[Federal Register Volume 59, Number 227 (Monday, November 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29181]


[Federal Register: November 28, 1994]


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FEDERAL TRADE COMMISSION
[File No. 941 0116]


American Home Products Corp.; Proposed Consent Agreement With 
Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
require, among other other things, a New Jersey-based corporation to 
divest its tetanus and diphtheria vaccine business to a Commission-
approved buyer, to license Cyanamid's rotavirus vaccine research to a 
Commission-approved licensee, and to discontinue reporting arrangements 
with licensees that may provide competitively sensitive information. 
The consent agreement also would prohibit, for ten years, the 
respondent from acquiring any interest in any entity engaged in the 
clinical development, or manufacture and sale, of tetanus, diphtheria, 
or rotavirus vaccines in the United States without prior Commission 
approval.

DATES: Comments must be received on or before January 27, 1995.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Claudia Higgins or Ann Malester, FTC/S-2224, Washington, DC 20580. 
(202) 326-2682

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the 
Commission's rules of practice (16 CFR 2.34), notice is hereby given 
that the following consent agreement containing a consent order to 
divest, having been filed with and accepted, subject to final approval, 
by the Commission, has been placed on the public record for a period of 
sixty (60) days. Public comment is invited. Such comments or views will 
be considered by the Commission and will be available for inspection 
and copying at its principal office in accordance with 
Sec. 4.9(b)(b)(ii) of the Commission's rules of practice (16 CFR 
4.9(b)(6)(ii)).

Agreement Containing Consent Order

    The Federal Trade Commission (``Commission''), having initiated an 
investigation of the Acquisition of certain stock of American Cyanamid 
Company (``Cyanamid'') by American Home Products Corporation (``AHP''), 
and it now appearing that AHP, hereinafter sometimes referred to as 
``Proposed Respondent,'' is willing to enter into an Agreement 
Containing Consent Order (``Agreement'') to (i) divest certain assets, 
(ii) license certain assets, (iii) contract manufacture certain 
products, (iv) cease and desist from certain acts, and (v) provide for 
certain other relief:
    It is hereby agreed By and between Proposed Respondent, by its duly 
authorized officers and its attorneys, and counsel for the Commission 
that:
    1. Proposed Respondent AHP is a corporation organized, existing and 
doing business under and by virtue of the laws of the state of 
Delaware, with its principal place of business located at Five Giralda 
Farms, Madison, New Jersey 07940.
    2. Proposed Respondent admits all the jurisdictional facts set 
forth in the draft of complaint here attached.
    3. Proposed Respondent waives:
    (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) All rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this Agreement; 
and
    (d) Any claims under the Equal Access to Justice Act.
    4. This Agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
Agreement is accepted by the Commission it, together with the draft of 
complaint contemplated thereby, will be placed on the public record for 
a period of sixty (60) days and information in respect thereto publicly 
released. The Commission thereafter may either withdraw its acceptance 
of this Agreement and so notify the Proposed Respondent, in which event 
it will take such action as it may consider appropriate, or issue and 
serve its complaint (in such form as the circumstances may require) and 
decision, in disposition of the proceeding.
    5. This Agreement is for settlement purposes only and does not 
constitute an admission by the Proposed Respondent that the law has 
been violated as alleged in the draft of complaint here attached, or 
that the facts as alleged in the draft complaint, other than 
jurisdictional facts, are true.
    6. This Agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 2.34 of the Commission's 
rules, the Commission may, without further notice to Proposed 
Respondent, (1) issue its complaint corresponding in form and substance 
with the draft of complaint here attached and its decision containing 
the following Order to divest and license and to cease and desist in 
disposition of the proceeding, and (2) make information public with 
respect thereto. When so entered, the Order shall have the same force 
and effect and may be altered, modified, or set aside in the same 
manner and within the same time provided by statute for other orders. 
The Order shall become final upon service. Delivery by the United 
States Postal Service of the complaint and decision containing the 
agreed-to Order to Proposed Respondent's address as stated in this 
Agreement shall constitute service. Proposed Respondent waives any 
right it may have to any other manner of service. The complaint may be 
used in construing the terms of the Order, and no agreement, 
understanding, representation, or interpretation not contained in the 
Order or the Agreement may be used to vary or contradict the terms of 
the Order.
    7. Proposed Respondent has read the proposed Complaint and Order 
contemplated hereby. Proposed Respondent understands that once the 
Order has been issued, it will be required to file one or more 
compliance reports showing it has fully complied with the Order. 
Proposed Respondent further understands that it may be liable for civil 
penalties in the amount provided by law for each violation of the Order 
after it becomes final.

Order

I

Definitions
    It is ordered, That, as used in this Order, the following 
definitions shall apply:
    A. ``AHP'' means American Home Products Corporation, its 
predecessors, subsidiaries, divisions, groups and affiliates controlled 
by AHP, and their respective directors, officers, employees, agents and 
representatives, and their respective successors and assigns.
    B. ``Cyanamid'' means American Cyanamid Company.
    C. ``Acquirer'' means the entity to whom AHP shall divest AHP's 
Tetanus and Diphtheria Vaccine Assets pursuant to Paragraph II of this 
Order.
    D. ``New Acquirer'' means the entity to whom the trustee shall 
divest AHP's Tetanus and Diphtheria Vaccine Assets pursuant to 
Paragraph IV of this Order.
    E. ``Rotavirus Licensee'' means the entity to whom AHP shall 
license Cyanamid's Rotavirus Vaccine Research pursuant to Paragraph V 
of this Order.
    F. ``Respondent'' means AHP.
    G. ``Commission'' means the Federal Trade Commission.
    H. ``Acquisition'' means the acquisition by AHP of the common stock 
of Cyanamid pursuant to a tender offer commended on August 10, 1994.
    I. ``AHP's Tetanus and Diphtheria Vaccine Assets'' means AHP's 
assets relating to the manufacture and sale of AHP's Tetanus and 
Diphtheria Vaccines that are not part of AHP's physical facilities or 
other tangible assets. ``AHP's Tetanus and Diphtheria Vaccine Assets'' 
include but are not limited to all formulations, patents, trade 
secrets, technology, know-how, specifications, designs, drawings, 
processes, production information, manufacturing information, testing 
and quality control data, research materials, technical information, 
distribution information, customer lists, information stored on 
management information systems and specifications sufficient for the 
Acquirer or the New Acquirer, as applicable, to use such information, 
software used solely in connection with AHP's Tetanus and Diphtheria 
Vaccines and all data, materials and information relating to United 
States Food and Drug Administration (``FDA'') approvals for Tetanus and 
Diphtheria Vaccines. ``AHP's Tetanus and Diphtheria Vaccine Assets'' do 
not include any manufacturing assets of AHP or any assets acquired by 
AHP from American Cyanamid as a result of the Acquisition or AHP's 
Vaccine Filling and Packaging Assets.
    J. ``AHP's Vaccine Filling and Packaging Assets'' means a non-
exclusive license to all patents, trade secrets, technology and know-
how relating to filling vials, syringes or other forms of filling or 
packaging used by AHP for Tetanus and Diphtheria Vaccines at any time 
up to and including the date of the Acquisition, including but not 
limited to the Tubex filling system. ``AHP's Vaccine Filling 
and Packaging Assets'' do not include any manufacturing assets of AHP 
or any assets acquired by AHP from American Cyanamid as a result of the 
Acquisition.
    K. ``Tetanus and Diphtheria Vaccines'' means vaccines used to 
create and maintain antitoxin levels in human beings to prevent tetanus 
and/or diphtheria, including tetanus toxoid vaccine, tetanus-diphtheria 
toxoids vaccine (adult) and diphtheria-tetanus toxoids vaccine 
(pediatric), approved by the FDA for sale in the United States.
    L. ``Contract Manufacture'' means the manufacture of Tetanus and 
Diphtheria Vaccines by AHP for sale to the Acquirer or the New 
Acquirer, as applicable, in Finished Packaged Form, in annual volumes 
not to exceed: Tetanus Toxoid (fluid) 1,000,000 doses; Tetanus Toxoid 
(absorbed) 3,000,000 doses; diphtheria-tetanus toxoids vaccine 
(pediatric) 1,000,000 doses; and tetanus-diphtheria toxoids vaccine 
(adult) 13,000,000 doses.
    M. ``Finished Packaged Form'' means packaged in a form acceptable 
for commercial sale in the United States, in each form of packaging, or 
substantially similar thereto (including Tubex & prefilled 
syringes) as that used by AHP (any time up to and including the date of 
the Acquisition) in the distribution and sale of AHP's Tetanus and 
Diphtheria Vaccines, with information including but not limited to the 
name and identification codes of the Acquirer or the New Acquirer, as 
applicable, inscribed on the packaging of the Tetanus and Diphtheria 
Vaccines, and packaged in units specified by the Acquirer or the New 
Acquirer, as applicable, as permitted by AHP's existing FDA approvals.
    N. ``Cost'' means AHP's actual per unit cost of manufacturing AHP's 
Tetanus and Diphtheria Vaccines, which may be adjusted once annually to 
reflect any increases in AHP's actual cost, provided, however, that for 
any year, the total rate of such adjustment with respect to all 
components of cost other than material and labor shall not exceed the 
rate of increase in the Consumer Price Index for such year.
    O. ``Formulation'' means any and all information, including both 
patent and trade secret information, technical assistance and advice, 
relating to the manufacture of Tetanus and Diphtheria Vaccines that 
meet United States Food and Drug Administration approved specifications 
therefor.
    P. ``Cyanamid's Rotavirus Vaccine Research'' means:
    (1) All of the patents and patent applications that Cyanamid holds, 
has an option to hold or is licensed to practice under and that are 
directed to the development of a vaccine to protect humans against 
rotavirus disease;
    (2) All of the know-how that Cyanamid received from licensors or 
developed itself that is directed to the development of a vaccine to 
protect humans against rotavirus disease;
    (3) All of the biochemical materials, including, but not limited 
to, reagents, cell lines, monoclonal antibodies, bacculovirus stocks 
and rotarvirus stocks that are directed to the development of a vaccine 
to protect humans against rotavirus disease; and
    (4) All documentation, written materials, and other relevant data 
that are directed to the development of a vaccine to protect humans 
against rotavirus disease;

as of that date of the licensing pursuant to Paragraph V or VI of this 
Order, which can be licensed to the Rotavirus Licensee including, but 
not limited to, those items enumerated in the Confidential Appendix A 
attached to the Confidential version of this Agreement on file at the 
Commission.

II

Tetanus and Diphtheria Vaccines Divestiture Provisions
    It is further ordered, That:
    A. Within four (4) months of the date this Order becomes final, AHP 
shall divest, absolutely and in good faith, AHP's Tetanus and 
Diphtheria Vaccine Assets and consummate an agreement that includes the 
provisions required by Paragraph II.C of this Order, with an Acquirer 
or a New Acquirer, as applicable, (hereinafter ``Divestiture 
Agreement'').
    B. Respondent shall divest AHP's Tetanus and Diphtheria Vaccine 
Assets only to and consummate a Divestiture Agreement only with an 
Acquirer or New Acquirer, as applicable, that receives the prior 
approval of the Commission and only in a manner that receives the prior 
approval of the Commission. The purpose of the divestiture of AHP's 
Tetanus and Diphtheria Vaccine Assets and the Divestiture Agreement is 
to ensure the continuation of AHP Tenanus and Diphtheria Vaccine Assets 
as an ongoing, independent operation, engaged in the same business in 
which AHP's Tetanus and Diphtheria Vaccine Assets are presently 
engaged, and to remedy the lessening of competition resulting from the 
proposed Acquisition as alleged in the Commission's Complaint.
    C. The Divestiture Agreement shall include the following and AHP 
shall commit to satisfy the following:
    1. AHP shall Contract Manufacture and deliver to the Acquirer or 
the New Acquirer, as applicable, in a timely manner the requirements of 
the Acquirer or the New Acquirer, as applicable, for Tetanus and 
Diphtheria Vaccines at AHP's Cost for a period not to exceed five (5) 
years from the date the Divestiture Agreement (or the New Acquirier's 
Divestiture Agreement, as applicable) is approved, or six (6) months 
after the date the Acquirer or the New Acquirer, as applicable, obtains 
all necessary FDA approvals to manufacture Tetanus and Diphtheria 
Vaccines for sale in the United States, whichever is earlier; Provided, 
however, That the five (5) year period shall be extended for a period 
not to exceed twenty-four (24) months if the trustee submits to the 
Commission the certification provided for in Subparagraph II.C.10 of 
this Order.
    2. AHP shall commence delivery of Tetanus and Diphtheria Vaccines 
to the Acquirer or the New Acquirer, as applicable, within two (2) 
months from the date the Commission approves the Acquirer and the 
Divestiture Agreement (or the New Acquirer and its Divestiture 
Agreement).
    3. After AHP commences delivery of Tetanus and Diphtheria Vaccine 
to the Acquirer or the New Acquirer, as applicable, pursuant to 
Subparagraph II.C.2 of this Order, all inventory of Tetanus and 
Diphtheria Vaccines produced by AHP at its facility located at 
Marietta, Pennsylvania, regardless of the date of its production, may 
be sold by AHP only to the Acquirer or the New Acquirer, as applicable.
    4. AHP shall make representations and warranties to the Acquirer or 
the New Acquirer, as applicable, that the Tetanus and Diphtheria 
Vaccines contract manufactured by AHP for the Acquirer or the New 
Acquirer, as applicable, meet the United States Food and Drug 
Administration approved specifications therefore and are not 
adulterated or misbranded within the meaning of the Food, Drug, and 
Cosmetic Act, 21 U.S.C. 321, et seq. AHP shall agree to indemnify, 
defend and hold the Acquirer or the New Acquirer, as applicable, 
harmless from any and all suits, claims, actions, demands, liabilities, 
expenses or losses alleged to result from the failure of the Tetanus 
and Diphtheria Vaccines contract manufacturer by AHP to meet FDA 
specifications. This obligation shall be contingent upon the Acquirer 
or the New Acquirer, as applicable, giving AHP prompt, adequate notice 
of such claim, cooperating fully in the defense of such claim, and 
permitting AHP to assume the sole control of all phases of the defense 
and/or settlement of such claim, including the selection of counsel. 
This obligation shall not require AHP to be liable for any negligent 
act or omission of the Acquirer or the New Acquirer, as applicable, or 
for any representations and warranties, express or implied, made by the 
Acquirer or the New Acquirer, as applicable, that exceed the 
representations and warranties made by AHP to the Acquirer or the New 
Acquirer, as applicable.
    5. During the term of contract manufacturing, upon reasonable 
request by the Acquirer or the New Acquirer, as applicable, AHP shall 
make available to the Acquirer or the New Acquirer, as applicable, all 
records kept in the normal course of business that relate to the cost 
of manufacturing Tetanus and Diphtheria Vaccines at its Marietta, 
Pennsylvania facility.
    6. Upon reasonable notice and request from the Acquirer or the New 
Acquirer, as applicable, AHP shall provide information, technical 
assistance and advice sufficient to assist the Acquirer or the New 
Acquirer, as applicable, in obtaining all necessary FDA approvals to 
manufacturing Tetanus and Diphtheria Vaccines for sale in the United 
States. Upon reasonable notice and request from the Acquirer or the New 
Acquirer, as applicable, AHP shall also provide consultation with 
knowledgeable employees of AHP and training at the Acquirer's facility 
or the New Acquirer's facility, as applicable, for a period of time, 
not to exceed one (1) year, sufficient to satisfy the Acquirer's 
management or the New Acquirer's management, as applicable, that its 
personnel are adequately trained in the manufacture of Tetanus and 
Diphtheria Vaccines for sale in the United States. Respondent may 
require reimbursement from the Acquirer or the New Acquirer, as 
applicable, for all its direct out-of-pocket expenses incurred in 
providing the services required by this Subparagraph II.C.6.
    7. AHP shall offer an option for a non-exclusive license of AHP's 
Vaccine Filling and Packaging Assets to the Acquirer or the New 
Acquirer, as applicable, which option shall be exercisable within one 
(1) year from the date the Commission approves the Divestiture 
Agreement and the Acquirer or New Acquirer, as applicable. The license 
granted pursuant to this Subparagraph: (a) May prohibit any 
sublicensing by the Acquirer or New Acquirer, as applicable, except as 
part of a sale of all of the Tetanus and Diphtheria Vaccines assets of 
the Acquirer or New Acquirer, as applicable, if such sale occurs after 
the Acquirer or the New Acquirer, as applicable, has obtained all 
necessary FDA approvals to manufacture tetanus and diphtheria vaccines 
for sale in the United States; (b) shall terminate if the Acquirer or 
New Acquirer, as applicable, ceases to produce or sell Tetanus and 
Diphtheria Vaccines in the United States, unless the license is 
transferred to a new entity pursuant to Paragraph II.C.7 (a); and (c) 
may prohibit the Acquirer or the New Acquirer, as applicable, from 
using AHP's Vaccine Filling and Packaging Assets for any purpose other 
than for filling and packaging products manufactured or sold by the 
Acquirer or the New Acquirer, as applicable.
    8. The Divestiture Agreement shall require the Acquirer or the New 
Acquirer, as applicable, to submit to the Commission within sixty (60) 
days of the approval by the Commission of the Divestiture Agreement 
with the Acquirer or the New Acquirer, as applicable, a certification 
attesting to the good faith intention of the Acquirer or the New 
Acquirer, as applicable, and including an actual plan by the Acquirer 
or the New Acquirer, as applicable, to obtain in an expeditious manner 
all necessary FDA approvals to manufacture Tetanus and Diphtheria 
Vaccines for sale in the United States.
    9. The Divestiture Agreement shall require the Acquirer or the New 
Acquirer, as applicable, to submit to the trustee appointed pursuant to 
Paragraph III of this order, periodic verified written reports setting 
forth in detail the efforts of the Acquirer or the New Acquirer, as 
applicable, to sell contract manufactured Tetanus and Diphtheria 
Vaccines in the United States and to obtain all FDA approvals necessary 
to manufacture its own Tetanus and Diphtheria Vaccines for sale in the 
United States. The Divestiture Agreement shall require the first such 
report to be submitted 60 days from the date the Divestiture Agreement 
is approved by the Commission and every 90 days thereafter until all 
necessary FDA approvals are obtained by the Acquirer or the New 
Acquirer, as applicable, to manufacture Tetanus and Diptheria Vaccines 
for sale in the United States. The Divestiture Agreement shall also 
require the Acquirer or the New Acquirer, as applicable, to report to 
the Commission and the trustee at least thirty (30) days prior to its 
ceasing the sale of contract manufactured Tetanus and Diphtheria 
Vaccines in the United States for any time period exceeding sixty (60) 
days or abandoning its efforts to obtain all necessary FDA approvals to 
manufacture its own Tetanus and Diphtheria Vaccines for sale in the 
United States.
    10. The Divestiture Agreement shall provide that the Commission may 
terminate the Divestiture Agreement if the Acquirer or the New 
Acquirer, as applicable: (1) Voluntarily ceases for sixty (60) days or 
more the sale of Tetanus and Diphtheria Vaccines in the United States 
prior to obtaining all necessary FDA approvals to manufacture Tetanus 
and Diphtheria Vaccines for sale in the United States; (2) abandons its 
efforts to obtain all necessary FDA approvals to manufacture Tetanus 
and Diphtheria Vaccines for sale in the United States; or (3) fails to 
obtain all necessary FDA approvals of its own to manufacture Tetanus 
and Diphtheria Vaccines for sale in the United States within five (5) 
years from the date the Commission approves the Divestiture Agreement 
with the Acquirer or the New Acquirer, as applicable; Provided, 
however, That the five (5) year period may be extended for a period not 
to exceed twenty-four (24) months if the trustees certifies to the 
Commission that the Acquirer or the New Acquirer, as applicable, made 
good faith efforts to obtain all necessary FDA approvals for 
manufacturing Tetanus and Diphtheria Vaccines for sale in the United 
States and that such FDA approvals appear likely to be obtained within 
such extended time period.
    11. The Divestiture Agreement shall provide that, if the 
Divestiture Agreement is terminated, the AHP Tetanus and Diphtheria 
Vaccine Assets shall be divested by the trustee to a New Acquirer 
pursuant to the provisions of Paragraph IV of this Order.
    D. While the obligations imposed by Paragraphs II, III or IV of 
this Order are in effect, Respondent shall take such actions as are 
necessary: (1) To maintain all necessary FDA approvals to manufacture 
AHP's Tetanus and Diphtheria Vaccines for sale in the United States; 
(2) to maintain the viability and marketability of AHP's Tetanus and 
Diphtheria Vaccine Assets as well as all tangible assets, including 
manufacturing facilities, needed to contract manufacture and sell 
Tetanus and Diphtheria Vaccines; and (3) to prevent the destruction, 
removal, wasting, deterioration or impairment of any of AHP's Tetanus 
and Diphtheria Vaccine Assets or tangible assets including 
manufacturing facilities needed to contract manufacture and sell 
Tetanus and Diphtheria Vaccines except for ordinary wear and tear.

III

Tetanus and Diphtheria Vaccines Trustee Auditor Provisions
    It is further ordered, That:
    A. Within thirty (30) days of the date this Order becomes final, 
the Commission shall appoint a trustee to ensure that AHP and the 
Acquirer or the New Acquirer, as applicable, expeditiously perform 
their respective responsibilities as required by the Divestiture 
Agreement approved by the Commission and by Paragraph II of this Order. 
AHP shall consent to the following terms and conditions regarding the 
trustee's powers, duties, authorities, and responsibilities:
    1. The Commission shall select the trustee, subject to the consent 
of AHP, which consent shall not be unreasonably withheld. IF AHP has 
not opposed, in writing, including the reasons for opposing, the 
selection of any proposed trustee within ten (10) days after notice by 
the staff of the Commission to AHP of the identity of any proposed 
trustee, AHP shall be deemed to have consented to the selection of the 
proposed trustee.
    2. The trustee shall have the power and authority to assure 
Respondent's compliance with the terms of Paragraph II of this Order 
and with the Divestiture Agreement with the Acquirer or the New 
Acquirer, as applicable.
    3. Within ten (10) days after appointment of the trustee, AHP shall 
execute a trust agreement that, subject to the prior approval of the 
Commission, confers on the trustee all the rights and powers necessary 
to permit the trustee to assure Respondent's compliance with the terms 
of Paragraph II of this Order and with the Divestiture Agreement with 
the Acquirer or the New Acquirer, as applicable.
    4. The trustee shall serve until such time as the Acquirer or the 
New Acquirer, as applicable, has received all necessary FDA approvals 
to manufacture Tetanus and Diphtheria Vaccines for sale in the United 
States, or for fifteen years, whichever is shorter.
    5. The trustee shall have full and complete access to the 
personnel, books, records, facilities and technical information related 
to the manufacture of AHP's Tetanus and Diphtheria Vaccines, or to any 
other relevant information, as the trustee may reasonably request, 
including but not limited to all records kept in the normal course of 
business that relate to the cost of manufacturing Tetanus and 
Diphtheria Vaccines. Respondent shall cooperate with any reasonable 
request of the trustee. Respondent shall take no action to interfere 
with or impede the trustee's ability to assure Respondent's compliance 
with Paragraph II of this Order and the Divestiture Agreement with the 
Acquirer or the New Acquirer, as applicable.
    6. The trustee shall serve, without bond or other security, at the 
cost and expense of AHP, on such reasonable and customary terms and 
conditions as the Commission may set. The trustee shall have authority 
to employ, at the cost and expense of AHP, such consultants, 
accountants, attorneys and other representatives and assistants as are 
reasonably necessary to carry out the trustee's duties and 
responsibilities. The trustee shall account for all expenses incurred. 
The Commission shall approve the account of the trustee, including fees 
for his or her services.
    7. Respondent shall indemnify the trustee and hold the trustee 
harmless against any losses, claims, damages, liabilities, or expenses 
arising out of, or in connection with, the performance of the trustee's 
duties, including all reasonable fees of counsel and other expenses 
incurred in connection with the preparations for, or defense of any 
claim whether or not resulting in any liability, except to the extent 
that such liabilities, losses, damages, claims, or expenses result from 
the misfeasance, gross negligence, willful or wanton acts, or bad faith 
by the trustee.
    8. If the trustee ceases to act or fails to act diligently, a 
substitute trustee shall be appointed in the same manner as provided in 
Paragraph III of this Order.
    9. The commission may on its own initiative or at the request of 
the trustee issue such additional orders or directions as may be 
necessary or appropriate to assure compliance with the requirements of 
Paragraph II of this Order and the Divestiture Agreement with the 
Acquirer or the New Acquirer, as applicable.
    10. The trustee shall evaluate reports submitted to it by the 
Acquirer or the New Acquirer, as applicable, with respect to the 
efforts of the Acquirer or the New Acquirer, as applicable, to obtain 
all necessary FDA approvals to manufacture Tetanus and Diphtheria 
Vaccines for sale in the United States and shall report in writing to 
the Commission every six months concerning compliance by the Respondent 
and the Acquirer or the New Acquirer, as applicable, with the 
provisions of Paragraph II of this Order and the efforts of the 
Acquirer or the New Acquirer, as applicable, to receive all necessary 
FDA approvals to manufacture Tetanus and Diphtheria Vaccines for sale 
in the United States.
    B. Respondent shall comply with all reasonable directives of the 
trustee regarding:
    1. Respondent's obligations to contract manufacture and deliver the 
Acquirer's requirements or the New Acquirer's requirements, as 
applicable, for Tetanus and Diphtheria Vaccines, pursuant to Paragraphs 
II.C.1 and II.C.2 of this Order;
    2. Respondent's obligations to provide representations and 
warranties regarding Tetanus and Diphtheria Vaccines, pursuant to 
Paragraph II.C.4 of this Order; and
    3. Respondent's obligations to provide information, technical 
assistance and advice, pursuant to Paragraph II.C.6 of this Order.
    C. If the Commission terminates the Divestiture Agreement pursuant 
to Paragraph II.C.10, the Commission may direct the trustee to seek a 
New Acquirer, as provided for in Paragraph IV of this Order.

IV

Tetanus and Diphtheria Vaccines Trustee Divestiture Provisions
    It is further ordered, That:
    A. (1) If AHP fails to divest absolutely and in good faith AHP's 
Tetanus and Diphtheria Vaccine Assets and to consummate a Divestiture 
Agreement with an Acquirer within four (4) months from the date this 
Order becomes final, then any executed Divestiture Agreement with the 
Acquirer shall be terminated and the Commission may direct the trustee 
appointed pursuant to Paragraph II of this Order (a) to divest AHP's 
Tetanus and Diphtheria Vaccine Assets and (b) to enter into a 
Divestiture Agreement that satisfies the requirements of Paragraph II 
of this Order with a New Acquirer. The trustee shall have the same 
authority and responsibilities pursuant to Paragraph III of this Order 
with respect to the New Acquirer.
    (2) If the Commission terminates the Divestiture Agreement pursuant 
to Paragraph II.C.10, the Commission may direct the trustee appointed 
under Paragraph III of this Order (a) to divest AHP's Tetanus and 
Diphtheria Vaccine Assets to a New Acquirer and (b) to enter into a new 
Divestiture Agreement with such New Acquirer. In any case under this 
subparagraph IV.A(2), the trustee shall have the same authority and 
responsibilities with respect to the New Acquirer as those described in 
Paragraph III of this Order.
    Neither the decision of the Commission to direct the trustee nor 
the decision of the Commission not to direct the trustee to divest 
AHP's Tetanus and Diphtheria Vaccine Assets under subparagraph IV.A(1) 
of this Paragraph shall preclude the Commission or the Attorney General 
from seeking civil penalties or any other relief available to it, 
including a court-appointed trustee, pursuant to section 5(l) of the 
Federal Trade Commission Act, or any other statute enforced by the 
Commission, for any failure by the respondent to comply with this 
order.
    B. If the trustee is directed under subparagraph A of this 
Paragraph to divest the AHP Tetanus and Diphtheria Vaccine Assets to a 
New Acquirer and to enter into a Divestiture Agreement with the New 
Acquirer, Respondent shall consent to the following terms and 
conditions regarding the trustee's powers, duties, authority, and 
responsibilities:
    1. The Commission shall extend the authority and responsibilities 
of the trustee appointed under Paragraph III of this Order to include 
divesting AHP's Tetanus and Diphtheria Vaccine Assets and directing AHP 
to enter into a Divestiture Agreement with the New Acquirer, subject to 
the consent of Respondent, which consent shall not be unreasonably 
withheld. If respondent has not opposed, in writing, including the 
reasons for opposing, the extension of the authority and 
responsibilities of the trustee selected under Paragraph III of this 
Order within ten (10) days after notice by the staff of the Commission 
to Respondent that the trustee's authority and responsibilities are to 
be extended pursuant to this paragraph, respondent shall be deemed to 
have consented to the extension of the trustee's authority and 
responsibilities.
    2. Subject to the prior approval of the Commission, the trustee 
shall have the exclusive power and authority to divest AHP's Tetanus 
and Diphtheria Vaccine Assets to a New Acquirer pursuant to the terms 
of Paragraph II of this Order and to enter into a Divestiture Agreement 
with the New Acquirer pursuant to the terms of Paragraph II of this 
Order, which Divestiture Agreement shall be subject to the prior 
approval of the Commission. The trustee will have the authorities and 
responsibilities as described in Paragraph III with respect to the New 
Acquirer.
    3. Within ten (10) days after extension of the trustee's authority 
and responsibilities, respondent shall amend the existing trust 
agreement, that, subject to the prior approval of the Commission and, 
in the case of a court-appointed trustee, of the court, transfers to 
the trustee all rights and powers necessary to permit the trustee to 
divest AHP's Tetanus and Diphtheria Vaccine Assets to a New Acquirer 
and to enter into a Divestiture Agreement with the New Acquirer.
    4. The trustee shall have six (6) months from the date the 
Commission extends his or her authority and responsibilities under 
Paragraph IV A.(1) of this Order to divest AHP's Tetanus and Diphtheria 
Vaccines Assets and to enter into a Divestiture Agreement with the New 
Acquirer that satisfies the requirements of Paragraph II of this Order.
    5. The trustee shall have full and complete access to the 
personnel, books, records and facilities of AHP related to the 
manufacture, distribution, or sale of Tetanus and Diphtheria Vaccines 
or to any other relevant information, as the trustee may request. 
Respondent shall develop such financial or other information as such 
trustee may request and shall cooperate with the trustee. Respondent 
shall take no action to interfere with or impede the trustee's 
accomplishment of his or her responsibilities.
    6. The trustee shall use his or her best efforts to negotiate the 
most favorable price and terms available in each contract that is 
submitted to the Commission, subject to respondent's absolute and 
unconditional obligation to divest at no minimum price; to assure that 
AHP enters into a Divestiture Agreement that complies with the 
provisions of paragraph II.A; to assure that AHP complies with the 
remaining provisions of paragraph II of this Order; and to assure that 
the New Acquirer obtains all necessary FDA approvals to manufacture 
Tetanus and Diphtheria Vaccines for sale in the United States. The 
divestiture and the Divestiture Agreement shall be made to the New 
Acquirer in the manner set forth in Paragraph II of this Order; 
provided, however, if the trustee receives bona fide offers from more 
than one acquiring entity, and if the Commission determines to approve 
more than one such acquiring entity, the trustee shall divest to the 
acquiring entity selected by respondent from among those approved by 
the Commission.
    7. The trustee shall serve, without bond or other security, at the 
cost and expense of respondent, on such reasonable and customary terms 
and conditions as the Commission or a court may set. The trustee shall 
have the authority to employ, at the cost and expense of respondent, 
such consultants, accountants, attorneys, investment bankers, business 
brokers, appraisers, and other representatives and assistants as are 
necessary to carry out the trustee's duties and responsibilities. The 
trustee shall account for all monies derived from the divestiture and 
all expenses incurred. After approval by the Commission and, in the 
case of a court-appointed trustee, by the court, of the account of the 
trustee, including fees for his or her services, all remaining monies 
shall be paid at the direction of the respondent. The trustee's 
compensation shall be based at least in significant part on a 
commission arrangement contingent on the trustee's locating a New 
Acquirier and assuring compliance with this Order.
    8. Respondent shall indemnify the trustee and hold the trustee 
harmless against any losses, claims, damages, liabilities, or expenses 
arising out of, or in connection with, the performance of the trustee's 
duties, including all reasonable fees of counsel and other expenses 
incurred in connection with the preparation for, or defense of any 
claim, whether or not resulting in any liability, except to the extent 
that such liabilities, losses, damages, claims, or expenses result from 
misfeasance, gross negligence, willful or wanton acts, or bad faith by 
the trustee.
    9. If the trustee ceases to act or fails to act diligently, a 
substitute trustee shall be appointed in the same manner as provided in 
Paragraph III of this order.
    10. The Commission or, in the case of a court-appointed trustee, 
the court, may on its own initiative or at the request of the trustee 
issue such additional orders or directions as may be necessary or 
appropriate to comply with the terms of this Order.
    11. The trustee shall have no obligation or authority to operate or 
maintain AHP's Tetanus and Diphtheria Vaccine Assets.
    12. The trustee shall report in writing to respondent and the 
Commission every sixty (60) days concerning his or her efforts to 
divest AHP's Tetanus and Diphtheria Vaccine Assets, AHP's compliance 
with the terms of this Order, and the New Acquirer's efforts to obtain 
all necessary FDA approval to manufacture Tetanus and Diphtheria 
Vaccines for sale in the United States.
    13. If, within five (5) years from the date on which the Commission 
approves the New Acquirer, the New Acquier has not obtained all 
necessary FDA approvals to manufacture Tetanus and Diphtheria Vaccines 
for sale in the United States, then the Divestiture Agreement between 
AHP and the New Acquirer shall terminate.

V

Rotavirus Vaccine Research Licensing Provisions
    It is further ordered That:
    A. Within twelve (12) months after the date this Order becomes 
final, Respondent shall: (1) Grant a non-exclusive license, in 
perpetuity, and in good faith, of any technical information and patent 
rights included in Cyanamid's Rotavirus Vaccine Research (see 
Paragraphs A & C of Confidential Appendix A); and (2) provide samples 
for research, adequate to satisfy the needs of the Rotavirus Licensee, 
of any physical assets included in Cyanamid's Rotavirus Vaccine 
Research (see Paragraph B of Confidential Appendix A) that are owned by 
AHP; Provided, however, That such license shall be limited: (i) To use 
solely in developing, producing and selling a vaccine to protect humans 
against rotavirus disease; and (ii) to preclude its use to develop a 
vector for a vaccine intended to protect against a disease other than 
rotavirus.
    B. Respondent shall license Cyanamid's Rotavirus Vaccine Research 
only to a Rotavirus Licensee that receives the prior approval of the 
Commission and only in a manner that receives the prior approval of the 
Commission. The purpose of the licensing of Cyanamid's Rotavirus 
Vaccine Research is to ensure the continuation of Cyanamid's Rotavirus 
Vaccine Research as an ongoing research project for a rotavirus vaccine 
to be approved by the FDA for sale in the United States and to remedy 
the lessening of competition resulting from the Acquisition as alleged 
in the Commission's complaint.
    C. Upon reasonable notice and request from the Rotavirus Licensee, 
Respondent shall provide reasonable assistance to the Rotavirus 
Licensee regarding the Cyanamid Rotavirus Vaccine Research. Such 
assistance shall include reasonable consultation with knowledgeable 
employees of AHP and training at the Rotavirus Licensee's facilities or 
at such other place as is mutually satisfactory to Respondent and the 
Rotavirus Licensee for a period of time sufficient to satisfy the 
Rotavirus Licensee's management that its personnel are appropriately 
trained to proceed with the Cyanamid Rotavirus Vaccine Research. 
However, AHP shall not be required to continue providing such 
assistance for more than six (6) months from the date the licensing is 
finally approved by the Commission. AHP may require reimbursement from 
the Rotavirus Licensee for all its direct out-of-pocket expenses 
incurred in providing the assistance to the Rotavirus Licensee.
    D. Pending licensing of Cyanamid's Rotavirus Vaccine Research, 
Respondent shall take such actions as are necessary to maintain the 
viability and marketability of Cyanamid's Rotavirus Vaccine Research 
and to prevent the destruction, removal, wasting, deterioration, or 
impairment of Cyanamid's Rotavirus Vaccine Research except for ordinary 
wear and tear.

VI

Rotavirus Vaccine Research Trustee Exclusive Licensing Provisions
    It is further ordered, That:
    A. If AHP has not, within twelve (12) months of the date this Order 
becomes final, complied with the requirements of Paragraph V of this 
Order, the Commission may appoint a trustee to (1) grant an exclusive 
license, in perpetuity, and in good faith, of any technical information 
and patent rights included in Cyanamid's Rotavirus Vaccine Research 
(see Paragraphs A & C of Confidential Appendix A); and (2) provide 
samples for research, adequate to satisfy the needs of the Rotavirus 
Licensee, of any physical assets included in Cyanamid's Rotavirus 
Vaccine Research (see Paragraph B of Confidential Appendix A) that are 
owned by AHP; Provided, however, That: (i) Such exclusive license shall 
be limited to use solely in developing, producing and selling a vaccine 
to protect humans against rotavirus disease; (ii) such license shall be 
limited to preclude its use to develop a vector for a vaccine intended 
to protect against a disease other than rotavirus; and (iii) AHP shall 
have the right to retain and use all of the Cyanamid Rotavirus Vaccine 
Research assets, including samples of the assets in Paragraph B of 
Confidential Appendix A, for the purpose of using them to develop a 
vector for a vaccine intended to protect against a disease other than 
rotavirus and for any other purpose other than developing and producing 
a vaccine to protect humans against rotavirus disease. In the event the 
Commission or the Attorney General brings an action against Respondent 
pursuant to section 5(1) of the Federal Trade Commission Act, 15 U.S.C. 
45(1), or any other statute enforced by the Commission, AHP shall 
consent to the appointment of a trustee in such action. Neither the 
appointment of a trustee nor a decision not to appoint a trustee under 
this Paragraph shall preclude the Commission or the Attorney General 
from seeking civil penalties or any other relief available to it, 
including a court appointed trustee, pursuant to section 5(1) of the 
FTC Act, or any other statute enforced by the Commission, for any 
failure by Respondent to comply with this order.
    B. If a trustee is appointed by the Commission or a court pursuant 
to Paragraph VI.A of this Order, AHP shall consent to the following 
terms and conditions regarding the trustee's powers, duties, 
authorities, and responsibilities.
    1. The Commission shall select the trustee, subject to the consent 
of AHP, which consent shall not be unreasonably withheld. The trustee 
shall be a person with experience and expertise in licensing 
technology. If AHP has not opposed, in writing, including the reasons 
for opposing, the selection of any proposed trustee within ten (10) 
days after notice by the staff of the Commission to AHP of the identity 
of any proposed trustee, AHP shall be deemed to have consented to the 
selection of the proposed trustee.
    2. Subject to the prior approval of the Commission, the trustee 
shall have the exclusive power and authority to grant an exclusive 
license of Cyanamid's Rotavirus Vaccine Research as described in 
Paragraph VI.A. (``the Rotavirus Exclusive License'').
    3. Within ten (10) days after appointment of the trustee, AHP shall 
execute a trust agreement that, subject to the prior approval of the 
Commission and, in the case of a court-appointed trustee, of the court, 
transfers to the trustee all rights and powers necessary to permit the 
trustee to enter into the Rotavirus Exclusive License as required by 
this Order.
    4. The trustee shall have twelve (12) months from the date the 
Commission approves the trust agreement described in Paragraph VI.C.3 
to accomplish the Rotavirus Exclusive License required by Paragraph VI 
of this Order, which shall be subject to the prior approval of the 
Commission. If, however, at the end of the twelve (12) month period, 
the trustee has submitted a plan of licensing or believes that 
exclusive licensing can be achieved within a reasonable time, the 
twelve (12) month period may be extended by the Commission or, in the 
case of a court-appointed trustee, by the court; provided, however, the 
Commission may extend the twelve (12) month period only two (2) times.
    5. The trustee shall have full and complete access to the 
personnel, books, records, data, facilities, and technical information 
related to the Rotavirus Vaccine Research, or to any other relevant 
information, as the trustee may reasonably request. Respondent shall 
develop such financial or other information as such trustee may request 
and shall cooperate with the trustee. Respondent shall take no action 
to interfere with or impede the trustee's ability to accomplish the 
exclusive licensing of Cyanamid's Rotavirus Vaccine Research required 
by this Order. Any delays in exclusively licensing Cyanamid's Rotavirus 
Vaccine Research required by this Order caused by Respondent shall 
extend the time under Paragraph VI.C.4 for accomplishing the exclusive 
licensing of Cyanamid's Rotavirus Vaccine Research required by this 
Order in an amount equal to the delay, as determined by the Commission 
or, for the court-appointed trustee, by the court.
    6. The trustee shall use his or her best efforts to negotiate the 
most favorable price and terms available in each contract that is 
submitted to the Commission, subject to AHP's absolute and 
unconditional obligation to grant an exclusive license to Cyanamid's 
Rotavirus Vaccine Research as required by this Order at no minimum 
price. The exclusive license shall be made in the manner and to the 
Rotavirus Licensee as set out in this Order; provided, however, if the 
trustee receives bona fide offers from more than one acquiring entity, 
and if the Commission determines to approve more than one such 
acquiring entity, the trustee shall grant an exclusive license to the 
acquiring entity selected by Respondent from among those approved by 
the Commission.
    7. The trustee shall serve, without bond or other security, at the 
cost and expense of AHP, on such reasonable and customary terms and 
conditions as the Commission or a court may set. The trustee shall have 
authority to employ, at the cost and expense of AHP, such consultants, 
accountants, attorneys, investment bankers, business brokers, 
appraisers and other representatives and assistants as are necessary to 
carry out the trustee's duties and responsibilities. After approval by 
the Commission and, in the case of a court-appointed trustee, by the 
court, of the account of the trustee, including fees for his or her 
services, all remaining monies shall be paid at the direction of AHP 
and the trustee's power shall be terminated. The trustee's compensation 
shall be based at least in significant part on a commission arrangement 
contingent on the trustee's ability to grant an exclusive license of 
Cyanamid's Rotavirus Vaccine Research.
    8. Respondent shall indemnify the trustee and hold the trustee 
harmless against any losses, claims, damages, liabilities, or expenses 
arising out of, or in connection with, the performance of the trustee's 
duties, including all reasonable fees of counsel and other expenses 
incurred in connection with the preparations for, or defense of any 
claim whether or not resulting in any liability, except to the extent 
that such liabilities, losses, damages, claims, or expenses result from 
the misfeasance, gross negligence, willful or wanton acts, or bad faith 
by the trustee.
    9. If the trustee ceases to act or fails to act diligently, a 
substitute trustee shall be appointed in the same manner as provided in 
Paragraph VI.A. of this Order.
    10. The Commission or, in the case of a court-appointed trustee, 
the court, may on its own initiative or at the request of the trustee 
issue such additional orders or directions as may be necessary or 
appropriate to enter into the Rotavirus Exclusive License required by 
this Order.
    11. The trustee shall have no obligation or authority to operate or 
maintain the Cyanamid Rotavirus Vaccine Research.
    12. The trustee shall report in writing to AHP and to the 
Commission every sixty (60) days concerning the trustee's efforts to 
grant an exclusive license of Cyanamid's Rotavirus Vaccine Research as 
required by this Order.

VII

GM-CSF and IL-3 Royalties
    It is further ordered, That:
    A. Within thirty (30) days of the date on which the FDA approves 
any product that includes in whole or in part GM-CSF, as identified in 
the October 9, 1987 Technology Transfer and GM-CSF Supply Agreement 
between AHP and Sandoz, Ltd. (``GM-CSF Agreement''), AHP shall take 
such action as may be necessary to ensure that the royalty payments 
made pursuant to Section 10.2(b) of the GM-CSF Agreement and any 
reports of such payments are made on a worldwide aggregated basis.
    B. Within thirty (30) days of the date on which the FDA has 
approved both (1) any product that includes in whole or in part IL-3, 
as identified in the August 17, 1987 License Agreement for IL-3 between 
AHP and Sandoz, Ltd. (``IL-3 Agreement''); and (2) any product that 
includes in whole or in part Pixy321, also identified as rhIL-3/rhGM-
CSF S. cerevisiae fusion protein, AHP shall take such action as may be 
necessary to ensure that the royalty payments made pursuant to Section 
3.2 of the IL-3 Agreement and any reports of such payments are made on 
a worldwide aggregated basis.

VIII

Prior Approval
    It is further ordered, That, for a period of ten (10) years from 
the date this Order becomes final or until Respondent satisfies the 
requirements of Paragraphs II, III or IV, whichever is later, 
Respondent shall not without the prior approval of the Commission, 
directly or indirectly, through subsidiaries, partnerships, or 
otherwise:
    A. Acquire more than 1% of the stock, share capital, equity, or 
other interest in any concern, corporate or non-corporate, presently 
engaged in, or within the two years preceding such acquisition engaged 
in, the (1) clinical development or (2) manufacture and sale of tetanus 
or diphtheria vaccines in the United States;
    B. Acquire any assets currently used for or previously used for 
(and still suitable for use for) the (1) clinical development or (2) 
manufacture and sale of tetanus or diphtheria vaccines in the United 
States;
    C. Acquire more than 1% of the stock, share capital, equity, or 
other interest in any concern, corporate or noncorporate, presently 
engaged in, or within the two years preceding such acquisition engaged 
in, the (1) clinical development or (2) manufacture and sale in the 
United States of a vaccine to protect humans against rotavirus disease; 
or
    D. Acquire any assets currently used for or previously used for 
(and still suitable for use for) the (1) clinical development or (2) 
manufacture and sale in the United States of a vaccine to protect 
humans against rotavirus disease.

IX.

Reports
    It is further ordered, That:
    A. Within sixty (60) days after the date this Order becomes final 
and every six (6) months after the date this Order becomes final until 
AHP has fully complied with the provisions of Paragraphs II, IV, V and 
VI of this Order, AHP shall submit to the Commission a verified written 
report setting forth in detail the manner and form in which it intends 
to comply, is complying, and has complied with these Paragraphs of this 
Order. AHP shall include in its compliance reports, among other things 
that are required from time to time, a full description of the efforts 
being made to comply with these Paragraphs of this Order, including a 
description of all substantive contacts or negotiations for 
accomplishing the divestitures and entering into the Divestiture 
Agreement required by this Order, including the identity of all parties 
contacted. AHP shall include in its compliance reports copies of all 
written communications to and from such parties, all internal 
memoranda, and all reports and recommendations concerning the 
Divestiture Agreement required by Paragraph II of this Order.
    B. One (1) year from the date this Order becomes final and annually 
for the next nine (9) years on the anniversary of the date this Order 
becomes final or until the Acquirer or New Acquirer, as applicable, has 
obtained all necessary FDA approvals to manufacture Tetanus and 
Diphtheria Vaccines for sale in the United States, whichever is later, 
and at such other times as the Commission may require, Respondent shall 
file a verified written report with the Commission setting forth in 
detail the manner and form in which it has complied and is complying 
with this Order.

X.

Access
    It is further ordered, That, for the purpose of determining or 
securing compliance with this Order, and subject to any legally 
recognized privilege, upon written request and on reasonable notice to 
Respondent, Respondent shall permit any duly authorized representatives 
of the Commission:
    A. Access, during office hours and in the presence of counsel, to 
inspect and copy all books, ledgers, accounts, correspondence, 
memoranda and other records and documents in the possession or under 
the control of Respondent, relating to any matters contained in this 
consent order; and
    B. Upon five (5) days' notice to Respondent, and without restraint 
or interference from Respondent, to interview officers or employees of 
Respondent, who may have counsel present, regarding such matters.

XI.

Corporate Change
    It is further ordered, That Respondent shall notify the Commission 
at least thirty (30) days prior to any change in Respondent such as 
dissolution, assignment or sale resulting in the emergence of a 
successor, the creation or dissolution of subsidiaries or any other 
change that may affect compliance obligations arising out of the Order.

XII.

Sunset
    It is further ordered, That, notwithstanding any other provision of 
this Order, this Order shall terminate twenty years from the date this 
Order becomes final.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted subject 
to final approval an agreement containing a proposed Consent Order from 
American Home Products Corporation (``AHP'') which requires AHP to 
divest its tetanus and diphtheria vaccines business to a Commission-
approved purchaser. Further, AHP would be required to license American 
Cyanamid Company's (``Cyanamid'') rotavirus vaccine research and to 
aggregate royalty payment information relating to sales of particular 
cytokines used for white blood cell and platelet restoration once FDA 
approval is obtained for these products.
    The proposed Consent Order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
Order.
    Pursuant to an August 17, 1994, Agreement and Plan of Merger, AHP 
will acquire all of Cyanamid's voting stock. The proposed complaint 
alleges that the proposed acquisition would violate Section 7 of the 
Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as 
amended, 15 U.S.C. 45, in the following five markets in the United 
States:
    (1) Combined tetanus and diphtheria vaccines approved for use for 
adults and children at least seven years old, known as ``adult Td'';
    (2) Combined diphtheria and tetanus vaccines for children between 
the ages of two months and seven years old, known as ``pediatric DT'';
    (3) Uncombined tetanus vaccines, known as ``tetanus toxoid'';
    (4) Rotavirus vaccine research and development; and
    (5) Cytokine research, development, and production.
    The proposed Consent Order would remedy the alleged violation in 
each of these markets. In the area of tetanus and diphtheria vaccines, 
AHP would be required to divest, within four months, its tetanus and 
diphtheria vaccines business to a Commission approved purchaser. 
Because that purchaser will need to obtain FDA approval before it can 
begin selling tetanus and diphtheria vaccines, the proposed Consent 
Order also requires AHP to manufacture these vaccines for the approved 
purchaser for a period of five years or until the purchaser gains FDA 
approvals to manufacture its own tetanus and diphtheria vaccines. AHP 
will be required to sell tetanus and diphtheria vaccines to the 
purchaser at cost, with annual adjustments (exclusive of materials and 
labor) indexed to the Consumer Price Index. In addition, under the 
proposed Consent Order, AHP is required to provide technical assistance 
and advice to assist the purchaser in obtaining FDA approval to 
manufacture and sell tetanus and diphtheria vaccines. The proposed 
Order also provides for a trustee to assure that AHP appropriately 
divests its tetanus and diphtheria vaccines business. If AHP fails to 
divest its tetanus and diphtheria business within four months, or if 
the acquirer abandons its effort to obtain FDA approval to manufacture 
and sell tetanus and diphtheria vaccines, then the trustee may be 
directed to find another acquirer.
    The proposed Consent Order also requires AHP to license, within one 
year, on a nonexclusive basis, the Cyanamid rotavirus vaccine research 
assets to a Commission-approved licensee. If AHP fails to find an 
approved licensee within one year, then the Commission may appoint a 
trustee to license the Cyanamid rotavirus vaccine research assets on an 
exclusive basis to an approved licensee. AHP is also required under the 
proposed Order to provide technical advice, assistance and training to 
enable the licensee to continue the Cyanamid rotavirus research as an 
ongoing project.
    The proposed Consent Order prohibits AHP from receiving information 
relating to the market for cytokines for white blood cell and platelet 
restoration, unless the information is aggregated on a worldwide basis. 
This provision of the proposed Consent Order does not become operative 
until the FDA approves AHP's products in this area.
    The proposed Consent Order will also prohibit AHP, for a period of 
ten (10) years, from acquiring any interest in any entity engaged in 
the clinical development, or manufacture and sale of tetanus, 
diphtheria or rotavirus vaccines in the United States without prior 
approval from the Commission. The proposed Order will also require AHP 
to provide to the Commission a report of its compliance with the 
provisions of the Order within sixty (60) days following the date this 
Order becomes final, and every six (6) months thereafter until the 
Commission has approved a purchaser and licensee.
    One year from the date the Order becomes final and annually 
thereafter for nine (9) years, AHP will be required to provide to the 
Commission a report of its compliance with the Consent Order. The 
Consent Order also requires AHP to notify the Commission at least 
thirty (30) days prior to any change in the structure of AHP resulting 
in the emergence of a successor. A sunset provision is also included 
which terminates the order after 20 years.
    The purpose of this analysis is to facilitate public comment on the 
proposed Order, and it is not intended to constitute an official 
interpretation of the agreement and proposed Order or to modify in any 
way their terms.
Donald S. Clark,
Secretary.

Concurring Statement of Commissioner Mary L. Azcuenaga

In American Home Products Corp., File No. 941-0116
    Today, the Commission accepts for public comment a consent 
agreement settling charges that American Home Products' proposed 
acquisition of American Cyanamid Company is likely substantially to 
lessen competition in the markets for three existing diphtheria and 
tetanus vaccines and substantially to lessen competition to develop 
a new rotavirus vaccine and to develop and produce cytokines. This 
appears to be a strong antitrust case, but I seriously question 
whether the remedy is sufficient.
    Under the order, the divestiture of tetanus and diphtheria 
vaccine assets is limited to certain intellectual property, 
including formulations, patents, trade secrets, technology, and 
know-how. The divestiture is structured so that, as a practical 
matter, the only firms that could acquire the assets in question are 
firms that in my opinion already would satisfy the tests under the 
law for potential entrants. In short, the order will not restore the 
competition lost as a result of the acquisition. Instead, the 
Commission should require the divestiture of a viable business unit, 
even if that business unit produces and sells products other than 
the vaccines in question.

[FR Doc. 94-29181 Filed 11-25-94; 8:45 am]
BILLING CODE 6750-01-M