On February 10, 2009, the FTC cleared Teva Pharmaceutical Industries’ acquisition of Barr Pharmaceuticals with divestitures. Teva, the largest generic drug manufacturer in the world, announced its plans in July 2008 to buy rival Barr for $8.9 billion. In its Analysis of the Agreement Containing Consent Orders to Aid Public Comment, the FTC identified 29 different products where the parties were two of no more than four generic competitors. Notably, the FTC excluded the brand version of the drug product from each relevant market, saying: “generic pharmaceutical customers are not likely to switch to the branded product because they are priced significantly higher than the generic products.”
The Commission alleged that the potential effects of the transaction were both unilateral and coordinated. Based on evidence identified in the course of investigation, the Commission noted that prices of generics are directly related to the number of generic companies competing in a given drug product. At the same time, the Commission asserted that competing generic drug products were homogenous, there was a lack of incentives to deviate, and business was predictable, such that the consolidation to fewer than four products would contribute to greater likelihood of collusion.
The Decision and Order required Teva and Barr to divest to Watson Pharmaceuticals Teva’s generic: 1) chlorzoxazone tablets; 2) deferoxamine injection; 3) fluoxetine weekly capsules; 4) carboplatin injection; and 5) metronidazole tablets; and Barr’s generic: 1) metoclopramide HCl tablets; 2) cyclosporine liquid; 3) cyclosporine capsules; 4) desmopressin acetate tablets; 5) epop; 6) flutamide capsules; 7) glipizide/metformin HCl tablets; 8) mirtazapine ODT; 9) tamoxifen citrate tablets; and 10) tetracycline HCl capsules. In addition, the parties were required to divest assets related to trazodone HCl tablets and 13 oral contraceptive products to Qualitest.