Kyphon Inc., Disc-O-Tech Medical Technologies Ltd. (Under Voluntary Liquidation), and Discotech Orthopedic Technologies Inc.; Analysis of Agreement Containing Consent Orders to Aid Public Comment, 58665-58668 [E7-20325]
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Federal Register / Vol. 72, No. 199 / Tuesday, October 16, 2007 / Notices
FEDERAL COMMUNICATIONS
COMMISSION
Public Information Collection
Requirement Submitted to OMB for
Review and Approval, Comments
Requested
mmaher on PROD1PC70 with NOTICES
October 10, 2007.
SUMMARY: The Federal Communications
Commission, as part of its continuing
effort to reduce paperwork burden,
invites the general public and other
Federal agencies to take this
opportunity to comment on the
following information collection, as
required by the Paperwork Reduction
Act of 1995, Public Law 104–13. An
agency may not conduct or sponsor a
collection of information unless it
displays a currently valid control
number. No person shall be subject to
any penalty for failing to comply with
a collection of information subject to the
Paperwork Reduction Act (PRA) that
does not display a valid control number.
Comments are requested concerning (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
burden estimate; (c) ways to enhance
the quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on the respondents,
including the use of automated
collection techniques or other forms of
information technology.
DATES: Written Paperwork Reduction
Act (PRA) comments should be
submitted on or before November 15,
2007. If you anticipate that you will be
submitting comments, but find it
difficult to do so within the period of
time allowed by this notice, you should
advise the contacts listed below as soon
as possible.
ADDRESSES: Direct all PRA comments to
Nicholas A. Fraser, Office of
Management and Budget, via Internet at
Nicholas_A._Fraser@omb.eop.gov or via
fax at (202) 395–5167 and to Cathy
Williams, Federal Communications
Commission, Room 1–C823, 445 12th
Street, SW., Washington, DC or via
Internet at Cathy.Williams@fcc.gov or
pra@fcc.gov.
To view a copy of this information
collection request (ICR) submitted to
OMB: (1) Go to the web page https://
www.reginfo.gov/public/do/PRAMain,
(2) look for the section of the web page
called ‘‘Currently Under Review,’’ (3)
click on the downward-pointing arrow
in the ‘‘Select Agency’’ box below the
‘‘Currently Under Review’’ heading, (4)
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select ‘‘Federal Communications
Commission’’ from the list of agencies
presented in the ‘‘Select Agency’’ box,
(5) click the ‘‘Submit’’ button to the
right of the ‘‘Select Agency’’ box, (6)
when the list of FCC ICRs currently
under review appears, look for the title
of this ICR (or its OMB control number,
if there is one) and then click on the ICR
Reference Number to view detailed
information about this ICR.’’
FOR FURTHER INFORMATION CONTACT: For
additional information or copies of the
information collection(s), contact Cathy
Williams at (202) 418–2918.
SUPPLEMENTARY INFORMATION:
OMB Control Number: 3060–1078.
Title: Rules and Regulations
Implementing the Controlling the
Assault of Non-Solicited Pornography
and Marketing Act of 2003, CG Docket
No. 04–53.
Form Number: Not applicable.
Type of Review: Extension of a
currently approved collection.
Respondents: Individuals or
households; business or other for-profit
entities; not-for-profit institutions.
Number of Respondents: 5,443,287.
Estimated Time per Response: 1–10
hours (average per response).
Frequency of Response:
Recordkeeping requirement; On
occasion reporting requirements; third
party disclosure requirement.
Obligation To Respond: Required to
obtain or retain benefits.
Total Annual Burden: 30,254,598
hours.
Total Annual Cost: $13,639,892.
Nature and Extent of Confidentiality:
Confidentiality is an issue to the extent
that individuals and households
provide personally identifiable
information, which is covered under the
FCC’s system of records notice (SORN),
FCC/CGB–1, ‘‘Informal Complaints and
Inquiries.’’
Privacy Act Impact Assessment: Yes.
The Privacy Impact Assessment was
completed on June 28, 2007. It may be
reviewed at: https://www.fcc.gov/omd/
privacyact/
Privacy_Impact_Assessment.html.
Needs and Uses: The reporting
requirements included under this OMB
Control Number 3060–1078 enables the
Commission to collect information
regarding violations of the Controlling
the Assault of Non-Solicited
Pornography and Marketing Act of 2003
(CAN–SPAM Act). This information is
used to help wireless subscribers stop
receiving unwanted commercial mobile
services messages.
On August 12, 2004, the Commission
released an Order, Rules and
Regulations Implementing the
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Controlling the Assault of Non-Solicited
Pornography and Marketing Act of 2003,
CG Docket No. 04–53, FCC 04–194,
adopting rules to prohibit the sending of
commercial messages to any address
referencing an Internet domain name
associated with wireless subscribers’
messaging services, unless the
individual addressee has given the
sender express prior authorization.
The information collection
requirements consist of 47 CFR 64.3100
(a)(4), (d), (e) and (f) of the
Commission’s rules.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. E7–20341 Filed 10–15–07; 8:45 am]
BILLING CODE 6712–01–P
FEDERAL TRADE COMMISSION
[File No. 071 0101]
Kyphon Inc., Disc-O-Tech Medical
Technologies Ltd. (Under Voluntary
Liquidation), and Discotech
Orthopedic Technologies Inc.;
Analysis of Agreement Containing
Consent Orders to Aid Public
Comment
Federal Trade Commission.
Proposed Consent Agreement.
AGENCY:
ACTION:
SUMMARY: The consent agreement in this
matter settles alleged violations of
federal law prohibiting unfair or
deceptive acts or practices or unfair
methods of competition. The attached
Analysis to Aid Public Comment
describes both the allegations in the
draft complaint and the terms of the
consent order—embodied in the consent
agreement—that would settle these
allegations.
Comments must be received on
or before November 8, 2007.
ADDRESSES: Interested parties are
invited to submit written comments.
Comments should refer to ‘‘Kyphon Inc.,
File No. 071 0101,’’ to facilitate the
organization of comments. A comment
filed in paper form should include this
reference both in the text and on the
envelope, and should be mailed or
delivered to the following address:
Federal Trade Commission/Office of the
Secretary, Room 135-H, 600
Pennsylvania Avenue, NW.,
Washington, DC 20580. Comments
containing confidential material must be
filed in paper form, must be clearly
labeled ‘‘Confidential,’’ and must
comply with Commission Rule 4.9(c).
DATES:
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Federal Register / Vol. 72, No. 199 / Tuesday, October 16, 2007 / Notices
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16 CFR 4.9(c) (2005).1 The FTC is
requesting that any comment filed in
paper form be sent by courier or
overnight service, if possible, because
U.S. postal mail in the Washington area
and at the Commission is subject to
delay due to heightened security
precautions. Comments that do not
contain any nonpublic information may
instead be filed in electronic form as
part of or as an attachment to e-mail
messages directed to the following email box: consentagreement@ftc.gov.
The FTC Act and other laws the
Commission administers permit the
collection of public comments to
consider and use in this proceeding as
appropriate. All timely and responsive
public comments, whether filed in
paper or electronic form, will be
considered by the Commission, and will
be available to the public on the FTC
Web site, to the extent practicable,
athttp;//www.ftc.gov. As a matter of
discretion, the FTC makes every effort to
remove home contact information for
individuals from the public comments it
receives before placing those comments
on the FTC Web site. More information,
including routine uses permitted by the
Privacy Act, may be found in the FTC’s
privacy policy, athttps://www.ftc.gov/ftc/
privacy.htm.
FOR FURTHER INFORMATION CONTACT:
Jonathan S. Klarfeld (202) 326-3187,
Bureau of Competition, Room NJ-5108,
600 Pennsylvania Avenue, NW.,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46(f), and § 2.34 of the Commission
Rules of Practice, 16 CFR 2.34, notice is
hereby given that the above-captioned
consent agreement containing a consent
order to cease and desist, having been
filed with and accepted, subject to final
approval, by the Commission, has been
placed on the public record for a period
of thirty (30) days. The following
Analysis to Aid Public Comment
describes the terms of the consent
agreement, and the allegations in the
complaint. An electronic copy of the
full text of the consent agreement
package can be obtained from the FTC
Home Page (for October 9, 2007), on the
World Wide Web, at https://www.ftc.gov/
os/2007/10/index.htm. A paper copy
can be obtained from the FTC Public
1 The comment must be accompanied by an
explicit request for confidential treatment,
including the factual and legal basis for the request,
and must identify the specific portions of the
comment to be withheld from the public record.
The request will be granted or denied by the
Commission’s General Counsel, consistent with
applicable law and the public interest. See
Commission Rule 4.9(c), 16 CFR 4.9(c).
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Reference Room, Room 130-H, 600
Pennsylvania Avenue, NW.,
Washington, DC 20580, either in person
or by calling (202) 326-2222.
Public comments are invited, and may
be filed with the Commission in either
paper or electronic form. All comments
should be filed as prescribed in the
ADDRESSES section above, and must be
received on or before the date specified
in the DATES section.
Analysis of Agreement Containing
Consent Order 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 Kyphon Inc.
(‘‘Kyphon’’) and Disc-O-Tech Medical
Technologies Ltd. (Under Voluntary
Liquidation) and Discotech Orthopedic
Technologies Inc. (collectively ‘‘Disc-OTech’’). The purpose of the proposed
Consent Agreement is to remedy the
anticompetitive effects that would
otherwise result from Kyphon’s
acquisition of Disc-O-Tech’s Confidence
assets. Under the terms of the proposed
Consent Agreement, Kyphon and DiscO-Tech are required to divest all assets
(including intellectual property) related
to Disc-O-Tech’s Confidence business to
a third party, enabling that third party
to manufacture and sell the Confidence
cement and delivery system for the
treatment of vertebral compression
fractures.
The proposed Consent Agreement has
been placed on the public record for
thirty days to solicit comments from
interested persons. Comments received
during this period will become part of
the public record. After thirty days, the
Commission will again review the
proposed Consent Agreement and the
comments received, and will decide
whether it should withdraw the
proposed Consent Agreement or make it
final.
On December 20, 2006, Kyphon
agreed to acquire certain spine-related
assets from Disc-O-Tech, including the
intellectual property, sales agreements,
and other assets relating to Disc-OTech’s B-Twin, SKy Bone Expander,
and Confidence product lines for
approximately $220 million (the
‘‘Acquisition’’). The Commission’s
complaint alleges that the proposed
acquisition of the assets related to the
Confidence system, 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 removing an actual, direct, and
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substantial competitor from the U.S.
market for minimally invasive vertebral
compression fracture (‘‘MIVCF’’)
treatment products. The proposed
Consent Agreement would remedy the
alleged violation by requiring a
divestiture that will replace the
competition that otherwise would be
lost in this market as a result of the
Acquisition.
II. The Parties
Kyphon develops and markets
medical devices used to restore and
preserve spinal function and diagnose
the source of low back pain, including
products used to treat vertebral
compression fractures in a minimally
invasive manner. In 2006, Kyphon
reported worldwide sales of
approximately $408 million, and U.S.
sales of $324 million.
Disc-O-Tech, an Israeli corporation
and its U.S. subsidiary that develops,
manufactures, and sells products for
minimally invasive orthopedic
surgeries, introduced the Confidence
system to the U.S. market in July 2006.
Disc-O-Tech’s global revenues were
approximately $14 million in 2006.
III. Minimally Invasive Vertebral
Compression Fracture Treatments
Vertebral compression fractures
(‘‘VCFs’’) occur when one or more
vertebral bodies collapse. Osteoporosis,
a degenerative bone disease that largely
affects elderly women, causes the vast
majority of VCFs, but they can also be
caused by cancerous tumors or
traumatic injury. For some patients,
VCFs cause extreme, persistent, and
debilitating pain.
Doctors and their patients have few
ways to effectively treat VCFs. In the
past, physicians most commonly treated
VCF patients with a variety of pain
management techniques such as back
braces, bed rest, and pain medication.
For many patients, these techniques do
not control the pain associated with
VCFs and could lead to later health
problems. Open surgery involving the
placement of metal hardware is rarely
performed to repair a VCF because the
patients are typically elderly and not
good candidates for successful
procedures. MIVCF treatments were
developed to provide doctors and their
patients with a VCF treatment that is
more effective than pain management
and safer and more effective than open
surgery.
Vertebroplasty, the first MIVCF
treatment to be introduced, involves the
injection of a fairly liquid
polymethylmethacrylate bone cement
into the fractured vertebral body under
fluoroscopy image guidance. The bone
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cement sets quickly, stabilizing the
fracture and eliminating painful
movement of loose bone in the vertebra.
Vertebroplasty effectively relieves pain,
but many doctors have safety concerns
regarding the risk of the liquid bone
cement leaking out of the vertebral
body.
Kyphoplasty, introduced by Kyphon
in 1999, is similar to vertebroplasty,
except that the physician performs the
additional step of inflating one or two
balloons inside the vertebral body
before injecting the bone cement. The
principal advantage of kyphoplasty is
that the inflation of the balloons creates
a cavity into which the bone cement can
flow, reducing the likelihood that
cement will leak outside of the vertebral
body. Kyphoplasty may have the
additional benefit of helping to restore
the vertebral body towards its prefracture shape and height. Because of its
safety advantage and other perceived
advantages, kyphoplasty is the most
widely used MIVCF treatment product
in the United States.
Because of the superiority of MIVCF
treatment products over alternatives, the
relevant product market in which to
analyze the competitive effects of the
Acquisition is no larger than MIVCF
treatment products. The relevant
geographic market is the United States.
MIVCF treatment products are medical
devices that are regulated by the United
States Food and Drug Administration
(‘‘FDA’’). MIVCF treatment products
sold outside the United States, but not
approved for sale in the United States,
are not viable alternatives for U.S.
consumers and hence are not in the
relevant market.
Kyphon’s premium-priced
kyphoplasty product dominates the
MIVCF treatment product market with
more than a ninety percent share based
on revenues. Disc-O-Tech’s Confidence
system is the first MIVCF treatment
product that uses a highly viscous
cement. Both Kyphon’s product, which
uses balloons, and Disc-O-Tech’s
product, which uses a highly viscous
cement, have substantially lower risks
of leakage from the vertebral body
following injection than do the
‘‘traditional’’ vertebroplasty products
offered by numerous other firms. All of
the latter inject a low viscosity cement.
As a result, Disc-O-Tech’s Confidence
system is poised to become a closer
substitute for Kyphon’s product than are
the traditional vertebroplasty products.
For this reason, traditional
vertebroplasty products will not
constrain the prices for Kyphon’s
product to the same extent that Disc-OTech’s Confidence system would, absent
its acquisition by Kyphon.
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There are other competitors in the
MIVCF treatment product market,
including Medtronic and Spineology,
but none provides the near-term
competitive threat to Kyphon posed by
Disc-O-Tech’s offering. Medtronic has
had limited success selling its Arcuate
XP product to date, and its product
appears to hold limited growth
prospects. Spineology’s MIVCF offering
has been and appears likely to remain
a niche product that competes primarily
for younger VCF patients. Although
several additional firms are attempting
to enter the MIVCF treatment product
market, the time line for
commercialization of these products is
significantly behind that of the
Confidence system, and none appears to
have the Confidence system’s
immediate prospects for success.
IV. Competitive Effects and Entry
Conditions
The Acquisition would cause
significant competitive harm in the
market for MIVCF treatment products.
Confidence is Kyphon’s principal
competitive threat, and, but for the
Acquisition, would make significant
inroads into Kyphon’s near-monopoly
position. Because both products offer a
safe method for treating VCFs, many
physicians consider the Confidence
system to be the best alternative to
kyphoplasty, particularly for elderly
osteoporotic patients who receive the
vast majority of kyphoplasty treatments.
By eliminating such a close competitor,
the Acquisition would likely allow
Kyphon to unilaterally raise prices in
the MIVCF treatment market. The
anticompetitive effects of the
Acquisition are exacerbated by the fact
that it appears to have been undertaken
with the specific goal of precluding
other major spine companies from
acquiring Confidence and marketing it
against kyphoplasty, which would have
happened had Kyphon not acquired
Confidence itself. By enabling Kyphon,
rather than a major spine company, to
control the further development and
positioning of Confidence, Kyphon
would be able to avoid the competition
that it otherwise would have faced in
the MIVCF treatment product market.
As such, the Acquisition, if
consummated, would have a significant,
adverse effect on competition.
New entry is not likely to avert the
anticompetitive effects of the proposed
transaction. It likely would take more
than two years for a would-be entrant to
develop a product, conduct clinical
trials, and submit the product for FDA
approval. After submitting an
application for FDA clearance or
approval, a firm must wait for the FDA
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58667
to review the material and respond to
any questions the FDA may have. In
addition to the development and
regulatory time requirements for firms
seeking to enter the MIVCF treatment
product market, there are substantial
intellectual property barriers an entrant
must overcome. Patent litigation among
competitors in this market is ongoing,
and key patents act as a major obstacle
to any prospective entrant. As such, any
new MIVCF treatment device of any
competitive significance would have to
be designed around existing patents.
Finally, even after a non-infringing
design is developed and the product is
manufactured, a firm would still need to
establish a U.S. sales and marketing
force. Considering all these factors,
entry into the manufacture and sale of
MIVCF treatment products is likely to
take longer than two years. Thus, timely
and sufficient entry in response to a
small but significant price increase is
extremely unlikely.
V. The Proposed Consent Agreement
The parties have agreed, pursuant to
the proposed Consent Agreement, to
divest Disc-O-Tech’s Confidence assets
to a Commission-approved acquirer no
later than 60 days after the Commission
accepts the Consent Agreement for
public comment, effectively remedying
the Acquisition’s anticompetitive effects
in the MIVCF treatment product market.
The Consent Agreement requires that
the parties divest all assets relating to
the Confidence system, including
tangible property, intellectual property,
and any permits and licenses that are
necessary to manufacture, distribute,
and sell the Confidence system. In
addition, the parties must divest the
rights to certain Disc-O-Tech
development efforts related to the
Confidence system. To the extent that
an acquirer of the Confidence assets
requires additional assets not included
in the asset package, the Consent
Agreement requires Kyphon to provide
a license to any other assets it acquired
from Disc-O-Tech, which will ensure
that the acquirer will be able to
immediately enter the MIVCF treatment
product market and remain a viable
competitor.
The proposed Consent Agreement
contains several provisions to help
ensure that the divestiture is successful.
First, the Commission will evaluate
possible purchasers of the divested
assets to ensure that the competitive
environment that would have existed
but for the transaction is restored. If the
parties do not divest the Confidence
assets within the 60-day time period to
a Commission-approved buyer, or if
Kyphon closes on the acquisition of the
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Confidence assets, the Consent
Agreement provides for the Commission
to appoint a trustee to divest the assets.
Second, Disc-O-Tech is required to
provide transitional services to the
Commission-approved buyer. These
transitional services, which are similar
in form to what Disc-O-Tech would
have provided to Kyphon, may be
necessary for a smooth transition of the
Confidence assets to the acquirer and to
ensure continued and uninterrupted
service to customers during the
transition. The Consent Agreement also
requires that Kyphon covenant not to
sue the acquirer of the Confidence assets
for infringing any intellectual property
Kyphon acquired from Disc-O-Tech that
is not being divested. This covenant
covers not only the Confidence assets,
but also extends to any developments an
acquirer might make to the Confidence
assets. This provision is designed as a
safety net to ensure that Kyphon does
not interfere with the acquirer’s freedom
to compete in the U.S. MIVCF treatment
product market with a patent
infringement lawsuit based on former
Disc-O-Tech intellectual property.
Finally, to ensure that the Commission
will have an opportunity to review any
attempt by Kyphon to acquire or license
any of the Confidence assets at any time
within the next two years, the proposed
Consent Agreement contains a prior
notice provision committing Kyphon to
an H-S-R framework, even if such a
transaction otherwise would be nonreportable.
The Order to Hold Separate and
Maintain Assets that is included in the
Consent Agreement requires that DiscO-Tech maintain the viability of the
Confidence business as a competitive
operation until the business is
transferred to a Commission-approved
buyer. Specifically, Disc-O-Tech must
maintain the confidentiality of sensitive
business information, and take all
actions required to prevent the
destruction or wasting of the Confidence
assets. Kyphon may not interfere with
the Confidence business during the
pendency of the divestiture by having
any involvement in the Confidence
business, making offers of employment
to Disc-O-Tech employees involved in
the Confidence business before the
Confidence assets are divested, or
interfering with Disc-O-Tech’s suppliers
of materials for the Confidence product.
The purpose of this analysis is to
facilitate public comment on the
proposed Consent Agreement, and it is
not intended to constitute an official
interpretation of the proposed Decision
and Order or to modify its terms in any
way.
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By direction of the Commission, with
Commissioners Harbour and Kovacic
recused.
Donald S. Clark,
Secretary.
[FR Doc. E7–20325 Filed 10–15–07: 8:45 am]
[Billing Code: 6750–01–S]
facilities. The goals are to provide the
following: (1) Firsthand exposure to
industry’s drug development processes
and (2) a venue for sharing information
about project management procedures
(but not drug-specific information) with
industry representatives.
II. The Site Tours Program
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
Training Program for Regulatory
Project Managers; Information
Available to Industry
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Notice.
SUMMARY: The Food and Drug
Administration (FDA) Center for Drug
Evaluation and Research (CDER) is
announcing the continuation of the
Regulatory Project Management Site
Tours and Regulatory Interaction
Program (the Site Tours Program). The
purpose of this document is to invite
pharmaceutical companies interested in
participating in this program to contact
CDER.
DATES: Pharmaceutical companies may
submit proposed agendas to the agency
by December 17, 2007.
ADDRESSES: Submit written proposed
agendas regarding the Site Tours
Program to Beth Duvall-Miller, Center
for Drug Evaluation and Research, Food
and Drug Administration, 10903 New
Hampshire Ave., Bldg. 22, rm. 6466,
Silver Spring, MD 20993–0002. You can
also reach Beth Duvall-Miller by
telephone at 301–796–0700 or by e-mail
at elizabeth.duvallmiller@fda.hhs.gov.
SUPPLEMENTARY INFORMATION:
III. Site Selection
I. Background
An important part of CDER’s
commitment to make safe and effective
drugs available to all Americans is
optimizing the efficiency and quality of
the drug review process. To support this
primary goal, CDER has initiated
various training and development
programs to promote high performance
in its regulatory project management
staff. CDER seeks to enhance
significantly review efficiency and
review quality by providing the staff
with a better understanding of the
pharmaceutical industry and its
operations. To this end, CDER is
continuing its training program to give
regulatory project managers the
opportunity to tour pharmaceutical
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In this program, over a 2- to 3-day
period, small groups (five or less) of
regulatory project managers, including a
senior level regulatory project manager,
can observe operations of
pharmaceutical manufacturing and/or
packaging facilities, pathology/
toxicology laboratories, and regulatory
affairs operations. Neither this tour nor
any part of the program is intended as
a mechanism to inspect, assess, judge,
or perform a regulatory function, but is
meant rather to improve mutual
understanding and to provide an avenue
for open dialogue. During the Site Tours
Program, regulatory project managers
will also participate in daily workshops
with their industry counterparts,
focusing on selective regulatory issues
important to both CDER staff and
industry. The primary objective of the
daily workshops is to learn about the
team approach to drug development,
including drug discovery, preclinical
evaluation, tracking mechanisms, and
regulatory submission operations. The
overall benefit to regulatory project
managers will be exposure to project
management, team techniques, and
processes employed by the
pharmaceutical industry. By
participating in this program, the
regulatory project manager will grow
professionally by gaining a better
understanding of industry processes and
procedures.
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All travel expenses associated with
the site tours will be the responsibility
of CDER; therefore, selection will be
based on the availability of funds and
resources for each fiscal year. Firms
interested in offering a site tour or
learning more about this training
opportunity should respond by (see
DATES) by submitting a proposed agenda
to Beth Duvall-Miller (see ADDRESSES).
Dated: October 9, 2007.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. E7–20430 Filed 10–15–07; 8:45 am]
BILLING CODE 4160–01–S
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[Federal Register Volume 72, Number 199 (Tuesday, October 16, 2007)]
[Notices]
[Pages 58665-58668]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-20325]
=======================================================================
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FEDERAL TRADE COMMISSION
[File No. 071 0101]
Kyphon Inc., Disc-O-Tech Medical Technologies Ltd. (Under
Voluntary Liquidation), and Discotech Orthopedic Technologies Inc.;
Analysis of Agreement Containing 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 or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before November 8, 2007.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Kyphon Inc., File No. 071 0101,'' to
facilitate the organization of comments. A comment filed in paper form
should include this reference both in the text and on the envelope, and
should be mailed or delivered to the following address: Federal Trade
Commission/Office of the Secretary, Room 135-H, 600 Pennsylvania
Avenue, NW., Washington, DC 20580. Comments containing confidential
material must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with Commission Rule 4.9(c).
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16 CFR 4.9(c) (2005).\1\ The FTC is requesting that any comment filed
in paper form be sent by courier or overnight service, if possible,
because U.S. postal mail in the Washington area and at the Commission
is subject to delay due to heightened security precautions. Comments
that do not contain any nonpublic information may instead be filed in
electronic form as part of or as an attachment to e-mail messages
directed to the following e-mail box: consentagreement@ftc.gov.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, athttp;//www.ftc.gov. As a matter of discretion, the FTC
makes every effort to remove home contact information for individuals
from the public comments it receives before placing those comments on
the FTC Web site. More information, including routine uses permitted by
the Privacy Act, may be found in the FTC's privacy policy, athttps://
www.ftc.gov/ftc/privacy.htm.
FOR FURTHER INFORMATION CONTACT: Jonathan S. Klarfeld (202) 326-3187,
Bureau of Competition, Room NJ-5108, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580.
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\1\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See Commission Rule 4.9(c),
16 CFR 4.9(c).
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 of
the Commission Rules of Practice, 16 CFR 2.34, notice is hereby given
that the above-captioned consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of thirty (30) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for October 9, 2007), on the World Wide Web, at https://www.ftc.gov/os/
2007/10/index.htm. A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington,
DC 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before the date specified in the DATES section.
Analysis of Agreement Containing Consent Order 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 Kyphon Inc. (``Kyphon'') and Disc-O-Tech Medical
Technologies Ltd. (Under Voluntary Liquidation) and Discotech
Orthopedic Technologies Inc. (collectively ``Disc-O-Tech''). The
purpose of the proposed Consent Agreement is to remedy the
anticompetitive effects that would otherwise result from Kyphon's
acquisition of Disc-O-Tech's Confidence assets. Under the terms of the
proposed Consent Agreement, Kyphon and Disc-O-Tech are required to
divest all assets (including intellectual property) related to Disc-O-
Tech's Confidence business to a third party, enabling that third party
to manufacture and sell the Confidence cement and delivery system for
the treatment of vertebral compression fractures.
The proposed Consent Agreement has been placed on the public record
for thirty days to solicit comments from interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will again review the proposed
Consent Agreement and the comments received, and will decide whether it
should withdraw the proposed Consent Agreement or make it final.
On December 20, 2006, Kyphon agreed to acquire certain spine-
related assets from Disc-O-Tech, including the intellectual property,
sales agreements, and other assets relating to Disc-O-Tech's B-Twin,
SKy Bone Expander, and Confidence product lines for approximately $220
million (the ``Acquisition''). The Commission's complaint alleges that
the proposed acquisition of the assets related to the Confidence
system, if consummated, would violate Section 7 of the Clayton Act, as
amended, 15 U.S.C. Sec. 18, and Section 5 of the Federal Trade
Commission Act, as amended, 15 U.S.C. Sec. 45, by removing an actual,
direct, and substantial competitor from the U.S. market for minimally
invasive vertebral compression fracture (``MIVCF'') treatment products.
The proposed Consent Agreement would remedy the alleged violation by
requiring a divestiture that will replace the competition that
otherwise would be lost in this market as a result of the Acquisition.
II. The Parties
Kyphon develops and markets medical devices used to restore and
preserve spinal function and diagnose the source of low back pain,
including products used to treat vertebral compression fractures in a
minimally invasive manner. In 2006, Kyphon reported worldwide sales of
approximately $408 million, and U.S. sales of $324 million.
Disc-O-Tech, an Israeli corporation and its U.S. subsidiary that
develops, manufactures, and sells products for minimally invasive
orthopedic surgeries, introduced the Confidence system to the U.S.
market in July 2006. Disc-O-Tech's global revenues were approximately
$14 million in 2006.
III. Minimally Invasive Vertebral Compression Fracture Treatments
Vertebral compression fractures (``VCFs'') occur when one or more
vertebral bodies collapse. Osteoporosis, a degenerative bone disease
that largely affects elderly women, causes the vast majority of VCFs,
but they can also be caused by cancerous tumors or traumatic injury.
For some patients, VCFs cause extreme, persistent, and debilitating
pain.
Doctors and their patients have few ways to effectively treat VCFs.
In the past, physicians most commonly treated VCF patients with a
variety of pain management techniques such as back braces, bed rest,
and pain medication. For many patients, these techniques do not control
the pain associated with VCFs and could lead to later health problems.
Open surgery involving the placement of metal hardware is rarely
performed to repair a VCF because the patients are typically elderly
and not good candidates for successful procedures. MIVCF treatments
were developed to provide doctors and their patients with a VCF
treatment that is more effective than pain management and safer and
more effective than open surgery.
Vertebroplasty, the first MIVCF treatment to be introduced,
involves the injection of a fairly liquid polymethylmethacrylate bone
cement into the fractured vertebral body under fluoroscopy image
guidance. The bone
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cement sets quickly, stabilizing the fracture and eliminating painful
movement of loose bone in the vertebra. Vertebroplasty effectively
relieves pain, but many doctors have safety concerns regarding the risk
of the liquid bone cement leaking out of the vertebral body.
Kyphoplasty, introduced by Kyphon in 1999, is similar to
vertebroplasty, except that the physician performs the additional step
of inflating one or two balloons inside the vertebral body before
injecting the bone cement. The principal advantage of kyphoplasty is
that the inflation of the balloons creates a cavity into which the bone
cement can flow, reducing the likelihood that cement will leak outside
of the vertebral body. Kyphoplasty may have the additional benefit of
helping to restore the vertebral body towards its pre-fracture shape
and height. Because of its safety advantage and other perceived
advantages, kyphoplasty is the most widely used MIVCF treatment product
in the United States.
Because of the superiority of MIVCF treatment products over
alternatives, the relevant product market in which to analyze the
competitive effects of the Acquisition is no larger than MIVCF
treatment products. The relevant geographic market is the United
States. MIVCF treatment products are medical devices that are regulated
by the United States Food and Drug Administration (``FDA''). MIVCF
treatment products sold outside the United States, but not approved for
sale in the United States, are not viable alternatives for U.S.
consumers and hence are not in the relevant market.
Kyphon's premium-priced kyphoplasty product dominates the MIVCF
treatment product market with more than a ninety percent share based on
revenues. Disc-O-Tech's Confidence system is the first MIVCF treatment
product that uses a highly viscous cement. Both Kyphon's product, which
uses balloons, and Disc-O-Tech's product, which uses a highly viscous
cement, have substantially lower risks of leakage from the vertebral
body following injection than do the ``traditional'' vertebroplasty
products offered by numerous other firms. All of the latter inject a
low viscosity cement. As a result, Disc-O-Tech's Confidence system is
poised to become a closer substitute for Kyphon's product than are the
traditional vertebroplasty products. For this reason, traditional
vertebroplasty products will not constrain the prices for Kyphon's
product to the same extent that Disc-O-Tech's Confidence system would,
absent its acquisition by Kyphon.
There are other competitors in the MIVCF treatment product market,
including Medtronic and Spineology, but none provides the near-term
competitive threat to Kyphon posed by Disc-O-Tech's offering. Medtronic
has had limited success selling its Arcuate XP product to date, and its
product appears to hold limited growth prospects. Spineology's MIVCF
offering has been and appears likely to remain a niche product that
competes primarily for younger VCF patients. Although several
additional firms are attempting to enter the MIVCF treatment product
market, the time line for commercialization of these products is
significantly behind that of the Confidence system, and none appears to
have the Confidence system's immediate prospects for success.
IV. Competitive Effects and Entry Conditions
The Acquisition would cause significant competitive harm in the
market for MIVCF treatment products. Confidence is Kyphon's principal
competitive threat, and, but for the Acquisition, would make
significant inroads into Kyphon's near-monopoly position. Because both
products offer a safe method for treating VCFs, many physicians
consider the Confidence system to be the best alternative to
kyphoplasty, particularly for elderly osteoporotic patients who receive
the vast majority of kyphoplasty treatments. By eliminating such a
close competitor, the Acquisition would likely allow Kyphon to
unilaterally raise prices in the MIVCF treatment market. The
anticompetitive effects of the Acquisition are exacerbated by the fact
that it appears to have been undertaken with the specific goal of
precluding other major spine companies from acquiring Confidence and
marketing it against kyphoplasty, which would have happened had Kyphon
not acquired Confidence itself. By enabling Kyphon, rather than a major
spine company, to control the further development and positioning of
Confidence, Kyphon would be able to avoid the competition that it
otherwise would have faced in the MIVCF treatment product market. As
such, the Acquisition, if consummated, would have a significant,
adverse effect on competition.
New entry is not likely to avert the anticompetitive effects of the
proposed transaction. It likely would take more than two years for a
would-be entrant to develop a product, conduct clinical trials, and
submit the product for FDA approval. After submitting an application
for FDA clearance or approval, a firm must wait for the FDA to review
the material and respond to any questions the FDA may have. In addition
to the development and regulatory time requirements for firms seeking
to enter the MIVCF treatment product market, there are substantial
intellectual property barriers an entrant must overcome. Patent
litigation among competitors in this market is ongoing, and key patents
act as a major obstacle to any prospective entrant. As such, any new
MIVCF treatment device of any competitive significance would have to be
designed around existing patents. Finally, even after a non-infringing
design is developed and the product is manufactured, a firm would still
need to establish a U.S. sales and marketing force. Considering all
these factors, entry into the manufacture and sale of MIVCF treatment
products is likely to take longer than two years. Thus, timely and
sufficient entry in response to a small but significant price increase
is extremely unlikely.
V. The Proposed Consent Agreement
The parties have agreed, pursuant to the proposed Consent
Agreement, to divest Disc-O-Tech's Confidence assets to a Commission-
approved acquirer no later than 60 days after the Commission accepts
the Consent Agreement for public comment, effectively remedying the
Acquisition's anticompetitive effects in the MIVCF treatment product
market. The Consent Agreement requires that the parties divest all
assets relating to the Confidence system, including tangible property,
intellectual property, and any permits and licenses that are necessary
to manufacture, distribute, and sell the Confidence system. In
addition, the parties must divest the rights to certain Disc-O-Tech
development efforts related to the Confidence system. To the extent
that an acquirer of the Confidence assets requires additional assets
not included in the asset package, the Consent Agreement requires
Kyphon to provide a license to any other assets it acquired from Disc-
O-Tech, which will ensure that the acquirer will be able to immediately
enter the MIVCF treatment product market and remain a viable
competitor.
The proposed Consent Agreement contains several provisions to help
ensure that the divestiture is successful. First, the Commission will
evaluate possible purchasers of the divested assets to ensure that the
competitive environment that would have existed but for the transaction
is restored. If the parties do not divest the Confidence assets within
the 60-day time period to a Commission-approved buyer, or if Kyphon
closes on the acquisition of the
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Confidence assets, the Consent Agreement provides for the Commission to
appoint a trustee to divest the assets. Second, Disc-O-Tech is required
to provide transitional services to the Commission-approved buyer.
These transitional services, which are similar in form to what Disc-O-
Tech would have provided to Kyphon, may be necessary for a smooth
transition of the Confidence assets to the acquirer and to ensure
continued and uninterrupted service to customers during the transition.
The Consent Agreement also requires that Kyphon covenant not to sue the
acquirer of the Confidence assets for infringing any intellectual
property Kyphon acquired from Disc-O-Tech that is not being divested.
This covenant covers not only the Confidence assets, but also extends
to any developments an acquirer might make to the Confidence assets.
This provision is designed as a safety net to ensure that Kyphon does
not interfere with the acquirer's freedom to compete in the U.S. MIVCF
treatment product market with a patent infringement lawsuit based on
former Disc-O-Tech intellectual property. Finally, to ensure that the
Commission will have an opportunity to review any attempt by Kyphon to
acquire or license any of the Confidence assets at any time within the
next two years, the proposed Consent Agreement contains a prior notice
provision committing Kyphon to an H-S-R framework, even if such a
transaction otherwise would be non-reportable.
The Order to Hold Separate and Maintain Assets that is included in
the Consent Agreement requires that Disc-O-Tech maintain the viability
of the Confidence business as a competitive operation until the
business is transferred to a Commission-approved buyer. Specifically,
Disc-O-Tech must maintain the confidentiality of sensitive business
information, and take all actions required to prevent the destruction
or wasting of the Confidence assets. Kyphon may not interfere with the
Confidence business during the pendency of the divestiture by having
any involvement in the Confidence business, making offers of employment
to Disc-O-Tech employees involved in the Confidence business before the
Confidence assets are divested, or interfering with Disc-O-Tech's
suppliers of materials for the Confidence product.
The purpose of this analysis is to facilitate public comment on the
proposed Consent Agreement, and it is not intended to constitute an
official interpretation of the proposed Decision and Order or to modify
its terms in any way.
By direction of the Commission, with Commissioners Harbour and
Kovacic recused.
Donald S. Clark,
Secretary.
[FR Doc. E7-20325 Filed 10-15-07: 8:45 am]
[Billing Code: 6750-01-S]
