Antitrust Law Daily AbbVie and Allergan agree to divestitures with FTC
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Thursday, March 19, 2020

AbbVie and Allergan agree to divestitures with FTC

By Peter Reap, J.D., LL.M.

The companies have entered into a consent agreement with the FTC as part of AbbVie’s pending acquisition of Allergan.

Research-based pharmaceutical company AbbVie has announced that it has entered into a consent decree with the FTC regarding its pending acquisition of pharmaceutical company Allergan. Under the agreement, the companies will divest brazikumab, Zenpep, and Viokace.

Specifically, the consent decree calls for the companies to divest: (1) brazikumab, an investigational IL-23 inhibitor in development for autoimmune diseases, to AstraZeneca; (2) Zenpep, a treatment for exocrine pancreatic insufficiency due to cystic fibrosis and other conditions, to Nestle; and (3) Viokace, another pancreatic enzyme preparation, also to Nestle. The consent decree, including the proposed purchasers, remains subject to further review and approval by the FTC. The parties anticipate closing in May 2020.

AbbVie disclosed plans to acquire Allergan in a cash and stock transaction for a transaction equity value of approximately $63 billion in June 2019. At that time, the companies said that the combined company would consist of several attractive franchises with leadership positions across immunology, hematologic oncology, medical aesthetics, neuroscience, women's health, eye care, and virology.

Earlier announcement. Earlier, in January 2020, the company announced that it had entered into definitive agreements to divest brazikumab and Zenpep in an effort to win ongoing regulatory approval. The adequacy of this proposed remedy was questioned in a February 18 letter to FTC Bureau of Competition Director Ian Conner from Families USA, Public Citizen, U.S. PIRG Education Fund, Services Employees International Union (SEIU), American Federation of State, County, and Municipal Employees (AFSCME), UNITE HERE, Consumer Action, American Federation of Teachers, Alliance for Retired Americans, American Family Voices, Doctors for America, End AIDS Now, Prescription Justice, Social Security Works, the Other 98, Treatment Action Group, and NextGen California. According to the letter, "the immunology product space is dominated by AbbVie which uses a variety of exclusionary tactics to hamper rivals." As a result, "[a]ny acquirer of brazikumab will need a strong market position, including a strong immunology product portfolio, to effectively restore competition." Therefore, the letter calls for restrictions on AbbVie’s allegedly anticompetitive contracting practices as part of a settlement.

EC approval. On January 10, the European Commission (EC) announced that it conditionally approved Allergan plc’s acquisition of AbbVie Inc. The EC’s investigation primarily focused on biologic treatments for ulcerative colitis and Crohn's disease, collectively termed inflammatory bowel diseases (IBD), where the activities of AbbVie and Allergan overlap.

Companies: AbbVie Inc.; Allergan plc

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