FTC Allows Allergan's Acquisition of Inamed But Requires Divestiture
On March 8, 2006, the Federal Trade Commission ("FTC") announced a Consent Agreement (subject to final approval) that will allow Allergan, Inc. ("Allergan") to acquire Inamed Corporation ("Inamed"). However, the FTC has mandated that Allergan divest the development and distribution rights of cosmetic botulinum toxin (tentatively branded "Reloxin") and return them to Ipsen, Ltd. ("Ipsen"). Inamed had possessed exclusive United States development and distribution rights to Reloxin, under a 2002 agreement with Ipsen. Botulinum toxin is a nonsurgical treatment for wrinkles due to repetitive muscle movements, such as "worry lines" on the forehead. Allergan's product, Botox, is currently the only botulinum type A product approved for treating facial wrinkles by the U.S. Food and Drug Administration ("FDA"). Inamed's product, Reloxin, is currently in FDA Phase III clinical trials. Ipsen has been manufacturing and marketing this product (under the name "Dysport") in Europe.
The FTC in its Complaint alleged that Allergan's acquisition of Inamed would violate Section 7 of the Clayton Act, as amended, and Section 5 of the FTC Act. Specifically, the FTC asserted that Inamed, with the potential FDA approval of Reloxin, was the firm in the best position to next enter the cosmetic botulinum toxin product market and compete with Allergan's Botox. According to the FTC, Allergan's acquisition of Inamed would have increased the ability of the combined firm to raise prices of cosmetic botulinum toxin products and increased the likelihood of the combined entity delaying or foregoing Reloxin's entry into the market, thereby delaying the resulting price competition.
In its Analysis of Agreement Containing Consent Orders to Aid Public Comment ("Analysis"), the FTC stated that, because of regulatory and technological barriers, obtaining FDA approval for cosmetic botulinum toxin can take at least two years. Therefore, the FTC asserted that entry in this market "would not be timely, likely, or sufficient in its magnitude, character, and scope to deter or counteract the anticompetitive effects [of Allergan's acquisition of Inamed]."
The Decision and Order contains numerous provisions regarding divestiture logistics, including the requirements that (1) within 20 days after the Order becomes final, Allergan and Inamed will divest the development and distribution rights relating to Reloxin back to Ipsen, (2) Allergan and Inamed will ensure that confidential business information relating to Reloxin is provided to Ipsen and not used or obtained by Allergan, (3) Ipsen has the opportunity to employ certain individuals with knowledge/experience relating to Reloxin, and (4) Allergan and Inamed comply with certain reporting requirements. The FTC appointed an Interim Monitor, and provided in the Order for the appointment of a Divestiture Trustee should Allergan and Inamed fail to fully comply with the Order.
For additional information about this Antitrust Development, please contact Toby G. Singer, leader of the Health Care Antitrust Practice.