Potential for Future Competitive Harm Results in Divestiture Requirement for Generic Drug Company Acquisition

Lori Kalani, Bernard Nash
Cozen O'Connor
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  • The Federal Trade Commission (“FTC”) reached a settlement with generic drug companies ANI Pharmaceuticals, Inc. (“ANI”) and Novitium Pharma LLC (“Novitium”), as well as Novitium’s parent company, to resolve allegations that ANI’s acquisition of Novitium would cause future harm to competition in markets for two generic medications in violation of the FTC Act and the Clayton Act.
  • The FTC’s complaint alleged that both ANI and Novitium have products in development relating to generic dexamethasone tablets, an oral steroid used to treat inflammation, including inflammation associated with COVID-19 infections, and that the acquisition eliminate a potential entrant and harm future competition in a market with only two current participants. The complaint further alleges that ANI currently sells an oral suspension of generic sulfamethoxazole-trimethoprim (SMX-TMP), an antibiotic used to treat a variety of infections, and that, prior to the acquisition, Novitium was well positioned to enter the market, but that the acquisition will stop Novitium’s plans to compete in this market.
  • Under the terms of the consent order, among other things, ANI agreed to divest to Prasco LLC its development rights in generic SMX-TMP and also assets with respect to dexamethasone. According to the FTC, the settlement preserves future competition in two generic pharmaceutical markets by ensuring that ongoing product development efforts for both drugs are in the hands of companies with an incentive to enter the market.
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