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US Federal Trade Commission files a lawsuit to block Amgen’s acquisition of Horizon Therapeutics
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The lawsuit states the $27.8 billion acquisition would allow Amgen to strengthen their drug portfolio and stifle drug competition in a bid to monopolize two fast-growing medications.
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The US Federal Trade Commission has filed a lawsuit to block Amgen’s $27.8 billion acquisition of Horizon Therapeutics.
In a press release from the FTC1, the organization claims the deal would allow Amgen to “would allow Amgen to leverage its portfolio of blockbuster drugs to entrench the monopoly positions of Horizon medications used to treat two serious conditions, thyroid eye disease and chronic refractory gout.”
The FTC also claims that the deal would “enable Amgen to use rebates on its existing blockbuster drugs to pressure insurance companies and pharmacy benefit managers (PBMs) into favoring Horizon’s two monopoly products.”
The two drugs mentioned are Tepezza, used to treat thyroid eye disease, and Krystexxa, used to treat chronic refractory gout.
“Rampant consolidation in the pharmaceutical industry has given powerful companies a pass to exorbitantly hike prescription drug prices, deny patients access to more affordable generics, and hamstring innovation in life-saving markets,” said FTC Bureau of Competition Director Holly Vedova in the release. “Today’s action --- the FTC’s first challenge to a pharmaceutical merger in recent memory --- sends a clear signal to the market: The FTC won't hesitate to challenge mergers that enable pharmaceutical conglomerates to entrench their monopolies at the expense of consumers and fair competition.”
According to the FTC, “Amgen has engaged in cross-market bundling, which involves conditioning rebates (or offering incremental rebates) on products such as Enbrel in exchange for giving Amgen drugs preferred placement on the insurers’ and PBMs’ lists of covered medications in different product markets.”
Furthermore, the value of the rebates that Amgen can offer on its high-volume drugs as part of its cross-market bundles may make it difficult, if not impossible, for smaller rivals who are developing drugs to compete against Tepezza and Krystexxa to match the level of rebates that Amgen would be able to offer, according to the release from the FTC.
The FTC cites that Amgen is one of the largest biopharmaceutical companies in the world, with global sales close to $25 billion and a product portfolio of 27 approved drugs. The FTC claims that Amgen has built its pharmaceutical portfolio “for years through acquisitions, thereby increasing its leverage with the insurers and PBMs that negotiate reimbursement for its products.”
The FTC also says that in securities filings, Horizon has boasted that its Tepezza “has no direct approved competition,” and that Krystexxa “faces limited direct competition.” Because of this, The FTC claims, Horizon charges “extremely high prices” for those medications – claiming the price to be approximately $350,000 for a six-month course of treatment of Tepezza and approximately $650,000 for an annual supply of Krystexxa.
In a separate press release2, Amgen expressed disappointment in the FTC’s decision to file a lawsuit to block the deal.
"Amgen is disappointed by the FTC's decision and remains committed to completing this acquisition, which will bring significant benefits to patients suffering from very serious rare diseases in the US and around the world, said the company in their release. We have been working cooperatively over the past several months to address the questions raised by the FTC's investigative staff and believe we have overwhelmingly demonstrated that this combination poses no legitimate competitive issues.”
Amgen refuted the claim from the FTC that the company might "bundle" the medicines, or “offer a multi-product discount” at some point in the future, stating it was “entirely speculative” does not reflect “real-world competitive dynamics behind providing rare-disease medicines to patients.”
After filing the suit, Amgen has agreed to not quickly close on the $27.8 billion acquisition of Horizon.
A US district court judge issued a temporary restraining order late on Wednesday after the two companies and the FTC reached an agreement that both sides said in a joint filing would “permit a full briefing and less-compressed consideration by the court of the FTC request.”
According to Reuters, absent an agreement, Amgen could have sought to close the deal as early as May 22, 2023.
Under the order, Amgen and Horizon will not close their transaction until the earlier of Sept. 15, or the second business day after the court rules on the FTC's request for a preliminary injunction.
Amgen stated in its release it would work with the court in a bid to complete the transaction by mid-December.
References:
FTC sues to block biopharmaceutical giant amgen from acquisition that would entrench monopoly drugs used to treat two serious illnesses. Press release. Federal Trade Commission; May 16, 2023. Accessed May 18, 2023. https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-sues-block-biopharmaceutical-giant-amgen-acquisition-would-entrench-monopoly-drugs-used-treat
Amgen responds to FTC action RE: proposed acquisition of horizon therapeutics. Press release. Amgen; May 16, 2023. Accessed May 18, 2023. https://www.amgen.com/newsroom/press-releases/2023/05/amgen-responds-to-ftc-action-re-proposed-acquisition-of-horizon-therapeutics
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