Notice2022-09532
Hikma Pharmaceuticals PLC/Custopharm, Inc.; Analysis of Agreement Containing Consent Orders To Aid Public Comment
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 4, 2022
Issuing agencies
Federal Trade Commission
Abstract
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis of Proposed Consent Orders to Aid Public Comment describes both the allegations in the complaint and the terms of the consent orders--embodied in the consent agreement--that would settle these allegations.
Full Text
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<title>Federal Register, Volume 87 Issue 86 (Wednesday, May 4, 2022)</title>
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[Federal Register Volume 87, Number 86 (Wednesday, May 4, 2022)]
[Notices]
[Pages 26355-26356]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-09532]
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FEDERAL TRADE COMMISSION
[File No. 221 0002]
Hikma Pharmaceuticals PLC/Custopharm, Inc.; Analysis of Agreement
Containing Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis of Proposed Consent Orders to Aid Public Comment
describes both the allegations in the complaint and the terms of the
consent orders--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before June 3, 2022.
ADDRESSES: Interested parties may file comments online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write: ``Hikma/
Custopharm; File No. 221 0002'' on your comment and file your comment
online at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by following the instructions on
the web-based form. If you prefer to file your comment on paper, please
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610
(Annex D), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Steven Wilensky (202-326-2650), Bureau
of Competition, Federal Trade Commission, 400 7th Street SW,
Washington, DC 20024.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis of Agreement Containing Consent Orders to Aid Public
Comment describes the terms of the consent agreement and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC website at
this web address: <a href="https://www.ftc.gov/news-events/commission-actions">https://www.ftc.gov/news-events/commission-actions</a>.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before June 3, 2022.
Write ``Hikma/Custopharm; File No. 221 0002'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Due to protective actions in response to the COVID-19 pandemic and
the agency's heightened security screening, postal mail addressed to
the Commission will be delayed. We strongly encourage you to submit
your comments online through the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
If you prefer to file your comment on paper, write ``Hikma/
Custopharm; File No. 221 0002'' on your comment and on the envelope,
and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite
CC-5610 (Annex D), Washington, DC 20580.
Because your comment will be placed on the publicly accessible
website at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else's Social Security
number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2)--including competitively sensitive information such
as costs, sales statistics, inventories, formulas, patterns, devices,
manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on <a href="https://www.regulations.gov">https://www.regulations.gov</a>--as legally required by FTC
Rule 4.9(b)--we cannot redact or remove your comment from that website,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
Visit the FTC website at <a href="https://www.ftc.gov">https://www.ftc.gov</a> to read this Notice
and the news release describing this matter. The FTC Act and other laws
the Commission administers permit the collection of public comments to
consider and use in this proceeding, as appropriate. The Commission
will consider all timely and responsive public comments it receives on
or before June 3, 2022. For information on the Commission's privacy
policy, including routine uses permitted by the Privacy Act, see
<a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
Analysis of Agreement Containing Consent Orders To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Order (``Consent
Agreement'') from Hikma Pharmaceuticals PLC (``Hikma''), Custopharm,
Inc. (``Custopharm''), Water Street Healthcare Partners, LLC (``Water
Street''), Water Street Healthcare Partners III, L.P. (``Fund III''),
Water Street Healthcare Partners IV (``Fund IV''), L.P., and Long Grove
Pharmaceuticals, LLC (``Long Grove'') (collectively, ``Respondents'').
The purpose of the Consent Agreement is to remedy the anticompetitive
effects that would likely result from Hikma's acquisition of Custopharm
(``the Proposed Acquisition''). Pursuant to an agreement dated
September 27, 2021, Hikma proposes to acquire Custopharm in a
transaction valued at approximately $375 million. As part of the
Proposed Acquisition, Custopharm agreed to carve out one of its
pipeline products, injectable triamcinolone acetonide
[[Page 26356]]
(``TCA''), and transferred its TCA assets to Long Grove. The Commission
alleges in its Complaint that the Proposed Acquisition, if consummated,
would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18,
and Section 5 of the Federal Trade Commission Act, as amended, 15
U.S.C. 45, by lessening future competition in the U.S. market for
injectable TCA. The Consent Agreement will remedy the alleged
violations by preserving the competition that otherwise would be
eliminated by the Proposed Acquisition.
Under the terms of the proposed Decision and Order (``Order''),
Respondent Hikma shall not acquire any rights or interests in TCA
products or assets, or any rights or interests in the therapeutical
equivalent or biosimilar of TCA products without the prior approval of
the Commission. The Order requires Respondents Long Grove and Water
Street to operate and maintain in the normal course of business the TCA
assets previously operated by Custopharm for a period lasting until
four years after the Order date.
The consent agreement has been placed on the public record for
thirty days for receipt of comments from interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will again evaluate the Consent
Agreement, along with the comments received, to make a final decision
as to whether it should withdraw from the consent agreement, modify it,
or make final the proposed Order.
I. The Respondents
Respondent Hikma is a multinational pharmaceutical company with
headquarters in London, England, and U.S. headquarters in Berkeley
Heights, New Jersey. Hikma manufactures both branded and generic
pharmaceutical products, including generic injectables.
Respondent Custopharm is incorporated in the State of Texas with
its principal place of business located in Carlsbad, California. Water
Street owns a majority of Custopharm. Custopharm develops generic
pharmaceutical products but does not have any of its own manufacturing
capabilities and manufacturers its products exclusively through
contract manufacturers. Those products are then sold through
Custopharm's commrcial arm, Leucadia Pharmaceuticals.
Respondent Water Street Healthcare Partners, LLC is a private
equity firm headquartered in Chicago, Illinois. Water Street is the
General Partner of Respondents Fund III and Fund IV. Respondent Fund
III is a private equity fund managed by Water Street located in
Chicago, Illinois. Fund III's portfolio includes Custopharm. Respondent
Fund IV is a private equity fund managed by Water Street located in
Chicago, Illinois. Fund IV's portfolio includes Long Grove. Respondent
Long Grove is a pharmaceutical company launched in 2019 and
headquartered in Rosemont, Illinois. Long Grove is owned by Fund IV.
II. The Relevant Market
In human pharmaceutical markets, prices generally decrease as the
number of generic competitors increases. Prices continue to decrease
incrementally with the entry of the second, third, fourth, and further
pharmaceutical competitors. Accordingly, a reduction in the number of
suppliers within each relevant market has a direct and substantial
effect on pricing.
The Proposed Acquisition would reduce future competition in the
market for injectable TCA. Injectable TCA is a corticosteroid used for
severe skin conditions and inflammation. Only three competitors
currently market injectable TCA: Bristol-Meyers Squibb, Amneal
Biosciences, and Teva Pharmaceutical Industries. Hikma and Custopharm
are two of a limited number of suppliers capable of entering the TCA
market in the near future.
III. Entry
Entry into the market at issue would not be timely, likely, or
sufficient in magnitude, character, and scope to deter or counteract
the anticompetitive effects of the Proposed Acquisition. The
combination of drug development times and regulatory requirements,
including approval by the FDA, is costly and lengthy.
IV. Competitive Effects
The effect of the Proposed Acquisition, if consummated, is likely
to substantially lessen competition by eliminating future competition
between Hikma and Custopharm in the market for injectable TCA. The
evidence shows that the Proposed Acquisition, absent a remedy, would
eliminate an additional independent entrant in the currently
concentrated market for injectable TCA, which would have enabled
customers to negotiate lower prices. Customers and competitors have
observed--and the pricing data confirms--that the price of
pharmaceutical products decreases with new entry even after several
other suppliers have entered the market. Thus, absent a remedy, the
Proposed Acquisition likely would cause U.S. consumers to pay
significantly higher prices for injectable TCA in the future.
V. The Proposed Order
The proposed Order effectively remedies the competitive concerns
raised by the Proposed Acquisition for the pharmaceutical product at
issue. The proposed Order requires that Hikma not acquire any rights or
interests in TCA products or assets, or rights or interests in the
therapeutical equivalent or biosimilar of TCA products without the
prior approval of the Commission. The proposed Order also requires
Water Street and Long Grove to operate and maintain in the normal
course of business the TCA assets for a period lasting until four years
after the date the Order is issued. The proposed Order also allows the
Commission to appoint an individual to serve as Monitor to observe and
report on Respondents' compliance with their obligations set forth in
the Order.
* * * * *
The purpose of this analysis is to facilitate public comment on the
Consent Agreement and proposed Order to aid the Commission in
determining whether it should make the proposed Order final. This
analysis is not an official interpretation of the proposed Order and
does not modify its terms in any way.
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-09532 Filed 5-3-22; 8:45 am]
BILLING CODE 6750-01-P
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</html>Indexed from Federal Register on May 4, 2022.
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