[Federal Register Volume 65, Number 250 (Thursday, December 28, 2000)]
[Notices]
[Pages 82374-82378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33029]


-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

[File No. 001 0088; Docket No. C-3990]


Glaxo Wellcome plc and SmithKline Beecham plc; Analysis to Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before January 17, 2001.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room H-159, 600 Pennsylvania Avenue, NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Molly S. Boast or Jacqueline K. 
Mendel, FTC/H-374, 600 Pennsylvania Avenue, NW., Washington, DC 20580, 
(202) 326-2039 or 326-2603.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the above-captioned consent agreement containing a consent 
order to cease and desist, having been filed with and accepted, subject 
to final approval, by the Commission, has been placed on the public 
record for a period of thirty (30) days. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An

[[Page 82375]]

electronic copy of the full text of the consent agreement package can 
be obtained from the FTC Home Page (for December 18, 2000), on the 
World Wide Web, at ``http://www.ftc.gov/os/2000/12/index.htm.'' A paper 
copy can be obtained from the FTC Public Reference Room, Room H-130, 
600 Pennsylvania Avenue, NW., Washington, DC 20580, either in person or 
by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room H-159, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. Two paper copies of each comment should be filed, 
and should be accompanied, if possible, by a 3\1/2\ inch diskette 
containing an electronic copy of the comment. 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 
section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(ii)).

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 Glaxo Wellcome plc (``Glaxo'') and SmithKline Beecham plc. 
(``SB'') which is designed to remedy the anticompetitive effects of the 
merger of Glaxo and SB. Under the terms of the agreement, the companies 
would be required to: (1) Divest all of SB's worldwide rights and 
intellectual property relating to its antiemetic drug, Kytril, to F. 
Hoffman LaRoche; (2) divest SB's intellectual property rights to 
manufacture and market ceftazidime to Abbott Laboratories; (3) divest 
SB's worldwide rights and intellectual property relating to its 
antiviral drugs, Famvir and Denavir, including the rights to the base 
active ingredients, penciclovir and famciclovir, to Novartis Pharm AG 
and Novartis Pharmaceuticals Corporation; (4) return to Cantab 
Pharmaceuticals plc all rights to use Cantab's DISC technology for the 
development of a prophylactic herpes vaccine; (5) divest Glaxo's U.S. 
and Canadian Zantac trademark rights to Pfizer (formerly Warner-
Lambert) and thereby remove restrictions on the ability of Pfizer's 
Zantac 75 to compete in the over-the-counter (``OTC'') H-2 blocker acid 
relief market; (6) assign all of SB's relevant intellectual property 
rights and relinquish all options to the drug renzapride, a drug to 
treat irritable bowel syndrome, to Alizyme plc; (7) assign all of 
Glaxo's relevant intellectual property rights and relinquish all of 
Glaxo's reversionary rights to GI147211C, a topoisomerase I inhibitor 
to treat certain types of cancer, to Gilead Sciences, Inc.; and (8) 
assign all of SB's relevant intellectual property rights and relinquish 
all options to regain control over frovatriptan, a drug to treat 
migrane headaches, to Vernalis Ltd.
    The proposed Consent Order has been placed on the public record for 
thirty (30) days for receipt of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) 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 
Consent Order.
    Pursuant to a scheme of arrangement announced on January 17, 2000, 
Glaxo and SB propose to combine their two companies in a transaction 
valued at approximately $182 billion. Thereafter, the merged entity 
will be renamed Glaxo SmithKline plc. The proposed Complaint alleges 
that the proposed merger, if consummated, would constitute a violation 
of 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 markets for the 
research, development, manufacture and sale of: (1) 5HT-3 antiemetic 
drugs; (2) ceftazidime; (3) second generation oral and intravenous 
antiviral drugs for the treatment of herpes virus infections; (4) 
prescription topical antiviral cremes for herpes labialis or oral 
herpes, commonly referred to as cold sores; (5) prophylactic herpes 
vaccines; (6) OTC H-2 blockers; (7) topoisomerase I inhibitors marketed 
or in development for the treatment of ovarian, non-small cell lung, 
colorectal and other solid tumor cancers; (8) drugs for the treatment 
of irritable bowel syndrome (``IBS''); and (9) triptan drugs for the 
treatment of migraine headaches. The proposed Consent Order would 
remedy the alleged violations by replacing the lost competition that 
would result from the merger in each of these markets.

5HT-3 Antiemetic Drugs

    Antiemetic drugs are administered to cancer patients undergoing 
chemotherapy and radiation therapy to prevent or lessen the nausea and 
vomiting associated with those medical procedures. 5HT-3 antiemetic 
products have revolutionized the treatment of patients with cancer 
because they are more effective than any of the older antiemetic 
products. Today, oncologists can pursue more aggressive chemotherapy 
and radiation regimens because patients are much less likely to 
experience debilitating nausea and vomiting, side effects that can 
curtail aggressive cancer treatment.
    The United States market for 5HT-3 antiemetic drugs is highly 
concentrated. In the $778 million dollar 5HT-3 antiemetic market, Glaxo 
markets Zofran and SB markets Kytril, which together represent 
approximately 90% of the market. Only one other firm, Aventis, markets 
a 5HT-3 antiemetic product, called Anzemet.
    Entry into the manufacture and sale of prescription pharmaceutical 
drugs is difficult, expensive, and time-consuming. De novo entry for 
pharmaceutical products has been estimated to take between 12 and 24 
years and cost upwards of $359 million. No other pharmaceutical company 
is expected to enter the United States market with a 5HT-3 antiemetic 
product in the foreseeable future.
    The merger of SB and Glaxo would reduce the number of 5HT-3 
antiemetic competitors from three to two; create a dominant firm with a 
greater than 90% share of the overall market; and leave Anzemet as the 
only remaining competitor against the combined Glaxo SmithKline. 
Currently, health care provider customers benefit enormously by 
competing Zofran and Kytril against one another to achieve favorable 
pricing.
    The Consent Agreement effectively remedies the anticompetitive 
effects in the market for 5HT-3 antiemetic drugs by requiring that: (1) 
SB divest all of its worldwide rights and intellectual property 
relating to Kytril (granisetron) to F. Hoffman-La Roche Ltd. 
(``Roche''); (2) SB submit all confidential information and know-how 
regarding Kytril to Roche; (3) the former SB sales force and management 
who participated in the marketing of Kytril maintain the 
confidentiality of this information; and (4) the former SB sales and 
marketing personnel be prohibited from selling products that compete 
with Kytril, i.e., Zofran, for a period of six to twelve months 
(depending on the status of the employee).
    The Consent Agreement also requires SB to contract manufacture 
Kytril for Roche until Roche obtains approval from the U.S. Food and 
Drug Administration (``FDA'') to manufacture Kytril for itself.

Second Generation Oral and Intravenous Antiviral Drugs for the 
Treatment of Herpes

    SB manufactures and markets Famvir, and Glaxo manufactures and 
markets Valtrex, the only two second generation oral and intravenous 
antiviral prescription drugs for the treatment of

[[Page 82376]]

herpes infections. Due to their greater bioavailability, superior 
efficacy, and requirements for less frequent dosing, Famvir and Valtrex 
have a significant advantage in treating herpes simplex virus Type 1 
(``HSV-1''), herpes simplex virus Type 2 (``HSV-2'') and the herpes 
varicella zoster virus (``herpes zoster'') over the first-generation 
drug acyclovir.
    New entry into the manufacture and sale of second generation 
antiviral drugs for the treatment of HSV-1, HSV-2 and herpes zoster 
infection is difficult, time-consuming, and expensive. SB and Glaxo are 
the only firms that have introduced second generation products to the 
market, and no other companies are developing drugs for these 
indications. Thus, given the amount of time it would take for a new 
product to obtain regulatory approval, entry cannot occur in a timely 
fashion to counter the anticipated anticompetitive effects of the 
proposed merger.
    The proposed merger of SB and Glaxo would eliminate the only 
competition that exists in the $500 million market for second 
generation prescription oral and intravenous antiviral drugs for the 
treatment of HSV-1, HSV-2, and herpes zoster. As a result of the 
proposed merger, American consumers are likely to pay higher prices for 
Valtrex and Famvir, and because SB and Glaxo offer the only second 
generation drugs available to treat HSV-1, HSV-2, and herpes zoster 
infections, the merger will result in a monopoly for an extended 
period, as there are no other drugs in research or development for 
these indications.
    The proposed divestiture to Novartis remedies the anticompetitive 
effects of the merger in both the oral and intravenous antiviral herpes 
infection treatment market as well as those in the topical oral herpes 
prescription creme market, which is discussed below. In the oral and 
intravenous herpes antiviral market, the divestiture resolves the 
anticompetitive effects of the proposed merger by requiring that: (1) 
SB divest all of its worldwide rights and intellectual property 
relating to Famvir, including rights to the base active ingredient 
famciclovir, to Novartis; (2) SB submit all confidential information 
and know-how regarding Famvir to Novartis; (3) the former SB sales 
force and management who participated in the marketing of Famvir 
maintain the confidentiality of this information; and (4) the former SB 
sales and marketing personnel be prohibited from selling products that 
compete with Famvir, i.e., Valtrex, for a period of six to twelve 
months (depending on the status of the employee).
    The Consent Agreement also requires SB to contract manufacture 
Famvir for Novartis until Novartis obtains FDA approval to manufacture 
Famvir for itself.

Prescription Topical Antiviral Cremes for Oral Herpes

    SB's Denavir is currently the only prescription topical antiviral 
medication approved by the FDA for the treatment of oral herpes 
infections, commonly called cold sores. Meanwhile, Glaxo's Zovirex 
creme is the dominant prescription cold sore product in much of Europe. 
Glaxo was in the final stages of seeking FDA approval to market its 
creme formulation of Zovirex for the treatment of oral cold sores in 
the United States. But, in April of 2000, after the announcement of its 
proposed merger with SB, Glaxo withdrew the Zovirex creme application 
then pending at the FDA, but without prejudice to refiling. At the 
time, Glaxo was a little more than six months from bringing its Zovirex 
cream to the U.S. market to compete against Denavir.
    De novo entry into prescription topical antiviral cremes for the 
treatment of oral herpes is difficult, time-consuming, and expensive. 
No other companies are currently developing prescription topical 
medications for the treatment of cold sores.
    The proposed merger eliminates the only potential entrant into the 
market for prescription topical antiviral medications for the treatment 
of cold sores--the Zovirex creme which Glaxo was close to bringing to 
market. If SB and Glaxo merge, it is highly unlikely that the merged 
firm would bring the Zovirex cream to market to compete against 
Denavir.
    As noted above, the proposed divestiture to Novartis remedies the 
anticompetitive effects of the merger in both the oral and intravenous 
antiviral herpes infection treatment market as well as those in the 
prescription topical oral herpes antiviral market. In the prescription 
topical oral herpes antiviral market, the divestiture resolves the 
anticompetitive effects of the proposed merger by requiring that: (1) 
SB divest all of its worldwide rights and intellectual property 
relating to Denavir, including rights to the base active ingredient 
penciclovir, to Novartis; (2) SB submit all confidential information 
and know-how regarding Denavir to Novartis; (3) the former SB sales 
force and management who participated in the marketing of Denavir 
maintain the confidentiality of this information; and (4) the former SB 
sales and marketing of Denavir maintain the confidentiality of this 
information; and (4) the former SB sales and marketing personnel be 
prohibited from selling products that compete with Denavir, i.e., 
topical Zovirex cream, for a period of six to twelve months (depending 
on the status of the employee).
    The Consent Agreement also requires SB to contract manufacture 
Denavir for Novartis until Novartis obtains FDA approval to manufacture 
Denavir for itself.

Ceftazidime

    Ceftazidime is an injectable antibiotic administered to 
hospitalized patients who are critically ill and at risk of 
contracting, and possible dying from, pseudomonas infection, a serious 
hospital-borne infection. Ceftazidime is considered the ``gold 
standard'' for treating patients who are either at risk of contracting 
pseudomonas or who have such infections. Ceftazidime is a third-
generation of a class of antibiotics called cephalosporins and is 
considered a ``broad spectrum'' antibiotic effective at treating a 
broad range of hospital-borne infection. Nearly all hospitals in the 
U.S. have ceftazidime on their formularies for use in combating 
pseudomonas infections.
    Last year, sales of all ceftazidime products were approximately $82 
million dollars in the U.S. Currently, only two firms, SB and Glaxo, 
manufacture ceftazidime. Three firms market ceftazidime products: Glaxo 
manufactures and markets Fortaz and Ceptaz; Lilly markets Tazidime, 
which is manufactured by SB; and Abbott Labs markets SB's Tazicef brand 
in the U.S. In 1999, sales of Glaxo's Fortaz and Ceptaz and of SB's 
Tazicef amounted to 85% of the market.
    There are significant barriers to entry into the manufacture and 
sale of ceftazidime. The production of ceftazidime requires an aseptic 
facility for both the manufacture and sterile filling processes, 
greatly increasing the costs and complexities of manufacturing the 
product. Building and obtaining FDA approval for this type of facility 
takes much longer than two years, and patents covering the manufacture 
of ceftazidime that do not expire for a number of years prevent generic 
production of ceftazidime at this time.
    The proposed merger of Glaxo and SB would create a monopoly in the 
manufacture of ceftazidime and would reduce the number of firms 
marketing ceftazidime from three to two. Glaxo SmithKline would not 
likely continue its relationship with Abbott as a marketer, removing a 
competing marketer of branded ceftazidime. Lilly, the only other 
competitor to Glaxo

[[Page 82377]]

SmithKline, would be dependent on Glaxo SmithKline for its supply. The 
presence of three ceftazidime competitors in the market allows 
customers to negotiate more favorable pricing than would be possible 
with only two firms. Consequently, after the merger, customers' ability 
to negotiate lower prices for ceftazidime would diminish, likely 
resulting in higher prices.
    The Consent Agreement effectively remedies the anticompetitive 
effects in the market for ceftazidime by requiring: (1) SB to provide 
all necessary intellectual property rights to manufacture and market 
ceftazidime to Abbott Laboratories, and (2) the creation of a new 
stream of supply for ceftazidime to Abbott that is independent of SB. 
Thereby, the Consent Agreement replaces SB's manufacturing and 
marketing rights and capabilities in the United States ceftazidime 
market.

Prophylactic Herpes Vaccines

    The evidence shows that the development of prophylactic vaccines to 
prevent infection by HSV-1 and HSV-2 is a relevant product market. 
Currently, no vaccines exist for the prevention of HSV-1 and HSV-2 
infection, but SB and Glaxo are two of very firms developing 
prophyactic vaccines to prevent herpes infections.
    SB is one of the world's three leading vaccine suppliers, and 
currently, SB has the most advanced development effort toward a 
prophylactic herpes vaccine. Glaxo is relatively new in the vaccine 
area, but has a significant effort underway to develop vaccines against 
genital herpies. Glaxo has been developing a vaccine for genital HSV 
infection using the Disabled Infectious Single Cycle (``DISC'') 
technology developed by Cantab Pharmaceuticals. With Cantab, Glaxo is 
currently pursuing a therapeutic indication, and had planned to begin 
work with Cantab designing Phase III clinical trials on a prophylactic 
indication this year, exercising its option to do so pursuant to its 
contract with Cantab.
    New entry into the research, development, manufacture and sale of 
vaccines to prevent HSV-1 and HSV-2 infection is extremely difficult, 
time-consuming, and expensive. Development of vaccines for other 
diseases have generally taken more than a decade and the time frames 
for vaccine development tend to be longer than those for prescription 
drugs. Other firms that have undertaken efforts to develop a 
prophylactic herpes vaccine either have failed in their efforts or are 
far behind and Glaxo/Cantab.
    The merger is likely to chill innovations in a very complex area as 
a combined Glaxo SmithKline would potentially forego the development 
efforts of one of the firms. Even if both products were developed, the 
merger would eliminate future price competition between the two 
prophylactic vaccines.
    The Consent Agreement effectively remedies the anticompetitive 
effects in the market for prophylactic vaccines for the prevention of 
infection by HSV-1 and HSV-2 by requiring Glaxo to return to Cantab all 
rights and information and results from clinical trials that are 
necessary for Cantab to develop a prophylactic herpes vaccine. This 
will permit Cantab to pursue a prophylactic indication for the vaccine 
developed by the joint venture, and, should that effort be 
unsuccessful, to develop a different prophylactic herpes vaccine using 
its DISC technology.

OTC H-2 Blockers

    Histamine-2 blockers, more commonly known as ``H-2 blockers,'' are 
a class of drugs available over-the-counter (``OTC'') for acide relief. 
H-2 blocker products originated as prescription products and were later 
approved by the FDA for OTC sale. As their name implies, H-2 blockers 
work by blocking histamine (acid) prodution, acting in essence like 
corks to prevent the release of stomach acid.
    Today, the $502 million OTC H-2 blocker market is comprised of four 
branded products--SB's Tagamet, Glaxo's Zantac 75 (marketed by Pfizer, 
formerly WArner-Lambert), Johnson & Johnson's Pepcid AC and Whitehall-
Robin's Axid, along with private label equivalents of Tagamet, Zantac 
75, and Pepcid AC. SB's Tagamet and Glaxo's Zantac 75 have a combined 
market share of approximately 41%.
    Entry into the OTC H-2 blocker acid relief market is time-
consuming, difficult, and expensive. New products take several years to 
develop; each must be approved by the FDA for OTC sale, or 
alternatively, approved to switch from prescription to OTC status; and 
furthermore, expensive advertising and promotion is required to 
establish a brand name in the OTC market. Currently, no additional H-2 
blockers are expected to enter the OTC market.
    The merger of SB and Glaxo is likely to lessen the competitivenes 
of Zantac 75 in the OTC market where it is marketed by Pfizer. 
Currently, the trademark license under which Pfizer sells Zantac 75 
requires the approval of Glaxo for any product or trademark changes or 
improvements. Prior to the merger, as licensor to Pfizer, Glaxo had the 
incentive to approve changes or improvements that would enhance the 
competitiveness of Zantac 75 in the OTC H-2 blocker market. But after 
the merger, it is likely that Glaxo SmithKline will be less inclined to 
approve changes to enhance the competitiveness of Zantac 75, an OTC H-2 
rival to its Tagamet. Furthermore, Pfizer would be in the difficult 
position of having to ask its close rival for permission to make 
product improvements, thereby exposing its future competitive strategy, 
which the rival might preemptively counter. Such a situation could 
prevent or discourage Pfizer from pursuing such competitive product 
improvements, as Glaxo SmithKline would be provided with direct access 
to cometitive intelligence on a product that competes directly against 
its own.
    The Consent Agreement effectively remedies the anticompetitive 
effects in the market for OTC H-2 blockers by: (1) Requiring Glaxo to 
divest all of its U.S. and Canadian trademark rights to Zantac to 
Pfizer; (2) removing all requirements on Pfizer to seek prior approval 
from Glaxo for any product line extensions; (3) removing all 
restrictions on Pfizer's ability to seek FDA approval of higher OTC 
dosage strengths for Zantac; (4) reducing the cost to Pfizer if a 
higher dosage strength is approved by the FDA for the OTC market to a 
payment not to exceed $3 million; and (5) allowing Pfizer to use any 
FDA approved form of the base active, ranitidine, in Zantac products. 
In the United States and Canada, Glaxo only retains the exclusive use 
of the Zantac name for prescription products that contains ranitidine. 
This gives Pfizer the unrestricted ability to market the OTC Zantac 
products, improve those products, and use the Zantac trademarks 
unfettered, which will allow Pfizer to compete vigorously and 
effectively in the OTC H-2 blocker market.

Topoisomerase I Inhibitors for the Treatment of Ovarian, non-SCLC, 
Colorectal, and Other Solid Tumor Cancers

    zSB's drug Hycamptin is currently a leading therapy for ovarian and 
non-small cell lung cancer (``non-SCLC''), and SB is pursuing 
indications for these cancers as well as a second-line indication for 
treating colorectal and other solid-tumor cancers. Gilead Sciences, in 
conjunction with Glaxo, is developing a topoisomerase I inhibitor, 
GI14722C, that is being developed for ovarian, breast, non-SCLC, and 
other solid tumor indications, including colorectal cancer. The only 
other topoisomerase I inhibitor on the market

[[Page 82378]]

is Pharmacia's Camptosar, which is indicated as a second-line treatment 
for colorectal cancer, and is being tested for non-SCLC.
    The proposed merger is likely to create anticompetitive effects in 
the topoisomerase I inhibitor market by potentially eliminating one of 
the few research and development efforts in this area. As a result of 
the merger, the combined entity could unilaterally delay, terminate or 
otherwise fail to develop the GI147211C topoisomerase I inhibitor, 
resulting in less product innovation, fewer choices, and higher prices 
for consumers.
    The Consent Agreement effectively remedies the anticompetitive 
effects in the market for topoisomerase I inhibitors for the treatment 
of certain cancers by requiring Glaxo to assign all relevant GI147211C 
intellectual property to Gilead and to relinquish its reversionary 
rights to Gilead's drug. Thus, the Consent Agreement eliminates Glaxo's 
ability to regain control over GI147211C, a drug likely to compete 
against SB's Hycamptin in combating ovarian, non-SCLC, colorectal, and 
other solid tumor cancers.

Drugs for the Treatment of Irritable Bowel Syndrome

    Irritable bowel syndrome (``IBS'') is not well understood and often 
has been labeled as several different conditions, including irritable 
colon and spastic colon. People with IBS experience varying symptoms, 
with some sufferers experiencing symptoms of diarrhea, others 
constipation, and still others a mix of both. The symptoms of IBS may 
include cramping, abdominal pain and other forms of abdominal 
discomfort. Seventy percent of IBS sufferers are women. IBS is 
estimated to affect up to 15% of the U.S. population.
    Glaxo currently owns a drug called Lotronex for the treatment of 
IBS. Though effective in treating IBS sufferers, Lotronex was recently 
taken off the market by Glaxo because of concerns about serious side 
effects in some patients, but Glaxo continues to conduct clinical 
trials for Lotronex. Lotronex is the only FDA-approved drug for the 
treatment of IBS. SB currently does not have a drug in this market, but 
has an option to acquire and market renzapride, a drug being developed 
by Alizyme Therapeutics plc for the treatment of IBS. Alizyme's 
renzapride drug is about 2-3 years from being on the market. In 
addition to the Alizyme/SB renzapride development effort, only two 
other drugs for IBS are in clinical development; thus, timely entry 
will not occur to deter or counteract the likely anticompetitive 
effects of the proposed merger.
    The proposed merger likely would eliminate one of the few research 
and development efforts on drugs to treat IBS. As a result of the 
merger, Glaxo SmithKline would likely delay, terminate or otherwise 
fail to develop renzapride which would compete against Lotronex, 
resulting in less product innovation, and consequently, fewer product 
choices, and higher prices for consumers.
    The Consent Agreement effectively remedies the anticompetitive 
effects in the market for drugs to treat IBS by requiring SB to assign 
all relevant intellectual property rights to Alizyme and to relinquish 
all options in renzapride, thus removing any possible influence over 
Alizyme's development of an IBS drug that is likely to compete directly 
against Glaxo's Lotronex.

Triptan Drugs for the Treatment of Migraine Headaches

    Glaxo is the leading seller of triptan drugs for the treatment of 
migraine headaches with its two triptan migraine drugs--Immitrex 
(sumatriptan succinate) and Amerge (naratriptan hydrochloride). SB has 
a reversionary interest in another triptan drug for migraines--SB209509 
(frovatriptan)--which is being developed by Vernalis Ltd. The only 
other approved migraine drugs in the triptan class are Maxalt 
(rizatriptan benzoate) from Merck and Zomig (zolmitriptan) from Astra 
Zeneca. Vernalis expects to submit final data to the FDA by the end of 
2000, and hopes to launch its frovatriptan drug in the second half of 
2001.
    In addition to the SB/Vernalis frovatriptan effort, only two other 
triptan drugs for migraine are in clinical development and are well 
behind the SB/Vernalis efforts. Thus, timely entry will not occur to 
deter or counteract the likely anticompetitive effects of the proposed 
merger.
    The proposer merger likely would eliminate one of the few research 
and development efforts on triptan drugs to treat migraines. As a 
result of the merger, Glaxo SmithKline would likely delay, terminate or 
otherwise fail to develop frovatriptan which would compete against 
Glaxo's Immitrex and Amerge, resulting in less product innovation, and 
consequently, fewer product choices and higher prices for consumers.
    To resolve the merger's anticompetitive effects in this market, SB 
renegotiated its agreement with Vernalis, assigning all relevant 
intellectual property to Vernalis and relinquishing its options in 
frovatriptan, which likely will compete directly against Glaxo's 
Immitrex and Amerge.
    The Consent Agreement also allows the Commission to appoint a 
Monitor Trustee to ensure Glaxo SmithKline's compliance with all of the 
requirements of the Order. In addition, the Commission may appoint a 
Divestiture Trustee in the event that Glaxo SmithKline fails to divest 
all of the assets required to be divested. Finally, the Consent 
Agreement imposes reporting requirements on Glaxo SmithKline until such 
time as it has fully complied with all of the provisions of the Order.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Order, and it is not intended to constitute an 
official interpretation of the proposed Consent Order or to modify its 
terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 00-33029 Filed 12-27-00; 8:45 am]
BILLING CODE 6750-01-M