[Federal Register Volume 67, Number 142 (Wednesday, July 24, 2002)]
[Notices]
[Pages 48475-48477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18702]


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FEDERAL TRADE COMMISSION

[File No. 021 0059]


Amgen Inc. and Immunex Corporation; Analysis To Aid Public 
Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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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 August 12, 2002.

ADDRESSES: Comments filed in paper form should be directed to: FTC/
Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. Comments filed in electronic form should be 
directed to: [email protected], as prescribed below.

FOR FURTHER INFORMATION CONTACT: Elizabeth Jex, Bureau of Competition, 
600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 326-3273.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), 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 electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for July 12, 2002), on the World Wide Web, at ``http://www.ftc.gov/os/2002/07/index.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Comments filed in paper form should 
be directed to: FTC/Office of the Secretary, Room 159-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. If a comment contains 
nonpublic information, it must be filed in paper form, and the first 
page of the document must be clearly labeled ``confidential.'' Comments 
that do not contain any nonpublic information may instead be filed in 
electronic form (in ASCII format, WordPerfect, or Microsoft Word) as 
part of or as an attachment to email messages directed to the following 
email box: [email protected]. Such comments 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)(6)(ii)).

Analysis of Agreement Containing 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 Amgen Inc. (``Amgen'') and Immunex Corporation (``Immunex'') that 
is designed to remedy the anticompetitive effects of the merger of 
Amgen and Immunex. Under the terms of the agreement, the companies 
would be required to: (1) Divest of all Immunex's assets relating to 
Leukine (a neutrophil regeneration factor) to Schering AG 
(``Schering''); (2) license certain Amgen patents relating to its tumor 
necrosis factor (``TNF'') receptor to Serono S.A. (``Serono''); and (3) 
license certain Amgen and Immunex patents relating to the development 
of Interleukin-1 (``IL-1'') receptors to Regeneron Pharmaceuticals Inc. 
(``Regeneron'').
    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 any comments received and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
Consent Order.
    In their merger agreement of December 16, 2001, Amgen and Immunex 
propose to combine their two companies in a transaction valued at 
approximately $16 billion. Thereafter, the merged entity will be called 
Amgen Inc. 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: (1) Neutrophil regeneration 
factors; (2) TNF inhibitors; and (3) IL-1 inhibitors. The proposed 
Consent Order would remedy the alleged violations by replacing the lost 
competition in each of these markets that would result from the merger.

Neutrophil Regeneration Factors

    Neutrophil regeneration factors are used to treat neutropenia, the 
suppression of production of certain white blood cells (known as 
``neutrophils'') which often results from chemotherapy. Immunex's 
product, Leukine, stimulates the production of both granulocytes and 
macrophages, two types of neutrophils, while Amgen's products, Neupogen 
and Neulasta, stimulate the production of granulocytes. The use of 
these products to stimulate neutrophil regeneration allows patients to 
maintain a robust immune system while continuing with their 
chemotherapy regimens. Annual U.S. sales of neutrophil regeneration 
factors total approximately $1.2 billion.
    The market for neutrophil regeneration factors is highly 
concentrated. Amgen and Immunex are the only companies with neutrophil 
regeneration factors approved for sale in the United States. Amgen's 
Neupogen is the leading product in this market, with 2001 sales of 
approximately $1.05 billion in the United States. In January 2002, 
Amgen launched Neulasta, an extended-release version of Neupogen. 
Immunex's 2001 sales for Leukine were $109 million.
    Entry into the neutrophil regeneration factor market requires 
lengthy preclinical and clinical trials, data collection and analysis, 
and expenditures of significant resources over many years to qualify 
manufacturing facilities with the Food and Drug Administration 
(``FDA''). Clinical development and FDA approval can extend from 6 to 
10 years and cost over $200 million. The FDA must approve all phases of 
development, including extensive preclinical and clinical work. The 
most significant barriers to entry include technical, regulatory, 
patent, clinical and production barriers. No company can reach advanced 
stages of development

[[Page 48476]]

in the relevant market without: (1) Clinical trial expertise; (2) 
patent rights sufficient to provide the company with reasonable 
assurances of freedom to operate; (3) commercial scale product 
manufacturing expertise and capacity; and (4) regulatory approvals.
    The proposed merger of Amgen and Immunex would cause significant 
anticompetitive effects in the U.S. neutrophil regeneration market by 
eliminating actual, direct, and substantial competition between the 
only two firms in the market. As a result, cancer patients that need 
these drugs would likely pay higher prices for neutrophil regeneration 
factors.
    The proposed Consent Order maintains competition in the market for 
neutrophil regeneration factors by requiring that Immunex sell its 
Leukine business to Schering so that Schering can maintain the present 
competition against Amgen as well as the continued research and 
development of Leukine for future competition.

TNF Inhibitors

    TNF is a cytokine that promotes the inflammation of human tissues. 
TNF inhibitors may be used to prevent the binding of TNF proteins with 
TNF receptors, thereby blocking the triggering of the inflammation 
cascade. TNF inhibitors are used primarily to treat rheumatoid 
arthritis, Crohn's disease, and psoriatic arthritis, but they also are 
being examined for a host of other autoimmune diseases. Annual U.S. 
sales of TNF inhibitors total approximately $1.4 billion.
    The market for TNF inhibitors is highly concentrated. Immunex, 
which makes Enbrel, and Johnson & Johnson (``J&J''), which makes 
Remicade, are the only companies with TNF inhibitors on the market. In 
2001, Immunex sold over $760 million of Enbrel in the United States and 
Canada, while Remicade accounted for the rest of the market in the 
United States. There are only three other companies with TNF inhibitors 
in clinical development in the United States. Amgen has a TNF inhibitor 
similar to Enbrel in clinical development that it expects to launch in 
2005. Abbott recently submitted a Biologic License Application to the 
FDA for its D2E7 product. Pharmacia and Celltech are jointly in Phase 
II trials for their TNF inhibitor, CDP870. Additionally, Serono is 
developing a TNF inhibitor for use in Europe, but it does not possess 
the patent rights necessary to market the product in the United States.
    New entry into the research, development, manufacture, and sale of 
TNF inhibitors is difficult, expensive, and time-consuming. As with 
other pharmaceutical markets, entry requires identifying a preclinical 
compound, performing animal safety tests, clinically developing the 
product in humans, securing FDA approval of commercial scale production 
facilities, and obtaining FDA approval to market the drug in the United 
States. In order to enter the market, a firm must incur substantial 
sunk costs to research, develop, manufacture, and sell a TNF inhibitor. 
De novo entry has been estimated to take from 8 to 10 years and cost 
over $400 million. New entry sufficient to deter or counteract the 
anticompetitive effects of the proposed merger would not occur in a 
timely manner.
    The proposed merger of Amgen and Immunex would cause significant 
anticompetitive effects in the U.S. TNF inhibitor market by eliminating 
potential competition from Amgen's TNF inhibitor in development. 
Immunex and Amgen are the only two firms that market or are developing 
soluble TNF receptor products in the United States and two of only five 
firms that are developing any type of TNF inhibitor for the U.S. 
market. As a result of the merger, consumers of these drugs would 
likely pay higher prices and have fewer alternatives for TNF inhibitors 
for the treatment of rheumatoid arthritis and other diseases.
    The proposed Consent Order maintains competition in the TNF 
inhibitor market by requiring that Amgen license certain patents to 
Serono, a Swiss biotechnology company with a soluble TNF inhibitor in 
clinical development that otherwise likely would not be sold in the 
United States due to blocking patents held by Amgen. This license would 
assure Serono that it has the freedom of operation necessary to market 
its TNF inhibitor in the U.S. Amgen retains the rights to pursue 
development of its TNF inhibitor either as a menotherapy or in 
combination with an IL-1 inhibitor.

IL-1 Inhibitors

    IL-1 is another cytokine that promotes the inflammation of human 
tissues. IL-1 inhibitors prevent the binding of IL-1protein with IL-1 
receptors, thereby blocking the triggering of the inflammation cascade. 
IL-1 inhibitors are used to treat rheumatoid arthritis.
    The market for IL-1 inhibitors is highly concentrated. Amgen's 
Kineret, approved by the FDA in November of 2001, is the only IL-1 
inhibitor on the U.S. market. Sales to date have exceeded $2.4 million. 
Immunex and Regeneron are the only other companies with IL-1 inhibitors 
in clinical trials in the United States. Regeneron's development and 
commercialization of its IL-1 Trap, however, may be delayed or 
foreclosed by patents owned by Immunex. It appears that Immunex is 
likely to succeed in its efforts to preclude Regeneron's successful 
commercializaiton of its IL-1 Trap product through patent infringement 
litigation for the following reasons: (1) Immunex has indicated that it 
will seek to block Regeneron by using patent litigation; (2) Regeneron 
has indicated that such litigation, even were it to yield an outcome 
favorable to Regeneron, could foreclose its ability to commercialize 
its IL-1 Trap; and (3) the likelihood of threatened patent litigation 
by Immunex will jeopardize and could effectively preclude 
commercialization of Regeneron's IL-1 Trap.
    New entry into the research, development, manufacture, and sale of 
IL-1 inhibitors is difficult, expensive, and time-consuming. As with 
other pharmaceutical markets, entry requires identifying a preclinical 
compound, perforning animal safety tests, clinically developing the 
product in humans, securing FDA approval of commercial scale production 
facilities, and obtaining FDA approval to market the drug in the United 
States. In order to enter the market, a firm must incur substantial 
sunk costs to research, develop, manufacture, and sell an IL-1 
inhibitor. De novo entry has been estimated to take between 6 to 10 
years and cost over $200 million. New entry sufficient to deter or 
counteract the anticompetitive effects of the merger would not occur in 
a timely manner.
    The proposed merger of Amgen and Immunex would cause significant 
anticompetitive effects in the U.S. IL-1 inhibitor market by 
eliminating Amgen's most significant (and likely only) potential 
competitor, Immunex. By consolidating the IL-1 patents of both 
companies, Amgen would be more likely to use its combined patents to 
block Regeneron from marketing an IL-1 inhibitor. Furthermore, Amgen 
and Immunex are the only companies actively engaged in the development 
of TNF/IL-1 combination therapies, which may prove more efficacious for 
the treatment of rheumatoid arthritis in many patients than using 
either drug alone. The proposed merger, therefore, is likely to lead to 
unilateral anticompetitive effects in the IL-1 inhibitor market by 
eliminating potential competition between Amgen and Immunex as well as 
the ongoing research and development competition between the companies.

[[Page 48477]]

    The proposed Consent Order remedies the merger's anticompetitive 
effects by requiring that Immunex license certain patents to Regeneron, 
given Regeneron the freedom of operation necessary to bring its IL-1 
Trap product to the market and compete against Amgen in this market.
    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. 02-18702 Filed 7-23-02; 8:45 am]
BILLING CODE 6750-01-M