Divestitures preserve competition in 5 U.S. markets for medical devices used in neurosurgery
Integra LifeSciences Holdings Corp. and Johnson & Johnson have agreed to a divestiture of five neurosurgical medical device product lines to settle Federal Trade Commission charges that Integra’s proposed $1 billion acquisition of Johnson & Johnson’s Codman Neuro division would negatively impact competition in those markets. Both companies supply a range of devices used in operative neurosurgery, hydrocephalus management and neuro-critical care.
According to the FTC’s complaint, the acquisition as it was proposed would likely harm competition in the U.S. markets for:
- intracranial pressure monitoring systems, which measure pressure inside the skull. Integra and Codman are the only significant suppliers of these systems in the United States, together accounting for 94 percent of the market.
- cerebrospinal fluid collection systems, which drain a patient’s excess cerebrospinal fluid and monitor pressures within the fluid. Integra and Codman are two of the only three competitively significant suppliers of these collection systems in the United States, together accounting for 71 percent of the market.
- non-antimicrobial external ventricular drainage catheters, which funnel excess cerebrospinal fluid from the brain to cerebrospinal fluid collection systems to relieve intracranial pressure. Integra and Codman are two of the only three competitively significant suppliers of these catheters in the United States, together accounting for 46 percent of the market.
- fixed pressure valve shunt systems, which redirect excess cerebrospinal fluid from the brain or spinal cord to another area of the body, usually the abdomen, for reabsorption. Integra and Codman are two of the only three competitively significant suppliers of these catheters in the United States, together accounting for 38 percent of the market.
- dural grafts, which are used to repair or replace a patient’s dura mater, the thick membrane that surrounds the brain and spinal cord and keeps cerebrospinal fluid in place. Integra manufactures more than three-quarters of the dural grafts sold in the United States, and Integra and Codman together control 75 percent of the market.
Under the terms of a settlement with the FTC, Integra will sell these medical device product lines to California-based Natus Medical Incorporated, which sells related neurological medical devices.
To better guard against any erosion to competition, Integra and Codman also must divest Integra’s manufacturing facility in San Diego, and the parties must supply Natus with cranial access kits – which provide tools used during cranial surgery and are often sold with the divestiture assets – until Natus is able to secure its own supply source.
Further details about the consent agreement – which provides for the Commission to appoint a monitor to ensure compliance with the order and allows the Commission to appoint a trustee – are set forth in the analysis to aid public comment for this matter.
Commission staff and the staff of the United Kingdom’s Competition and Markets Authority worked cooperatively on this investigation.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 2-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through Oct. 27, 2017, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.
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 $40,654.
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Office of Public Affairs
Aylin M. Skroejer
Bureau of Competition