[Federal Register Volume 80, Number 40 (Monday, March 2, 2015)]
[Notices]
[Pages 11202-11204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-04205]


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FEDERAL TRADE COMMISSION

[File No. 141 0141]


Novartis AG; Analysis of Proposed Consent Orders 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 methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the draft complaint and the terms of the consent 
orders--embodied in the consent agreement--that would settle these 
allegations.

DATES: Comments must be received on or before March 25, 2015.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/novartisgskconsent online or on paper, 
by following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Novartis AG 
GlaxoSmithKline--Consent Agreement; File No. 1410141'' on your comment 
and file your comment online at https://ftcpublic.commentworks.com/ftc/novartisgskconsent by following the instructions on the Web-based form. 
If you prefer to file your comment on paper, write ``Novartis AG

[[Page 11203]]

GlaxoSmithKline--Consent Agreement; File No. 1410141'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Stephanie Bovee, Bureau of 
Competition, (202-326-2083), 600 Pennsylvania Avenue NW., Washington, 
DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent orders 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 February 23, 2015), on the World Wide Web, 
at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before March 25, 2015. 
Write ``Novartis AG GlaxoSmithKline--Consent Agreement; File No. 
1410141'' on your comment. Your comment--including your name and your 
state--will be placed on the public record of this proceeding, 
including, to the extent practicable, on the public Commission Web 
site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of 
discretion, the Commission tries to remove individuals' home contact 
information from comments before placing them on the Commission Web 
site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/novartisgskconsent by following the instructions on the Web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``Novartis AG 
GlaxoSmithKline--Consent Agreement; File No. 1410141'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before March 25, 2015. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Orders To Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Novartis AG (``Novartis''), which is designed to 
remedy the anticompetitive effects of Novartis' proposed acquisition of 
oncology assets from GlaxoSmithKline PLC (``GSK''). The Commission has 
placed the proposed Consent Agreement on the public record for thirty 
days for receipt of comments from interested persons. Comments received 
during this period will become part of the public record. After thirty 
days, the Commission will again evaluate the proposed Consent 
Agreement, along with any comments received, in order to make a final 
decision as to whether it should withdraw from the proposed Consent 
Agreement, modify it, or make final the Decision and Order (``Order'').
    Pursuant to an agreement dated April 22, 2014 (the ``Agreement''), 
Novartis proposes to acquire GSK's marketed oncology products and two 
pipeline oncology compounds for approximately $16 billion (the 
``Transaction''). GSK currently has a BRAF inhibitor and an MEK 
inhibitor approved by the FDA, as well as the only BRAF/MEK combination 
therapy approved for sale in the United States. BRAF and MEK inhibitors 
are medicines that inhibit molecules associated with the development of 
cancer. Novartis has BRAF and MEK inhibitors in late-stage development, 
as well as a BRAF/MEK combination therapy that it expects to launch in 
the near future.
    The Commission alleges in its Complaint that the Transaction, if 
consummated, would violate 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, by substantially lessening competition in U.S. 
markets for BRAF inhibitors and MEK inhibitors. The proposed Consent 
Agreement will remedy the alleged violations by preserving competition 
that the Transaction would otherwise eliminate.

[[Page 11204]]

Under the terms of the Consent Agreement, Novartis is required to 
divest all rights and assets related to LGX818, its BRAF inhibitor, and 
MEK162, its MEK inhibitor, to Array BioPharma Inc. (``Array'').

II. The Relevant Products and Markets

    The relevant markets in which to analyze the Transaction are the 
development and sale of BRAF inhibitors and MEK inhibitors. BRAF and 
MEK inhibitors are orally administered, targeted oncology products. 
Physicians currently use BRAF and MEK inhibitors, increasingly in 
combination, to treat metastatic, late-stage melanoma. Last year in the 
United States, there were approximately 76,100 new cases of melanoma 
and 9,710 deaths caused by melanoma.\2\ In addition to melanoma, 
researchers are studying BRAF and MEK inhibitors as potential 
treatments for a range of cancers, including ovarian cancer, colorectal 
cancer, and non-small cell lung cancer.
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    \2\ U.S. Department of Health and Human Services, National 
Institutes of Health, National Cancer Institute, ``Melanoma,'' 
http://www.cancer.gov/cancertopics/types/melanoma.
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    The United States is the relevant geographic market in which to 
assess the competitive effects of the Transaction because the FDA must 
approve BRAF and MEK inhibitors, as well as the use of the two 
inhibitors in combination, for marketing and sale in the United States. 
Accordingly, products sold outside of the United States, but not 
approved by the FDA, are not alternatives for U.S. consumers.
    The BRAF and MEK inhibitor markets in the United States are highly 
concentrated. Tafinlar[supreg], sold by GSK, and Zelboraf[supreg], sold 
by F. Hoffman-La Roche AG (``Roche''), are currently the only FDA-
approved BRAF inhibitors. Novartis' BRAF inhibitor in development, 
LGX818, is the only other product likely to begin competing with GSK 
and Roche in the near future. GSK's Mekinist[supreg] is currently the 
only FDA-approved MEK inhibitor, while Novartis' MEK162 is one of only 
a small number of MEK inhibitors in late-stage clinical development. 
GSK also sells the only FDA-approved BRAF/MEK combination therapy, 
which is comprised of Tafinlar and Mekinist. Aside from GSK, Roche and 
Novartis are the only companies with BRAF/MEK combinations in late-
stage development.

III. Entry

    Entry into U.S. markets for BRAF inhibitors and MEK inhibitors 
would not be timely, likely, or sufficient in magnitude, character, and 
scope to deter or counteract the anticompetitive effects of the 
Transaction. Like other oncology products, BRAF and MEK inhibitors must 
complete clinical trials and garner approval by the FDA before they can 
enter the U.S. markets. Development of new oncology medicines is 
expensive, time consuming, and has a high rate of failure. The time and 
resources required to develop and market a new oncology medicine make 
it unlikely that de novo entry into the relevant markets would be 
sufficient to offset the anticompetitive effects of the Transaction, 
and no firms currently have products in development that are likely to 
enter and prevent competitive harm from the Transaction.

IV. Effects of the Acquisition

    Without a remedy, the Transaction will eliminate likely future 
competition between GSK and Novartis in the concentrated markets for 
BRAF and MEK inhibitors. Absent the acquisition, Novartis likely would 
have obtained FDA approval for and launched its LGX818 and MEK162 
products in the near future in direct competition with GSK's 
combination offering for treating metastatic melanoma patients. The 
Transaction would also likely reduce the development of BRAF and MEK 
inhibitors to treat other types of cancer, because GSK and Novartis are 
currently developing their respective BRAF and MEK inhibitors for 
several of the same indications beyond melanoma. By eliminating the 
potential head-to-head competition between Novartis and GSK, the 
Transaction will likely result in higher prices for BRAF and MEK 
inhibitors and reduced choice for U.S. health care consumers.

V. The Consent Agreement

    The proposed Consent Agreement effectively remedies the 
Transaction's anticompetitive effects by requiring Novartis to divest 
to Array all of its rights and assets related to LGX818 and MEK162. The 
divestiture will preserve the competition that otherwise would have 
been lost in the markets for BRAF and MEK inhibitors.
    Array is a biopharmaceutical company headquartered in Boulder, 
Colorado, that focuses on the discovery, development, and 
commercialization of oncology medicines. Array is well suited to 
acquire LGX818 and MEK162 because it initially developed MEK162 and is 
currently a partner with Novartis in the development of both products. 
Array is a sophisticated company that possesses both the incentive and 
ability to develop and commercialize LGX818 and MEK162 either 
independently or with a new partner.
    The Order requires Novartis to divest its rights and interests in 
LGX818 and MEK162 to Array no later than ten days after consummation of 
the proposed transaction or on the date that the Order becomes final, 
whichever is earlier. The divestiture includes regulatory approvals, 
intellectual property, assets related to ongoing clinical trials and 
manufacturing processes, and other confidential business information 
related to the divested compounds. To ensure that the divestiture is 
successful, the Order requires Novartis to provide transitional support 
to Array and to manufacture and supply the divested compounds while it 
transfers manufacturing processes to Array.
    The Commission has agreed to appoint an Interim Monitor to ensure 
that Novartis complies with all of its obligations under the Consent 
Agreement and to keep the Commission informed about the status of the 
transfer of rights and assets to Array.
    The Commission's goal in evaluating possible divestiture purchasers 
is to maintain the competitive environment that existed prior to the 
Transaction. If the Commission ultimately determines that Array is not 
an acceptable acquirer, or that the manner of the divestiture is 
unacceptable, then the parties must unwind the sale of rights and 
assets to Array and divest them to a Commission-approved acquirer 
within six months of the date that the Order becomes final. In that 
circumstance, the Commission may appoint a trustee to divest the rights 
and assets if the parties fail to divest them as required.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Agreement; it is not intended to constitute an 
official interpretation of the proposed Order or to modify its terms in 
any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-04205 Filed 2-27-15; 8:45 am]
BILLING CODE 6750-01-P