The Federal Trade Commission has set a condition for Aurobindo Pharma Limited to close its $250 million purchase of Lannett Company Inc.: Aurobindo must sell four specific generic drug products to Quagen Pharmaceuticals LLC.
According to the FTC, the acquisition would combine two of a limited number of rivals in markets for four generic pharmaceuticals. The agency said the consolidation would reduce the number of independent competitors in those narrow markets and could put pressure on prices for medications used in a range of clinical settings, from organ transplant care to treatment for dry mouth following radiation therapy.
Under the terms of the proposed consent order, Aurobindo will divest the following products to Quagen:
- Mycophenolate mofetil oral suspension - an immunosuppressant used to prevent organ transplant rejection.
- Niacin extended release tablets - indicated for managing cholesterol levels.
- Pilocarpine tablets - used to treat dry mouth.
- Rabeprazole sodium delayed release tablets - a proton pump inhibitor that reduces stomach acid.
Daniel Guarnera, Director of the FTC’s Bureau of Competition, commented on the action: "The FTC has shown a deep commitment to lowering drug prices for all Americans. The FTC’s action today will protect millions of patients from the threat of higher generic drug prices, allowing Americans to focus on their health and not on how much a specific drug is going to cost."
The FTC's proposed consent order frames the divestiture as a remedy to settle allegations that the acquisition would eliminate head-to-head competition between the two drugmakers in each of the four affected product markets. To facilitate an orderly transfer and immediate operation of the divested assets, the order requires Aurobindo and Lannett to provide transition services to Quagen.
In addition to the divestiture and transition-service obligations, the consent order calls for a monitor to oversee compliance with the companies' obligations under the agreement. The monitor will be tasked with ensuring the divestiture and related measures are carried out in a manner consistent with preserving competition in the impacted markets.
The Commission voted 2-0 to issue the complaint and accept the consent agreement for public comment. Members of the public have 30 days to submit comments on the proposed consent agreement, after which the FTC will consider those comments as it determines final action.
This notice follows the FTC's assessment that the proposed transaction would materially reduce competition in a small number of product markets, and that the proposed divestiture to Quagen is a targeted remedy intended to maintain a greater number of independent suppliers for each affected generic drug.