Antitrust Lawyer Blog Commentary on Current Developments

FTC Approves Akorn’s Acquisition of Hi-Tech Pharmacal

On April 14, 2014, the FTC announced that it reached a settlement agreement with Akorn Enterprises (“Akorn”), which allows it to proceed with its acquisition of Hi-Tech Pharmacal, Inc. (“Hi-Tech”).

Specifically, Akorn and Hi-Tech will sell the rights and assets to three generic prescription eye medications and two generic topical anesthetics to Watson Laboratories, Inc., to settle the FTC’s allegations that Akorn’s proposed $640 million acquisition of Hi-Tech would be anticompetitive and lead to higher prices for consumers.

The following drugs will be affected by the FTC’s consent order:

• Generic Ciloxan drops, which are eye drops used to treat bacterial eye infections and corneal ulcers. The proposed transaction would reduce from four to three the number of competitors in this already highly concentrated market.
• Generic Quixin drops, which are eye drops used to treat bacterial eye infections The acquisition would reduce the number of current competitors from three to two.
• Generic Xylocaine jelly, a topical anesthetic prescription drug, for which the proposed acquisition would reduce the number of competitors from three to two.
• Generic EMLA cream, a topical anesthetic prescription drug. The proposed transaction would leave only three remaining competitors, and give the merged firm more than 70 percent of the U.S. market.
• Generic Ilotycin ointment, prescribed for bacterial eye infections, which is currently sold by three firms in the U.S. As Hi-Tech was poised to enter the market in the near future, Akorn’s acquisition of Hi-Tech would therefore deprive consumers of the benefits of future competition that would come with Hi-Tech’s entry into this highly concentrated market.

Under the consent agreement, Akorn and Hi-Tech are required to sell these assets to Watson. The agreement also requires Akorn to assign Watson its contract for making branded and generic EMLA cream within 10 days after the deal is consummated. If the FTC finds that Watson is not an acceptable acquirer of the drugs, it can require Akorn to unwind the sales and divest the drugs to another FTC-approved buyer within six months. Finally, the proposed order requires the companies to maintain the drugs to be sold as viable, marketable, and competitive pending their divestiture, and allows the FTC to appoint a monitor to ensure that the companies comply with the order’s requirements. The FTC Commissioners voted 4-0 to accept the agreement.

 

Andre Barlow
202-589-1838
abarlow@dbmlawgroup.com

Mark Ye
202-589-1834
mye@dbmlawgroup.com