June 3, 2011— The Federal Trade Commission (FTC) yesterday tentatively approved the merger of blood product manufacturers Grifols and Talecris on the condition that the companies sell several of their assets. In a concurring separate statement , however, Commissioner Julie Brill called attention to the difficulty that 340B covered entities have had trying to obtain the blood product intravenous immunoglobulin (IVIG) at discounted prices.
Brill commented that “all too often … manufacturers have not made their products available at statutorily mandated prices. This subverts Congress’s goal of ensuring access to life-saving pharmaceuticals and increases costs to the health care system overall.” While Brill joined the rest of the commission in approving the merger, she said she “expect[s] … that the commission, other federal and state agencies, and affected purchasers will closely monitor these markets, both as to future proposed consolidations and potential coordinated behavior, including behavior that may adversely impact indigent and other at-risk patients through the critical 340B program.”
Ted Slafsky, executive director of Safety Net Hospitals for Pharmaceutical Access (SNHPA), said that “although SNHPA is disappointed the merger was approved and concerned that it could further impede covered entities’ already limited access to 340B-priced blood products, we applaud Commissioner Brill for recognizing the importance of discounted IVIG to our members and their vulnerable patient populations.”SNHPA represents more than 700 disproportionate share and rural hospitals enrolled in the 340B program and has advocated for many years for improved access to IVIG at 340B prices.
According to a news release issued by Grifols when it first announced the merger, the manufacturer sees the deal as a win-win for the two companies and the patients receiving their products. The press release states that “Grifols’ leading global footprint will benefit from Talecris’ strong presence in the United States and Canada. Grifols’ available manufacturing capacity will enable Talecris to increase production in the near term. As a result, the combined company will be better able to meet the needs of more patients with under-diagnosed diseases around the world.” If the FTC had not approved the merger, Grifols would have had to pay Talecris a $375 million breakup fee.
The FTC’s proposed settlement agreement requires Grifols to sell its fractionation facility in Melville, N.Y., and plasma collection centers in Mobile, Ala., and Winston-Salem, N.C., to Kedrion, a European-based producer of plasma products. Grifols must also manufacture three blood products, including IVIG, for several years for Kedrion to sell in the U.S. market. The purpose of these requirements is to enable Kedrion to enter the American blood product market. Currently, the only four significantly sized IVIG suppliers in the U.S. market are Grifols, Talecris, CSL, and Baxter. According to the FTC, Grifols and Talecris make up 8.4 percent and 22.8 percent of the market, respectively.
The FTC’s proposed settlement agreement is available for inspection on the agency’s Web site and will be open for public comment until July 1. In the meantime, Grifols is allowed to proceed with its acquisition of Talecris. According to an expert on the FTC approval process, very rarely do public comments result in a company having to undo a merger.