FTC sues to block Amgen’s $27.8B deal for Horizon

The Federal Trade Commission (FTC) is questioning Amgen’s $27.8 billion acquisition of Horizon Therapeutics. The agency took a step by filing a federal complaint alleging that Amgen would utilize its market position to protect the monopolies of two Horizon medications. The FTC has started a movement to conduct a detailed analysis of how pharmaceutical acquisitions may hurt consumers.

The FTC is pursuing a different route than usual by referencing the scope of Amgen’s present business. Typically, the agency’s objections to biopharma transactions include particular product or market overlaps, which businesses can overcome by divesting their assets. An example of this is Celgene, which sold Otezla to Amgen before the former business was acquired by Bristol Myers Squibb, while Allergan sold off an investigational medicine before being absorbed by AbbVie.

The FTC’s latest position, which was considered by agency officials and outside experts at a conference last year, is that “cross-market bundling” operations might stifle competition and boost consumer costs.

The Federal Trade Commission believes that Amgen has always leveraged its range of medications to gain a competitive advantage over its competitors. The company is offering discounts on products in exchange for connecting Amgen with brokers for their medications, followed by PBMs’ lists of covered medications in various product markets.

Voting took place to stop the purchase, in which the results were 3-0, despite the fact that the commission presently lacks any Republican members.

Amgen was confident in closing the agreement as they denied the allegations of the FTC.

The company believes that the FTC claims are speculative and are not in line with real-world competitive dynamics which are necessary to provide rare-disease medicines to patients.

Wall Street analysts had their share of doubts that the FTC’s claims would be successful in court. SVB Securities analyst David Risinger was doubtful of FTC having any evidence to support their claim of the company’s competitive move. Nonetheless, the FTC’s action fueled speculation that the agency would also seek to dispute Pfizer’s acquisition of Seagen. FTC claims suggest that the $12 billion in oncology revenue recognized by Pfizer in 2022 may be an anti-competitive move.

Analysts believe that if the FTC begins to dispute more pharma mergers, it will disrupt the regular cycle of acquisitions that feeds giant drugmakers’ pipelines while providing funds to investors in smaller businesses to spend on biotech startups.

Horizon shares plunged more than 15% in early trade, whereas the shares of other firms that had recently committed to buyouts fell as a result of the lawsuit. Pfizer’s $43 billion proposal for Seagen dropped as much as 6%, while Merck’s $10.8 billion bid for Prometheus Biosciences dropped as much as 2%.

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