The Federal Trade Commission took action today to protect patients who rely on medical instruments used in sinus procedures. The FTC’s order requires Medtronic, Inc. to divest a subsidiary of Intersect ENT, Inc. as a condition of Medtronic’s proposed acquisition. The subsidiary, Fiagon, which makes ear, nose, and throat navigation systems and balloon sinus dilation products, will be sold to Hemostasis, LLC to prevent concentration and ultimately harm to patients.
“Today’s action by the FTC is part of our efforts to combat the problem of rising healthcare costs,” said Holly Vedova, Director of the Bureau of Competition. “These are already concentrated markets for critical medical instruments. Medtronic is the top provider of ear, nose, and throat navigation systems. We are requiring Medtronic to divest Fiagon because we are concerned that the deal would otherwise lead to higher prices and reduced innovation in this important medical care market."
Medtronic is a global medical device company with U.S. headquarters in Minnesota that is a dominant provider of ENT navigation systems, which allow physicians to view and track the location of instruments during sinus procedures. Medtronic also develops and markets balloon sinus dilation products, which physicians use to clear blocked sinuses.
Intersect is a California-based medical device company that focuses on devices for ENT procedures, and its Fiagon subsidiary is a nascent competitor in the U.S. markets for both ENT navigation systems and balloon sinus dilation products, according to the complaint.
Under the terms of the Proposed Order, Medtronic and Intersect must divest the entire Fiagon business to Hemostasis no later than 10 days after Medtronic acquires Intersect. Additionally, Medtronic and Intersect must obtain prior approval from the FTC for 10 years before buying ENT navigation systems and balloon sinus dilation assets to address any future attempts to consolidate these important markets.
Divestiture buyer Hemostasis must obtain prior approval for three years before transferring any of the divested assets to any buyer, and for seven additional years before transferring any divested assets to a buyer that manufactures and sells ENT navigation systems or balloon sinus dilation products.
As explained in the accompanying analysis to aid public comment, the Commission will appoint Ms. Jeryl Hilleman as the monitor to report on the companies’ compliance with the Order’s requirements to ensure these markets remain competitive for American doctors and patients going forward.
The Commission vote to issue the complaint and accept the proposed Consent Order for public comment was 4-0. The FTC will publish the Consent Agreement package in the Federal Register shortly. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $46,517.