FTC approves Teva-Cephalon deal with conditions

The Federal Trade Commission said Friday it required Teva Pharmaceutical Industries Ltd., to sell the rights and assets related to a generic cancer pain drug and a generic muscle relaxant as a condition of approval for its proposed $6.8 billion acquisition of Cephalon, Inc.

The FTC also required Teva to enter into a supply agreement that will allow Par Pharmaceuticals, Inc., to sell a generic version of Cephalon’s narcolepsy drug Provigil in 2012.

Teva is based in Israel but has operations in North Wales and just broke ground on a new facility in Northeast Philadelphia. Cephalon's headquarters is in Frazer. Par's headquarters is in Woodcliff Lake, N.J.

“This settlement preserves competitive markets for current generic drugs, which are key to holding down the cost of health care for consumers," Richard Feinstein, director of the FTC’s Bureau of Competition, said in a statement. "It also ensures there will be competition among generic drugs introduced in the future.”

The FTC issued what it calls a complaint (read here) if it thinks a proposed acquisition would violate anti-trust laws. It said the Teva-Cephalon deal was problematic on three items. The commission voted 4-0 to approve the complaint and then the proposed consent order, which includes the divestiture of assets to Par. The public can register opinions on the FTC web site for 30 days, after which the commission will decide if the agreement is final.

Teva said in a statement Friday night that it still expects to close its acquisition of Cephalon by Oct. 14. The European Commission must still give approval, but indications are that Teva has met commission requirements.

Cephalon's brand-name drug Actiq is a "transmucosal fentanyl citrate lozenge," which is used for pain by cancer patients. The FTC said Teva's acquisition of Cephalon would have left only two U.S. generic manufacturers of the drug, with Covidien being the other, and would have given Teva more than 80 percent share of the sales of the generic Actiq product. Actiq and the generic versions had about $173 million in sales, according to IMS Health data, Teva said in its statement.

Cephalon acquired the brand-name muscle relaxant drug Amrix, approved by the FDA in 2007. The FTC said that while no companies currently make or sell a generic version of Amrix, Teva and Cephalon are two of only a limited number of suppliers that may be able to enter the market quickly with a generic product. Cephalon and Watson Pharma, Inc., agreed to a deal in May on Watson producing a generic version of the drug. Amrix and generic versions had about $125 million in annual sales.

The third problem was the generic status of Cephalon's brand-name drug Provigil, which is used to treat excessive sleepiness, but also had $1.1 billion in sales in 2010. Modafinil tablets will eventually be the generic product, but no company makes them now. According to the FTC statement, Teva, Ranbaxy Pharmaceuticals, Inc., Mylan Pharmaceutical Inc., and Barr Laboratories, Inc. – which Teva now owns – were all planning to start selling generic versions and all are eligible to seek a 180-day marketing exclusivity provided under federal law. However, the FTC said, each company also signed a deal with Cephalon to refrain from selling generic Provigil until April 2012. The FTC was uncomfortable with the reduced competition.

The FTC statement is here.