American Home Products Corp.; Proposed Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 941 0116]

American Home Products Corp.; Proposed Consent Agreement With

Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

require, among other other things, a New Jersey-based corporation to

divest its tetanus and diphtheria vaccine business to a Commission-

approved buyer, to license Cyanamid's rotavirus vaccine research to a

Commission-approved licensee, and to discontinue reporting arrangements

with licensees that may provide competitively sensitive information.

The consent agreement also would prohibit, for ten years, the

respondent from acquiring any interest in any entity engaged in the

clinical development, or manufacture and sale, of tetanus, diphtheria,

or rotavirus vaccines in the United States without prior Commission

approval.

DATES: Comments must be received on or before January 27, 1995.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Claudia Higgins or Ann Malester, FTC/S-2224, Washington, DC 20580.

(202) 326-2682

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the

Commission's rules of practice (16 CFR 2.34), notice is hereby given

that the following consent agreement containing a consent order to

divest, having been filed with and accepted, subject to final approval,

by the Commission, has been placed on the public record for a period of

sixty (60) days. Public comment is invited. Such comments or views will

be considered by the Commission and will be available for inspection

and copying at its principal office in accordance with

Sec. 4.9(b)(b)(ii) of the Commission's rules of practice (16 CFR

4.9(b)(6)(ii)).

Agreement Containing Consent Order

The Federal Trade Commission (``Commission''), having initiated an

investigation of the Acquisition of certain stock of American Cyanamid

Company (``Cyanamid'') by American Home Products Corporation (``AHP''),

and it now appearing that AHP, hereinafter sometimes referred to as

``Proposed Respondent,'' is willing to enter into an Agreement

Containing Consent Order (``Agreement'') to (i) divest certain assets,

(ii) license certain assets, (iii) contract manufacture certain

products, (iv) cease and desist from certain acts, and (v) provide for

certain other relief:

It is hereby agreed By and between Proposed Respondent, by its duly

authorized officers and its attorneys, and counsel for the Commission

that:

1. Proposed Respondent AHP is a corporation organized, existing and

doing business under and by virtue of the laws of the state of

Delaware, with its principal place of business located at Five Giralda

Farms, Madison, New Jersey 07940.

2. Proposed Respondent admits all the jurisdictional facts set

forth in the draft of complaint here attached.

3. Proposed Respondent waives:

(a) Any further procedural steps;

(b) The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this Agreement;

and

(d) Any claims under the Equal Access to Justice Act.

4. This Agreement shall not become part of the public record of the

proceeding unless and until it is accepted by the Commission. If this

Agreement is accepted by the Commission it, together with the draft of

complaint contemplated thereby, will be placed on the public record for

a period of sixty (60) days and information in respect thereto publicly

released. The Commission thereafter may either withdraw its acceptance

of this Agreement and so notify the Proposed Respondent, in which event

it will take such action as it may consider appropriate, or issue and

serve its complaint (in such form as the circumstances may require) and

decision, in disposition of the proceeding.

5. This Agreement is for settlement purposes only and does not

constitute an admission by the Proposed Respondent that the law has

been violated as alleged in the draft of complaint here attached, or

that the facts as alleged in the draft complaint, other than

jurisdictional facts, are true.

6. This Agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

rules, the Commission may, without further notice to Proposed

Respondent, (1) issue its complaint corresponding in form and substance

with the draft of complaint here attached and its decision containing

the following Order to divest and license and to cease and desist in

disposition of the proceeding, and (2) make information public with

respect thereto. When so entered, the Order shall have the same force

and effect and may be altered, modified, or set aside in the same

manner and within the same time provided by statute for other orders.

The Order shall become final upon service. Delivery by the United

States Postal Service of the complaint and decision containing the

agreed-to Order to Proposed Respondent's address as stated in this

Agreement shall constitute service. Proposed Respondent waives any

right it may have to any other manner of service. The complaint may be

used in construing the terms of the Order, and no agreement,

understanding, representation, or interpretation not contained in the

Order or the Agreement may be used to vary or contradict the terms of

the Order.

7. Proposed Respondent has read the proposed Complaint and Order

contemplated hereby. Proposed Respondent understands that once the

Order has been issued, it will be required to file one or more

compliance reports showing it has fully complied with the Order.

Proposed Respondent further understands that it may be liable for civil

penalties in the amount provided by law for each violation of the Order

after it becomes final.

Order

I

Definitions

It is ordered, That, as used in this Order, the following

definitions shall apply:

A. ``AHP'' means American Home Products Corporation, its

predecessors, subsidiaries, divisions, groups and affiliates controlled

by AHP, and their respective directors, officers, employees, agents and

representatives, and their respective successors and assigns.

B. ``Cyanamid'' means American Cyanamid Company.

C. ``Acquirer'' means the entity to whom AHP shall divest AHP's

Tetanus and Diphtheria Vaccine Assets pursuant to Paragraph II of this

Order.

D. ``New Acquirer'' means the entity to whom the trustee shall

divest AHP's Tetanus and Diphtheria Vaccine Assets pursuant to

Paragraph IV of this Order.

E. ``Rotavirus Licensee'' means the entity to whom AHP shall

license Cyanamid's Rotavirus Vaccine Research pursuant to Paragraph V

of this Order.

F. ``Respondent'' means AHP.

G. ``Commission'' means the Federal Trade Commission.

H. ``Acquisition'' means the acquisition by AHP of the common stock

of Cyanamid pursuant to a tender offer commended on August 10, 1994.

I. ``AHP's Tetanus and Diphtheria Vaccine Assets'' means AHP's

assets relating to the manufacture and sale of AHP's Tetanus and

Diphtheria Vaccines that are not part of AHP's physical facilities or

other tangible assets. ``AHP's Tetanus and Diphtheria Vaccine Assets''

include but are not limited to all formulations, patents, trade

secrets, technology, know-how, specifications, designs, drawings,

processes, production information, manufacturing information, testing

and quality control data, research materials, technical information,

distribution information, customer lists, information stored on

management information systems and specifications sufficient for the

Acquirer or the New Acquirer, as applicable, to use such information,

software used solely in connection with AHP's Tetanus and Diphtheria

Vaccines and all data, materials and information relating to United

States Food and Drug Administration (``FDA'') approvals for Tetanus and

Diphtheria Vaccines. ``AHP's Tetanus and Diphtheria Vaccine Assets'' do

not include any manufacturing assets of AHP or any assets acquired by

AHP from American Cyanamid as a result of the Acquisition or AHP's

Vaccine Filling and Packaging Assets.

J. ``AHP's Vaccine Filling and Packaging Assets'' means a non-

exclusive license to all patents, trade secrets, technology and know-

how relating to filling vials, syringes or other forms of filling or

packaging used by AHP for Tetanus and Diphtheria Vaccines at any time

up to and including the date of the Acquisition, including but not

limited to the Tubex filling system. ``AHP's Vaccine Filling

and Packaging Assets'' do not include any manufacturing assets of AHP

or any assets acquired by AHP from American Cyanamid as a result of the

Acquisition.

K. ``Tetanus and Diphtheria Vaccines'' means vaccines used to

create and maintain antitoxin levels in human beings to prevent tetanus

and/or diphtheria, including tetanus toxoid vaccine, tetanus-diphtheria

toxoids vaccine (adult) and diphtheria-tetanus toxoids vaccine

(pediatric), approved by the FDA for sale in the United States.

L. ``Contract Manufacture'' means the manufacture of Tetanus and

Diphtheria Vaccines by AHP for sale to the Acquirer or the New

Acquirer, as applicable, in Finished Packaged Form, in annual volumes

not to exceed: Tetanus Toxoid (fluid) 1,000,000 doses; Tetanus Toxoid

(absorbed) 3,000,000 doses; diphtheria-tetanus toxoids vaccine

(pediatric) 1,000,000 doses; and tetanus-diphtheria toxoids vaccine

(adult) 13,000,000 doses.

M. ``Finished Packaged Form'' means packaged in a form acceptable

for commercial sale in the United States, in each form of packaging, or

substantially similar thereto (including Tubex & prefilled

syringes) as that used by AHP (any time up to and including the date of

the Acquisition) in the distribution and sale of AHP's Tetanus and

Diphtheria Vaccines, with information including but not limited to the

name and identification codes of the Acquirer or the New Acquirer, as

applicable, inscribed on the packaging of the Tetanus and Diphtheria

Vaccines, and packaged in units specified by the Acquirer or the New

Acquirer, as applicable, as permitted by AHP's existing FDA approvals.

N. ``Cost'' means AHP's actual per unit cost of manufacturing AHP's

Tetanus and Diphtheria Vaccines, which may be adjusted once annually to

reflect any increases in AHP's actual cost, provided, however, that for

any year, the total rate of such adjustment with respect to all

components of cost other than material and labor shall not exceed the

rate of increase in the Consumer Price Index for such year.

O. ``Formulation'' means any and all information, including both

patent and trade secret information, technical assistance and advice,

relating to the manufacture of Tetanus and Diphtheria Vaccines that

meet United States Food and Drug Administration approved specifications

therefor.

P. ``Cyanamid's Rotavirus Vaccine Research'' means:

(1) All of the patents and patent applications that Cyanamid holds,

has an option to hold or is licensed to practice under and that are

directed to the development of a vaccine to protect humans against

rotavirus disease;

(2) All of the know-how that Cyanamid received from licensors or

developed itself that is directed to the development of a vaccine to

protect humans against rotavirus disease;

(3) All of the biochemical materials, including, but not limited

to, reagents, cell lines, monoclonal antibodies, bacculovirus stocks

and rotarvirus stocks that are directed to the development of a vaccine

to protect humans against rotavirus disease; and

(4) All documentation, written materials, and other relevant data

that are directed to the development of a vaccine to protect humans

against rotavirus disease;

as of that date of the licensing pursuant to Paragraph V or VI of this

Order, which can be licensed to the Rotavirus Licensee including, but

not limited to, those items enumerated in the Confidential Appendix A

attached to the Confidential version of this Agreement on file at the

Commission.

II

Tetanus and Diphtheria Vaccines Divestiture Provisions

It is further ordered, That:

A. Within four (4) months of the date this Order becomes final, AHP

shall divest, absolutely and in good faith, AHP's Tetanus and

Diphtheria Vaccine Assets and consummate an agreement that includes the

provisions required by Paragraph II.C of this Order, with an Acquirer

or a New Acquirer, as applicable, (hereinafter ``Divestiture

Agreement'').

B. Respondent shall divest AHP's Tetanus and Diphtheria Vaccine

Assets only to and consummate a Divestiture Agreement only with an

Acquirer or New Acquirer, as applicable, that receives the prior

approval of the Commission and only in a manner that receives the prior

approval of the Commission. The purpose of the divestiture of AHP's

Tetanus and Diphtheria Vaccine Assets and the Divestiture Agreement is

to ensure the continuation of AHP Tenanus and Diphtheria Vaccine Assets

as an ongoing, independent operation, engaged in the same business in

which AHP's Tetanus and Diphtheria Vaccine Assets are presently

engaged, and to remedy the lessening of competition resulting from the

proposed Acquisition as alleged in the Commission's Complaint.

C. The Divestiture Agreement shall include the following and AHP

shall commit to satisfy the following:

1. AHP shall Contract Manufacture and deliver to the Acquirer or

the New Acquirer, as applicable, in a timely manner the requirements of

the Acquirer or the New Acquirer, as applicable, for Tetanus and

Diphtheria Vaccines at AHP's Cost for a period not to exceed five (5)

years from the date the Divestiture Agreement (or the New Acquirier's

Divestiture Agreement, as applicable) is approved, or six (6) months

after the date the Acquirer or the New Acquirer, as applicable, obtains

all necessary FDA approvals to manufacture Tetanus and Diphtheria

Vaccines for sale in the United States, whichever is earlier; Provided,

however, That the five (5) year period shall be extended for a period

not to exceed twenty-four (24) months if the trustee submits to the

Commission the certification provided for in Subparagraph II.C.10 of

this Order.

2. AHP shall commence delivery of Tetanus and Diphtheria Vaccines

to the Acquirer or the New Acquirer, as applicable, within two (2)

months from the date the Commission approves the Acquirer and the

Divestiture Agreement (or the New Acquirer and its Divestiture

Agreement).

3. After AHP commences delivery of Tetanus and Diphtheria Vaccine

to the Acquirer or the New Acquirer, as applicable, pursuant to

Subparagraph II.C.2 of this Order, all inventory of Tetanus and

Diphtheria Vaccines produced by AHP at its facility located at

Marietta, Pennsylvania, regardless of the date of its production, may

be sold by AHP only to the Acquirer or the New Acquirer, as applicable.

4. AHP shall make representations and warranties to the Acquirer or

the New Acquirer, as applicable, that the Tetanus and Diphtheria

Vaccines contract manufactured by AHP for the Acquirer or the New

Acquirer, as applicable, meet the United States Food and Drug

Administration approved specifications therefore and are not

adulterated or misbranded within the meaning of the Food, Drug, and

Cosmetic Act, 21 U.S.C. 321, et seq. AHP shall agree to indemnify,

defend and hold the Acquirer or the New Acquirer, as applicable,

harmless from any and all suits, claims, actions, demands, liabilities,

expenses or losses alleged to result from the failure of the Tetanus

and Diphtheria Vaccines contract manufacturer by AHP to meet FDA

specifications. This obligation shall be contingent upon the Acquirer

or the New Acquirer, as applicable, giving AHP prompt, adequate notice

of such claim, cooperating fully in the defense of such claim, and

permitting AHP to assume the sole control of all phases of the defense

and/or settlement of such claim, including the selection of counsel.

This obligation shall not require AHP to be liable for any negligent

act or omission of the Acquirer or the New Acquirer, as applicable, or

for any representations and warranties, express or implied, made by the

Acquirer or the New Acquirer, as applicable, that exceed the

representations and warranties made by AHP to the Acquirer or the New

Acquirer, as applicable.

5. During the term of contract manufacturing, upon reasonable

request by the Acquirer or the New Acquirer, as applicable, AHP shall

make available to the Acquirer or the New Acquirer, as applicable, all

records kept in the normal course of business that relate to the cost

of manufacturing Tetanus and Diphtheria Vaccines at its Marietta,

Pennsylvania facility.

6. Upon reasonable notice and request from the Acquirer or the New

Acquirer, as applicable, AHP shall provide information, technical

assistance and advice sufficient to assist the Acquirer or the New

Acquirer, as applicable, in obtaining all necessary FDA approvals to

manufacturing Tetanus and Diphtheria Vaccines for sale in the United

States. Upon reasonable notice and request from the Acquirer or the New

Acquirer, as applicable, AHP shall also provide consultation with

knowledgeable employees of AHP and training at the Acquirer's facility

or the New Acquirer's facility, as applicable, for a period of time,

not to exceed one (1) year, sufficient to satisfy the Acquirer's

management or the New Acquirer's management, as applicable, that its

personnel are adequately trained in the manufacture of Tetanus and

Diphtheria Vaccines for sale in the United States. Respondent may

require reimbursement from the Acquirer or the New Acquirer, as

applicable, for all its direct out-of-pocket expenses incurred in

providing the services required by this Subparagraph II.C.6.

7. AHP shall offer an option for a non-exclusive license of AHP's

Vaccine Filling and Packaging Assets to the Acquirer or the New

Acquirer, as applicable, which option shall be exercisable within one

(1) year from the date the Commission approves the Divestiture

Agreement and the Acquirer or New Acquirer, as applicable. The license

granted pursuant to this Subparagraph: (a) May prohibit any

sublicensing by the Acquirer or New Acquirer, as applicable, except as

part of a sale of all of the Tetanus and Diphtheria Vaccines assets of

the Acquirer or New Acquirer, as applicable, if such sale occurs after

the Acquirer or the New Acquirer, as applicable, has obtained all

necessary FDA approvals to manufacture tetanus and diphtheria vaccines

for sale in the United States; (b) shall terminate if the Acquirer or

New Acquirer, as applicable, ceases to produce or sell Tetanus and

Diphtheria Vaccines in the United States, unless the license is

transferred to a new entity pursuant to Paragraph II.C.7 (a); and (c)

may prohibit the Acquirer or the New Acquirer, as applicable, from

using AHP's Vaccine Filling and Packaging Assets for any purpose other

than for filling and packaging products manufactured or sold by the

Acquirer or the New Acquirer, as applicable.

8. The Divestiture Agreement shall require the Acquirer or the New

Acquirer, as applicable, to submit to the Commission within sixty (60)

days of the approval by the Commission of the Divestiture Agreement

with the Acquirer or the New Acquirer, as applicable, a certification

attesting to the good faith intention of the Acquirer or the New

Acquirer, as applicable, and including an actual plan by the Acquirer

or the New Acquirer, as applicable, to obtain in an expeditious manner

all necessary FDA approvals to manufacture Tetanus and Diphtheria

Vaccines for sale in the United States.

9. The Divestiture Agreement shall require the Acquirer or the New

Acquirer, as applicable, to submit to the trustee appointed pursuant to

Paragraph III of this order, periodic verified written reports setting

forth in detail the efforts of the Acquirer or the New Acquirer, as

applicable, to sell contract manufactured Tetanus and Diphtheria

Vaccines in the United States and to obtain all FDA approvals necessary

to manufacture its own Tetanus and Diphtheria Vaccines for sale in the

United States. The Divestiture Agreement shall require the first such

report to be submitted 60 days from the date the Divestiture Agreement

is approved by the Commission and every 90 days thereafter until all

necessary FDA approvals are obtained by the Acquirer or the New

Acquirer, as applicable, to manufacture Tetanus and Diptheria Vaccines

for sale in the United States. The Divestiture Agreement shall also

require the Acquirer or the New Acquirer, as applicable, to report to

the Commission and the trustee at least thirty (30) days prior to its

ceasing the sale of contract manufactured Tetanus and Diphtheria

Vaccines in the United States for any time period exceeding sixty (60)

days or abandoning its efforts to obtain all necessary FDA approvals to

manufacture its own Tetanus and Diphtheria Vaccines for sale in the

United States.

10. The Divestiture Agreement shall provide that the Commission may

terminate the Divestiture Agreement if the Acquirer or the New

Acquirer, as applicable: (1) Voluntarily ceases for sixty (60) days or

more the sale of Tetanus and Diphtheria Vaccines in the United States

prior to obtaining all necessary FDA approvals to manufacture Tetanus

and Diphtheria Vaccines for sale in the United States; (2) abandons its

efforts to obtain all necessary FDA approvals to manufacture Tetanus

and Diphtheria Vaccines for sale in the United States; or (3) fails to

obtain all necessary FDA approvals of its own to manufacture Tetanus

and Diphtheria Vaccines for sale in the United States within five (5)

years from the date the Commission approves the Divestiture Agreement

with the Acquirer or the New Acquirer, as applicable; Provided,

however, That the five (5) year period may be extended for a period not

to exceed twenty-four (24) months if the trustees certifies to the

Commission that the Acquirer or the New Acquirer, as applicable, made

good faith efforts to obtain all necessary FDA approvals for

manufacturing Tetanus and Diphtheria Vaccines for sale in the United

States and that such FDA approvals appear likely to be obtained within

such extended time period.

11. The Divestiture Agreement shall provide that, if the

Divestiture Agreement is terminated, the AHP Tetanus and Diphtheria

Vaccine Assets shall be divested by the trustee to a New Acquirer

pursuant to the provisions of Paragraph IV of this Order.

D. While the obligations imposed by Paragraphs II, III or IV of

this Order are in effect, Respondent shall take such actions as are

necessary: (1) To maintain all necessary FDA approvals to manufacture

AHP's Tetanus and Diphtheria Vaccines for sale in the United States;

(2) to maintain the viability and marketability of AHP's Tetanus and

Diphtheria Vaccine Assets as well as all tangible assets, including

manufacturing facilities, needed to contract manufacture and sell

Tetanus and Diphtheria Vaccines; and (3) to prevent the destruction,

removal, wasting, deterioration or impairment of any of AHP's Tetanus

and Diphtheria Vaccine Assets or tangible assets including

manufacturing facilities needed to contract manufacture and sell

Tetanus and Diphtheria Vaccines except for ordinary wear and tear.

III

Tetanus and Diphtheria Vaccines Trustee Auditor Provisions

It is further ordered, That:

A. Within thirty (30) days of the date this Order becomes final,

the Commission shall appoint a trustee to ensure that AHP and the

Acquirer or the New Acquirer, as applicable, expeditiously perform

their respective responsibilities as required by the Divestiture

Agreement approved by the Commission and by Paragraph II of this Order.

AHP shall consent to the following terms and conditions regarding the

trustee's powers, duties, authorities, and responsibilities:

1. The Commission shall select the trustee, subject to the consent

of AHP, which consent shall not be unreasonably withheld. IF AHP has

not opposed, in writing, including the reasons for opposing, the

selection of any proposed trustee within ten (10) days after notice by

the staff of the Commission to AHP of the identity of any proposed

trustee, AHP shall be deemed to have consented to the selection of the

proposed trustee.

2. The trustee shall have the power and authority to assure

Respondent's compliance with the terms of Paragraph II of this Order

and with the Divestiture Agreement with the Acquirer or the New

Acquirer, as applicable.

3. Within ten (10) days after appointment of the trustee, AHP shall

execute a trust agreement that, subject to the prior approval of the

Commission, confers on the trustee all the rights and powers necessary

to permit the trustee to assure Respondent's compliance with the terms

of Paragraph II of this Order and with the Divestiture Agreement with

the Acquirer or the New Acquirer, as applicable.

4. The trustee shall serve until such time as the Acquirer or the

New Acquirer, as applicable, has received all necessary FDA approvals

to manufacture Tetanus and Diphtheria Vaccines for sale in the United

States, or for fifteen years, whichever is shorter.

5. The trustee shall have full and complete access to the

personnel, books, records, facilities and technical information related

to the manufacture of AHP's Tetanus and Diphtheria Vaccines, or to any

other relevant information, as the trustee may reasonably request,

including but not limited to all records kept in the normal course of

business that relate to the cost of manufacturing Tetanus and

Diphtheria Vaccines. Respondent shall cooperate with any reasonable

request of the trustee. Respondent shall take no action to interfere

with or impede the trustee's ability to assure Respondent's compliance

with Paragraph II of this Order and the Divestiture Agreement with the

Acquirer or the New Acquirer, as applicable.

6. The trustee shall serve, without bond or other security, at the

cost and expense of AHP, on such reasonable and customary terms and

conditions as the Commission may set. The trustee shall have authority

to employ, at the cost and expense of AHP, such consultants,

accountants, attorneys and other representatives and assistants as are

reasonably necessary to carry out the trustee's duties and

responsibilities. The trustee shall account for all expenses incurred.

The Commission shall approve the account of the trustee, including fees

for his or her services.

7. Respondent shall indemnify the trustee and hold the trustee

harmless against any losses, claims, damages, liabilities, or expenses

arising out of, or in connection with, the performance of the trustee's

duties, including all reasonable fees of counsel and other expenses

incurred in connection with the preparations for, or defense of any

claim whether or not resulting in any liability, except to the extent

that such liabilities, losses, damages, claims, or expenses result from

the misfeasance, gross negligence, willful or wanton acts, or bad faith

by the trustee.

8. If the trustee ceases to act or fails to act diligently, a

substitute trustee shall be appointed in the same manner as provided in

Paragraph III of this Order.

9. The commission may on its own initiative or at the request of

the trustee issue such additional orders or directions as may be

necessary or appropriate to assure compliance with the requirements of

Paragraph II of this Order and the Divestiture Agreement with the

Acquirer or the New Acquirer, as applicable.

10. The trustee shall evaluate reports submitted to it by the

Acquirer or the New Acquirer, as applicable, with respect to the

efforts of the Acquirer or the New Acquirer, as applicable, to obtain

all necessary FDA approvals to manufacture Tetanus and Diphtheria

Vaccines for sale in the United States and shall report in writing to

the Commission every six months concerning compliance by the Respondent

and the Acquirer or the New Acquirer, as applicable, with the

provisions of Paragraph II of this Order and the efforts of the

Acquirer or the New Acquirer, as applicable, to receive all necessary

FDA approvals to manufacture Tetanus and Diphtheria Vaccines for sale

in the United States.

B. Respondent shall comply with all reasonable directives of the

trustee regarding:

1. Respondent's obligations to contract manufacture and deliver the

Acquirer's requirements or the New Acquirer's requirements, as

applicable, for Tetanus and Diphtheria Vaccines, pursuant to Paragraphs

II.C.1 and II.C.2 of this Order;

2. Respondent's obligations to provide representations and

warranties regarding Tetanus and Diphtheria Vaccines, pursuant to

Paragraph II.C.4 of this Order; and

3. Respondent's obligations to provide information, technical

assistance and advice, pursuant to Paragraph II.C.6 of this Order.

C. If the Commission terminates the Divestiture Agreement pursuant

to Paragraph II.C.10, the Commission may direct the trustee to seek a

New Acquirer, as provided for in Paragraph IV of this Order.

IV

Tetanus and Diphtheria Vaccines Trustee Divestiture Provisions

It is further ordered, That:

A. (1) If AHP fails to divest absolutely and in good faith AHP's

Tetanus and Diphtheria Vaccine Assets and to consummate a Divestiture

Agreement with an Acquirer within four (4) months from the date this

Order becomes final, then any executed Divestiture Agreement with the

Acquirer shall be terminated and the Commission may direct the trustee

appointed pursuant to Paragraph II of this Order (a) to divest AHP's

Tetanus and Diphtheria Vaccine Assets and (b) to enter into a

Divestiture Agreement that satisfies the requirements of Paragraph II

of this Order with a New Acquirer. The trustee shall have the same

authority and responsibilities pursuant to Paragraph III of this Order

with respect to the New Acquirer.

(2) If the Commission terminates the Divestiture Agreement pursuant

to Paragraph II.C.10, the Commission may direct the trustee appointed

under Paragraph III of this Order (a) to divest AHP's Tetanus and

Diphtheria Vaccine Assets to a New Acquirer and (b) to enter into a new

Divestiture Agreement with such New Acquirer. In any case under this

subparagraph IV.A(2), the trustee shall have the same authority and

responsibilities with respect to the New Acquirer as those described in

Paragraph III of this Order.

Neither the decision of the Commission to direct the trustee nor

the decision of the Commission not to direct the trustee to divest

AHP's Tetanus and Diphtheria Vaccine Assets under subparagraph IV.A(1)

of this Paragraph shall preclude the Commission or the Attorney General

from seeking civil penalties or any other relief available to it,

including a court-appointed trustee, pursuant to section 5(l) of the

Federal Trade Commission Act, or any other statute enforced by the

Commission, for any failure by the respondent to comply with this

order.

B. If the trustee is directed under subparagraph A of this

Paragraph to divest the AHP Tetanus and Diphtheria Vaccine Assets to a

New Acquirer and to enter into a Divestiture Agreement with the New

Acquirer, Respondent shall consent to the following terms and

conditions regarding the trustee's powers, duties, authority, and

responsibilities:

1. The Commission shall extend the authority and responsibilities

of the trustee appointed under Paragraph III of this Order to include

divesting AHP's Tetanus and Diphtheria Vaccine Assets and directing AHP

to enter into a Divestiture Agreement with the New Acquirer, subject to

the consent of Respondent, which consent shall not be unreasonably

withheld. If respondent has not opposed, in writing, including the

reasons for opposing, the extension of the authority and

responsibilities of the trustee selected under Paragraph III of this

Order within ten (10) days after notice by the staff of the Commission

to Respondent that the trustee's authority and responsibilities are to

be extended pursuant to this paragraph, respondent shall be deemed to

have consented to the extension of the trustee's authority and

responsibilities.

2. Subject to the prior approval of the Commission, the trustee

shall have the exclusive power and authority to divest AHP's Tetanus

and Diphtheria Vaccine Assets to a New Acquirer pursuant to the terms

of Paragraph II of this Order and to enter into a Divestiture Agreement

with the New Acquirer pursuant to the terms of Paragraph II of this

Order, which Divestiture Agreement shall be subject to the prior

approval of the Commission. The trustee will have the authorities and

responsibilities as described in Paragraph III with respect to the New

Acquirer.

3. Within ten (10) days after extension of the trustee's authority

and responsibilities, respondent shall amend the existing trust

agreement, that, subject to the prior approval of the Commission and,

in the case of a court-appointed trustee, of the court, transfers to

the trustee all rights and powers necessary to permit the trustee to

divest AHP's Tetanus and Diphtheria Vaccine Assets to a New Acquirer

and to enter into a Divestiture Agreement with the New Acquirer.

4. The trustee shall have six (6) months from the date the

Commission extends his or her authority and responsibilities under

Paragraph IV A.(1) of this Order to divest AHP's Tetanus and Diphtheria

Vaccines Assets and to enter into a Divestiture Agreement with the New

Acquirer that satisfies the requirements of Paragraph II of this Order.

5. The trustee shall have full and complete access to the

personnel, books, records and facilities of AHP related to the

manufacture, distribution, or sale of Tetanus and Diphtheria Vaccines

or to any other relevant information, as the trustee may request.

Respondent shall develop such financial or other information as such

trustee may request and shall cooperate with the trustee. Respondent

shall take no action to interfere with or impede the trustee's

accomplishment of his or her responsibilities.

6. The trustee shall use his or her best efforts to negotiate the

most favorable price and terms available in each contract that is

submitted to the Commission, subject to respondent's absolute and

unconditional obligation to divest at no minimum price; to assure that

AHP enters into a Divestiture Agreement that complies with the

provisions of paragraph II.A; to assure that AHP complies with the

remaining provisions of paragraph II of this Order; and to assure that

the New Acquirer obtains all necessary FDA approvals to manufacture

Tetanus and Diphtheria Vaccines for sale in the United States. The

divestiture and the Divestiture Agreement shall be made to the New

Acquirer in the manner set forth in Paragraph II of this Order;

provided, however, if the trustee receives bona fide offers from more

than one acquiring entity, and if the Commission determines to approve

more than one such acquiring entity, the trustee shall divest to the

acquiring entity selected by respondent from among those approved by

the Commission.

7. The trustee shall serve, without bond or other security, at the

cost and expense of respondent, on such reasonable and customary terms

and conditions as the Commission or a court may set. The trustee shall

have the authority to employ, at the cost and expense of respondent,

such consultants, accountants, attorneys, investment bankers, business

brokers, appraisers, and other representatives and assistants as are

necessary to carry out the trustee's duties and responsibilities. The

trustee shall account for all monies derived from the divestiture and

all expenses incurred. After approval by the Commission and, in the

case of a court-appointed trustee, by the court, of the account of the

trustee, including fees for his or her services, all remaining monies

shall be paid at the direction of the respondent. The trustee's

compensation shall be based at least in significant part on a

commission arrangement contingent on the trustee's locating a New

Acquirier and assuring compliance with this Order.

8. Respondent shall indemnify the trustee and hold the trustee

harmless against any losses, claims, damages, liabilities, or expenses

arising out of, or in connection with, the performance of the trustee's

duties, including all reasonable fees of counsel and other expenses

incurred in connection with the preparation for, or defense of any

claim, whether or not resulting in any liability, except to the extent

that such liabilities, losses, damages, claims, or expenses result from

misfeasance, gross negligence, willful or wanton acts, or bad faith by

the trustee.

9. If the trustee ceases to act or fails to act diligently, a

substitute trustee shall be appointed in the same manner as provided in

Paragraph III of this order.

10. The Commission or, in the case of a court-appointed trustee,

the court, may on its own initiative or at the request of the trustee

issue such additional orders or directions as may be necessary or

appropriate to comply with the terms of this Order.

11. The trustee shall have no obligation or authority to operate or

maintain AHP's Tetanus and Diphtheria Vaccine Assets.

12. The trustee shall report in writing to respondent and the

Commission every sixty (60) days concerning his or her efforts to

divest AHP's Tetanus and Diphtheria Vaccine Assets, AHP's compliance

with the terms of this Order, and the New Acquirer's efforts to obtain

all necessary FDA approval to manufacture Tetanus and Diphtheria

Vaccines for sale in the United States.

13. If, within five (5) years from the date on which the Commission

approves the New Acquirer, the New Acquier has not obtained all

necessary FDA approvals to manufacture Tetanus and Diphtheria Vaccines

for sale in the United States, then the Divestiture Agreement between

AHP and the New Acquirer shall terminate.

V

Rotavirus Vaccine Research Licensing Provisions

It is further ordered That:

A. Within twelve (12) months after the date this Order becomes

final, Respondent shall: (1) Grant a non-exclusive license, in

perpetuity, and in good faith, of any technical information and patent

rights included in Cyanamid's Rotavirus Vaccine Research (see

Paragraphs A & C of Confidential Appendix A); and (2) provide samples

for research, adequate to satisfy the needs of the Rotavirus Licensee,

of any physical assets included in Cyanamid's Rotavirus Vaccine

Research (see Paragraph B of Confidential Appendix A) that are owned by

AHP; Provided, however, That such license shall be limited: (i) To use

solely in developing, producing and selling a vaccine to protect humans

against rotavirus disease; and (ii) to preclude its use to develop a

vector for a vaccine intended to protect against a disease other than

rotavirus.

B. Respondent shall license Cyanamid's Rotavirus Vaccine Research

only to a Rotavirus Licensee that receives the prior approval of the

Commission and only in a manner that receives the prior approval of the

Commission. The purpose of the licensing of Cyanamid's Rotavirus

Vaccine Research is to ensure the continuation of Cyanamid's Rotavirus

Vaccine Research as an ongoing research project for a rotavirus vaccine

to be approved by the FDA for sale in the United States and to remedy

the lessening of competition resulting from the Acquisition as alleged

in the Commission's complaint.

C. Upon reasonable notice and request from the Rotavirus Licensee,

Respondent shall provide reasonable assistance to the Rotavirus

Licensee regarding the Cyanamid Rotavirus Vaccine Research. Such

assistance shall include reasonable consultation with knowledgeable

employees of AHP and training at the Rotavirus Licensee's facilities or

at such other place as is mutually satisfactory to Respondent and the

Rotavirus Licensee for a period of time sufficient to satisfy the

Rotavirus Licensee's management that its personnel are appropriately

trained to proceed with the Cyanamid Rotavirus Vaccine Research.

However, AHP shall not be required to continue providing such

assistance for more than six (6) months from the date the licensing is

finally approved by the Commission. AHP may require reimbursement from

the Rotavirus Licensee for all its direct out-of-pocket expenses

incurred in providing the assistance to the Rotavirus Licensee.

D. Pending licensing of Cyanamid's Rotavirus Vaccine Research,

Respondent shall take such actions as are necessary to maintain the

viability and marketability of Cyanamid's Rotavirus Vaccine Research

and to prevent the destruction, removal, wasting, deterioration, or

impairment of Cyanamid's Rotavirus Vaccine Research except for ordinary

wear and tear.

VI

Rotavirus Vaccine Research Trustee Exclusive Licensing Provisions

It is further ordered, That:

A. If AHP has not, within twelve (12) months of the date this Order

becomes final, complied with the requirements of Paragraph V of this

Order, the Commission may appoint a trustee to (1) grant an exclusive

license, in perpetuity, and in good faith, of any technical information

and patent rights included in Cyanamid's Rotavirus Vaccine Research

(see Paragraphs A & C of Confidential Appendix A); and (2) provide

samples for research, adequate to satisfy the needs of the Rotavirus

Licensee, of any physical assets included in Cyanamid's Rotavirus

Vaccine Research (see Paragraph B of Confidential Appendix A) that are

owned by AHP; Provided, however, That: (i) Such exclusive license shall

be limited to use solely in developing, producing and selling a vaccine

to protect humans against rotavirus disease; (ii) such license shall be

limited to preclude its use to develop a vector for a vaccine intended

to protect against a disease other than rotavirus; and (iii) AHP shall

have the right to retain and use all of the Cyanamid Rotavirus Vaccine

Research assets, including samples of the assets in Paragraph B of

Confidential Appendix A, for the purpose of using them to develop a

vector for a vaccine intended to protect against a disease other than

rotavirus and for any other purpose other than developing and producing

a vaccine to protect humans against rotavirus disease. In the event the

Commission or the Attorney General brings an action against Respondent

pursuant to section 5(1) of the Federal Trade Commission Act, 15 U.S.C.

45(1), or any other statute enforced by the Commission, AHP shall

consent to the appointment of a trustee in such action. Neither the

appointment of a trustee nor a decision not to appoint a trustee under

this Paragraph shall preclude the Commission or the Attorney General

from seeking civil penalties or any other relief available to it,

including a court appointed trustee, pursuant to section 5(1) of the

FTC Act, or any other statute enforced by the Commission, for any

failure by Respondent to comply with this order.

B. If a trustee is appointed by the Commission or a court pursuant

to Paragraph VI.A of this Order, AHP shall consent to the following

terms and conditions regarding the trustee's powers, duties,

authorities, and responsibilities.

1. The Commission shall select the trustee, subject to the consent

of AHP, which consent shall not be unreasonably withheld. The trustee

shall be a person with experience and expertise in licensing

technology. If AHP has not opposed, in writing, including the reasons

for opposing, the selection of any proposed trustee within ten (10)

days after notice by the staff of the Commission to AHP of the identity

of any proposed trustee, AHP shall be deemed to have consented to the

selection of the proposed trustee.

2. Subject to the prior approval of the Commission, the trustee

shall have the exclusive power and authority to grant an exclusive

license of Cyanamid's Rotavirus Vaccine Research as described in

Paragraph VI.A. (``the Rotavirus Exclusive License'').

3. Within ten (10) days after appointment of the trustee, AHP shall

execute a trust agreement that, subject to the prior approval of the

Commission and, in the case of a court-appointed trustee, of the court,

transfers to the trustee all rights and powers necessary to permit the

trustee to enter into the Rotavirus Exclusive License as required by

this Order.

4. The trustee shall have twelve (12) months from the date the

Commission approves the trust agreement described in Paragraph VI.C.3

to accomplish the Rotavirus Exclusive License required by Paragraph VI

of this Order, which shall be subject to the prior approval of the

Commission. If, however, at the end of the twelve (12) month period,

the trustee has submitted a plan of licensing or believes that

exclusive licensing can be achieved within a reasonable time, the

twelve (12) month period may be extended by the Commission or, in the

case of a court-appointed trustee, by the court; provided, however, the

Commission may extend the twelve (12) month period only two (2) times.

5. The trustee shall have full and complete access to the

personnel, books, records, data, facilities, and technical information

related to the Rotavirus Vaccine Research, or to any other relevant

information, as the trustee may reasonably request. Respondent shall

develop such financial or other information as such trustee may request

and shall cooperate with the trustee. Respondent shall take no action

to interfere with or impede the trustee's ability to accomplish the

exclusive licensing of Cyanamid's Rotavirus Vaccine Research required

by this Order. Any delays in exclusively licensing Cyanamid's Rotavirus

Vaccine Research required by this Order caused by Respondent shall

extend the time under Paragraph VI.C.4 for accomplishing the exclusive

licensing of Cyanamid's Rotavirus Vaccine Research required by this

Order in an amount equal to the delay, as determined by the Commission

or, for the court-appointed trustee, by the court.

6. The trustee shall use his or her best efforts to negotiate the

most favorable price and terms available in each contract that is

submitted to the Commission, subject to AHP's absolute and

unconditional obligation to grant an exclusive license to Cyanamid's

Rotavirus Vaccine Research as required by this Order at no minimum

price. The exclusive license shall be made in the manner and to the

Rotavirus Licensee as set out in this Order; provided, however, if the

trustee receives bona fide offers from more than one acquiring entity,

and if the Commission determines to approve more than one such

acquiring entity, the trustee shall grant an exclusive license to the

acquiring entity selected by Respondent from among those approved by

the Commission.

7. The trustee shall serve, without bond or other security, at the

cost and expense of AHP, on such reasonable and customary terms and

conditions as the Commission or a court may set. The trustee shall have

authority to employ, at the cost and expense of AHP, such consultants,

accountants, attorneys, investment bankers, business brokers,

appraisers and other representatives and assistants as are necessary to

carry out the trustee's duties and responsibilities. After approval by

the Commission and, in the case of a court-appointed trustee, by the

court, of the account of the trustee, including fees for his or her

services, all remaining monies shall be paid at the direction of AHP

and the trustee's power shall be terminated. The trustee's compensation

shall be based at least in significant part on a commission arrangement

contingent on the trustee's ability to grant an exclusive license of

Cyanamid's Rotavirus Vaccine Research.

8. Respondent shall indemnify the trustee and hold the trustee

harmless against any losses, claims, damages, liabilities, or expenses

arising out of, or in connection with, the performance of the trustee's

duties, including all reasonable fees of counsel and other expenses

incurred in connection with the preparations for, or defense of any

claim whether or not resulting in any liability, except to the extent

that such liabilities, losses, damages, claims, or expenses result from

the misfeasance, gross negligence, willful or wanton acts, or bad faith

by the trustee.

9. If the trustee ceases to act or fails to act diligently, a

substitute trustee shall be appointed in the same manner as provided in

Paragraph VI.A. of this Order.

10. The Commission or, in the case of a court-appointed trustee,

the court, may on its own initiative or at the request of the trustee

issue such additional orders or directions as may be necessary or

appropriate to enter into the Rotavirus Exclusive License required by

this Order.

11. The trustee shall have no obligation or authority to operate or

maintain the Cyanamid Rotavirus Vaccine Research.

12. The trustee shall report in writing to AHP and to the

Commission every sixty (60) days concerning the trustee's efforts to

grant an exclusive license of Cyanamid's Rotavirus Vaccine Research as

required by this Order.

VII

GM-CSF and IL-3 Royalties

It is further ordered, That:

A. Within thirty (30) days of the date on which the FDA approves

any product that includes in whole or in part GM-CSF, as identified in

the October 9, 1987 Technology Transfer and GM-CSF Supply Agreement

between AHP and Sandoz, Ltd. (``GM-CSF Agreement''), AHP shall take

such action as may be necessary to ensure that the royalty payments

made pursuant to Section 10.2(b) of the GM-CSF Agreement and any

reports of such payments are made on a worldwide aggregated basis.

B. Within thirty (30) days of the date on which the FDA has

approved both (1) any product that includes in whole or in part IL-3,

as identified in the August 17, 1987 License Agreement for IL-3 between

AHP and Sandoz, Ltd. (``IL-3 Agreement''); and (2) any product that

includes in whole or in part Pixy321, also identified as rhIL-3/rhGM-

CSF S. cerevisiae fusion protein, AHP shall take such action as may be

necessary to ensure that the royalty payments made pursuant to Section

3.2 of the IL-3 Agreement and any reports of such payments are made on

a worldwide aggregated basis.

VIII

Prior Approval

It is further ordered, That, for a period of ten (10) years from

the date this Order becomes final or until Respondent satisfies the

requirements of Paragraphs II, III or IV, whichever is later,

Respondent shall not without the prior approval of the Commission,

directly or indirectly, through subsidiaries, partnerships, or

otherwise:

A. Acquire more than 1% of the stock, share capital, equity, or

other interest in any concern, corporate or non-corporate, presently

engaged in, or within the two years preceding such acquisition engaged

in, the (1) clinical development or (2) manufacture and sale of tetanus

or diphtheria vaccines in the United States;

B. Acquire any assets currently used for or previously used for

(and still suitable for use for) the (1) clinical development or (2)

manufacture and sale of tetanus or diphtheria vaccines in the United

States;

C. Acquire more than 1% of the stock, share capital, equity, or

other interest in any concern, corporate or noncorporate, presently

engaged in, or within the two years preceding such acquisition engaged

in, the (1) clinical development or (2) manufacture and sale in the

United States of a vaccine to protect humans against rotavirus disease;

or

D. Acquire any assets currently used for or previously used for

(and still suitable for use for) the (1) clinical development or (2)

manufacture and sale in the United States of a vaccine to protect

humans against rotavirus disease.

IX.

Reports

It is further ordered, That:

A. Within sixty (60) days after the date this Order becomes final

and every six (6) months after the date this Order becomes final until

AHP has fully complied with the provisions of Paragraphs II, IV, V and

VI of this Order, AHP shall submit to the Commission a verified written

report setting forth in detail the manner and form in which it intends

to comply, is complying, and has complied with these Paragraphs of this

Order. AHP shall include in its compliance reports, among other things

that are required from time to time, a full description of the efforts

being made to comply with these Paragraphs of this Order, including a

description of all substantive contacts or negotiations for

accomplishing the divestitures and entering into the Divestiture

Agreement required by this Order, including the identity of all parties

contacted. AHP shall include in its compliance reports copies of all

written communications to and from such parties, all internal

memoranda, and all reports and recommendations concerning the

Divestiture Agreement required by Paragraph II of this Order.

B. One (1) year from the date this Order becomes final and annually

for the next nine (9) years on the anniversary of the date this Order

becomes final or until the Acquirer or New Acquirer, as applicable, has

obtained all necessary FDA approvals to manufacture Tetanus and

Diphtheria Vaccines for sale in the United States, whichever is later,

and at such other times as the Commission may require, Respondent shall

file a verified written report with the Commission setting forth in

detail the manner and form in which it has complied and is complying

with this Order.

X.

Access

It is further ordered, That, for the purpose of determining or

securing compliance with this Order, and subject to any legally

recognized privilege, upon written request and on reasonable notice to

Respondent, Respondent shall permit any duly authorized representatives

of the Commission:

A. Access, during office hours and in the presence of counsel, to

inspect and copy all books, ledgers, accounts, correspondence,

memoranda and other records and documents in the possession or under

the control of Respondent, relating to any matters contained in this

consent order; and

B. Upon five (5) days' notice to Respondent, and without restraint

or interference from Respondent, to interview officers or employees of

Respondent, who may have counsel present, regarding such matters.

XI.

Corporate Change

It is further ordered, That Respondent shall notify the Commission

at least thirty (30) days prior to any change in Respondent such as

dissolution, assignment or sale resulting in the emergence of a

successor, the creation or dissolution of subsidiaries or any other

change that may affect compliance obligations arising out of the Order.

XII.

Sunset

It is further ordered, That, notwithstanding any other provision of

this Order, this Order shall terminate twenty years from the date this

Order becomes final.

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission (``Commission'') has accepted subject

to final approval an agreement containing a proposed Consent Order from

American Home Products Corporation (``AHP'') which requires AHP to

divest its tetanus and diphtheria vaccines business to a Commission-

approved purchaser. Further, AHP would be required to license American

Cyanamid Company's (``Cyanamid'') rotavirus vaccine research and to

aggregate royalty payment information relating to sales of particular

cytokines used for white blood cell and platelet restoration once FDA

approval is obtained for these products.

The proposed Consent Order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement or make final the agreement's proposed

Order.

Pursuant to an August 17, 1994, Agreement and Plan of Merger, AHP

will acquire all of Cyanamid's voting stock. The proposed complaint

alleges that the proposed acquisition would violate 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 following five markets in the United

States:

(1) Combined tetanus and diphtheria vaccines approved for use for

adults and children at least seven years old, known as ``adult Td'';

(2) Combined diphtheria and tetanus vaccines for children between

the ages of two months and seven years old, known as ``pediatric DT'';

(3) Uncombined tetanus vaccines, known as ``tetanus toxoid'';

(4) Rotavirus vaccine research and development; and

(5) Cytokine research, development, and production.

The proposed Consent Order would remedy the alleged violation in

each of these markets. In the area of tetanus and diphtheria vaccines,

AHP would be required to divest, within four months, its tetanus and

diphtheria vaccines business to a Commission approved purchaser.

Because that purchaser will need to obtain FDA approval before it can

begin selling tetanus and diphtheria vaccines, the proposed Consent

Order also requires AHP to manufacture these vaccines for the approved

purchaser for a period of five years or until the purchaser gains FDA

approvals to manufacture its own tetanus and diphtheria vaccines. AHP

will be required to sell tetanus and diphtheria vaccines to the

purchaser at cost, with annual adjustments (exclusive of materials and

labor) indexed to the Consumer Price Index. In addition, under the

proposed Consent Order, AHP is required to provide technical assistance

and advice to assist the purchaser in obtaining FDA approval to

manufacture and sell tetanus and diphtheria vaccines. The proposed

Order also provides for a trustee to assure that AHP appropriately

divests its tetanus and diphtheria vaccines business. If AHP fails to

divest its tetanus and diphtheria business within four months, or if

the acquirer abandons its effort to obtain FDA approval to manufacture

and sell tetanus and diphtheria vaccines, then the trustee may be

directed to find another acquirer.

The proposed Consent Order also requires AHP to license, within one

year, on a nonexclusive basis, the Cyanamid rotavirus vaccine research

assets to a Commission-approved licensee. If AHP fails to find an

approved licensee within one year, then the Commission may appoint a

trustee to license the Cyanamid rotavirus vaccine research assets on an

exclusive basis to an approved licensee. AHP is also required under the

proposed Order to provide technical advice, assistance and training to

enable the licensee to continue the Cyanamid rotavirus research as an

ongoing project.

The proposed Consent Order prohibits AHP from receiving information

relating to the market for cytokines for white blood cell and platelet

restoration, unless the information is aggregated on a worldwide basis.

This provision of the proposed Consent Order does not become operative

until the FDA approves AHP's products in this area.

The proposed Consent Order will also prohibit AHP, for a period of

ten (10) years, from acquiring any interest in any entity engaged in

the clinical development, or manufacture and sale of tetanus,

diphtheria or rotavirus vaccines in the United States without prior

approval from the Commission. The proposed Order will also require AHP

to provide to the Commission a report of its compliance with the

provisions of the Order within sixty (60) days following the date this

Order becomes final, and every six (6) months thereafter until the

Commission has approved a purchaser and licensee.

One year from the date the Order becomes final and annually

thereafter for nine (9) years, AHP will be required to provide to the

Commission a report of its compliance with the Consent Order. The

Consent Order also requires AHP to notify the Commission at least

thirty (30) days prior to any change in the structure of AHP resulting

in the emergence of a successor. A sunset provision is also included

which terminates the order after 20 years.

The purpose of this analysis is to facilitate public comment on the

proposed Order, and it is not intended to constitute an official

interpretation of the agreement and proposed Order or to modify in any

way their terms.

Donald S. Clark,

Secretary.

Concurring Statement of Commissioner Mary L. Azcuenaga

In American Home Products Corp., File No. 941-0116

Today, the Commission accepts for public comment a consent

agreement settling charges that American Home Products' proposed

acquisition of American Cyanamid Company is likely substantially to

lessen competition in the markets for three existing diphtheria and

tetanus vaccines and substantially to lessen competition to develop

a new rotavirus vaccine and to develop and produce cytokines. This

appears to be a strong antitrust case, but I seriously question

whether the remedy is sufficient.

Under the order, the divestiture of tetanus and diphtheria

vaccine assets is limited to certain intellectual property,

including formulations, patents, trade secrets, technology, and

know-how. The divestiture is structured so that, as a practical

matter, the only firms that could acquire the assets in question are

firms that in my opinion already would satisfy the tests under the

law for potential entrants. In short, the order will not restore the

competition lost as a result of the acquisition. Instead, the

Commission should require the divestiture of a viable business unit,

even if that business unit produces and sells products other than

the vaccines in question.

[FR Doc. 94-29181 Filed 11-25-94; 8:45 am]

BILLING CODE 6750-01-M