FTC Challenges Post-Closing Deal Too Small to Be Subject to the HSR Act

The Federal Trade Commission (FTC) has filed a complaint against Ovation Pharmaceuticals, Inc. (Ovation) in connection with its 2006 acquisition of a drug nearing FDA approval (NeoProfen). The FTC alleged that NeoProfen was the only potential competitor to Ovation’s own marketed product (Indocin) used to treat a potentially life-threatening heart defect in premature babies called patent ductus asteriosus (PDA). According to the FTC complaint, after acquiring the rights to NeoProfen, Ovation raised the price of Indocin nearly 1300% from $36 per vial to $500 per vial and soon thereafter introduced NeoProfen at approximately the same price.

The FTC alleges that Ovation’s acquisition of NeoProfen violates Section 7 of the Clayton Act and Section 5 of the FTC Act by inter alia eliminating the only price constraint on Indocin, to the detriment of hospitals, state Medicaid agencies, and other purchasers. The FTC seeks a divestiture of one of the products to restore the competition that was allegedly lost when Ovation acquired NeoProfen. The complaint also requests other equitable relief, including disgorgement of “all unlawfully obtained profits.”

For the full story, please view the PDF.