FTC requires Cardinal to sell some nuclear pharmacies

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The Federal Trade Commission (FTC) found that Cardinal Health’s purchase of nuclear pharmacies from Biotech was anticompetitive and will require the company to reconstitute and sell facilities located in Las Vegas, Albuquerque, N.M. and El Paso, Texas. The commission claimed Cardinal’s purchases reduced competition for low-energy radiopharmaceuticals in the three cities.

Cardinal acquired the three pharmacies from Biotech in July 2009, pursuant to an Asset Purchase Agreement. Both Cardinal and Biotech operated nuclear pharmacies in these cities prior to the acquisition, and the pharmacies produced, distributed and sold SPECT radiopharmaceuticals to hospitals and cardiology clinics. The FTA found that the agreement violated the Clayton Act, because the purchase could substantially lessen competition or tend to create a monopoly in the production, sale and distribution of radiopharmaceuticals.

Cardinal now holds a low-energy radiopharmaceuticals monopoly in Albuquerque, according to the commission, and until November 2010, when another nuclear pharmacy opened in El Paso, they had a monopoly there as well. Cardinal still holds a large market share in El Paso, and as a result of the purchase, has a large market share in Las Vegas.

“Cardinal must divest to each buyer the intellectual property related to the nuclear pharmacies that Biotech owned before the acquisition. Cardinal also must obtain, maintain and transfer all regulatory approvals, licenses, permits, clearances and other assets needed to operate the pharmacies being acquired,” the FTC wrote. “Further, Cardinal must demonstrate to the FTC that each buyer has a supply of two vital low-energy radiopharmaceutical inputs, the radioisotope technetium 99 and a heart perfusion agent.”

The FTC may appoint a divestiture trustee to carry out Cardinal’s obligation if suitable acquirers are not found within six months. In addition to the above terms, Cardinal must also grant its customers in the three cities a two-year right to terminate—without penalty or charge—their existing contracts with Cardinal to buy low-energy pharmaceuticals.

The FTC vote approving the complaint and proposed consent order was 4-0-1, with Commissioner William E. Kovacic recused, according to the release. The order will be published in the Federal Register and be subject to public comment for 30 days, until Aug. 22.