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The Federal Trade Commission on Tuesday filed a lawsuit to block Amgen’s $27.8 billion acquisition of drugmaker Horizon Therapeutics, saying it would thwart competition in the drug industry.
The FTC said the deal would allow Amgen to exploit a maneuver known as bundling, in which drug companies leverage their large portfolios of drugs to offer discounts to insurers and others in exchange for preference for their products. The agency pointed to two expensive Horizon drugs that lacked competition, saying bundling would entrench those monopolies.
The committee’s move is its most aggressive yet after years of indicating it would be more stringent in vetting drug mergers. Its commissioners voted 3-0 to approve the lawsuit.
The agency’s lawsuit “sends a clear signal to the market: The FTC will not hesitate to challenge mergers that enable pharmaceutical conglomerates to consolidate their monopolies at the expense of consumers and fair competition,” said Holly Fedova, a senior commission official.
Amgen said the merger did not pose competitive problems and would not bring the two Horizon products together.
The merger, announced late last year, was poised to be one of the largest drug deals in recent years.
The FTC has long forced merged drug companies to sell drugs that treat the same types of ailments, but it’s very rare for them to try to scrap a merger altogether. This situation is unusual because Amgen and Horizon do not sell competing products.
Background: The Federal Trade Commission has been challenging corporate deals
Under the Biden administration, the FTC has challenged corporate mergers for reasons that go beyond traditional antitrust concerns about overlapping products.
Federal Trade Commission Chair Lena Khan has been very skeptical of corporate mergers in the tech industry. For example, the agency has tried unsuccessfully to block Meta, the parent company of Facebook and Instagram, from buying a small virtual reality startup, a rare acquisition challenge in an emerging market for an unproven product.
The FTC’s move to try to block the Amgen-Horizon merger over concerns about the combination is also unusual. “It tells us that the FTC is examining new theories of harm that haven’t been front and center before,” said Michael Carrier, an expert on antitrust issues in the pharmaceutical industry at Rutgers Law School.
Why it matters: Aggregation can keep drug prices up
The FTC’s concern about bundling in the Amgen-Horizon merger is related to concerns about rising drug prices.
There has been increasing interest in rebates that drug companies offer insurance companies and industry intermediaries known as pharmacy benefit managers in exchange for preference for their drugs. By offering deep discounts through bundling, a company can prevent competitors from gaining market share or discourage them from trying to enter the market. That can keep prices high.
In the case of Amgen and Horizon, the FTC said, the merger would enable Amgen to pressure insurers and pharmacy benefit managers to prefer two expensive Horizon drugs in rare cases. The medications treat autoimmune diseases, thyroid disease, an inflammatory condition, and chronic heat gout.
Amgen’s promise to the FTC not to bundl Horizon’s products will be difficult for regulators to enforce. Drug negotiations are confidential, and drugmakers have a long history of finding creative ways to get around such commitments, said Amit Sarpatwari, an expert on pharmaceutical policy at Harvard Medical School.
What’s next: The case will go to court
Amgen and Horizon said they will not abandon the deal and will go to court to try to move the merger forward by mid-December. The outcome will likely be decided by a federal court in Illinois, where the Federal Trade Commission has filed its lawsuit.
“How it operates will be a key test of the ability to use antitrust law as a way to promote affordable access to pharmaceuticals,” said Dr. Sarbuari.
David McCabe contributed reporting.
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