This paper details the Federal Trade Commission's (FTC) analysis in four recent generic drug merger consents: Watson/Andrx, Barr/Pliva, Teva/Ivax, and Novartis/Eon. It discusses the FTC's basis for requiring divestitures in each of these mergers. The factual analysis is followed by some general guidance on the mode of analysis for FTC review of generic drug mergers. Based on this guidance, companies entering into such transactions can better anticipate under what circumstances the Commission will require divestitures.
For background on these deals and other deals reviewed by the FTC, the FTC publishes a semiannual report entitled ‘Overview of FTC Antitrust Actions in Pharmaceutical Services and Products’, which details all pharmaceutical matters challenged by the Commission. It is available at www.ftc.gov/bc/0608rxupdate.pdf.
2.
This occurred in Baxter/Wyeth (FTC 2003 consent order) and in Hoechst AG/Marion Merrell Dow (FTC 1995 consent order).
3.
In 2004, the FTC released data detailing challenges (ie brought suit or obtained a consent agreement) to mergers covering the years 1996–2003. This data provides information regarding FTC merger challenges for all industries, including the pharmaceutical industry. The report detailing this information is available at www.ftc.gov/os/2004/08/040831horizmergersdata96–03.pdf.
4.
The FTC's ‘consent package’ for each of the transactions is available on the FTC website (by searching under ‘Past Commission Actions’ at www.ftc.gov/ftc/formal/htm). The most pertinent documents in each ‘consent package’ are the Complaint, Decision and Order, and Analysis to Aid Public Comment. The ‘Analysis’ statement is not considered an ‘official interpretation’ of the other documents, but is intended to be a plain English explanation of the Order to facilitate public comment and often is more expansive in providing the rationale for relief than the Complaint. When the parties and the FTC reach agreement on a consent, the consent is placed on record for a 30-day public comment period. For most transactions, no public comments are received, and the order is formally entered soon after the period expires.
5.
Divestiture of one branded product for organ preservation solutions also was required.
Watson/Andrx Analysis to Aid Public Comment, at p. 4.
8.
In that market (hydrocodone bitartrate/ibuprofen) there were three competitors on the market and one likely entrant constituted the fourth competitor. Watson/Andrx Analysis to Aid Public Comment, at p. 4.
9.
Under the joint Federal Trade Commission/Department of Justice ‘Merger Guidelines,’ entry is considered timely if it occurs within a two-year period.
10.
Watson/Andrx Analysis to Aid Public Comment, at p. 3.
Teva/Ivax Analysis to Aid Public Comment, at p. 3.
18.
This observation relating to a specific high market-share figure should not be over-emphasised. The FTC Complaint and Analysis to Aid Public Comment in these consents does not uniformly provide such figures, and the more relevant factor appears to be the number of overall competitors left in the market post-deal. If a merger reduced the number of competitors in a market from four to three, and the two merging parties had a minimal share, the transaction would, however, pose less competitive concerns in that market.
