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Novartis will divest four topical skin treatments.

WASHINGTON -- The Federal Trade Commission is requiring Novartis AG to give up its marketing rights to four topical skin care medications under a proposed settlement resolving charges that Novartis' acquisition of Fougera Holdings Inc. would harm competition in the market for these topical drugs.

The settlement order requires Novartis to end a marketing agreement that allows it to sell three topically applied generic drugs and return all rights to a fourth generic drug in development to its manufacturer, Tolmar Inc.

On May 1 Novartis entered into an agreement under which it proposed to acquire Fougera in a deal valued at approximately $1.5 billion. According to the FTC's complaint, Novartis' acquisition of Fougera would violate a section of the Clayton Act by reducing competition in the generic drug markets for three skin care drugs: calcipotriene topical solution, lidocaine-prilocaine cream and metronidazole topical gel. The complaint also alleges that the acquisition would eliminate potential competition in the market for the sale of diclofenac sodium gel.

Generic calcipotriene topical solution is used to treat chronic, moderately severe scalp psoriasis. Three firms offer a generic version of the drug in the United States--Novartis, Fougera and G&W Laboratories. Novartis leads the market with a share of about 67%, followed by G&W with 22% and Fougera with 11% according to FTC figures.

Genetic lidocaine-prilocaine cream is used as a local anesthetic to prevent pain resulting from injections and surgery. It is available in 30-gram tubes and packages of five 5-gram tubes (known as 5-5 tubes), with the former prescribed to patients for home use and the latter used only in hospitals. Fougera, Hi-Tech Pharmaceutical Co. and Novartis are the only U.S. suppliers of 30-gram tubes. The market for generic 5-5 tubes is more concentrated, with Novartis and Fougera being the only U.S. suppliers. The proposed acquisition would create a duopoly in the U.S. market for 30-gram tubes and a monopoly in the U.S. market for generic 5-5 tubes, the commission asserts.

Generic metronidazole topical gel is used to treat inflamed rosacea, a condition that causes facial skin to become chronically red. Taro Pharmaceutical Industries is the market leader for the drug, with a share of approximately 43%, followed by Fougera with approximately 36%, Novartis with about 19%, and G&W with about 2%. In each market, the FTC contends, the proposed acquisition would eliminate one of a limited number of suppliers and cause competitive harm by facilitating price increases--or eliminating price decreases.

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Title Annotation:RX/Generic Drugs
Publication:Chain Drug Review
Date:Sep 24, 2012
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