Legal Library: Cases and Proceedings

The Commission settled with Barr Laboratories concluding its federal court action challenging an agreement between Warner Chilcott and Barr in which, the Commission alleged, Barr agreed not to sell a lower-priced generic substitute of Warner Chilcott’s branded Ovcon 35, an oral contraceptive drug, for several years for $20 million. On November 5, 2005 a complaint was filed in District Court for the District Columbia seeking to put an end to an agreement between drug manufacturers Galen Chemicals Ltd. (now known as Warner Chilcott) and Barr Laboratories that denies consumers the choice of a lower priced generic version of Warner Chilcott’s Ovcon® oral contraceptive. According to the FTC’s complaint, Barr planned to launch a generic version of Ovcon as soon it received regulatory approval from the Food and Drug Administration. Warner Chilcott expected to lose half its Ovcon sales within the first year if Ovcon faced competition from a generic equivalent. Faced with this prospect, instead of competing with Barr, Warner Chilcott entered into an agreement 24 with Barr, preventing entry of Barr’s generic Ovcon into the United States for five years. In exchange for Barr’s promise not to compete, Warner Chilcott paid Barr $20 million. In September 2006, under the threat of a preliminary injunction sought by the Commission, Warner Chilcott waived the exclusionary provision in its agreement, and the next day Barr announced its intention to start selling generic Ovcon in the United States. Under the terms of the October 2006 order settling the Commission’s charges, Warner Chilcott agreed to certain terms to protect generic entry into the market.

The Commission ordered divestitures to resolve competitive concerns in the U.S. market for five generic drugs stemming from Mylan Laboratories’ proposed acquisition of the generic arm of Merck Pharmaceuticals, a transaction valued at approximately $6.6 billion. Under a September 2007 consent order with the Commission, Mylan and Merck must divest all assets relating to flecainide acetate tablets, acebutolol hydrochloride capsules, guanfacine hydrochloride tablets, nicardipine hydrochloride capsules, and sotalol hydrochloride. The generic drugs at issue are used for the treatment of many conditions, including hypertension and heart arrhythmia. The order requires the divestiture of all assets related to the relevant products to Amneal Pharmaceuticals, a generic drug manufacturer.

The Commission settled charges stemming from American Renal Associates’ (ARA) proposed acquisition of assets from Fresenius AG, which would have made ARA the only operator of dialysis clinics in the Warwick/Cranston area of Rhode Island. The purchase agreement called for the sale of five Fresenius clinics to ARA, including two in the Warwick/Cranston area, and the closure of an additional three Fresenius clinics in Rhode Island and Massachusetts. The parties terminated their purchase agreement after FTC staff raised antitrust concerns, but the Commission challenged the closure of the three clinics as a naked agreement to pay a competitor to exit the market, and also alleged a Section 7 violation in the Warwick/ Cranston market for dialysis services. The Commission’s order bars the parties from entering into any agreement to close dialysis clinics, and requires ARA to notify the Commission if it intends to acquire any dialysis centers in the Warwick/Cranston area for a period of 10 years.