Legal Library: Cases and Proceedings

The consent order settles charges that Hospira Inc.’s proposed $2 billion acquisition of rival drug manufacturer Mayne Pharma Ltd. would likely reduce competition in the following products: hydromorphone hydrochloride (hydromorphone), nalbuphine hydrochloride (nalbuphine), morphine sulfate (morphine), preservative-free morphine, and deferoxamine mesylate (deferoxamine).  In settling the Commission’s charges, the companies agreed to divest to Barr Pharmaceuticals, Inc. (Barr), within 10 days of the acquisition, Mayne’s rights and assets related to the relevant products.

The consent order settles charges that Johnson & Johnson’s (J&J) proposed $16.6 billion acquisition of Pfizer Inc.’s (Pfizer) Consumer Healthcare business would likely reduce competition in the U.S. markets for over-the-counter (OTC) H-2 blockers used to prevent and relieve heartburn, OTC hydrocortisone anti-itch products, OTC night-time sleep aids, and OTC diaper rash treatments. In settling the Commission’s charges, the companies have agreed to sell Pfizer’s Zantac H-2 blocker business to Boehringer Ingelheim Pharmaceuticals Inc. (Boehringer), and Pfizer’s Cortizone hydrocortisone anti-itch business, Pfizer’s Unisom night-time sleep aid business, and J&J’s Balmex diaper rash treatment business to Chattem, Inc.

A consent order settled charges that Watson Pharmaceuticals, Inc.’s proposed $1.9 billion acquisition of Andrx Corporation, would have likely led to competitive problems in the markets for 13 generic drug products. Watson was required to end its marketing agreements with Interpham Holdings, divest Andrx’s right to develop, make, and market generic extended release tablets that correct the effects of type 2 diabetes, and divest Andrx’s rights and assets related to the developing and marketing of 11 generic oral contraceptives.

There is a related federal proceeding and two related administrative proceedings:

• Watson Pharmaceuticals / Actavis Inc.
• Watson Pharmaceuticals, Inc., a corporation, and Robin Hood Holdings Limited, a limited liability company

The consent order settles charges that Barr Pharmaceutical, Inc.’s proposed acquisition of Pliva d.d for approximately $2.5 billion would have eliminated current or future competition between Barr and Pliva in certain markets for generic pharmaceuticals treating depression, high blood pressure and ruptured blood vessels, and in the market for organ preservation solutions. In settling the Commission’s charges, Barr is required to sell its generic antidepressant trazodone and its generic blood pressure medication triamterene/HCTZ. Barr also is required to divest either Pliva’s or Barr’s generic nimodipine for use in treating ruptured blood vessels in the brain. Finally, Barr is required to divest Pliva’s branded organ preservation solution Custodial.

The consent order allowed Teva to acquire IVAX Corporation, provided the companies sell the rights and assets needed to manufacture and market 15 generic pharmaceutical products. Among the drugs sold were several forms of generic amoxicillin and amoxicillin clavulanate potassium that are widely used in the United States.

To resolve competitive concerns for three generic pharmaceuticals that arose from Novartis AG’s acquisition of Eon Labs, Inc., Novartis agreed to divest all the assets necessary to manufacture and market generic desipramine hydrochloride tablets, orphenadrine citrate extended release (ER) tablets, and rifampin oral capsules in the United States to Amide within 10 days of Novartis’s acquisition of Eon. Further, Novartis, through its Sandoz generic pharmaceuticals division, will supply Amide with orphenadrine citrate ER and desipramide hydrochloride tablets until Amide obtains FDA approval to manufacture the products itself, and will assist Amide in obtaining all necessary FDA approvals.

The consent order settled antitrust concerns that Sanofi's proposed $64 billion acquisition of Aventis would create significant overlaps in several markets for pharmaceutical products while creating the world's third largest pharmaceutical company. Under terms of the consent order, Sanofi must: 1) divest its Arixtra factor Xa inhibitor to GlaxoSmithKline, plc; 2) divest its key clinical studies for the Campto® cytotoxic colorectal cancer treatment to Pfizer, Inc. and 3) divest Aventis' contractual rights to the Estorra insomnia drug either to Sepracor, Inc. or to another Commission-approved buyer.

Bristol-Myers Squibb Company (BMS) settled charges that it engaged in illegal business practices to delay the entry of three low price generic pharmaceuticals that would be in direct competition with three of its branded drugs. The complaint alleged that BMS purposely made wrongful listings in the Orange Book of the U.S. Food & Drug Administration and that it also paid a potential competitor over $70 million to delay the entry of its generic drug. The three drugs involved in the complaint are: Taxol (containing the active ingredient paclitaxel) – used to treat ovarian, breast, and lung cancers; Platinol (containing the active ingredient cisplatin) – used for the treatment of various forms of cancer; and BuSpar (containing the active ingredient buspirone) – used to manage anxiety disorders. To prevent recurrence of Bristol's pattern of alleged improper listings, the consent order eliminates Bristol's ability to obtain a 30-month stay on later-listed patents. By denying Bristol the benefit of the 30-month stay on later-listed patents, the order would reduce Bristol's incentive to engage in improper behavior before the PTO and the FDA to obtain and list a patent for the purpose of obtaining an unwarranted automatic 30-month stay.

A final consent order permits Pfizer Inc.'s acquisition of Phamacia Corporation while requiring the divestiture of various products including extended release drugs used in the treatment of an overactive bladder; hormone replacement therapies; erectile dysfunction; canine arthritis; and motion sickness. Novartis AG, Neurocrine Biosciences, Inc., Schering-Plough Corporation, Johnson & Johnson, Insight Pharmaceuticals Corporation, and Cadbury Schweppes are named in the order as potential buyers of the various pharmaceuticals and products.

Baxter settled Commission concerns stemming from its $316 million proposed acquisition of Wyeth Corporation's generic injectable drug business and agreed to divest several pharmaceutical products. The Commission charged that the acquisition would reduce competition in the manufacture and sale of propofol (a general anesthetic); new injectable iron replacement therapies; metocloprarnide (used to treat nausea); and vecuronium and pancuronium (neuromuscular blocking agents used to temporarily freeze muscles during surgery). The consent order requires divestitures in each of the pharmaceutical markets.

Amgen settled antitrust charges that its proposed $16 billion acquisition of Immunex Corporation would reduce competition and tend to create a monopoly in the biopharmaceutical markets for neutrophil (white blood cell) regeneration factors; tumor necrosis factor (TNF) inhibitors; and interleukin-1 (IL-1) inhibitors. The consent order requires the firms to sell all of Immunex's assets related to Leukine -a neutrophil regeneration factor -to Schering AG; license certain intellectual property rights to TNF inhibitors to Serono S.A.; and license certain intellectual property rights related to IL-1 inhibitors to Regeneron Pharmaceuticals Inc.

The Commission charged Biovail Corporation with illegally acquiring an exclusive patent license for Tiazac, a pharmaceutical used to treat high blood pressure and chronic chest pain. The complaint further alleged that Biovail, in an effort to maintain its monopoly, wrongfully listed the acquired license in the U.S. Food and Drug Administration’s “Orange Book” for the purpose of blocking generic competition to its branded Tiazac. The consent order requires Biovail to divest part of its exclusive rights to DOV; prohibits the firm from taking any action that would trigger additional statutory stays on final FDA approval of a generic form of Tiazac; and also prohibits Biovail from wrongfully listing any patents in the Orange Book for a product for which the company already has an New Drug Application from the FDA.

A consent order settled charges that FMC and Asahi Chemical Industry Co. Ltd. of Japan entered into a conspiracy to divide the world market for microcrystalline cellulose (MCC), a binder used in making pharmaceutical tablets, into two territories. According to the complaint, FMC allegedly agreed not to sell the pharmaceutical to customers in Japan or East Asia without Asahi Chemical's consent, while Asahi Chemical agreed not to sell the pharmaceutical to customers in North America or Europe without the consent of FMC. The final order prohibits such behavior in the future and restricts FMC from acting as the U.S. distributor for any competing manufacturer of microcrystalline cellulose (including Asahi Chemical) for 10 years. In addition, for five years, FMC is prohibited from distributing in the United States any other product manufactured by Asahi Chemical.

The Commission authorized staff to seek a preliminary injunction to block DGF’s proposed acquisition of Leiner Davis Gelatin Corporation and its Goodman Fielder USA, Inc. subsidiary. According to the Commission this transaction, if allowed to proceed as planned, would increase the likelihood of anticompetitive activity in the U.S. market for pigskin and beef hide gelatin, used by the food industry as an ingredient in edible products and by the pharmaceutical industry to produce capsules and tablets. The combination of the two firms would account for more than 50 percent of the relevant market in the U.S. A proposed consent agreement designed to remedy the significant antitrust concerns was accepted for public comment March 7, 2002; the consent order was finalized April 17, 2002.