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Cephalon Inc. and the Federal Trade Commission have finally resolved their dispute over the company’s $515 million acquisition of Cima Laboratories Inc., clearing the way for the deal to close. Three FTC commissioners voted Monday to drop antitrust objections to the merger after Cephalon pledged to license its cancer pain drug Actiq to generic drug maker Barr Laboratories Inc. The agreement means Cephalon will be able to add Cima’s advanced cancer drug OraVescent fentanyl to its product line as soon as the medication secures Food and Drug Administration approval. FTC Commissioner Mozelle Thompson dissented from the agency’s decision, writing in a separate statement that the antitrust remedy will not restore competition lost from the merger. He said the commission should have challenged the merger in court. Commissioner Pamela Harbour recused herself from the case. Investors have said licensing Actiq is a small price to pay for Cima, whose OraVescent fentanyl patent runs through 2019. Actiq’s patent expires in 2006. “Cima is clearly poised to become Cephalon’s major competitor in this market in the next few years, and this order ensures that the competition that would have been created by Cima’s product will not be lost,” FTC competition bureau director Susan Creighton said. West Chester, Pa.-based Cephalon agreed Nov. 3 to acquire Eden Prairie, Minn.-based Cima for $34 per share in cash. The offer led Cima to abort an August 2003 merger with aaiPharma Inc. Cima shareholders approved the Cephalon deal in June. The companies announced in June that they had reached a tentative deal with the FTC staff to resolve the antitrust objections to the merger. Cephalon declined to provide details of the settlement at that time. Much of the debate with the FTC staff focused on how Cephalon’s licensing of Actiq would work and when the company would have to issue such a license. This was complicated because Cephalon did not want to license the drug until it was certain that OraVescent fentanyl would win FDA approval. Yet the FTC needed enough certainty in the licensing commitment for a generic drug company to justify investing in the manufacturing and marketing of the pain medication. The settlement requires Cephalon to license Actiq to Barr once the FDA approves OraVescent fentanyl. If that approval is delayed, Cephalon must still issue the license by February 2007. It also must agree to supply the drug to Barr if the company cannot get FDA approval for its manufacturing process quickly enough. The FTC said this ensures generic entry at least a year earlier than would otherwise have been possible. In a separate “Statement of the Commission,” the agency said the Cephalon-Cima case is novel because the companies are unlikely to develop new types of fentanyl-based painkillers and Actiq is nearly off patent. By expediting development of generic Actiq, consumers will benefit more than if the companies remained separate, the FTC said. Copyright �2004 TDD, LLC. All rights reserved.

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