FTC Takes Action to Protect Americans from Higher Drug Costs in Aurobindo, Lannett Deal

The Federal Trade Commission took action to protect American patients from higher drug costs by requiring Aurobindo Pharma Limited to divest four different generic drug products to complete its $250 million acquisition of Lannett Company Inc.

Aurobindo's acquisition of Lannett would combine two of a limited number of competitors in the markets for four different generic pharmaceutical products that provide critical relief for patients, ranging from drugs used to prevent organ transplant rejection to tablets that treat dry mouth after radiation therapy.

Under the terms of the FTC's proposed consent order, Aurobindo will be required to divest four generic pharmaceutical products to Quagen Pharmaceuticals LLC, an experienced generic pharmaceutical company.

"The FTC has shown a deep commitment to lowering drug prices for all Americans," said Daniel Guarnera, Director of the FTC's Bureau of Competition. "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 generic products to be divested to Quagen under the terms of the FTC's consent order are:

• Mycophenolate mofetil oral suspension-an immunosuppressant prescribed to help prevent organ transplant rejection.
• Niacin extended release (ER) tablets-a drug used to manage cholesterol levels and to prevent or manage niacin, a B-complex vitamin, deficiency.
• Pilocarpine tablets-a drug used to treat dry mouth, often after radiation therapy for head and neck cancer or in patients with Sjögren's syndrome, which is an autoimmune disease causing the immune system to attack moisture-producing glands.
• Rabeprazole sodium delayed release (DR) tablets-a proton pump inhibitor used to reduce stomach acid and are indicated for the treatment of duodenal ulcers, gastroesophageal reflux disease and Zollinger-Ellison syndrome, a condition where the stomach produces too much acid.

The FTC's proposed consent order settles allegations that Aurobindo's acquisition of Lannett would eliminate competition between the two drug manufacturers, reducing the number of independent significant competitors for each of the four generic drugs.

Without the divestitures, the deal would increase the likelihood that Aurobindo would be able to unilaterally exercise market power in these four drug markets, while the remaining competitors could engage in coordinated interaction, potentially raising the cost of generic drugs, the complaint further alleges. Ultimately, customers would be forced to pay higher prices, the FTC's complaint states.

The FTC's proposed consent order, which requires the divestitures, also specifies, among other terms, that Aurobindo and Lannett provide transition services to enable Quagen to effectively operate the divested assets immediately. Aurobindo and Lannett will also be subject to a monitor to oversee compliance obligations.

The Commission vote to issue the complaint and accept the consent agreement for public comment was 2-0.

The public will have 30 days to submit comments on the proposed consent agreement package. Instructions for filing comments appear on the docket. Once processed, they will be posted on Regulations.gov.

NOTE: The Commission issues an administrative complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions.