FTC Sues to Block Amgen Acquisition of Horizon Therapeutics
On May 16, the Federal Trade Commission (FTC) announced that it has filed a lawsuit in federal court to block biopharmaceutical giant Amgen from acquiring Horizon Therapeutics, saying the deal would allow Amgen to leverage its portfolio of blockbuster drugs to entrench the monopoly positions of Horizon medications used to treat thyroid eye disease and chronic refractory gout.
The FTC argues that the transaction would enable Amgen to use rebates on its existing blockbuster drugs to pressure insurance companies and pharmacy benefit managers (PBMs) into favoring Horizon’s two monopoly products: Tepezza, used to treat thyroid eye disease, and Krystexxa, used to treat chronic refractory gout. Neither of these treatments have any competition in the pharmaceutical marketplace.
“Rampant consolidation in the pharmaceutical industry has given powerful companies a pass to exorbitantly hike prescription drug prices, deny patients access to more affordable generics, and hamstring innovation in life-saving markets,” said FTC Bureau of Competition Director Holly Vedova. “Today’s action—the FTC’s first challenge to a pharmaceutical merger in recent memory—sends a clear signal to the market: The FTC won’t hesitate to challenge mergers that enable pharmaceutical conglomerates to entrench their monopolies at the expense of consumers and fair competition.”
In its announcement of the suit, the FTC argued that “Given how central protecting and growing Tepezza and Krystexxa monopoly revenues are to the deal valuation Amgen calculated for Horizon, Amgen has strong incentives post-acquisition to raise Tepezza and Krystexxa rivals’ barriers to entry or dissuade them from competing as aggressively if and when they gain FDA approval.”
The FTC highlighted it ongoing work to in response to widespread complaints about rebates and fees paid by drug manufacturers to PBMs and other intermediaries to favor high-cost drugs at the expense of lower cost drugs. In a June 2022 policy statement, the FTC stated that these financial relationships create numerous conflicts of interest and can shift costs and misalign incentives in a way that stifles competition from lower-cost or higher-quality drugs, thereby harming patients, doctors, health plans, and competition. The FTC’s market inquiry examining the business practices of PBMs is also ongoing.
As part of its suit to block the acquisition, the FTC cited securities filings in which Horizon boasted that its Tepezza “has no direct approved competition,” and that Krystexxa “faces limited direct competition.” “Because of this, Horizon charges extremely high prices for those medications—approximately $350,000 for a six-month course of treatment of Tepezza and approximately $650,000 for an annual supply of Krystexxa,” wrote the FTC.
Of particular concern to the FTC is Amgen’s use of cross-market bundling, which involves conditioning rebates (or offering incremental rebates) on products such as Enbrel in exchange for giving Amgen drugs preferred placement on the insurers’ and PBMs’ lists of covered medications in different product markets.
“The value of the rebates that Amgen can offer on its high-volume drugs as part of its cross-market bundles may make it difficult, if not impossible, for smaller rivals who are developing drugs to compete against Tepezza and Krystexxa to match the level of rebates that Amgen would be able to offer,” said the FTC.
In response to the suit, Amgen issued the following statement:
Amgen is disappointed by the FTC’s decision and remains committed to completing this acquisition, which will bring significant benefits to patients suffering from very serious rare diseases in the U.S. and around the world. We have been working cooperatively over the past several months to address the questions raised by the FTC’s investigative staff and believe we have overwhelmingly demonstrated that this combination poses no legitimate competitive issues.
The medicines offered by Amgen and Horizon generally treat different diseases and patient populations, and there are no overlaps of competitive concern. The FTC’s claim that Amgen might “bundle” these medicines (offer a multi-product discount) at some point in the future is entirely speculative and does not reflect the real world competitive dynamics behind providing rare-disease medicines to patients. And we committed that we would not bundle the Horizon products raised as issues; however, the Commission still decided to pursue this path. Furthermore, we are unaware of any prior acquisition that has been blocked under a bundling theory.
Original post: https://www.medtechintelligence.com/news_article/ftc-sues-to-block-amgen-acquisition-of-horizon-therapeutics/
Post publish date: