81 FR 80056 - Valeant Pharmaceuticals International, Inc.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

Federal Register Volume 81, Issue 220 (November 15, 2016)

Page Range		80056-80058
FR Document		2016-27440

The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the complaint and the terms of the consent order-- embodied in the consent agreement--that would settle these allegations.

Federal Register, Volume 81 Issue 220 (Tuesday, November 15, 2016)

[Federal Register Volume 81, Number 220 (Tuesday, November 15, 2016)]
[Notices]
[Pages 80056-80058]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2016-27440]

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FEDERAL TRADE COMMISSION

[File No. 151 0236]

Valeant Pharmaceuticals International, Inc.; Analysis To Aid
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis to Aid Public Comment describes both the
allegations in the complaint and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before December 7, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/valeantparagonpelicanconsent online or
on paper, by following the instructions in the Request for Comment part
of the SUPPLEMENTARY INFORMATION section below. Write ``In the Matter
of Valeant Pharmaceuticals International, Inc., File No. 1510236'' on
your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/valeantparagonpelicanconsent by
following the instructions on the web-based form. If you prefer to file
your comment on paper, write ``In the Matter of Valeant Pharmaceuticals
International, Inc., File No. 1510236'' on your comment and on the
envelope, and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Charles Harwood, FTC Northwest
Regional Office, 915 Second Ave., Room 2896, Seattle, WA 98174 (206-
220-4480).

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for November 7, 2016), on the World Wide Web,
at http://www.ftc.gov/os/actions.shtm.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before December 7,
2016. Write ``In the Matter of Valeant Pharmaceuticals International,
Inc., File No. 1510236'' on your comment. Your comment--including your
name and your state--will be placed on the public record of this
proceeding, including, to the extent practicable, on the public
Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a
matter of discretion, the Commission tries to remove individuals' home
contact information from comments before placing them on the Commission
Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which . . . is privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR

[[Page 80057]]

4.9(c).\1\ Your comment will be kept confidential only if the FTC
General Counsel, in his or her sole discretion, grants your request in
accordance with the law and the public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/valeantparagonpelicanconsent by following the instructions on the
web-based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
If you file your comment on paper, write ``In the Matter of Valeant
Pharmaceuticals International, Inc., File No. 1510236'' on your comment
and on the envelope, and mail your comment to the following address:
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver
your comment to the following address: Federal Trade Commission, Office
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor,
Suite 5610 (Annex D), Washington, DC. If possible, submit your paper
comment to the Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before December 7, 2016. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

The Federal Trade Commission (``Commission'') has accepted for
public comment an Agreement Containing Consent Order (``Consent
Order'') with Valeant Pharmaceuticals International, Inc. (``Valeant'')
to remedy the alleged anticompetitive effects resulting from Valeant's
acquisition of Paragon Holdings I, Inc., including wholly-owned
subsidiaries Paragon Vision Sciences, Inc. and CRT Technology, Inc.
(``Paragon'').
The Complaint alleges that the acquisition violated Section 7 of
the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal
Trade Commission Act, as amended, 15 U.S.C. 45, by lessening
competition in the markets for polymer discs, or ``buttons,'' used to
make three different types of rigid gas permeable (``GP'') contact
lenses: Orthokeratology contact lenses, large-diameter scleral contact
lenses, and general vision correction contact lenses. The Consent Order
would remedy the alleged violations by restoring competition in these
GP button markets.
Under the terms of the Consent Order, Valeant is required to divest
Paragon in its entirety, including the assets of Pelican Products LLC
(``Pelican''), a manufacturer of contact lens packaging.
The proposed Consent Order has been placed on the public record for
30 days to solicit comments from interested persons. Comments received
during this period will become part of the public record. After 30
days, the Commission will again review the proposed Consent Order and
any comments received, and decide whether the Consent Order should be
withdrawn, modified, or made final.

1. The Parties

Valeant is a Canadian conglomerate that develops and markets
prescription and non-prescription pharmaceutical products. Through its
subsidiary Bausch + Lomb, Valeant is a leading producer of GP buttons
used to make GP contact lenses. Prior to its acquisition by Valeant in
May 2015, Paragon was a United States corporation with its principal
place of business in Arizona. Paragon produces GP buttons used to make
GP contact lenses and also produces finished GP lenses.
After the Paragon acquisition, Valeant also purchased Pelican, a
manufacturer of contact lens packaging, and the only producer of FDA-
approved vials for wet-shipping finished orthokeratology lenses.
Pelican became a subsidiary of Paragon. This acquisition ensured
Valeant's access to the vials, after Pelican's owner announced plans to
exit the market.

2. The Relevant Market

Both parties engage in developing, manufacturing, and selling GP
buttons in the United States. The relevant product markets in which to
analyze the effects of the acquisition are the manufacture and sale of
FDA-approved GP buttons for: Orthokeratology GP lenses, which are worn
to reshape the cornea; large-diameter scleral GP lenses, which cover
the white of the eye and are used post-surgery, for transplants, and to
treat eye disease; and general vision correction GP lenses. Each type
of GP lens requires a GP button with parameters unique to that lens
type.
GP lenses are used, and in some cases are medically necessary, to
address a variety of vision problems, including dry eyes, abnormal
curvatures of the eye, corneal disease, post-eye surgery complications,
and eye trauma. Optical labs use GP buttons to make GP contact lenses
to fulfill prescriptions from eye care professionals. Prescriptions
typically specify a particular product and brand of button, and eye
care professionals invest significant capital in fitting equipment for
the brands they prescribe.
The FDA requires that GP lenses must be made from FDA-approved GP
buttons. Thus, there are no alternatives to FDA-approved GP buttons for
making each of the types of GP lenses and the relevant geographic
market is the United States.
Prior to the acquisition, Valeant and Paragon independently
produced buttons for all three types of GP lenses. In the market for
orthokeratology GP buttons, the combination of Valeant and Paragon was
a merger to monopoly. In the market for scleral GP buttons, the
combined company accounted for 70-80 percent of the market. In the
market for general vision correction GP buttons, the combined company's
market share was approximately 65-75 percent.

3. Effects of Acquisitions

The acquisition likely caused significant competitive harm in the
relevant markets. Specifically, the acquisition of Paragon eliminated
actual, direct, and substantial competition between Valeant and Paragon
in the relevant markets for GP buttons and allowed Valeant to
unilaterally exercise market power. For instance, following the
acquisition, Valeant increased prices in all three GP button markets.
Prior to the acquisition, Valeant and Paragon also competed on
innovation, with the incentive to develop new GP lens buttons and
improve button materials by investing in research, development, and
adoption. This innovation led to broader product lines, improvements to
button materials, and marketing and education funding for optical labs.
The acquisition also eliminated this innovation competition between
Valeant and Paragon.

[[Page 80058]]

4. Entry and Efficiencies

Entry into the relevant market has not been, and would not be,
timely, likely, or sufficient to deter or counteract the
anticompetitive effects of the acquisition. Optical labs have limited
short-term ability to switch from Valeant and Paragon, which supply the
majority of their GP scleral buttons and GP general vision correction
buttons, and 100 percent of their GP orthokeratology buttons. Optical
labs might try to persuade eye care professionals to switch to a
different material and brand, but ultimately the decision is made by
the eye care professional, for whom such a change is costly and time-
consuming.
Considerable entry barriers also arise from the FDA approval
process. For GP orthokeratology buttons, the FDA premarket approval
process takes several years because finished orthokeratology lenses
worn overnight are Class III medical devices. For GP scleral and
general vision buttons, the FDA premarket notification process likely
requires at least one year, as the finished lenses incorporating such
buttons are Class II medical devices.
We did not find any evidence of efficiencies that would outweigh
the competitive concerns arising from the Paragon acquisition.

5. Consent Order

The proposed Consent Order requires Valeant to divest Paragon in
its entirety no later than ten (10) days after the order date, to
remedy the concerns raised by the acquisition and restore competition
in the relevant markets by instituting Paragon as an independent,
viable competitor to Valeant. The proposed Consent Order also requires
Valeant to divest Pelican with Paragon to ensure continued access to
FDA-approved vials for shipping its finished lenses.
The proposed Consent Order requires that Valeant must divest
Paragon and Pelican to Paragon Companies LLC in an upfront transaction.
Paragon Companies LLC is a newly created entity owned by Joe Sicari.
Mr. Sicari was the president of Paragon prior to its acquisition by
Valeant in May 2015.
The Commission may, at any time, appoint a Monitor with the power
and authority to ensure that Valeant fulfills all obligations and
responsibilities under the Consent Order and Divestiture Agreement.
The Consent Order will remain in effect for ten (10) years, and
contains standard compliance and reporting requirements.

By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-27440 Filed 11-14-16; 8:45 am]
BILLING CODE 6750-01-P

Document Created: 2016-11-15 00:47:44
Document Modified: 2016-11-15 00:47:44

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Proposed Consent Agreement.
Dates		Comments must be received on or before December 7, 2016.
Contact		Charles Harwood, FTC Northwest Regional Office, 915 Second Ave., Room 2896, Seattle, WA 98174 (206- 220-4480).
FR Citation		81 FR 80056