[Federal Register Volume 85, Number 92 (Tuesday, May 12, 2020)]
[Notices]
[Pages 28007-28010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10081]
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FEDERAL TRADE COMMISSION
[File No. 191 0169]
AbbVie Inc. and Allergan plc; Analysis of Consent Order 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 to Aid Public Comment describes both the
allegations in the complaint and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.
DATES: Comments must be received on or before June 11, 2020.
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: ``AbbVie and
Allergan; File No. 191 0169'' 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; or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Kari Wallace (202-326-3085), Bureau of
Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW,
Washington, DC 20580.
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 (for
May 5, 2020), 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 11, 2020.
Write ``AbbVie and Allergan; File No. 191 0169'' 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 the public health emergency in response to the COVID-19
outbreak and the agency's heightened security screening, postal mail
addressed to the Commission will be subject to delay. We strongly
encourage you to submit your
[[Page 28008]]
comments online through the https://www.regulations.gov website.
If you prefer to file your comment on paper, write ``AbbVie and
Allergan; File No. 191 0169'' 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; or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024. If possible, submit your paper comment to the
Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure that your comment does not include any sensitive or
confidential information. In particular, your comment should not
include any 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 any 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 in
particular 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 the public FTC website--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from the FTC 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 http://www.ftc.gov to read this Notice and
the news release describing this matter. The FTC Act and other laws
that 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 that
it receives on or before June 11, 2020. 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 Consent Order To Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Orders (``Consent
Agreement'') from AbbVie Inc. (``AbbVie'') and Allergan plc
(``Allergan'') designed to remedy the anticompetitive effects resulting
from AbbVie's proposed acquisition of Allergan. The proposed Decision
and Order (``Order'') contained in the Consent Agreement requires
Allergan to divest all rights and assets related to its Zenpep and
Viokase products to Nestl[eacute] S.A. (``Nestl[eacute]''). The
proposed Order also requires that Allergan return its rights and assets
related to brazikumab to AstraZeneca plc (``AstraZeneca'').
The proposed Consent Agreement has been placed on the public record
for thirty days so that interested persons may submit comments.
Comments received during this period will become part of the public
record. After thirty days, the Commission will review the comments
received and decide whether it should withdraw, modify, or make the
Consent Agreement final.
Pursuant to a Scheme of Arrangement under Irish law, AbbVie will
acquire all of the voting securities of Allergan from its shareholders
for approximately $63 billion (the ``Acquisition''). The Commission's
Complaint alleges 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 substantially lessening competition in the U.S. markets for (1)
prescription drugs for the treatment of exocrine pancreatic
insufficiency (``EPI''); (2) Interleukin-23 (``IL-23'') inhibitors for
the treatment of moderate-to-severe Crohn's disease; and (3) IL-23
inhibitors for the treatment of moderate-to-severe ulcerative colitis.
The proposed Consent Agreement will remedy the alleged violations by
preserving the competition that otherwise would be lost in these
markets as a result of the proposed Acquisition.
II. The Parties
Headquartered in North Chicago, Illinois, AbbVie researches,
develops, manufactures, and sells prescription pharmaceutical products
and biologic products in several therapeutic areas, including
immunology, oncology, virology, neuroscience, and women's health. Among
other products, AbbVie sells a product to treat EPI and is developing
an IL-23 inhibitor to treat moderate-to-severe Crohn's disease and
ulcerative colitis. Like AbbVie, Allergan researches, develops,
manufactures, and sells prescription pharmaceutical products in the
United States. Among its products, Allergan also sells a product to
treat EPI and is developing an IL-23 inhibitor to treat moderate-to-
severe Crohn's disease and ulcerative colitis.
III. The Relevant Products and Structure of the Markets
A. Drugs for the Treatment of Exocrine Pancreatic Insufficiency
EPI is a condition that results from a deficiency of pancreatic
enzymes. Patients who have EPI cannot properly digest fats, proteins,
and carbohydrates in the foods they eat and, as a result, may suffer
from malnutrition and have uncomfortable gastrointestinal symptoms when
they eat. EPI is treated using pancreatic enzyme products. Pancreatic
enzyme products contain the active ingredient pancrelipase, a mixture
of the digestive enzymes amylase, lipase, and protease that is
extracted from the pancreas of a pig.
Only four companies sell prescription pancreatic enzyme product in
the United States: AbbVie, Allergan, Vivus Inc. (``Vivus''), and Chiesi
USA, Inc. (``Chiesi''). AbbVie is the clear market leader with its
product, Creon, and Allergan is the second-largest supplier, with its
product, Zenpep. Vivus sells Pancreaze and Chiesi sells Pertzye.
Allergan also sells a second pancreatic enzyme product, Viokase,
although its sales in the United States are much more limited.
Together, AbbVie and Allergan have a share of more than 95
[[Page 28009]]
percent of the market for drugs to treat EPI.
B. Interleukin-23 Inhibitors for the Treatment of Moderate-to-Severe
Crohn's Disease and for the Treatment of Moderate-to-Severe Ulcerative
Colitis
Ulcerative colitis and Crohn's disease are the most common causes
of chronic inflammation of the digestive tract. Both diseases have
similar symptoms--severe diarrhea, abdominal pain, fatigue, and weight
loss--and both can be debilitating and lead to life-threatening
complications. The location of the inflammation is the primary
difference between the two diseases: Ulcerative colitis is a continuous
inflammation of the colon, affecting only the innermost lining, while
Crohn's disease can occur anywhere between the mouth and the anus, has
healthy parts of the digestive tract between inflamed parts, and can
occur in all layers of the bowel walls. Because the diseases are
similar, drugs that are effective in treating ulcerative colitis are
also typically effective in treatment Crohn's disease (and vice versa),
but the United States Food and Drug Administration (``FDA'') requires
that companies seeking ulcerative colitis and Crohn's disease
indications for drugs conduct separate clinical studies and submit
separate applications to market drugs for each indication.
Various drugs are approved to treat ulcerative colitis and Crohn's
disease, but the effectiveness for most drugs is limited. IL-23
inhibitors are a new class of drugs to treat both diseases. Johnson &
Johnson's Stelara is the only IL-23 inhibitor currently approved to
treat moderate-to-severe Crohn's disease and ulcerative colitis in the
United States. Stelara is both an IL-23 inhibitor and an Interleukin-12
inhibitor. Only three other companies--AbbVie, Allergan, and Eli Lilly
and Company--have IL-23 inhibitors in late-stage development for
ulcerative colitis and Crohn's disease. Allergan is developing
brazikumab and AbbVie is developing Skyrizi.
IV. The Relevant Geographic Market
The United States is the relevant geographic market in which to
assess the competitive effects of the proposed Acquisition. Drugs to
treat EPI and drugs to treat moderate-to-severe ulcerative colitis and
Crohn's disease are prescription pharmaceutical products and regulated
by FDA. As such, products sold outside the United States, but not
approved for sale in the United States, do not provide viable
competitive alternatives for U.S. consumers.
V. Competitive Effects of the Acquisition
The proposed Acquisition would likely result in substantial
competitive harm to consumers in the markets for prescription drugs for
the treatment of EPI, IL-23 inhibitors for the treatment of moderate-
to-severe Crohn's disease, and IL-23 inhibitors for the treatment of
moderate-to-severe ulcerative colitis. Together, AbbVie and Allergan
account for more than 95 percent of the market for drugs to treat EPI,
and they are two of a limited number of companies in late-stage
development with IL-23 inhibitors to treat moderate-to-severe
ulcerative colitis and Crohn's disease.
VI. Entry Conditions
Entry in the relevant markets would not be timely, likely, or
sufficient in magnitude, character, and scope to deter or counteract
the anticompetitive effects of the proposed Acquisition. New entry
would require significant investment of time and money for product
research and development, regulatory approval by the FDA, developing
clinical history supporting the long-term efficacy of the product, and
establishing a U.S. sales and service infrastructure. Such development
efforts are difficult, time-consuming, and expensive, and often fail to
result in a competitive product reaching the market.
VII. The Consent Agreement
The Consent Agreement eliminates the competitive concerns raised by
the proposed Acquisition by requiring the combined company to divest
Allergan's Zenpep and Viokase business, including its regulatory
approvals, intellectual property, contracts, and inventory to
Nestl[eacute], and Allergan's brazikumab business to AstraZeneca.
AbbVie and Allergan also must transfer all business information,
research and development information, regulatory, formulation, and
manufacturing reports related to the divested products, as well as
provide access to knowledgeable employees to assist in the transfer.
The provisions of the Consent Agreement ensure that Nestl[eacute] and
AstraZeneca become independent, viable, and effective competitors in
the U.S. markets.
Nestl[eacute] is the world's largest food and beverage company,
operating in more than 190 countries around the world. While the
company is most well-known for its chocolate products, it also operates
Nestl[eacute] Health Science, an integrated health company that focuses
on nutrition products, including enteral feeding products that are used
in hospitals and at home by patients who are unable to chew or swallow
food. Nestl[eacute]'s existing business includes products that are
highly complementary to the divestiture assets. Nestl[eacute] has the
expertise, U.S. sales infrastructure, and resources to restore the
competition that otherwise would have been lost due to the proposed
Acquisition.
AstraZeneca is a global research-based pharmaceutical company
specializing in researching, developing, manufacturing, and marketing
prescription products. AstraZeneca was responsible for conducting some
of the early phase clinical studies for brazikumab, but out-licensed
the product to Allergan in 2016. AstraZeneca is a well-qualified buyer
for brazikumab because, as the original innovator of the product, it
already has experience developing brazikumab prior to out-licensing it
to Allergan, and, further, the key team members who were previously
responsible for brazikumab's development are still employed by the
company and will take responsibility for the developing the product.
With its resources, capabilities, and previous experience with
brazikumab, AstraZeneca is well positioned to successfully develop and
commercialize the product and thereby replace the competition that
otherwise would have been lost through the proposed Acquisition.
AbbVie and Allergan must accomplish the divestitures no later than
ten days after consummating the proposed Acquisition. If the Commission
determines that Nestl[eacute] or AstraZeneca are not acceptable
acquirers, or that the manner of the divestitures is not acceptable,
the proposed Order requires AbbVie and Allergan to unwind the sale of
rights and assets and then divest the affected product to a Commission-
approved acquirer within six months of the date the Order becomes
final. The Commission has agreed to appoint a Monitor to ensure that
AbbVie and Allergan comply with all of their obligations pursuant to
the Consent Agreement and to keep the Commission informed about the
status of the transfer of the rights and assets to the buyers. The
proposed Order further allows the Commission to appoint a trustee in
the event that AbbVie and Allergan fail to divest the products as
required.
The purpose of this analysis is to facilitate public comment on the
Consent Agreement, and it is not intended to constitute an official
interpretation of the proposed Order or to modify its terms in any way.
[[Page 28010]]
By direction of the Commission.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-10081 Filed 5-11-20; 8:45 am]
BILLING CODE 6750-01-P