Order preserves competition in U.S. markets for generic sulfamethoxazole-trimethoprim oral suspension and generic dexamethasone
The Federal Trade Commission will require generic drug marketers ANI Pharmaceuticals, Inc. and Novitium Pharma LLC to divest, to Prasco LLC, ANI’s development rights to one generic drug used to treat common infections and assets with respect to another generic drug used to treat inflammation as part of a settlement resolving charges that ANI’s $210 million acquisitionof Novitium likely would be anticompetitive. The divestitures are for generic sulfamethoxazole-trimethoprim oral suspension, also known as SMX-TMP, and generic dexamethasone tablets.
Generic SMX-TMP oral suspension is an antibiotic used to treat a variety of infections, including ear infections, urinary tract infections, and bronchitis. ANI is a current participant in this market, while Novitium is one of a limited number of companies well positioned to enter. Generic dexamethasone tablets are an oral steroid product used to treat inflammation associated with a variety of conditions, including certain types of arthritis, allergic reactions, skin diseases, and breathing problems. Both ANI and Novitium have products in development in this market and the acquisition would eliminate a potential entrant in an already concentrated market. According to the complaint, without a remedy, the acquisition would likely harm future competition in U.S. markets for both of these generic products.
“Today’s settlement preserves future competition in two important generic pharmaceutical markets by ensuring that ongoing product development efforts for both drugs are in the hands of firms that have the same incentive to enter the market and drive down prices as existed between ANI and Novitium prior to the merger,” said Holly Vedova, Director of the Bureau of Competition. “Preserving the potential for entry ensures that the merged firm does not kill off ongoing product development efforts that could cause prices for its products to go down. We will remain vigilant in our efforts to protect existing and future competition in pharmaceutical markets.”
Under the terms of the proposed order, ANI and Novitium are required to divest ANI’s rights and assets to generic SMX-TMP oral suspension and generic dexamethasone tablets to Prasco within 10 days after the acquisition is final. As explained in the accompanying analysis to aid public comment, Prasco is a capable purchaser with experience marketing and distributing generic pharmaceutical products, and it will be able to replace the competition otherwise lost from the acquisition.
The proposed order also protects competition going forward as it contains a prior approval provision that gives the Commission notice and approval rights for future related acquisitions in these markets. Specifically, it contains a prior approval provision that requires ANI and Novitium to obtain Commission approval before acquiring any other SMX-TMP oral suspension or dexamethasone tablet product. It also requires Commission approval before the companies may acquire any rights or interests in certain products that have erythromycin and ethylsuccinate as the active ingredients. While the two companies do not currently compete in erythromycin and ethylsuccinate products, ANI sells an erythromycin and ethylsuccinate product and Novitium owns an unexecuted option to acquire a similar product. This prior-approval provision allows the Commission to evaluate whether a future acquisition of the erythromycin and ethylsuccinate product would reduce competition at the time the acquisition is proposed.
Prasco is prohibited under the order from selling the acquired products for a combined period of 10 years after the order is issued, except to an acquirer that receives prior approval from the Commission.
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 $43,792.