U.S. FTC Sues to Block Amgen’s $27.8 Billion Deal for Horizon Therapeutics

U.S. FTC Sues to Block Amgen’s $27.8 Billion Deal for Horizon Therapeutics

The U.S. Federal Trade Commission (FTC) has filed a lawsuit in the U.S. Federal Court in Illinois to block the drug maker Amgen’s $27.8 billion acquisition of the pharmaceutical company Horizon Therapeutics, contended that it would thwart competition in the drug industry.

The FTC has alleged that the deal would allow Amgen to exploit a maneuver known as bundling, in which pharmaceutical companies take advantage of their large portfolios of drugs to offer discounts to insurers and others in exchange for favoring their products.

The FTC pointed out two expensive Horizon medications that lack competition, stating that bundling would entrench those monopolies.

It was further contended by the FTC that Amgen would potentially be able to offer rebates on its existing drugs to pressure insurers and pharmacy benefit managers into favoring the two Horizon products, a strategy known as “cross-market bundling.”

Holly Vedova, a Senior Commission Official, while expressing that the agency’s lawsuit sends a clear signal to the market, said, “the F.T.C. won’t hesitate to challenge mergers that enable pharmaceutical conglomerates to entrench their monopolies at the expense of consumers and fair competition.”

The FTC vehemently asserted that the California-based Amgen has a history of leveraging its drug portfolio to gain advantages over potential rivals.

Per contra, Amgen defended by stating that the merger did not pose competitive issues and that it would not bundle the two Horizon products.

The merger, which was finalized late last year, was projected to be one of the most significant pharmaceutical deals in recent years.

As part of the FTC's investigation into Amgen-Horizon's merger, the FTC has expressed concerns regarding high drug prices as a result of bundling.

Drug companies are known for offering rebates to insurers and middlemen in the industry, known as pharmacy benefit managers, as a way to favor their drugs, which has received increased attention over the past few years.

By offering deep discounts through bundling, a company can prevent competitors from gaining market share or discourage them from entering the market, thus keeping the prices high.

Notably, the FTC has traditionally required combining pharmaceutical companies to sell off medications that treat similar conditions, but it is much less common for it to attempt to prevent a merger entirely.

This case is particularly unusual since Amgen and Horizon do not sell competing products.