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Protecting competition in the market for three topical dermatology drugs, the Federal Trade Commission has approved orders requiring Valeant Pharmaceuticals International, Inc. to divest three drugs used to treat different skin ailments, as conditions of acquiring Ortho Dermatologics, Inc. from Johnson & Johnson, and Dermik Laboratories, Inc. from Sanofi.

Under the settlements, Valeant will sell the manufacturing and marketing rights to drug products that treat acne and actinic keratosis, a pre-cancerous skin lesion, to Mylan Pharmaceuticals Inc. Valeant also will sell the marketing rights to a drug that treats fine line wrinkles to Spear Pharmaceuticals, Inc. Both settlements preserve competition and prevent higher prices that likely would have resulted from the acquisitions.

The proposed settlement orders with Valeant [Decision and Order in FTC File No. 111 0215, Decison and Order in FTC File No. 111 0216] are part of the FTC's ongoing efforts to promote competition in the health care sector. This effort will benefit U.S. consumers by keeping drug prices low while preserving quality and choice of products and services.

Dermik. Valeant proposes to acquire Dermik, Sanofi's dermatological unit, for approximately $425 million. According to the FTC's complaint, Valeant's acquisition of Dermik would illegally reduce competition in the U.S. market for two topical skin-care drugs: 1) BenzaClin and its generic equivalent, a combination of two drug agents (one an antibiotic and the other an antimicrobial) that are used to treat common acne, and 2) topical fluorouracil cream, known as topical 5FU, which is used to treat actinic keratosis, a pre-cancerous lesion resulting from years of extensive sun exposure.

The FTC alleges the proposed transaction would cause significant harm to consumers of BenzaClin and 5FU by eliminating the direct and substantial competition that currently exists between Valeant and Sanofi (via its Dermik unit) for these products. Specifically, Valeant's acquisition of Dermik would eliminate competition between Dermik's branded BenzaClin and its closest competitor – the only generic equivalent of BenzaClin available in the United States. The acquisition also would give Valeant control over three topical 5FU products for actinic keratosis, Valeant's branded Efudex, Dermik's branded Carac, and Valeant's authorized generic version of Efudex. These acquisitions, the FTC alleges, would lead to higher prices for consumers.

To resolve the FTC's concerns as to BenzaClin, the proposed settlement order requires Valeant to sell to Mylan all rights to generic BenzaClin. Mylan currently manufactures and markets generic BenzaClin, under the terms of a licensing agreement with Valeant. In addition, as to 5FU, the settlement requires Valeant to license to Mylan the rights to manufacture and market the authorized generic version of Efudex. Both divestitures also require Valeant to transfer all marketing, research, and development rights of the drugs to Mylan.

Ortho Dermatologics. Valeant proposes to acquire Ortho Dermathologics, a division of Johnson & Johnson's Janssen Pharmaceuticals, Inc., for approximately $345 million. Valeant and Ortho sell competing prescription tretinoin emollient creams, which are topical products derived from Vitamin A and used to treat fine line wrinkles. Valeant, under contract with Spear Pharmaceuticals, sells a branded treatment, called Refissa, as well as a generic version of the drug.

As originally proposed, Valeant's acquisition of Ortho would have given the company a monopoly in tretinoin emollient cream and thus likely would have led to higher prices for consumers, the FTC complaint alleges. To remedy this concern, the proposed order settling the FTC's charges would require Valeant to return all marketing rights to Refissa and the generic tretinoin emollient cream to Spear Pharmaceuticals.

The Commission votes approving the two complaints and proposed consent orders were each 4-0. The proposed orders will be published in the Federal Register shortly, and will be subject to public comment for 30 days, until January 12, 2012, after which the Commission will decide whether to make them final. Comments on Dermik can be submitted separately from comments on Ortho Dermatologics.

NOTE: The Commission issues a 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. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent order is for settlement purposes only and does not constitute an admission of a law violation. 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 $16,000.

The FTC's Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call
202-326-3300, send an email to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook and follow us on Twitter.

(FTC File Nos. 111-0216, Ortho Dermatologics; 111-0215, Dermik)
(Valeant.final)

Contact Information

MEDIA CONTACT:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
STAFF CONTACT:
Jacqueline K. Mendel,
Bureau of Competition
202-326-2603