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[Federal Register Volume 87, Number 86 (Wednesday, May 4, 2022)]
[Notices]
[Pages 26355-26356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09532]

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FEDERAL TRADE COMMISSION

[File No. 221 0002]

Hikma Pharmaceuticals PLC/Custopharm, Inc.; Analysis of Agreement 
Containing Consent Orders To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis of Proposed Consent Orders to Aid Public Comment 
describes both the allegations in the complaint and the terms of the 
consent orders--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before June 3, 2022.

ADDRESSES: Interested parties may file comments online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write: ``Hikma/
Custopharm; File No. 221 0002'' on your comment and file your comment 
online at https://www.regulations.gov by following the instructions on 
the web-based form. If you prefer to file your comment on paper, please 
mail your comment to the following address: Federal Trade Commission, 
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 
(Annex D), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Steven Wilensky (202-326-2650), Bureau 
of Competition, Federal Trade Commission, 400 7th Street SW, 
Washington, DC 20024.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis of Agreement Containing Consent Orders to Aid Public 
Comment describes the terms of the consent agreement and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC website at 
this web address: https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before June 3, 2022. 
Write ``Hikma/Custopharm; File No. 221 0002'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website.
    Due to protective actions in response to the COVID-19 pandemic and 
the agency's heightened security screening, postal mail addressed to 
the Commission will be delayed. We strongly encourage you to submit 
your comments online through the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Hikma/
Custopharm; File No. 221 0002'' on your comment and on the envelope, 
and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610 (Annex D), Washington, DC 20580.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2)--including competitively sensitive information such 
as costs, sales statistics, inventories, formulas, patterns, devices, 
manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on https://www.regulations.gov--as legally required by FTC 
Rule 4.9(b)--we cannot redact or remove your comment from that website, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC website at https://www.ftc.gov to read this Notice 
and the news release describing this matter. The FTC Act and other laws 
the Commission administers permit the collection of public comments to 
consider and use in this proceeding, as appropriate. The Commission 
will consider all timely and responsive public comments it receives on 
or before June 3, 2022. For information on the Commission's privacy 
policy, including routine uses permitted by the Privacy Act, see 
https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Orders To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order (``Consent 
Agreement'') from Hikma Pharmaceuticals PLC (``Hikma''), Custopharm, 
Inc. (``Custopharm''), Water Street Healthcare Partners, LLC (``Water 
Street''), Water Street Healthcare Partners III, L.P. (``Fund III''), 
Water Street Healthcare Partners IV (``Fund IV''), L.P., and Long Grove 
Pharmaceuticals, LLC (``Long Grove'') (collectively, ``Respondents''). 
The purpose of the Consent Agreement is to remedy the anticompetitive 
effects that would likely result from Hikma's acquisition of Custopharm 
(``the Proposed Acquisition''). Pursuant to an agreement dated 
September 27, 2021, Hikma proposes to acquire Custopharm in a 
transaction valued at approximately $375 million. As part of the 
Proposed Acquisition, Custopharm agreed to carve out one of its 
pipeline products, injectable triamcinolone acetonide

[[Page 26356]]

(``TCA''), and transferred its TCA assets to Long Grove. The Commission 
alleges in its Complaint that the Proposed Acquisition, if consummated, 
would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, 
and Section 5 of the Federal Trade Commission Act, as amended, 15 
U.S.C. 45, by lessening future competition in the U.S. market for 
injectable TCA. The Consent Agreement will remedy the alleged 
violations by preserving the competition that otherwise would be 
eliminated by the Proposed Acquisition.
    Under the terms of the proposed Decision and Order (``Order''), 
Respondent Hikma shall not acquire any rights or interests in TCA 
products or assets, or any rights or interests in the therapeutical 
equivalent or biosimilar of TCA products without the prior approval of 
the Commission. The Order requires Respondents Long Grove and Water 
Street to operate and maintain in the normal course of business the TCA 
assets previously operated by Custopharm for a period lasting until 
four years after the Order date.
    The consent agreement has been placed on the public record for 
thirty days for receipt of comments from interested persons. Comments 
received during this period will become part of the public record. 
After thirty days, the Commission will again evaluate the Consent 
Agreement, along with the comments received, to make a final decision 
as to whether it should withdraw from the consent agreement, modify it, 
or make final the proposed Order.

I. The Respondents

    Respondent Hikma is a multinational pharmaceutical company with 
headquarters in London, England, and U.S. headquarters in Berkeley 
Heights, New Jersey. Hikma manufactures both branded and generic 
pharmaceutical products, including generic injectables.
    Respondent Custopharm is incorporated in the State of Texas with 
its principal place of business located in Carlsbad, California. Water 
Street owns a majority of Custopharm. Custopharm develops generic 
pharmaceutical products but does not have any of its own manufacturing 
capabilities and manufacturers its products exclusively through 
contract manufacturers. Those products are then sold through 
Custopharm's commrcial arm, Leucadia Pharmaceuticals.
    Respondent Water Street Healthcare Partners, LLC is a private 
equity firm headquartered in Chicago, Illinois. Water Street is the 
General Partner of Respondents Fund III and Fund IV. Respondent Fund 
III is a private equity fund managed by Water Street located in 
Chicago, Illinois. Fund III's portfolio includes Custopharm. Respondent 
Fund IV is a private equity fund managed by Water Street located in 
Chicago, Illinois. Fund IV's portfolio includes Long Grove. Respondent 
Long Grove is a pharmaceutical company launched in 2019 and 
headquartered in Rosemont, Illinois. Long Grove is owned by Fund IV.

II. The Relevant Market

    In human pharmaceutical markets, prices generally decrease as the 
number of generic competitors increases. Prices continue to decrease 
incrementally with the entry of the second, third, fourth, and further 
pharmaceutical competitors. Accordingly, a reduction in the number of 
suppliers within each relevant market has a direct and substantial 
effect on pricing.
    The Proposed Acquisition would reduce future competition in the 
market for injectable TCA. Injectable TCA is a corticosteroid used for 
severe skin conditions and inflammation. Only three competitors 
currently market injectable TCA: Bristol-Meyers Squibb, Amneal 
Biosciences, and Teva Pharmaceutical Industries. Hikma and Custopharm 
are two of a limited number of suppliers capable of entering the TCA 
market in the near future.

III. Entry

    Entry into the market at issue would not be timely, likely, or 
sufficient in magnitude, character, and scope to deter or counteract 
the anticompetitive effects of the Proposed Acquisition. The 
combination of drug development times and regulatory requirements, 
including approval by the FDA, is costly and lengthy.

IV. Competitive Effects

    The effect of the Proposed Acquisition, if consummated, is likely 
to substantially lessen competition by eliminating future competition 
between Hikma and Custopharm in the market for injectable TCA. The 
evidence shows that the Proposed Acquisition, absent a remedy, would 
eliminate an additional independent entrant in the currently 
concentrated market for injectable TCA, which would have enabled 
customers to negotiate lower prices. Customers and competitors have 
observed--and the pricing data confirms--that the price of 
pharmaceutical products decreases with new entry even after several 
other suppliers have entered the market. Thus, absent a remedy, the 
Proposed Acquisition likely would cause U.S. consumers to pay 
significantly higher prices for injectable TCA in the future.

V. The Proposed Order

    The proposed Order effectively remedies the competitive concerns 
raised by the Proposed Acquisition for the pharmaceutical product at 
issue. The proposed Order requires that Hikma not acquire any rights or 
interests in TCA products or assets, or rights or interests in the 
therapeutical equivalent or biosimilar of TCA products without the 
prior approval of the Commission. The proposed Order also requires 
Water Street and Long Grove to operate and maintain in the normal 
course of business the TCA assets for a period lasting until four years 
after the date the Order is issued. The proposed Order also allows the 
Commission to appoint an individual to serve as Monitor to observe and 
report on Respondents' compliance with their obligations set forth in 
the Order.
* * * * *
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement and proposed Order to aid the Commission in 
determining whether it should make the proposed Order final. This 
analysis is not an official interpretation of the proposed Order and 
does not modify its terms in any way.

    By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-09532 Filed 5-3-22; 8:45 am]
BILLING CODE 6750-01-P
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