US trade regulator wants to block Amgen's $28 billion deal on hold. Here's why

The US Federal Trade Commission (FTC) on Tuesday filed a lawsuit on Tuesday seeking to block Amgen Inc.'s proposed $27.8 billion acquisition of Horizon Therapeutics Plc. The US trade regulator has allegedthat the merger would create a monopoly for medications treating thyroid eye disease and chronic refractory gout, hampering competition and potentially leading to higher drug prices.

According to the sealed complaint filed in Illinois Federal Court, the acquisition would allow Amgen to further solidify Horizon's dominant position in the market. The FTC's complaint hassoughtan injunction to halt the merger until the commission couldproceed with an in-house trial to determine whether the proposed deal violatesantitrust law.

While opposing Amgen's billion-dollar deal, FTC's Competition Bureau DirectorHolly Vedovahas emphasised the need for preventing pharmaceutical companiesfrom consolidatingmonopolies.“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,” Bloomberg quoted Vedova as saying.

Amgen, however, has countered FTC's allegations, stating that the claim of a potential 'multiproduct discount' was speculative and did not align with the competitive dynamics of the real world, a Bloomberg report noted. Horizon Therapeutics has also issued a statement, denying claims madeby the US trade regulator.

'Multiproduct discount' is a monopolistic practiceoften frowned upon by the market. While it gives multiple products in one bundle at cheaper rates, this practice oftenforces smaller competitors to exit the market in the long run.

FTC vs. Big Pharma

This lawsuit marks the first time since 2009 that the FTC has taken legal action to prevent a pharmaceutical merger. In the past, the agency typically allowed mergers to proceed on the condition that the companies divested any overlapping treatments. However, under the leadership of Lina Khan, the US trade regulator has adopted a more stringent approach, challenging high-profile deals such as Microsoft Corp.'s proposed acquisition of Activision Blizzard Inc. and Intercontinental Exchange Inc.'s purchase of Black Knight Inc, a mortgage software rival.

Amgen, a prominent player in the pharmaceutical industry with 27 approved drugs, including popular treatments for rheumatoid arthritis and psoriasis, now faces scrutiny over its acquisition strategy. On the other hand, Horizon Therapeutics distributes 11 drug products in the US, including Tepezza, which is used to treat thyroid eye disease, and Krystexxa, a medicationfor chronic refractory gout. These medications currently enjoy a lack of competition in the market, generating significant revenue for Horizon in 2022 — $1.97 billion for Tepezza and $716 million for Krystexxa, as reported in company filings.

Under the Biden administration, the regulatorhas closely examined mergers, conduct, and pricing practices within the hospital, physician practice, pharmaceutical, and medical device sectors. Its scrutiny has resulted in five hospitals abandoning their merger plansin the past two years. Additionally, the FTC has launched investigations into pharmaceutical benefit managers like Cigna Group's Express Scripts and CVS Health Corp.'s Caremark to explore their potential role in driving up drug prices.

(With agency inputs)