FTC Sues Over Amgen’s $28 Billion Horizon Therapeutics Deal

(Bloomberg) -- The Federal Trade Commission sued to block Amgen Inc.’s $27.8 billion deal to buy Horizon Therapeutics Plc Tuesday, arguing the tie-up would stifle competition for the development of treatments for serious illnesses.

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In a sealed complaint filed in Illinois federal court, the FTC said the acquisition would allow Amgen to entrench Horizon’s monopoly on medications for thyroid eye disease and chronic refractory gout. Horizon shares closed down 14.2% in New York trading, the most since August 2022. Amgen was down 2.4%.

The complaint seeks an injunction barring the deal from closing while the FTC moves forward with an in-house trial on whether the merger violates antitrust law.

“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,” FTC Competition Bureau Director Holly Vedova said in a statement. “The FTC won’t hesitate to challenge mergers that enable pharmaceutical conglomerates to entrench their monopolies at the expense of consumers and fair competition.”

Amgen said it “remains committed” to completing the Horizon acquisition.

The FTC allegations that the companies might offer a multiproduct discount at some point in the future “is entirely speculative and does not reflect the real world competitive dynamics,” Amgen said. “We are unaware of any prior acquisition that has been blocked under a bundling theory.”

Horizon said in a statement it “does not and has no plans to bundle any of its rare disease medicines.”

The suit marks the first time the FTC has sued to stop a pharmaceutical deal since 2009. In the past, the agency allowed industry mergers to move forward so long as the companies divested any overlapping treatments. An redacted copy of the complaint was not immediately available.

But the agency under Chair Lina Khan has taken a tougher approach to deals, challenging Microsoft Corp.’s proposed acquisition of Activision Blizzard Inc. and Intercontinental Exchange Inc.’s deal to buy mortgage software rival Black Knight Inc.

Amgen has 27 approved drugs, including blockbuster treatments like Enbrel for rheumatoid arthritis and Otezla for psoriasis. Horizon has distributes 11 drug products in the US, including Tepezza, used to treat thyroid eye disease, and Krystexxa, for chronic refractory gout, which do not face competition, the FTC said. In 2022, Tepezza brought in $1.97 billion in revenue and Krystexxa $716 million in revenue for Horizon, according to company filings.

Health care has been a prime focus for the Biden FTC, which examines deals and conduct involving hospitals and physician practices, pharmaceuticals and medical devices. The agency’s antitrust scrutiny has led five hospitals to abandon merger plans over the past two years. The FTC also has been probing pharmaceutical benefit managers like Cigna Group’s Express Scripts and CVS Health Corp.’s Caremark as part of a study into whether the middlemen lead to higher drug prices.

In 2021, the FTC said it would rethink its approach to pharmaceutical mergers after an explosion of deals in which the agency only rarely intervened. A Bloomberg Law analysis found that the FTC imposed conditions on less than one-third of the 38 pharmaceutical deals valued at $10 billion or more between 2010 and 2021.

“Relatively few leading drugs have been developed within the largest pharmaceutical companies,” Khan said at a workshop last year on pharmaceutical mergers. “As antitrust enforcers, it’s our job to promote their competition that will help create the right conditions for the next generation of scientific advances.”

The case is Federal Trade Commission v. Amgen, 1:23-cv-03053, US District Court, Northern District of Illinois.

--With assistance from Ike Swetlitz.

(Updates with closing shares.)

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