Pfizer’s Acquisition of Wyeth Clears Antitrust Hurdles

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Pfizer, Inc.’s proposed $68 billion acquisition of Wyeth was conditionally approved by the Federal Trade Commission (FTC) today. The agency signed off on the combination of the pharmaceutical giants, subject to divestitures aimed at preserving competition in multiple U.S. markets for animal pharmaceuticals and vaccines.

The FTC alleged that, if the acquisition were to proceed as proposed, it could have had anticompetitive effects in 21 U.S. markets for vaccines, antibiotics, and other treatments for animals. It was determined, however, that the transaction did not raise anticompetitive concerns in the markets for human pharmaceuticals.

In announcing the complaint and proposed consent order, the FTC took the somewhat unusual step of issuing a separate statement. Commission statements are more commonly issued when the agency seeks to explain a decision not to take an action or when there are dissenting views. In this matter, there were no dissents. Only two commissioners approved the proposed settlement, with Commissioners Pamela Jones Harbour and William E. Kovacic recused.

The statement was issued by the Commission to explain [the] decision, provide greater visibility into this important investigation, and, in the event that there are future such transactions, describe the framework . . . used in [the] analysis.”

The Commission’s statement noted that the transaction involved the combination of the largest prescription pharmaceutical company in both the United States and the world (Pfizer) and the twelfth-largest prescription pharmaceutical company in the United States (Wyeth). It explained the agency’s investigation into the competitive effects analysis of the acquisition with respect to markets for human pharmaceuticals, including Alzheimer’s disease treatments.

While it was determined that the merger was not likely to substantially reduce competition or potential competition in any relevant human health market in which Pfizer and Wyeth might compete, the Commission expressed its intention to monitor the markets and continue to evaluate future transactions “to ensure that any merger or acquisition does not undermine the pharmaceutical industry’s competitiveness.”

International Approvals

Canada’s Competition Bureau also approved the transaction today, subject to the divestiture of a significant number of animal health products. The U.S. and Canadian approvals are the last significant antitrust hurdles for the acquisition. Today’s settlements follow clearances from competition authorities in Europe in July, and more recently in China and Australia in September. Approval in each of these jurisdictions was also conditioned on the divestment of certain animal health assets. The FTC’s announcement noted that the U.S. agency’s cooperation with its foreign counterparts.

Details of the complaint and proposed consent order, In the Matter of Pfizer
Inc. and Wyeth, FTC Dkt. C-4267, appear on the FTC website and will appear at CCH Trade Regulation Reporter ¶16,376.

The statement of the Canada Competition Bureau appears on the Competition Bureau's website.

FTC, Minnesota Can Proceed with Claims Against Drug Company’s Acquisition

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The federal district court in Minneapolis will allow the Federal Trade Commission and the State of Minnesota to proceed to trial with their claims against Lundbeck, Inc., in connection with the drug company’s 2006 acquisition of a drug—NeoProfen—used to treat a potentially-deadly congenital heart defect in premature babies.

The court denied Lundbeck’s motion for summary judgment and set a set a trial date of December 7, 2009.

When it acquired NeoProfen, Lundbeck—formerly Ovation Pharmaceuticals, Inc.—had already held the rights to Indocin (injectable indomethacin)—the only drug available to treat patent ductus arteriosus (PDA) in the United States. NeoProfen (injectable ibuprofen) had not been approved by the Food and Drug Administration to treat PDA but was used in Europe to treat the disease.

Government Allegations

The FTC alleged that—by acquiring the rights to NeoProfen—Lundbeck violated Sec. 7 of the Clayton Act and Sec. 5 of the FTC Act.

Similarly, the State of Minnesota argued that Lundbeck violated Sec. 7 of the Clayton Act by acquiring the rights to NeoProfen and violated Sec. 2 of the Sherman Act by willfully maintaining its monopoly power in the market for the sale of drugs for the treatment of PDA.

Same Market?

On its motion for summary judgment, Lundbeck contended that Indocin and NeoProfen were not in the same market. It maintained that doctors distinguish Indocin from NeoProfen based on clinical and safety attributes and that doctors do not switch between the drugs based on price. The court rejected the contention.

The FTC and Minnesota responded that Indocin and NeoProfen treated the same medical condition in the same patient population. In addition, a significant number
of hospitals stocked either Indocin or NeoProfen but not both, and hospitals considered price when purchasing drugs.

Market Power

The court also rejected Lundbeck’s argument that it lacked market power because the entry of a generic manufacturer of indomethacin was imminent. The FTC and the State of Minnesota pointed to manufacturing difficulties, and there was no agreement that generic indomethacin would be in the market within the calendar year, the court explained.

The July 21 decision in FTC v. Lundbeck, Inc., appears at 2009-2 CCH Trade Cases ¶ 76,682.