FTC Requires Valeant (VRX) to Divest Paragon
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(Updated - November 7, 2016 4:09 PM EST)
Canadian pharmaceutical conglomerate Valeant Pharmaceuticals International, Inc., (NYSE: VRX) parent of Bausch + Lomb, has agreed to divest Paragon Holdings I, Inc. to settle charges that its May 2015 acquisition of Paragon violated Section 7 of the Clayton Act and Section 5 of the Federal Trade Commission Act. Prior to the acquisition, both Valeant and an independent Paragon produced polymer discs used to make rigid gas permeable, or “GP,” contact lenses.
Valeant will sell Paragon in its entirety to a newly created entity, Paragon Companies LLC, headed by the former president of Paragon, Joe Sicari. Under the settlement, Paragon Companies also will acquire the assets of Pelican Products LLC – a contact lens packaging company that Valeant acquired after its purchase of Paragon – that is the only producer of FDA-approved vials used for shipping some GP lenses.
According to the complaint,Valeant’s acquisition of Paragon eliminated competition between Valeant and Paragonfor the sale of FDA-approved buttons used for three types of GP lenses: orthokeratology lenses, worn to reshape the cornea; large-diameter scleral lenses, which cover the white of the eye and are used after eye surgery, for corneal transplants, and to treat eye disease; and general vision correction lenses.
The acquisition combined the two largest manufacturers of GP buttons, accounting for more than 70 percent of U.S. sales across all three button types. This allowed Valeant to exercise market power unilaterally in each button market by increasing prices, reducing volume discounts, decreasing innovation, and reducing product distribution options, according to the complaint.
Under the terms of the proposed consent order, within 10 days after the order becomes final, Valeant is required to divest Paragon in its entirety, including the Pelican assets.
Further details about the consent agreement are set forth in the analysis to aid public comment for this matter.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 3-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through Dec. 7, 2016, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.
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