Proposed Acquisition likely would cause significant 
anticompetitive harm to consumers by eliminating current competition 
between Amneal and Impax in the markets for generic desipramine 
hydrochloride tablets, generic ezetimibe and simvastatin IR tablets, 
and generic felbamate tablets. Generic desipramine hydrochloride 
tablets, generic ezetimibe and simvastatin IR tablets, and generic 
felbamate tablets are commodity products, and prices typically 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 generally decreases due to the 
direct competition between the existing suppliers and each additional 
supplier. Customers also raise concerns about their ability to source 
product at a competitive price if one supplier experiences 
manufacturing difficulties when there are fewer competitors in the 
market. The Proposed Acquisition would combine two of the only five 
companies selling generic desipramine hydrochloride tablets, and would 
combine two of the only four companies selling generic ezetimibe and 
simvastatin IR tablets and generic felbamate tablets, likely resulting 
in higher prices.
    But for the proposed Consent Agreement, the Proposed Acquisition 
also is likely to delay the introduction of beneficial competition, and 
subsequent price decreases, by eliminating future competition in seven 
markets in which either Amneal or Impax is a current competitor and the 
other is likely to enter. Multiple customers expressed concerns about 
the effect of the proposed merger on the market for generic aspirin and 
dipyridamole ER capsules, in which Amneal is the only current generic 
competitor and Impax is approved to enter. Impax is one of only three 
competitors providing generic azelastine nasal spray, and the imminent 
entry of Amneal likely would allow customers to negotiate more 
competitive prices and secure adequate supply. Impax is one of very few 
well-positioned entrants in the market for generic diclofenac sodium 
and misoprostol DR tablets, in which Amneal is one of four current 
competitors, and customers note that they would benefit from additional 
entry to negotiate pricing. Amneal is the only generic erythromycin 
tablet competitor, and Impax is one of a limited number of companies 
with products in development that upon entry would allow customers to 
negotiate lower prices. Amneal is the only foreseeable entrant in the 
market for generic fluocinonide-E cream, in which Impax is one of only 
three competitors. In the market for generic methylphenidate 
hydrochloride ER tablets, Amneal is one of four current competitors and 
Impax is one of few potential entrants. Finally, Amneal is one of only 
a few entrants poised to enter the market for generic olopatadine 
hydrochloride nasal spray, in which Impax is one of only three current 
competitors. Absent a remedy, the Proposed Acquisition likely would 
cause U.S. consumers to pay higher prices for the aforementioned 
generic products.

IV. The Consent Agreement

    As the Commission explained in its remedy review, The FTC's Merger 
Remedies 2006-2012: A Report of the Bureaus of Competition and 
Economics (hereafter ``The FTC Merger Remedies Study'') \1\, products 
made at third-party manufacturing sites are easier to divest and 
involve less risk than the technology transfer from in-house 
manufacturing to a new facility, and thus help ensure the success of 
divestitures. As a result, in most cases, if one of the products is 
developed or manufactured by a third party, the Commission will require 
divestiture of that product.
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    \1\ See The FTC's Merger Remedies 2006-2012: A Report of the 
Bureaus of Competition and Economics (Jan. 2017) at 36-37, https://www.ftc.gov/system/files/documents/reports/ftcs-merger-remedies-2006-2012-report-bureaus-competition-economics/p143100_ftc_merger_remedies_2006-2012.pdf.
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    Additionally, in mergers involving complex pharmaceutical products 
that are difficult to manufacture, the Commission generally will 
require the divestiture of an on-market product over a pipeline product 
to place the greater risk on the merging parties rather than the 
public, with exceptions for compelling and fact-specific reasons. When 
such compelling, fact-specific reasons exist, ``The goal of a 
divestiture is to put the product development effort (including any 
pending regulatory filings) in the hands of a new firm with the same 
ability and incentive to bring the pipeline product to market.'' \2\
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    \2\ See The FTC's Merger Remedies Study at 31.
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    The proposed Consent Agreement conforms to this approach and 
remedies the competitive concerns raised by the Proposed Acquisition in 
the generic azelastine nasal spray and generic olopatadine 
hydrochloride nasal spray markets by requiring Impax to return any 
rights and assets it has to its partner and ANDA-owner for these 
products, Perrigo. The proposed Consent Agreement remedies the 
competitive concerns raised by the Proposed Acquisition in the generic 
fluocinonide-E cream market by requiring Impax to return any rights and 
assets it has to its partner and ANDA-owner for this product, G&W. The 
parties must accomplish these divestitures no later than ten days after 
they consummate the Proposed Acquisition.
    The proposed Consent Agreement remedies the competitive concerns 
raised by the Proposed Acquisition in seven of the markets at issue by 
requiring Impax to divest all of its rights and assets related to those 
products to ANI. ANI is a pharmaceutical corporation that develops, 
manufacturers, sells, and distributes solid oral, liquid, and topical 
pharmaceutical products in the United States. ANI's track record in 
developing

[[Page 19767]]

and bringing to market pipeline products suggests that the divested 
products will be placed in the hands of a firm with the same ability 
and incentive to bring the products to market. As explained below, the 
Consent Agreement helps make that outcome more likely.
    For two of the products that both Amneal and Impax currently 
market, generic desipramine hydrochloride tablets and felbamate 
tablets, Impax will assign its contract manufacturing agreements to 
ANI. For the third currently-marketed product, Amneal will supply ANI 
with generic ezetimibe and simvastatin IR tablets for two years with 
the option to extend for two additional years.
    In four overlap markets in which Amneal has an on-market product 
and Impax has a product in development, Impax will divest its rights 
and assets to ANI rather than requiring Amneal to divest its on-market, 
in-house manufactured products. Each of these product markets has 
specific facts that warrant the divestiture of the Impax rights and 
assets rather than the Amneal product. Of note, three products--generic 
aspirin and dipyridamole ER capsules, generic methylphenidate 
hydrochloride ER tablets, and generic diclofenac sodium and misoprostol 
DR tablets--are more complicated to manufacture because they have 
extended or delayed release characteristics.
    For generic aspirin and dipyridamole ER capsules, Amneal is the 
only manufacturer with a product on the market. Amneal manufactures 
this product in-house. Impax received FDA approval for its ANDA in 2017 
and had expected to use a third-party manufacturer to launch its 
product. That manufacturer experienced some manufacturing difficulties 
and Impax had begun the process of developing the means to produce the 
product at its own facilities. With the divestiture, ANI will finalize 
the manufacturing process and expects to have the Impax drug on the 
market soon. Nevertheless, should ANI be unable to market its own 
version of this product by October 1, 2019, ANI has the option to 
source generic aspirin and dipyridamole ER capsules from Amneal until 
ANI obtains the necessary regulatory approvals or through March 1, 
2021, whichever date is earlier. This ensures that ANI will be able to 
market a competing product near the time Impax likely would have had 
the product on market, and provides the incentive for ANI to 
manufacture and market its own product. An alternative divestiture of 
the Amneal product would involve more risk and could jeopardize the 
only generic product on the market.
    The FDA approved Amneal's ANDA for generic methylphenidate 
hydrochloride ER tablets in February 2018. Impax also has an approved 
ANDA. Impax's product is contract manufactured, but the contract 
manufacturer needs to resolve manufacturing issues before it can resume 
manufacturing the product. It will be less risky for Impax to assign 
its manufacturing contract to ANI than to affect a technology transfer 
from Amneal for this complex product, and it will put the product in 
ANI's hands, which has the same ability and incentive as Impax to bring 
methylphenidate hydrochloride ER tablets to market. Thus, the proposed 
Order requires the divestiture of Impax's rights and assets to ANI.
    For generic diclofenac sodium and misoprostol DR tablets, Amneal 
has an on-market in-house manufactured product, and Impax is partnered 
with Micro Labs to commercialize a competing product. Impax holds only 
marketing rights to the product; Micro Labs is responsible for 
development and manufacturing. Impax will transfer its marketing 
agreement with Micro Labs to ANI, and Micro Labs will manufacture the 
product for ANI for the current contract term.
    For erythromycin tablets, Amneal launched its product in March 
2018, and only one other competitor, Arbor Pharmaceuticals, is 
currently selling erythromycin tablets. Amneal manufactures the 
erythromycin tablets in-house. Impax is one of a few companies 
developing the product, and once approved, it plans to outsource the 
manufacturing. Here, the easier-to-divest product is the Impax drug in 
development. Thus, Commission staff considers it prudent to leave the 
in-house Amneal-manufactured product with the merged firm, an ongoing 
and viable competitor to Arbor. Further, Impax will transfer all of its 
assets related to its development of erythromycin tablets to ANI, which 
has the same ability and incentive to bring a competing third 
erythromycin tablet to market.
    The proposed Order also requires Amneal to provide transitional 
services to ANI, Perrigo, and G&W to assist them in establishing their 
manufacturing capabilities and securing all of the necessary FDA 
approvals. These transitional services include technical assistance to 
manufacture the ten products at issue in substantially the same manner 
and quality employed or achieved by Impax. It also includes advice and 
training from knowledgeable employees of the parties. Under the 
proposed Consent Agreement, the Commission also will appoint an Interim 
Monitor.
    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 ANI, 
Perrigo, and/or G&W are not acceptable acquirers, or that the manner of 
the divestitures is not acceptable, the proposed Order requires the 
parties to unwind the sale of rights to ANI, Perrigo, and/or G&W and 
then divest the affected 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 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. 2018-09546 Filed 5-3-18; 8:45 am]
 BILLING CODE 6750-01-P