Akorn, Inc.; Analysis To Aid Public Comment, 47135-47136 [2014-18982]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 79, Number 155 (Tuesday, August 12, 2014)]
[Notices]
[Pages 47135-47136]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-18982]



[[Page 47135]]

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FEDERAL TRADE COMMISSION

[File No. 141 0162]


Akorn, 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 September 3, 2014.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/akornincconsent online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Akorn, Inc.--Consent 
Agreement; File No. 141 0162'' on your comment and file your comment 
online at https://ftcpublic.commentworks.com/ftc/akornincconsent 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: Jasmine Y. Rosner, 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 orders 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 August 4, 2014), on the World Wide Web, at 
https://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 3, 
2014. Write ``Akorn, Inc.--Consent Agreement; File No. 141 0162'' 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 https://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/akornincconsent by following the instructions on the web-based 
form. If this Notice appears at https://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``Akorn, Inc.--Consent 
Agreement; File No. 141 0162'' 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 https://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 3, 2014. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at https://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 Akorn, Inc. (``Akorn'') that is designed to remedy 
the anticompetitive effects in the market for generic injectable 
rifampin (``generic rifampin'') resulting from Akorn's acquisition of 
VersaPharm Inc. (``VersaPharm''). Under the terms of the proposed 
Consent Agreement, Akorn is required to divest its Abbreviated New Drug 
Application (``ANDA'') for generic rifampin to Watson Laboratories, 
Inc. (``Watson''), a wholly-owned subsidiary of Actavis plc.
    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

[[Page 47136]]

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 May 9, 2014, 
Akorn plans to acquire all of VPI Holdings Corp., the parent company of 
VersaPharm, for approximately $324 million (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 future 
competition in the sale of generic rifampin. The proposed Consent 
Agreement will remedy the alleged violations by preserving the future 
competition that would otherwise be eliminated by the Proposed 
Acquisition.

The Product and Structure of the Market

    The Proposed Acquisition would reduce the number of future 
suppliers in the market for generic rifampin. Generic rifampin is an 
antibacterial medication used as a first-line treatment to kill or 
prevent the growth of tuberculosis. There are currently three generic 
drug companies with approved ANDAs for rifampin: VersaPharm, Mylan/
Agila, and Bedford. Akorn is one of a limited number of firms that have 
a generic rifampin product in development and an ANDA under review by 
the U.S. Food and Drug Administration (``FDA''). As a result, the 
Proposed Acquisition would significantly reduce the number of future 
suppliers for generic rifampin.

Entry

    Entry into the market for generic rifampin 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 FDA approval, is costly and lengthy. In addition, the 
expertise and facilities required to manufacture injectable products is 
sufficiently specialized that only a limited number of firms are 
capable of participating in such markets. The stability and sterility 
requirements specific to manufacturing injectable pharmaceuticals 
present a number of problems and costs that discourage new entry or 
expansion in the market for generic rifampin.

Effects

    The Proposed Acquisition would likely cause significant 
anticompetitive harm to consumers by eliminating the future competition 
that would otherwise have occurred when Akorn's generic rifampin 
product entered the market. 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 price of generic 
pharmaceutical products decreases with new entry even after a number of 
suppliers has entered the market. Further, customers have confirmed 
that, in pharmaceutical markets that can experience significant 
manufacturing problems and shortages, such as the market for generic 
rifampin, the entry of a fourth, fifth, sixth, or even subsequent 
generic competitor produces more competitive prices than if fewer 
suppliers are available to them. The Proposed Acquisition would 
eliminate significant future competition between Akorn and VersaPharm. 
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 market for generic rifampin. Absent the 
Proposed Acquisition, the presence of Akorn as an additional competitor 
likely would have allowed customers to negotiate lower prices, as well 
as secure supply in times of product shortages. Thus, the Proposed 
Acquisition will likely cause U.S. consumers to pay significantly 
higher prices for generic rifampin, absent a remedy.

The Consent Agreement

    The proposed Consent Agreement effectively remedies the Proposed 
Acquisition's anticompetitive effects in the relevant product market. 
Pursuant to the Consent Agreement, Akorn is required to divest its 
rights related to generic rifampin to Watson. Akorn must accomplish 
this divestiture 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 Watson is 
not an acceptable acquirer of the divested asset, or that the manner of 
the divestiture is not acceptable, the parties must unwind the sale of 
rights to Watson and divest the asset to a Commission-approved acquirer 
within six months of the date the Order becomes final. In that 
circumstance, the Commission may appoint a trustee to divest the asset 
if the parties fail to divest it as required.
    The proposed Consent Agreement contains several provisions to help 
ensure that the divestiture is successful. The Order requires Akorn to 
take all action necessary to maintain the economic viability, 
marketability, and competitiveness of the asset to be divested. Akorn 
must assist Watson in securing FDA approval for the pending ANDA. Akorn 
must also provide transitional services to assist Watson in setting up 
its generic rifampin manufacturing process, which includes conveying 
all know-how, data, and other information necessary to transfer its 
manufacturing capabilities. To allow Watson to enter the market while 
it validates its manufacturing process, the Order requires Akorn to 
provide Watson with a supply of product.
    The Commission has agreed to appoint F. William Rahe from Quantic 
Regulatory Services, LLC to act as an interim monitor to assure that 
Akorn expeditiously complies with all of its obligations and perform 
all of its responsibilities pursuant to the Consent Agreement. To 
ensure that the Commission remains informed about the status of the 
transfer of rights and assets, the Consent Agreement requires Akorn 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. 2014-18982 Filed 8-11-14; 8:45 am]
BILLING CODE 6750-01-P