| In a merger or acquisition in the pharmaceutical | | | | interim monitor, to oversee the operation. The FTC |
| industry, it is important that there are strong | | | | regards the interim monitor as the eyes and ears of |
| structural remedies available, such as a divestiture of | | | | the FTC and is required to watch all of areas of the |
| assets from one of the two businesses. Remediation | | | | merger or acquisition and identify any issues that |
| of the perceived anticompetitive impact of a merger | | | | may arise which may hinder an independent and |
| through the means of a structural remedy is | | | | effective competitor from being established in the |
| considered to be "clean" because it involves no | | | | market. |
| oversight or supervision once the divesture has been | | | | In recent years, the FTC has included an interim |
| completed. However, many in the FDA, as well as | | | | monitor provision in those consent orders in which an |
| other professionals in the industry consider this a | | | | upfront buyer has been identified and the divestiture |
| "black box" approach, and feel that there isn't enough | | | | will take place shortly after the finalization of the deal. |
| transparency in these types of divestitures. | | | | Although it is the FTC's decision whether to appoint |
| During divestitures of significant magnitude both | | | | an interim monitor or not, most divestitures in the |
| parties go through great lengths to ensure that any | | | | pharmaceutical or biotechnology industry involving |
| kind of divestiture intended to remedy the | | | | upfront buyers, in recent years, have required the |
| anti-competitive effects of the merger is sufficient to | | | | services of an interim monitor. According to many |
| preserve a post-merger competitive market. In | | | | expert pharmaceutical consultants and |
| simpler terms, the goal of the divestiture is to ensure | | | | representatives, this frequent use of interim monitors |
| that the purchaser or acquirer of the divested assets | | | | in these up-front buyer situations, only illustrates the |
| can actually possess not only the means, but also the | | | | tremendous weight and influence the FTC puts on |
| incentive to maintain the competitive product(s) in | | | | the protection of divested assets, even for a short |
| the market of concern. To ensure that the buyer in | | | | period of time until the business is transferred to the |
| question will have the proper incentive and means to | | | | buyer. |
| become a viable competitor, the divestiture must | | | | While many companies may see interim monitors as |
| include all the necessary assets, technology, | | | | yet another form of government intrusion in the |
| know-how and business information to enable the | | | | pharmaceutical industry, many companies and the |
| buyer compete fully following the completion of the | | | | FTC do not. They believe that not only does |
| transfer of assets and technology. | | | | transparency promote more accountability in the |
| Because of this "lack of transparency" concern | | | | pharmaceutical industry, but increases their level of |
| associated with mergers in highly regulated and | | | | credibility with the overall public. As such, the FTC |
| complex industries, the Federal Trade Commission | | | | recognizes the critical role of an interim monitor in |
| (FTC) has the power to include special provisions in a | | | | assuring transparency and accountability that leads to |
| Consent Order to appoint an individual, known as an | | | | a more successful transfer of ownership. |