In an unprecedented move, the US Federal Trade Commission (FTC) sued to block the Amgen Horizon deal on Tuesday. FTC’s lawsuit against Amgen is filed under the aegis of permitting biopharmaceutical giant Amgen Inc to leverage its portfolio of prizewinner drugs to fortify the monopoly positions of Horizon’s two key medications. The Amgen Horizon Therapeutics acquisition was earmarked at $27.8 billion.
FTC is blocking the Amgen Horizon deal to nip a crisis in the bud, fearing that Amgen could pressure insurance companies and pharma managers to use rebates and prioritize favorable terms for Horizon’s products – thyroid eye disease drug Tepezza and chronic refractory gout drug Krystexxa. Neither of the two treatment drugs have any substantial contemporaries in the pharmaceutical industry.
FTC’s legal action on the Amgen acquisition has digressed from its previous disposition of flagging therapeutic overlaps in both companies. Amgen Horizon Therapeutics’ lawsuit stems from FTC’s demeanor of requiring one of the two medicines to be divested. The case is assigned to federal court’s Judge John Kness in Chicago.
The proposed Amgen Horizon Therapeutics acquisition was set to be the largest pharma transaction in 2022. FTC argues that Amgen has a solid incentive to upend the barriers of entry for rivals or even dissuade them from competing aggressively should they gain FDA approval.
This legal action also dovetails with other widespread complaints about rebates paid by drug manufacturers to PBMs and intermediaries to favor high-priced drugs at the detriment of lower-cost drugs.
AstraZeneca’s $39 billion acquisition of Alexion Pharma in April 2021 was the last major pharmaceutical deal given the green light by the FTC.
Amgen Horizon Therapeutics Acquisition: A Pharmaceutical Controversial Deal
The Amgen Horizon acquisition was announced in December in a move to offset increased competition and also gain respite from the rare disease drugs offering protection from the pricing provisions of the Inflation Reduction Act.
Ireland-and-Illinois-based Horizon Therapeutics is a global biotechnology giant parading its medicinal focus on rare, autoimmune, and severe inflammatory diseases. Horizon’s portfolio of 11 drugs, including Tepezza (no direct approved competition) and Krystexxa (limited direct competition) has fetched the company about $3.6 billion in sales.
With this monopolistic undue advantage, Horizon levies hefty treatment costs for these two medications – $3,50,000 for Tepezza’s six-month course and $6,50,000 for the annual dosage supply of Krystexxa.
The world’s largest biopharmaceutical company Amgen Inc is based in California, with a portfolio bragging of 27 approved drugs such as Enbrel, Otezla, and Prolia, which face patent loss in coming years. Throughout Amgen’s history, the company has engaged in cross-market bundling – leveraging acquisitions with the insurers to negotiate reimbursements for its products. Amgen made global sales of $24.8 billion in 2022.
“Rampant consolidation in the pharmaceutical industry has allowed powerful companies to exorbitantly hike prescription drug prices, deny patients access to more affordable generics, and thwart innovation in life-saving markets.”
The value of these rebates on Amgen’s high-volume drugs can hamper smaller rivals who cannot match the cross-market bundles in developing drug rivals against Tepezza and Krystexxa. These financial relationships can misalign incentives by stifling competition. It can further deprive the medical fraternity of accessing critical options for thyroid eye disease and chronic refractory gout.
Amgen perceives the deal valuation to be crucial and is protecting the monopoly revenues of Tepezza and Krystexxa.
FTC Lawsuit To Block The Amgen Horizon Acquisition
A month after the news of the Amgen Horizon Therapeutics acquisition, Sen. Elizabeth Warren wrote to FTC Chair Lina Khan to scrutinize and oppose the controversial pharmaceutical deal for antitrust violations. The letter detailed Tepezza’s cost of $433,000 and the history of both companies surging the prices of their drugs.
From FTC’s investigation of Amgen to its legal action on the Amgen Horizon acquisition is the bureau’s first challenge to the market of pharmaceutical mergers in recent history. In a way of sending a message across the market, the FTC is geared up to unhesitantly scrutinize and challenge pharmaceutical conglomerates that could entrench their monopolies. It’s unethical to do so at the expense of consumers and fair competition.
“The FTC has signaled its grit and determination to scrutinize pharma mergers more stringently.”
Chairman William Kovacic described FTC’s lawsuit against Amgen Horizon deal as a means to an end with no settlement to be pursued as the agency does not believe it can fix the perceived competitive issues.
The bureaucratic agency’s preliminary injunction was 3-0, approving FTC’s legal action on the Amgen Horizon acquisition.
Amgen’s hope to close the Horizon acquisition by the first half of 2023. reacted to FTC’s lawsuit. Stating it was disappointed in the decision, Amgen referred to having overwhelmingly demonstrated that the deal had no legitimate competitive repercussions. FTC lawsuit against Amgen Horizon acquisition will hear a final verdict presumably by Mid-December.
FTC investigation of Amgen drove Horizon’s share price down 14 percent to close at $96.34 and Amgen’s stock skedaddled 2.4 percent to $227.88.