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Home , Pfizer, Wyeth

62310 Federal Register / Vol. 74, No. 227 / Friday, November 27, 2009 / Notices

STATUS: This meeting will be open to the www.ftc.gov/os/caselist/0910053/ development information, and public. index.shtm, and may also be secured regulatory materials, as well as two of ITEMS TO BE DISCUSSED: from the following address: Federal Fort Dodge’s three U.S. Correction and Approval of Minutes. Trade Commission, Consumer Response facilities. These divestitures fully Notice of Proposed Rulemaking on Center, Public Reference Room, Room preserve the competition that the Federal Officeholder’s and Candidates’ H–130, 600 Avenue, NW., proposed acquisition would otherwise Participation in Certain Non-Federal Washington, DC 20580. eliminate. Fundraising Events. FOR FURTHER INFORMATION CONTACT: The proposed Consent Agreement has Final Rules on Campaign Travel. Michael R. Moiseyev, Bureau of been placed on the public record for Consideration of Policy to Place First Competition, 600 Pennsylvania Avenue, thirty days for receipt of comments by General Counsel’s Reports on the Public NW., Washington, DC 20580, (202) 326– interested persons. Comments received Record. 3106. during this period will become part of Adoption of Policy to Prepare and SUPPLEMENTARY INFORMATION: Pursuant the public record. After thirty days, the Publish a Guidebook for Complainants to section 6(f) of the Federal Trade Commission will again review the and Respondents in Enforcement Commission Act, 38 Stat. 721, 15 U.S.C. proposed Consent Agreement and the Matters. 46(f), and § 2.34 the Commission Rules comments received to decide whether it Co-sponsorship of 2010 COGEL of Practice, 16 CFR 2.34, notice is should withdraw from the proposed Annual Meeting. hereby given that the above-captioned Consent Agreement, modify it, or make Management and Administrative consent agreement containing a consent final the accompanying Decision and Matters. order to cease and desist, having been Order (‘‘Order’’). Individuals who plan to attend and filed with and accepted, subject to final Pursuant to an Agreement and Plan of require special assistance, such as sign approval, by the Commission, has been Merger dated as of January 25, 2009, language interpretation or other placed on the public record for a period proposes to acquire all of the reasonable accommodations, should of thirty (30) days. The following issued and outstanding shares of , contact Mary Dove, Commission Analysis to Aid Public Comment whereby each outstanding share of Secretary, at (202) 694–1040, at least 72 describes the terms of the consent Wyeth common stock will be converted hours prior to the hearing date. agreement, and the allegations in the into the right to receive $33 in cash and PERSON TO CONTACT FOR INFORMATION: complaint. An electronic copy of the 0.985 share of Pfizer common stock. Judith Ingram, Press Officer, Telephone: full text of the consent agreement Both parties manufacture human and (202) 694–1220. package can be obtained from the FTC animal health biological and Home Page (for October 14, 2009), on pharmaceutical products. The combined Mary W. Dove, the World Wide Web, at http:// firm would have projected worldwide Secretary of the Commission. www.ftc.gov/opa/2009/10/pfizer.shtm. revenues of almost $72 billion. The [FR Doc. E9–27976 Filed 11–25–09; 8:45 am] A paper copy can be obtained from the Commission’s complaint alleges that the BILLING CODE 6715–01–M FTC Public Reference Room, Room 130– proposed acquisition, if consummated, H, 600 Pennsylvania Avenue, NW., would violate Section 7 of the Clayton Washington, DC 20580, either in person Act, as amended, 15 U.S.C. 18, and FEDERAL TRADE COMMISSION or by calling (202) 326–2222. Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. [File No. 091 0053] Analysis of Proposed Agreement Containing Consent Orders To Aid 45, in U.S. markets for the manufacture Pfizer Inc. and Wyeth; Analysis of Public Comment and sale of: (1) Killed cattle respiratory Agreement Containing Consent Order ; (2) modified-live cattle I. Introduction To Aid Public Comment and Statement respiratory vaccines; (3) cattle of the Federal Trade Commission The Federal Trade Commission reproductive vaccines; (4) cattle (‘‘Commission’’) has accepted, subject to pasteurella vaccines; (5) lactating-cow AGENCY: Federal Trade Commission. final approval, an Agreement mastitis treatments; (6) dry-cow mastitis ACTION: Notice of acceptance of consent Containing Consent Orders (‘‘Consent treatments; (7) dairy cattle broad- agreement. Agreement’’) with Pfizer Inc. (‘‘Pfizer’’), spectrum with low milk- which is designed to remedy the withholding times; (8) cattle SUMMARY: The consent agreement in this anticompetitive effects of its proposed macrocyclic lactone parasiticides; (9) matter settles alleged violations of acquisition of Wyeth. Under the terms cattle benzimidazole parasiticides; (10) Federal law prohibiting unfair or of the Consent Agreement, Pfizer must canine combination vaccines; (11) deceptive acts or practices or unfair divest to canine monovalent parvovirus vaccines; methods of competition. The attached Vetmedica, Inc. (‘‘BI’’) Wyeth’s U.S. (12) canine monovalent coronavirus Analysis to Aid Public Comment animal health business (‘‘Fort Dodge’’) vaccines; (13) canine monovalent describes both the allegations in the in all areas of overlap, except for equine leptospira vaccines; (14) canine complaint and the terms of the consent tapeworm parasiticides and equine bordetella vaccines; (15) feline order—embodied in the consent herpesvirus vaccines. In the area of combination vaccines; (16) feline agreement—that settle these allegations. equine tapeworm parasiticides, the vaccines; (17) companion ADDRESSES: Copies of the Statement of consent order requires Pfizer to return to animal rabies vaccines; (18) companion the Commission, the Agreement Virbac S.A. (‘‘Virbac’’) Pfizer’s exclusive animal cephalosporin antibiotics; (19) Containing Consent Orders, the distribution rights for these products. In equine tapeworm parasiticides Decision and Order (Redacted Public the area of equine herpesvirus vaccines, containing praziquantel; (20) equine Version), the Order To Maintain Assets, Pfizer is ordered to divest to BI Pfizer’s herpesvirus vaccines; and (21) equine the Complaint, the Analysis To Aid equine herpesvirus products. The assets joint-injected steroids. The proposed Public Comment, and other materials for each of the divestitures include all Consent Agreement remedies the may be found on the Federal Trade of the relevant intellectual property, alleged violations by replacing in each Commission Web site, at http:// customer lists, research and of the relevant markets the lost

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competition that would result from the and Fort Dodge account for over 53 that affect dairy cows.1 Pfizer’s products acquisition. percent of all modified-live respiratory are considered the most effective antibiotics for dairy cows and have a II. The Products and Structure of the sales in the . As zero-day withholding period, while Fort Markets with killed respiratory vaccines, the 5- way modified-live respiratory vaccine is Dodge’s product has a low withholding The proposed acquisition of Wyeth by the most commonly used modified-live period of two to four days. A generic Pfizer would combine two of the largest cattle respiratory vaccine. As a result of version of one of Pfizer’s products was animal health suppliers in the United the proposed acquisition, Pfizer would recently introduced. As a result of the States. The companies overlap in control over 68 percent of the 5-way proposed acquisition, Pfizer would have several animal health markets, and, if modified-live respiratory vaccine a near monopoly in this $162 million consummated, the transaction likely market. market. would lead to anticompetitive effects in Cattle macrocyclic lactone each of the relevant markets. More Cattle reproductive vaccines are used parasiticides are the newest and most specifically, the transaction would to prevent early- and late-stage abortions effective class of cattle parasiticides in decrease the number of competing in pregnant cattle. The markets for cattle suppliers in the overlap markets, which reproductive vaccines include, most the United States. They are effective number has a direct and substantial significantly: (1) The market for against both internal and external effect on the prices of animal health modified-live 10-way vaccines, which parasites. There are only three branded products. The evidence shows that contain modified-live viral respiratory players in the $118 million U.S. market: customers are able to obtain lower and Leptospira antigens; (2) the market Pfizer, Fort Dodge, and Merial. prices by threatening to switch to for killed 10-way vaccines, which Although generic versions of Merial’s another supplier or presenting the contain killed viral respiratory and product are available, there are no incumbent supplier with a rival’s lower Leptospira antigens; and (3) the market generic versions of Pfizer’s or Fort offer. Customers have stated that they for lepto/vibrio vaccines, which contain Dodge’s products currently on the generally can negotiate lower prices in Leptospira and Campylobacter fetus market. The proposed acquisition would markets with more participants and antigens. After the acquisition, Pfizer significantly increase the concentration that, historically, they have seen prices would have 83 percent of the $13 in this market, leaving Pfizer with rise in markets in which the number of million modified-live 10-way market in approximately 42 percent of the market. market participants has declined. the United States, with Intervet/ Cattle benzimidazole parasiticides are Pfizer and Fort Dodge are the market Schering-Plough Animal Health (‘‘ISP’’), an older generation of parasiticides used leaders in the area of cattle health AgriLaboratories, Ltd. (‘‘AgriLabs’’), and primarily by cattle breeders to treat products. After the transaction, Pfizer BI accounting for 11 percent, 4 percent, internal parasites, such as lungworms, would have over 60 percent of several and 2 percent, respectively. Pfizer also tapeworms, and liver flukes. Pfizer, Fort of the relevant cattle product markets. In would control 76 percent of sales in Dodge, and ISP are the only suppliers to the cattle vaccines area, Pfizer and Fort killed 10-way vaccines, leaving offer cattle benzimidazole parasiticides Dodge have broad and significantly with 18 percent and AgriLabs with 6 in the United States. After the proposed overlapping portfolios of respiratory, percent of this $9 million market. acquisition, ISP would be the only reproductive, and pasteurella vaccines. Finally, in the lepto/vibrio vaccine remaining constraint on Pfizer’s ability Customers choose the specific vaccine market, Pfizer and Fort Dodge to raise prices, accounting for 67 percent products that most closely match their collectively account for almost 39 of this $16 million market. Pfizer would needs based on several factors, percent of this $2.6 million market, and control the remaining 33 percent of the including, among others, disease risk Novartis leads with 41 percent. market. assessments and relative prices. Beyond cattle health products, Pfizer Killed cattle respiratory vaccines Cattle pasteurella vaccines are used to prevent pneumonia as well as lesser and Fort Dodge are also two of only four prevent respiratory diseases in pregnant major suppliers in the relevant respiratory in cows caused by cattle without the risk of causing companion animal vaccines and Pasteurella multocida and Mannheimia abortion. Pfizer and Fort Dodge account pharmaceuticals markets. In the haemolytica . Pfizer, Fort Dodge, for over 50 percent of all killed majority of these markets, the BI, ISP, and Merial are the only respiratory vaccine sales in the United transaction would reduce the number of significant suppliers of products in States. The most commonly used killed competitors from four to three and give these markets in the United States. The respiratory vaccine is the 5-way vaccine, Pfizer between 50 and 100 percent of proposed acquisition would reduce the which prevents infectious bovine the market. As in the cattle vaccines number of competitors in these markets, rhinotracheitis, types 1 and 2 of bovine area, Pfizer and Fort Dodge have broad leaving Pfizer significantly larger than virus diarrhea, parainfluenza 3, and and significantly overlapping portfolios any of its remaining competitors. bovine respiratory syncytial virus. As a of companion animal vaccines. result of the acquisition, Pfizer would Lactating-cow and dry-cow mastitis Customers can choose the specific have 61 percent of the market for killed treatments are used to treat infections of vaccine products that most closely 5-way respiratory vaccines, leaving the udder that occur during either match their needs based on several Novartis Animal Health (‘‘Novartis’’) as lactation or the dry period between factors, including, among others, Pfizer’s only significant competitor. pregnancies. The markets for lactating- vaccination protocols recommended by Modified-live cattle respiratory cow and dry-cow mastitis treatments are vaccines prevent the same diseases as highly concentrated, with Pfizer and 1 killed respiratory vaccines, but contain To ensure that -contaminated milk is Fort Dodge together accounting for more not distributed, the United States Food and Drug modified-live rather than killed antigens than 90 percent of sales in each of these Administration (‘‘FDA’’) has set ‘‘withholding to stimulate greater protection. Because times’’ for each antibiotic product and mandates markets. modified-live respiratory vaccines that any milk that is produced during the induce stronger immunities, most Broad-spectrum antibiotic products withholding period be discarded. A principal with low milk-withholding times can be consideration for dairy farmers in purchasing customers will use modified-live antibiotics, therefore, is how quickly they can vaccines for non-pregnant cattle. Pfizer used to treat a large variety of infections resume milk production after treatment.

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veterinarians and disease risk chlamydia, and calicivirus. Pfizer, Fort to treat tapeworms and other internal assessments. Dodge, ISP, and Merial are the only parasites, which are the leading cause of Canine combination vaccines prevent significant suppliers of feline equine colic in the United States. common canine diseases, such as those combination vaccines in the United Currently, Pfizer has a 33 percent share caused by canine distemper, adenovirus States. Total U.S. sales of feline of this approximately $22 million (types 1 and 2), parainfluenza, combination vaccines are $28 million. market; Fort Dodge has a 31 percent parvovirus, coronavirus, and Leptospira. The proposed acquisition would reduce market share; and Merial has a 36 Pfizer, Fort Dodge, Merial, and ISP are the number of significant suppliers of percent market share. The proposed the four significant companies that feline combination vaccines from four to acquisition would give Pfizer 64 percent supply canine combination vaccines in three, with Pfizer’s sales considerably of the market for equine tapeworm the United States. Total U.S. sales of greater than those of its two remaining parasiticides, leaving Merial as its only canine combination vaccines are $126 competitors. remaining competitor. million. The proposed acquisition Feline leukemia vaccines can provide Equine herpesvirus vaccines are used would reduce the number of significant effective protection against feline primarily for the prevention of equine suppliers of canine combination leukemia, a fatal disease that breaks rhinopneumonitis, an upper respiratory vaccines from four to three. down a cat’s immune system to such an disease, which can cause abortion in While parvovirus, coronavirus, and extent that it can no longer defend pregnant mares. Pfizer, Fort Dodge, ISP, leptospira vaccines are all available as against otherwise harmless invasions by and BI are the only suppliers of equine part of canine combination vaccines, the bacteria, viruses, or other sources of herpesvirus vaccines in the United monovalent forms are administered as disease. Pfizer, Fort Dodge, Merial, and States, sales of which total $30 million. booster shots for puppies that have a ISP are the only companies that supply The proposed acquisition would reduce particularly high risk of exposure to the feline leukemia vaccines in the United the number of suppliers from four to disease. Pfizer, Fort Dodge, Merial, and States, sales of which are $38 million. three, with Pfizer significantly larger ISP are the only four companies that The proposed acquisition would reduce than its two remaining competitors. supply canine monovalent parvovirus the number of suppliers from four to Equine joint-injected steroids can be vaccines in the United States, a $2.1 three, with Pfizer significantly larger used to reduce joint , treat million market. The proposed than its two remaining competitors. osteoporosis, and prevent lameness in acquisition would give Pfizer control of Companion animal rabies vaccines are horses. Pfizer has a 60 percent share of 66 percent of the canine monovalent used to prevent rabies, a fatal and this $7.3 million market, while Fort parvovirus vaccine market. incurable neurological disease. Pfizer, Dodge has a 40 percent share. The The same four players-Pfizer, Fort Fort Dodge, Merial, and ISP are the only proposed acquisition would create a Dodge, Merial, and ISP-are also the only companies that offer companion animal monopoly in the market for equine four companies that supply canine rabies vaccines in the United States. joint-injected steroids in the United monovalent coronavirus vaccines in the U.S. sales of such vaccines total States. United States. The proposed acquisition approximately $60 million, and the III. Entry would further entrench Pfizer as the proposed acquisition would reduce the dominant supplier with an 81 percent number of suppliers of companion Entry into the manufacture and sale of share of the $2.3 million market for animal rabies vaccines from four to the relevant animal health vaccine and canine monovalent coronavirus three. pharmaceutical markets would not be vaccines. Companion animal cephalosporins timely, likely, or sufficient in its In the market for canine monovalent are a recent generation of broad- magnitude, character, or scope to deter leptospira vaccines, the proposed spectrum antibiotics that are effective or counteract the anticompetitive effects acquisition would combine the only two against both gram-positive and gram- of the proposed acquisition. Developing companies that currently supply such negative organisms and can be used to and obtaining United States Department vaccines in the United States. Pfizer treat a wide range of infections. Pfizer of Agriculture approval (in the case of currently has a 53 percent share, and and Fort Dodge are the only two vaccines) for the manufacture and sale Fort Dodge controls the remaining 47 suppliers of branded companion animal of each of the relevant products can take percent of this $9.2 million market. The cephalosporins in the United States. as many as five years due to substantial proposed acquisition would grant Pfizer The only other companion animal regulatory, technological, and complete control over the market for cephalosporins are generic human and intellectual property barriers. Similarly, canine monovalent leptospira vaccines. animal cephalosporin products. These obtaining FDA approval (in the case of Canine bordetella vaccines are used products, however, have limited pharmaceutical products) can take five primarily to prevent infectious competitive significance because of to seven years for a currently developed tracheobronchitis, which is the most dosing differences found in the generic product and as many as ten or more prevalent upper respiratory human products and a relative lack of years for an entirely new product. contracted by dogs in the United States. technical and research support offered In addition to the regulatory, There are five suppliers of canine with the generic animal products. As a developmental, and manufacturing bordetella vaccines in the United States: result of the proposed acquisition, Pfizer hurdles facing a potential entrant, many Pfizer, Fort Dodge, ISP, Merial, and BI. would have 70 percent of this $52 of the markets at issue are characterized Total U.S. sales of canine bordetella million market. by particular conditions that make new vaccines amount to $53.3 million. The In addition to cattle and companion entry unlikely. For example, some proposed acquisition would reduce the animal products, the proposed products, such as vaccines for cattle, number of suppliers of canine bordetella acquisition also poses competitive equine, and companion animals, are vaccines from five to four, leaving Pfizer concerns in three equine product particularly difficult to manufacture, significantly larger than its three markets: tapeworm parasiticides; have relatively small profit remaining competitors. herpesvirus vaccines; and joint-injected opportunities, and have a high potential Feline combination vaccines are used steroids. The market for equine for adverse reactions and product to prevent common feline diseases, such tapeworm parasiticides containing failure. In other markets, such as those as feline panleukopenia, rhinotracheitis, praziquantel consists of products used for companion animal vaccines, a

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substantial initial investment is The proposed Consent Agreement biologics, to oversee the required necessary because veterinarians tend to contains several provisions designed to technology transfers. As part of the purchase all their vaccines from a single ensure that these divestitures are proposed remedy, Pfizer is required to supplier; as a result, a new entrant must successful. Pfizer must provide various execute an agreement conferring all develop a large portfolio of vaccines in transitional services to enable BI to rights and powers necessary for the order to be a significant competitor. compete against Pfizer immediately Interim Trustee to satisfy his following the acquisition, including any IV. Effects of the Acquisition responsibilities under the Order to technical assistance that BI may need. assure successful divestitures. The The proposed acquisition would Pfizer also must provide BI with the Commission has appointed Dr. Stephen cause significant competitive harm to regulatory approvals, brand names, J.D. Bell of Tunnell Consulting to be the consumers in the relevant U.S. markets marketing materials, customer contracts, Interim Monitor and it is anticipated for cattle, companion animal, and and other assets associated with that he will obtain support and equine health products by eliminating marketing and selling the divested assistance from his colleague, Mr. Arlo actual, direct, and substantial products in the United States. Millen. The monitors will ensure that competition between Pfizer and Wyeth. BI is a reputable supplier of animal the Commission remains informed The transaction would increase the health products and is well positioned about the status of the proposed likelihood that Pfizer will be able to to manufacture and market the divested divestitures and asset transfers. unilaterally exercise market power, assets and to compete effectively in the The purpose of this analysis is to increase the likelihood of coordinated relevant markets. In the United States, facilitate public comment on the interaction between or among suppliers, BI’s animal health revenues totaled proposed Consent Agreement, and it is reduce Pfizer’s incentives to pursue approximately $215 million in 2008. not intended to constitute an official further , and Moreover, the acquisition by BI does not increase the likelihood that consumers present competitive problems in any of interpretation of the proposed Consent will pay higher prices. In each of the the relevant markets because it currently Agreement or to modify its terms in any relevant markets, the evidence shows has either a very limited presence or no way. that consumers have experienced lower presence at all in each of those areas. Statement of the Federal Trade prices, increased research and With its resources, capabilities, and Commission development, and better service due to experience marketing animal and the competitive rivalry that exists human health products, BI is well The Federal Trade Commission has between market participants— placed to replicate the competition that voted to accept a Consent Order in its particularly that which currently exists would be lost with the proposed investigation of Pfizer Inc.’s proposed between Pfizer and Wyeth. The acquisition. acquisition of Wyeth. The Consent evidence also shows that, when any of The proposed Consent Agreement Order remedies the anticompetitive the competitors experienced supply also preserves the existing competition effects that the Commission believes are problems, the remaining competitors in the equine tapeworm parasiticides likely to result from the transaction in increased their prices, and, conversely, market by requiring Pfizer to return to numerous markets for animal health that consumers were able to negotiate Virbac Pfizer’s distribution rights for the products. After a thorough investigation, lower prices when new rivals entered relevant parasiticide products no later the Commission has concluded that the the relevant markets. than ten days after the acquisition. In transaction does not raise 2000, Virbac entered into a 15-year anticompetitive concerns in any human V. The Consent Agreement licensing agreement with Pfizer, under health product markets. We write here The proposed Consent Agreement which Virbac grants Pfizer exclusive to explain our decision, provide greater preserves competition in each of the distribution rights to market and sell the visibility into this important relevant markets alleged in the equine tapeworm parasiticide products investigation, and, in the event that complaint by requiring that Pfizer divest in the United States. Virbac is there are future such transactions, the following assets to BI no later than particularly well suited to acquire these describe the framework that we used in ten days after the acquisition: All of the assets because it currently manufactures our analysis. Fort Dodge assets relating to killed cattle the products and has the resources, The Commission allocated extensive respiratory vaccines, modified-live technical capabilities, and experience to resources to the investigation.2 The cattle respiratory vaccines, cattle be successful in restoring the price, quality, and availability of reproductive vaccines, cattle pasteurella competition that would be lost if the prescription pharmaceutical products vaccines, lactating-cow and dry-cow proposed Pfizer/Wyeth transaction were has a tremendous impact on mastitis treatments, dairy cattle broad- to proceed unremedied. costs, and a significant part of the spectrum antibiotic products with low If the Commission determines that investigation focused on ascertaining milk-withholding times, cattle either BI or Virbac is not an acceptable whether the proposed transaction would macrocyclic lactone parasiticides, cattle acquirer of the assets to be divested, or adversely affect competition in human benzimidazole parasiticides, canine that the manner of the divestitures is not pharmaceutical markets. The combination vaccines, canine acceptable, Pfizer must unwind the Commission is dedicated to promoting monovalent parvovirus vaccines, canine sale(s) and divest the assets within six competition in health care markets to monovalent coronavirus vaccines, months of the date the Order becomes ensure that costs are contained and to canine monovalent leptospira vaccines, final to another Commission-approved canine bordetella vaccines, feline acquirer. If Pfizer fails to divest within 2 During the course of its comprehensive combination vaccines, feline leukemia the six months, the Commission may investigation, Bureau of Competition staff vaccines, companion animal rabies appoint a trustee to divest the relevant conducted nearly 200 interviews, and reviewed vaccines, companion animal assets. hundreds of thousands of documents produced by cephalosporins, and equine joint- The proposed remedy also allows for the parties and third parties. The investigation also involved close cooperation with foreign injected steroids, as well as the Pfizer the appointment of an Interim Trustee, competition authorities, including those from assets relating to equine herpesvirus experienced in obtaining regulatory , , the , , vaccines. approval and the manufacture of New Zealand, and South Africa.

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protect incentives for pharmaceutical First, we assessed whether the merger economic and therapeutic reasons, is companies to develop new . might substantially reduce competition critical. Consequently, the Commission in any relevant human health market in staff dedicated much of its time to I. Background which Pfizer and Wyeth currently investigating the competitive landscape Pfizer is the largest prescription compete. We conclude that it does not. in this market, and how the proposed pharmaceutical company in both the With respect to a small number of transaction would affect it, if at all. United States and the world, with $48.4 diseases or conditions, including renal Pfizer currently markets a product billion in worldwide revenues for 2008. cell carcinoma and MRSA infections, called Aricept, the leading drug on the In addition to manufacturing and selling Pfizer and Wyeth both market market today to treat Alzheimer’s pharmaceutical products, Pfizer also treatments. Evidence gathered in the disease, and has several other products researches and develops new investigation showed that, although to treat Alzheimer’s disease in clinical pharmaceutical products. At the end of Pfizer and Wyeth produce drugs that development. Wyeth currently does not 2008, Pfizer had 114 products in various target the same indications, their offer a product to treat Alzheimer’s stages of clinical development. Based on products are not close substitutes for— disease, but does have several products the evidence gathered during the or indeed competitive with—each other. in development. investigation, Pfizer’s overall market In addition, it appears that in these The explosive growth of the share of pharmaceutical and biotech markets a sufficient number of other Alzheimer’s disease patient population products totals about 9 percent in the competitors will remain after has caused the market for treatments to United States. consummation of the Pfizer/Wyeth attract considerable attention. Besides At the time of the acquisition, Wyeth transaction. Moreover, the products that Pfizer and Wyeth, a significant number was the twelfth-largest prescription these other companies offer are closer of other companies, including both large pharmaceutical company in the United competitors to either the Pfizer or and small pharmaceutical companies States. Wyeth’s worldwide annual Wyeth products than the Pfizer and and companies, have revenue totaled about $22.2 billion in Wyeth products are to each other. products in development for the 2008, $16.8 billion of which was from Accordingly, Pfizer and Wyeth’s treatment of the disease. As of today, pharmaceutical and biological sales. consolidation is unlikely to facilitate the there are approximately 50 companies Like Pfizer, Wyeth also researches, exercise of market power in any of these with at least 66 products in various develops, manufactures, and sells markets. phases of development. Among those Second, we assessed whether the companies are 14 of the largest pharmaceutical products and is also a evidence supported a challenge based pharmaceutical companies in the world, significant participant in the biologic upon a theory that the transaction as well as numerous small- and and vaccine areas of human threatened to eliminate potential future medium-sized pharmaceutical and pharmaceuticals. Wyeth is the fourth competition in any relevant market. We biotechnology firms. While there are largest biotechnology company by conclude that it does not. several different therapeutic approaches revenue in the world and has 18 There are a small number of diseases being pursued for Alzheimer’s disease, biologic products in clinical or conditions for which Pfizer or Wyeth Pfizer and Wyeth overlap in only a development. markets a product where the other small number of these areas. In those Although both Pfizer and Wyeth are company is developing a potentially therapeutic areas where they do overlap, substantial suppliers of human competitive product, or both companies there are several other companies also pharmaceutical products, their are developing products that could developing products. respective product portfolios are highly compete against each other in the Overall, the evidence demonstrates complementary. Staff’s investigation future. Here, we considered not only the that Pfizer and Wyeth’s products are evaluated numerous potential overlaps products that Pfizer and Wyeth are unlikely to be sufficiently close where the companies may compete directly developing, but also products competitors that the elimination of against each other, either now or in the that other companies are developing in competition between them would affect future. In particular, the investigation which Pfizer or Wyeth have a financial the competitiveness of any relevant included significant analysis of four interest. For example, both Pfizer and human health market. Rather, the most markets—treatments for renal cell Wyeth are developing products to treat likely outcome is that they each will carcinoma, Methicillin-resistant osteoporosis. After careful investigation, compete more closely with products (or ‘‘MRSA’’ though, we conclude that the from other companies. infections), osteoporosis, and transaction is not likely to affect Third, we assessed whether a Alzheimer’s disease—to determine competition in this market, based on combined Pfizer/Wyeth would have a whether the transaction would non-public information that Pfizer’s and greater ability to engage in undermine competition in those Wyeth’s products are unlikely to be anticompetitive bundling, block new markets. Beyond these specific overlaps, close competitors. drug development with a merger-created the staff thoroughly investigated We also extensively investigated patent thicket, or adversely impact the whether the transaction could have an Alzheimer’s disease treatments. market for basic research and impact on competition in human Alzheimer’s disease is a progressive and innovation in any human health pharmaceutical markets more broadly, terminal neurodegenerative disorder of markets, but with a particular focus on whether on innovation, the intellectual the brain that is the sixth-leading cause Alzheimer’s disease, the area of most property landscape, clinical of death in the United States, affecting significant overlap. We conclude that development, or marketing. The approximately five million people. The the proposed transaction is unlikely to evidence demonstrates that it will not. number of Americans suffering from affect the market(s) in any of these ways. Alzheimer’s disease is expected to grow As part of its investigation, staff II. Competitive Effects Analysis exponentially, and expenditures on evaluated whether the acquisition Beyond the areas addressed by the drugs to treat Alzheimer’s disease are would change the negotiating power Consent Order, the Commission expected to more than double in the between Pfizer and its customers such analyzed three principal theories of next ten years. The future that consumers would be harmed potential competitive harm. competitiveness of this market, for both because of unlawful tying, bundling, or

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exclusive dealing by Pfizer. Prescription the transaction is not likely to affect DEPARTMENT OF HEALTH AND pharmaceutical customers (e.g., competition in basic research or HUMAN SERVICES insurance companies) set up bid innovation. Within Alzheimer’s disease processes for purchasing specifically, fundamental information Federal Financial Participation in State pharmaceutical products on a product- about the disease, including its cause, Assistance Expenditures; Federal by-product (or category-by-category) how to diagnose it prior to the Matching Shares for , the basis and have generally resisted efforts appearance of symptoms, and when Children’s Health Insurance Program, by large pharmaceutical companies to intervention must occur to modify the and Aid to Needy Aged, Blind, or Disabled Persons for October 1, 2010 bundle products across categories, disease, is still unknown. There is no unless the bundle is in the customer’s through September 30, 2011 scientific consensus about the most best interest. We found no evidence that promising track for the treatment of AGENCY: this acquisition would undermine Office of the Secretary, DHHS. customers’ ability to prevent Alzheimer’s disease. As a result, it is a ACTION: Notice. anticompetitive bundling. As a result, dynamic area of drug development, and SUMMARY: The Federal Medical we conclude that the addition of the the many companies working in this disease area are pursuing many different Assistance Percentages (FMAP) and Wyeth portfolio of products to Pfizer’s Enhanced Federal Medical Assistance portfolio is not likely to enhance the pathways with compounds that can have different effects and risk factors. Percentages (eFMAP) for Fiscal Year merged entity’s ability to engage in 2011 have been calculated pursuant to anticompetitive bundling, especially Although Pfizer and Wyeth are two of the Social Security Act (the Act). These because the combined portfolio would the most active companies pursuing percentages will be effective from contain few blockbuster drugs. research and development activities in Staff also investigated whether the October 1, 2010 through September 30, the Alzheimer’s disease area, it is 2011. This notice announces the acquisition would create a patent unlikely that the combination of the thicket by virtue of the breadth of the calculated FMAP and eFMAP rates that Pfizer and Wyeth’s Alzheimer’s disease combined companies’ patent portfolio. the U.S. Department of Health and pipelines will diminish the incentives A merger-created patent thicket could Human Services (HHS) will use in reduce or eliminate competition in of Pfizer or any other company to determining the amount of Federal human pharmaceutical products by compete in the research and matching for State medical assistance enabling the combined firm to prevent development of Alzheimer’s disease (Medicaid) and Children’s Health other pharmaceutical companies from treatments. Further, the combination of Insurance Program (CHIP) expenditures, developing products through the Pfizer and Wyeth is not likely to affect Temporary Assistance for Needy enforcement of intellectual property the ability of other companies to Families (TANF) Contingency Funds, rights. After evaluating the parties’ continue to develop and ultimately Child Support Enforcement collections, respective patent portfolios in a number introduce new products to treat Child Care Mandatory and Matching of areas where both firms are active, Alzheimer’s disease. Funds of the Child Care and Development Fund, Foster Care Title including, most notably, Alzheimer’s The Commission’s extensive disease, the evidence showed that the IV–E Maintenance payments, and investigation and commitment of Adoption Assistance payments. The combination of the intellectual property resources in this matter reflects its of Pfizer with that of Wyeth would not table gives figures for each of the 50 dedication to ensuring that pose any greater barrier to entry to third- States, the District of Columbia, Puerto pharmaceutical markets are competitive party companies than the intellectual Rico, the Virgin Islands, Guam, property held by the companies and that consumers have access to American Samoa, and the individually. innovative and affordable medications. Commonwealth of the Northern Mariana Finally, staff evaluated whether the Although the Commission, based on the Islands. transaction would decrease basic evidence gathered, determined that this Programs under title XIX of the Act research or the pace of innovation in transaction did not raise anticompetitive exist in each jurisdiction. Programs pharmaceutical markets by eliminating concerns in the markets for human under titles I, X, and XIV operate only a leader in pharmaceutical research and pharmaceuticals, the Commission in Guam and the Virgin Islands, while development; changing the incentives of remains dedicated to ensuring that a program under title XVI (Aid to the companies performing pharmaceutical pharmaceutical markets are competitive. Aged, Blind, or Disabled) operates only research and development; or reducing We will closely monitor these markets in . The percentages in this the number of potential research, and continue to evaluate future notice apply to State expenditures for marketing, or funding partners. transactions under the framework most medical services and medical Pharmaceutical research and explained here to determine their effect insurance services, and assistance development is a dynamic field with on competition in the health care payments for certain social services. The multiple participants including both market, and, where appropriate, take Act provides separately for Federal large and small traditional action to ensure that any merger or matching of administrative costs. Sections 1905(b) and 1101(a)(8)(B) of pharmaceutical companies, specialty acquisition does not undermine the pharmaceutical companies, the Act require the Secretary of HHS to ’s biotechnology companies, and contract publish the FMAP rates each year. The competitiveness. research organizations. The evidence Secretary calculates the percentages, does not indicate that the combination By direction of the Commission, using formulas in sections 1905(b) and raises antitrust concerns in these Commissioner Harbour and Commissioner 1101(a)(8)(B), and calculations by the respects. Kovacic recused. Department of Commerce of average Even within the discrete product Donald S. Clark, income per person in each State and for areas where both Pfizer and Wyeth are Secretary. the Nation as a whole. The percentages actively pursuing research and [FR Doc. E9–28336 Filed 11–25–09; 8:45 am] must fall within the upper and lower development, such as treatments for limits given in section 1905(b) of the Alzheimer’s disease, we conclude that BILLING CODE 6750–01–P Act. The percentages for the District of

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