U.S. Sues to Block Amgen’s $27.8 Billion Takeover of Horizon Therapeutics

The News

The Federal Trade Commission on Tuesday sued to block the drug maker Amgen’s $27.8 billion acquisition of the pharmaceutical company Horizon Therapeutics, saying it would thwart competition in the drug industry.

The F.T.C. said 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 agency pointed to two expensive Horizon medications that lack competition, saying that bundling would entrench those monopolies.

The commission’s move is its most aggressive yet after years of signaling that it would be tougher in scrutinizing pharmaceutical mergers. Its commissioners voted 3 to 0 to approve filing the suit.

Holly Vedova, a senior commission official, said the agency’s lawsuit “sends a clear signal to the market: 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.”

Amgen said the merger did not pose competitive issues and that it would not bundle the two Horizon products.

The merger, announced late last year, was poised to be one of the largest pharmaceutical deals in recent years.

The F.T.C. has long forced merging pharmaceutical companies to sell off drugs that treat the same types of diseases, but it is much rarer for it to try to quash a merger altogether. This case is unusual because Amgen and Horizon do not sell competing products.

Background: The F.T.C. has been challenging corporate deals

Under the Biden administration, the F.T.C. has challenged corporate mergers for reasons that go beyond traditional antitrust concerns about overlapping products.

The F.T.C. chair, Lina Khan, has been very 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 virtual reality start-up, a rare challenge to an acquisition in a nascent market for an unproven product.

The F.T.C.’s move to try to block the Amgen-Horizon merger because of concerns about bundling is also unusual. “It tells us that the F.T.C. is considering new theories of harm that have not been front and center before,” said Michael Carrier, an expert on antitrust issues in the pharmaceutical industry at Rutgers Law School.

Why It Matters: Bundling can keep drug prices high

The F.T.C.’s concern about bundling in the Amgen-Horizon merger is linked to concerns about high drug prices.

There has been increased attention to the rebates that drug companies offer to insurers and the industry middlemen 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 F.T.C. said, the merger would enable Amgen to pressure insurers and pharmacy benefit managers to favor two expensive Horizon 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 F.T.C. not to bundle the two Horizon products would be difficult for regulators to enforce. Drug negotiations are confidential, and drug makers have a long history of finding creative ways to get around such commitments, said Ameet Sarpatwari, an expert in pharmaceutical policy at Harvard Medical School.

What’s Next: The case will move to court

Amgen and Horizon said that they would not abandon the deal and would go to court to try to push through the merger by mid-December. The outcome is likely to be decided by a federal court in Illinois, where the F.T.C. filed its lawsuit.

“How it plays out will serve as a litmus test for the ability to use antitrust law as a way to promote affordable access to pharmaceuticals,” Dr. Sarpatwari said.

David McCabe contributed reporting.