FTC Puts Conditions on Mylan’s Proposed Acquisition of Agila from Strides

The Federal Trade Commission will require Mylan, Inc., and Agila Specialties Global Pte. Ltd and Agila Specialties Pvt. Ltd. (collectively, Agila) to divest 11 generic injectable drugs as a condition of allowing Mylan’s proposed acquisition of Agila from Strides Arcolab Ltd. (Strides).

According to the complaint, in each of these 11 markets, Mylan and Agila are two of only a limited number of current or likely future competitors.  The number of suppliers in generic pharmaceutical markets matters because prices generally decrease as the number of competing generic suppliers increases.  In addition, the injectable generic products of concern are highly susceptible to supply disruptions caused by the inherent difficulties of producing sterile liquid drugs.  The complaint alleges that by reducing the number of competitors in these markets, the acquisition as originally proposed would eliminate important competition and likely lead to higher prices, absent the remedies required by the proposed consent agreement. 

“This proposed settlement will ensure that these important generic injectable medications, which are used to treat conditions ranging from heart disease and hypertension to cancer, remain available at a competitive price, now and in the foreseeable future,” said Deborah Feinstein, Director of the FTC’s Bureau of Competition.  “Preserving existing competition is especially important in markets for injectable drugs where supply disruptions have led to shortages.”

Mylan proposes to acquire Agila for approximately $1.85 billion, under an agreement dated February 27, 2013.  The FTC’s complaint charges the deal as proposed would violate the antitrust laws, by substantially reducing competition in the markets for 11 generic injectable drugs.  The FTC alleges the deal would reduce current or future competition in six product markets and future competition in five other markets.  A list of all 11 drugs, along with the structure of the relevant markets, can be found in the analysis to aid public comment for this matter on the FTC’s website.

The complaint alleges that the proposed acquisition would eliminate existing or imminent competition in markets for the following six generic drugs:

• Amiodarone hydrochloride injection, an anti-arrythmic heart drug used to treat patients with frequently recurring ventricular fibrillation or unstable ventricular tachycardia;
• Etomidate injection, an anesthetic used during surgery;
• Fluorouracil injection, which is used to treat several types of cancer, including breast and pancreatic;
• Labetalol hydrochloride injection, which is used to treat severe hypertension;
• Mesna injection, a detoxifying agent used to prevent urinary tract damage caused by a particular chemotherapy drug; and
• Methotrexate sodium preservative-free injection, which is used to treat several types of pediatric cancers, as well as certain autoimmune disorders.

The FTC’s complaint also alleges that the proposed transaction would reduce future competition for four drugs by increasing the likelihood that the combined company would forego or delay the launch of these generic products or otherwise reduce important price competition.  These drugs include:

• Acetylcysteine injection, which is used to prevent or minimize liver damage caused by acetaminophen overdose;
• Fomepizole injection, which is used to treat accidental poisoning caused by ethylene glycol or methanol;
• Ganciclovir injection, an antiviral drug used to treat patients with weakened immune systems to slow the growth of a form of herpes that can lead to blindness; and
• Meropenem injection, an antibiotic used as a last resort to treat serious bacterial infections in the ICU.

Finally, the FTC’s complaint alleges that the proposed acquisition would likely reduce competition in the future market for generic mycophenolate mofetil injection, which is currently only available as a branded drug.  Mycophenolate mofetil is used in transplant medicine to reduce the chance of organ transplant rejection.  Roche Palo Alto, LLC currently sells the branded version of this drug.  When generic entry occurs, Mylan and Agila would likely be among a limited number of suppliers.  Thus, the proposed acquisition reduces the number of likely future generic competitors in this market.

The proposed consent order is designed to remedy the alleged anticompetitive effects that the proposed acquisition otherwise would have in each of the 11 drug markets.  It requires Mylan to divest either Mylan or Agila/Strides products as follows:  1) Mylan’s fluorouracil injection and methotrexate sodium preservative-free injection to Intas Pharmaceuticals Ltd.; 2) Mylan’s etomidate injection, ganciclovir injection, meropenem injection, and mycophenolate mofetil injection, as well as Agila/Strides’amiodarone hydrochloride injection and fomepizole injection to JHP Pharmaceuticals, LLC; and 3) Agila/Strides’ acetylcysteine injection and mesna injection to Sagent Pharmaceuticals.  The proposed order also requires Mylan to release all of its rights relating to labetalol hydrochloride injection to Gland Pharma Ltd.  Finally, the proposed consent order contains supply and technology provisions to ensure the acquirers can immediately and effectively compete in the marketplace.

The Commission vote to accept the consent agreement containing the proposed consent order for public comment was 4-0.  The FTC will publish a description of 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 October 28, 2013, after which the Commission will decide whether to make the proposed consent order final.  Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section.

Comments in paper form should be mailed or delivered to:  Federal Trade Commission, Office of the Secretary, Room H-113, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.  The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. Comments also can be filed electronically.

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 $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 e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001.  To learn more about the Bureau of Competition, read Competition Counts.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.