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Friday, Jun 9, 2023

FTC Moves to Quash Amgen Deal

Thousand Oaks-based pharma giant Amgen Inc. faces a new and somewhat unexpected hurdle in its $27.8 billion deal to buy Irish drug company Horizon Therapeutics plc.: last week the Federal Trade Commission filed suit to block the deal.

The FTC announced on May 16 that it had filed the lawsuit because of concerns the deal could give Amgen monopoly pricing power over two potential blockbuster drugs that Horizon has developed: Tepezza, used to treat thyroid eye disease, and Krystexxa, which is used to treat chronic refractory gout.

In order for the deal to be blocked – even temporarily – a federal judge must approve the injunction that the FTC is seeking.

In response, Amgen said it was disappointed in the FTC decision and “remains committed to completing the acquisition.”

Amgen initially announced the acquisition last December and had hoped to close the deal by late summer or early fall. But the FTC lawsuit has thrown a wrench into that timetable.

In its response, Amgen said it’s still working to complete the deal by mid-December. But in comments in the media, several analysts said the deal’s completion may slide into next year – assuming it doesn’t fall through in the meantime.

Investors in their initial reaction directed most of their doubts about the deal to Horizon; shares of that company fell 15% immediately upon official word of the FTC lawsuit and closed May 16 down 14%.

Amgen shares, by comparison, suffered a modest hit on May 16, falling 2.4% to $227.95. However, that was enough to help drive the overall Dow Jones Industrial Average down 336 points, or 1%; Amgen is one of the 30 stocks comprising the DJIA.

The central issue in the FTC’s lawsuit is the concern that if the deal were to go through, Amgen might engage in a practice the agency called “cross-market bundling” with regard to the two Horizon drugs. Specifically, the FTC said, this practice “involves conditioning rebates (or offering incremental rebates) on products such as Enbrel in exchange for giving Amgen drugs preferred placement on the insurers’ and (pharmacy benefit managers’) lists of covered medications in different product markets.”

In such a scenario, the FTC said, it would be much more difficult for other smaller pharmaceutical companies to bring drugs to market that compete with Tepezza or Krystexxa.

Amgen in its response disputed this claim.

“The medicines offered by Amgen and Horizon generally treat different diseases and patient populations, and there are no overlaps of competitive concern,” Amgen said in its statement. “The FTC’s claim that Amgen might ‘bundle’ these medicines 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.”

Furthermore, Amgen stated, “We committed that we would not bundle the Horizon products raised as issues.”

Hannah Madans Welk
Hannah Madans Welk
Hannah Madans Welk is a managing editor at the Los Angeles Business Journal and the San Fernando Valley Business Journal. She previously covered real estate for the Los Angeles Business Journal. She has done work with publications including The Orange County Register, The Real Deal and doityourself.com.

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