The Federal Trade Commission on Tuesday sued to block drugmaker Amgen’s acquisition of pharmaceutical company Horizon Therapeutics for $27.8 billion, saying it would stifle competition in the pharmaceutical industry.
The FTC said the settlement would allow Amgen to exploit a maneuver known as bundling, in which drug companies leverage their large drug portfolios to offer discounts to insurers and others in exchange for favoring their products. The agency singled out Horizon’s two expensive drugs as lacking competition and said the grouping would entrench those monopolies.
The commission’s move is the most aggressive yet after signage years that that it would be more difficult in the scrutiny of pharmaceutical mergers. Its commissioners voted 3-0 to approve the filing of the lawsuit.
Holly Vedova, a senior commission official, said the agency’s lawsuit “sends a clear signal to the marketplace: The FTC will not hesitate to challenge mergers that allow pharmaceutical conglomerates to entrench their monopolies at the expense of consumers and competition.” loyal”.
Amgen it said that the merger did not raise competition concerns and that it would not combine the two Horizon products.
The merger, announced late last year, was set to be one of the biggest pharmaceutical deals in recent years.
The FTC has long forced merged drug companies to sell drugs that treat the same types of diseases, but it’s much rarer for it to try to undo a merger entirely. This case is unusual because Amgen and Horizon do not sell competing products.
Background: The FTC has been questioning corporate settlements
Under the Biden administration, the FTC has challenged corporate mergers for reasons that go beyond traditional antitrust concerns about product overlap.
FTC Chair Lina Khan has been highly skeptical of corporate mergers in the tech industry. For example, the agency unsuccessfully tried to block Meta, the parent company of Facebook and Instagram, from buying a small VR company, a rare challenge for an acquisition in a fledgling market for an untested product.
The FTC’s move to try to block the Amgen-Horizon merger because of concerns about bundling is also unusual. “It tells us that the FTC is considering new theories of harm that haven’t been front and center before,” said Michael Carrier, an antitrust expert in the pharmaceutical industry at Rutgers Law School.
Why It Matters: Bundles Can Keep Drug Prices High
The FTC’s concern about bundling in the Amgen-Horizon merger is related to concerns about high drug prices.
More attention has been paid to the rebates that drug companies offer to insurers and industry intermediaries known as pharmacy benefit managers in exchange for favoring their drugs. By offering deep discounts through bundling, a company can prevent competitors from gaining market share or discourage them from even trying to enter the market. That can keep prices high.
In the case of Amgen and Horizon, the FTC said, the merger would allow Amgen to pressure insurers and pharmaceutical benefit managers to favor Horizon’s two expensive drugs for rare conditions. The drugs treat an autoimmune disease, thyroid eye disease, and an inflammatory condition, chronic refractory gout.
Amgen’s promise to the FTC not to bundle the two Horizon products would be difficult for regulators to enforce. Drug negotiations are confidential, and drugmakers have a long history of finding creative ways around such commitments, said Ameet Sarpatwari, a drug policy expert at Harvard Medical School.
What’s next: the case will go to court
Amgen and Horizon said they would not abandon the agreement and would go to court to try to push through the merger in mid-December. The outcome is likely to be decided by a federal court in Illinois, where the FTC filed its lawsuit.
“How it is developed will serve as a litmus test for the ability to use antitrust law as a way to promote affordable access to pharmaceuticals,” said Dr. Sarpatwari.
David McCabe contributed reporting.