On December 29, 2008, the Federal Trade Commission (“FTC”) required a divestiture to resolve antitrust concerns with King Pharmaceuticals, Inc.’s (“King”) $1.6 billion acquisition of Alpharma, Inc. (“Alpharma”).
To remedy the situation, the FTC is requiring King to divest Alpharma’s brand Kadian, an oral long-acting opioid (“LAO”) analgesic drug, to Actavis, one of the world’s largest generic drug companies, no later than 10 days of King’s acquisition of Alpharma. According to the FTC, King’s own brand of an oral LAO drug, Avinza, is a close substitute to Kadian for many customers.
Oral LAO drugs are prescribed to patients suffering from moderate-to-severe chronic pain. Other drugs short-acting opioids or non-oral opioids are not close substitutes for the oral LAO products. The market for LAO drugs is highly concentrated. Although Purdue Pharma, Inc.’s oral LAO brand OxyContin is the dominant product in the oral LAO drug market in the United States, King’s Avinza and Alphama’s Kadian are very competitive. In 2007, the oral LAO drug market made $4 billion in total annual sales.
Because Actavis currently manufactures King’s oral LAO drug, the FTC believes it is well suited to acquire King’s assets. It takes approximately 2 years to obtain the approval for the manufacturing and sale of oral LAO drugs from the U.S. Food and Drug Administration. This divestiture gives Actavis the opportunity to obtain approval to create and sell an “authorized” generic oral LAO drug earlier than currently possible as the patent on Kadian expires in 2010.