[Federal Register Volume 69, Number 152 (Monday, August 9, 2004)]
[Notices]
[Pages 48240-48243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18128]


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FEDERAL TRADE COMMISSION

[File No. 041-0031]


Sanofi-Synthelabo, et al.; 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 26, 2004.

ADDRESSES: Comments should refer to ``Sanofi-Synthelabo, et al., File 
No. 041 0031,'' to facilitate the organization of comments. A comment 
filed in paper form should include this reference both in the text and 
on the envelope, and should be mailed or delivered to the following 
address: Federal Trade Commission/Office of the Secretary, Room H-159, 
600 Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form, as explained in the 
Supplementary Information section. The FTC is requesting that any 
comment filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions. 
Comments filed in electronic form (except comments containing any 
confidential material) should be sent to the following e-mail box: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Paul Frontczak, FTC, Bureau of 
Competition, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-3002.

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 28, 2004), on the World Wide Web, at ``http://www.ftc.gov/os/2004/07/index.htm.'' A paper copy can be obtained from the FTC Public 
Reference

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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. Written comments must be submitted 
on or before August 26, 2004. Comments should refer to ``Sanofi-
Synthelabo, et al., File No. 041 0031,'' to facilitate the organization 
of comments. A comment filed in paper form should include this 
reference both in the text and on the envelope, and should be mailed or 
delivered to the following address: Federal Trade Commission/Office of 
the Secretary, Room H-159, 600 Pennsylvania Avenue, NW., Washington, DC 
20580. If the comment contains any material for which confidential 
treatment is requested, it must be filed in paper (rather than 
electronic) form, and the first page of the document must be clearly 
labeled ``Confidential.'' \1\ The FTC is requesting that any comment 
filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions. 
Comments filed in electronic form should be sent to the following e-
mail box: [email protected].
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
makes every effort to remove home contact information for individuals 
from the public comments it receives before placing those comments on 
the FTC Web site. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Sanofi-Synth[eacute]labo (``Sanofi'') and Aventis. 
The Consent Agreement contains an Order to Maintain Assets to preserve, 
among other things, the viability, marketability, and competitiveness 
of the assets to be divested pending their divestiture. The Consent 
Agreement also contains a Decision and Order that is designed to remedy 
the anticompetitive effects of Sanofi's proposed acquisition of 
Aventis. Under the terms of the Consent Agreement, the companies will 
be required to: (1) Divest all Arixtra[reg] assets; (2) divest to 
Pfizer all United States intellectual property and key clinical trials, 
currently conducted by Aventis, related to Camptosar[reg]; and (3) 
divest Aventis' royalty rights to Sepracor's Estorra[reg].
    The proposed Consent Agreement has been placed on the public record 
for thirty days for receipt of comments by interested persons. Comments 
received during this period will become part of the public record. 
After thirty 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.
    Pursuant to a tender offer launched January 26, 2004, Sanofi 
proposes to acquire Aventis. The offer accepted by Aventis' Board 
values Aventis at approximately $64 billion. The Commission's Complaint 
alleges that the proposed acquisition, 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 Federal Trade Commission Act, as amended, 15 
U.S.C. 45, in the markets for: (1) Factor Xa inhibitors; (2) cytotoxic 
drugs that treat colorectal cancer; and (3) prescription drugs that 
treat insomnia. The proposed Consent Agreement would remedy the alleged 
violations by replacing the lost competition that would result from the 
acquisition in each of these markets.

Factor Xa Inhibitors

    Factor Xa inhibitors are anticoagulant products that are used in 
acute settings to treat and prevent venous thromboembolism (``VTE'') 
and other conditions relating to excessive blood clot formation. 
Although unfractionated heparin was once the standard of care for the 
acute prevention and treatment of VTE and related complications, factor 
Xa inhibitors have become the treatment of choice due in large part to 
a better side effect profile and ease of use. Annual U.S. sales of 
factor Xa inhibitors totaled $1.35 billion in 2003.
    The U.S. market for factor Xa inhibitors is highly concentrated. 
Aventis' market leading Lovenox[reg] currently accounts for over 90 
percent of factor Xa inhibitor sales in the United States. Sanofi 
markets Arixtra[reg], a more recent market entrant whose competitive 
significance is likely to expand as it receives Food and Drug 
Administration (``FDA'') approval for new indications. Although other 
factor Xa inhibitors are available in the United States--including 
Pfizer's Fragmin[reg] and Pharmion's Innohep[reg]--they have not been 
successful competitors in the market.
    As with most pharmaceutical products, entry into the manufacture 
and sale of factor Xa inhibitors is difficult, expensive and time 
consuming. In order to enter the market, a firm must incur substantial 
sunk costs to research, develop, manufacture and sell factor Xa 
inhibitors. In addition, the approval for multiple indications is 
critical to the success of a new factor Xa inhibitor. Gaining FDA 
approval for each indication takes a significant amount of time because 
of the need to conduct clinical trials in support of each indication. 
New or expanded entry sufficient to deter or counteract the 
anticompetitive effects of the acquisition likely would not occur in a 
timely manner. New entry is unlikely to occur in the face of a 5 to 10 
percent increase in the price of these drugs, and current factor Xa 
inhibitors also would be unlikely to counteract such a price increase. 
The only firm that is likely to launch a product in the United States 
in the foreseeable future is AstraZeneca, which recently filed a New 
Drug Application with the FDA for its own factor Xa inhibitor, 
Exanta[reg]. However, Exanta[reg] is a direct thrombin inhibitor rather 
than a factor Xa inhibitor. Further, AstraZeneca is seeking approval 
for only one of the indications that factor Xa inhibitors are approved 
for. Therefore, it is unlikely that entry by Exanta[reg] would have a 
sufficient, timely effect on competition to resolve the competitive 
effects of the proposed acquisition.
    The proposed acquisition would cause significant anticompetitive 
harm in the U.S. market for factor Xa inhibitors by eliminating the 
actual, direct, and substantial competition between Sanofi and Aventis. 
This loss of competition likely would result in higher prices.
    The proposed Consent Order maintains competition in the factor Xa 
inhibitor market by requiring that: (1) Sanofi divest Arixtra[reg] to 
GlaxoSmithKline; (2) Sanofi transfer to GlaxoSmithKline the 
manufacturing

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facilities used by Sanofi to produce Arixtra[reg] in final finished 
form; (3) Sanofi contract manufacture the active pharmaceutical 
ingredient (``API'') and certain intermediate step ingredients until 
such time as GlaxoSmithKline obtains the necessary regulatory approvals 
and supply sources that will allow it to manufacture the API 
independently; (4) Sanofi assist GlaxoSmithKline in completing three 
key clinical trials; (5) Sanofi provide incentives to certain employees 
to continue in their positions until the divestiture is accomplished; 
(6) for a period of time after the assets are divested, Sanofi provide 
GlaxoSmithKline an opportunity to enter into employment contracts with 
individuals who have experience relating to Arixtra[reg]; and (7) 
Sanofi take steps to maintain the confidentiality of confidential 
information related to Arixtra[reg].

Cytotoxic Drugs for the Treatment of Colorectal Cancer

    Colorectal cancer is the second leading cause of cancer-related 
deaths in the United States for both men and women. Approximately 
146,940 new cases of colorectal cancer will be diagnosed in 2004 and 
56,730 people will die from the disease. Cytotoxic colorectal cancer 
drugs have been shown to be more effective than older, generic drug 
treatments. The U.S. market for cytotoxic colorectal cancer therapies 
currently generates approximately $1 billion in annual sales.
    The U.S. market for cytotoxic colorectal cancer drugs is highly 
concentrated. Two major cytotoxic products approved by the FDA for the 
treatment of colorectal cancer are Sanofi's product, Eloxatin[reg], and 
Camptosar[reg], a product developed by Yakult Honsha (``Yakult'') and 
marketed in the U.S. by Pfizer. Combined, the two products have over 80 
percent of the U.S. cytotoxic colorectal cancer drug market. Roche is 
the only other provider in the market with more than a 1 percent market 
share.
    Entry into the market for cytotoxic colorectal cancer drugs is 
difficult, time consuming, and costly because of the lengthy 
development periods, the need for FDA approval, and the substantial 
sunk costs required to research, develop, manufacture and sell these 
drugs.
    Although Aventis does not directly market a cytotoxic colorectal 
cancer drug in the United States, there are significant contractual 
entanglements between Aventis and Pfizer that affect the U.S. market. 
Pfizer licenses irinotecan (under the brand name Camptosar[reg]) from 
Yakult for sales in the United States. Aventis licenses irinotecan 
(under the brand name Campto[reg];) from Yakult for sales in other 
territories. Under a data transfer agreement, Pfizer and Aventis share 
the results of key clinical trials. Aventis also possesses a number of 
U.S. patents relating to Camptosar[reg]. These entanglements allow 
Aventis to impact the Camptosar[reg] business. The proposed acquisition 
thus creates an overlap in the U.S. market between Sanofi's 
Eloxatin[reg] and Aventis' contractual ties to Camptosar[reg]. This 
overlap affords the combined firm (1) access to competitively sensitive 
information from its main competitor, Pfizer, and (2) control over key 
clinical trials that Pfizer relies on for FDA applications that would 
expand Camptosar[reg] indications in the United States. Therefore, the 
proposed acquisition would cause significant anticompetitive harm in 
the U.S. market for cytotoxic colorectal cancer drugs by reducing the 
actual, substantial competition between Sanofi and Pfizer.
    The proposed Consent Agreement eliminates the potential 
anticompetitive effects of the acquisition in the U.S. cytotoxic 
colorectal cancer drug market by requiring the parties to: (1) Divest 
to Pfizer key clinical studies for Campto[reg] that are currently 
conducted by Aventis, together with certain U.S. patents and other 
assets pertaining to territories where Pfizer currently markets 
Camptosar[reg]; (2) provide Pfizer with the opportunity to enter into 
employment contracts with certain employees involved in the key 
clinical trials; (3) deliver to Pfizer all confidential business 
information regarding Camptosar[reg] that Aventis has in its 
possession; and (4) commit to maintain the assets to be divested in a 
manner that preserves the integrity, viability, and value of the 
assets, until the divestitures are accomplished.

Prescription Drugs for the Treatment of Insomnia

    More than 50 million people in the United States suffer from 
insomnia, the perception or complaint of inadequate sleep. The U.S. 
insomnia treatment market is estimated to have generated approximately 
$1.65 billion in 2003 sales and is projected to increase to $3.36 
billion by 2010.
    Sanofi dominates the market for prescription drugs that treat 
insomnia with its well known product, Ambien[reg]. Sanofi's market 
share in the United States exceeded 85 percent in 2003. Sepracor is 
developing a product called Estorra[reg], which is expected to be 
launched in the beginning of 2005 and is likely to become a significant 
competitor to Ambien[reg]. Although Aventis does not market a 
prescription sleep drug in the United States, there are financial and 
informational entanglements between Aventis and Sepracor relating to 
the Estorra[reg] product. Therefore, the acquisition creates an overlap 
between Ambien[reg] and Aventis' royalty rights to Estorra[reg].
    The proposed acquisition would create anticompetitive effects in 
the market for prescription drugs that treat insomnia by diluting 
competition between Sanofi and Sepracor. Although several new products 
are expected to enter the market in the next five years, it is unlikely 
that the entry of these products, alone or in combination, could 
counteract the anticompetitive effects of the acquisition. Accordingly, 
allowing Sanofi to acquire Aventis' rights to Estorra would reduce 
Sanofi's incentives to compete against Sepracor in the prescription 
sleep drug market and would be likely to lead to higher prices.
    The proposed Consent Agreement remedies the acquisition's 
anticompetitive effects by requiring the parties to divest their 
contractual rights to Estorra[reg]. No later than 90 days after the 
Order becomes final, the parties are required to divest their rights to 
Estorra[reg] royalties in a manner that receives Commission approval, 
either to Sepracor or to a third party approved by the Commission.

Interim Monitor

    The Commission has appointed Francis J. Civille as Interim Monitor 
to oversee the asset transfers and to ensure Sanofi's and Aventis' 
compliance with all of the provisions of the proposed Consent Order. 
Mr. Civille has over 35 years of experience in the pharmaceutical 
industry and is well-respected in the industry. In order to ensure that 
the Commission remains informed about the status of the proposed 
divestitures and the transfers of assets, the proposed Consent Order 
requires Sanofi and Aventis to file reports with the Commission 
periodically until the divestitures and transfers are accomplished.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and it is not intended to constitute an official 
interpretation of the Consent Agreement or to modify its terms in any 
way.


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    By direction of the Commission, Commissioner Harbour recused.
Donald S. Clark,
Secretary.
[FR Doc. 04-18128 Filed 8-6-04; 8:45 am]
BILLING CODE 6750-01-P