USA — The Federal Trade Commission (FTC) has made a bold move to block Amgen’s US$27.8 billion acquisition of Horizon Therapeutics, citing concerns about anti-competitive practices in the pharmaceutical industry.

The FTC claims that the deal would enable Amgen to use bundling strategies, leveraging its extensive drug portfolio to offer discounts to insurers and others in exchange for preferential treatment.

The commission specifically points out two Horizon medications with no competition, asserting that bundling would solidify these monopolies.

This legal action signifies the FTC’s heightened scrutiny of pharmaceutical mergers, aligning with its more assertive approach in recent years.

In a unanimous decision, the commissioners voted in favor of filing the lawsuit, aiming to send a clear message to the market that the FTC will challenge mergers that allow pharmaceutical giants to reinforce their monopolies at the expense of fair competition and consumers.

Amgen has responded, claiming that the merger poses no competitive issues and that it has no intention of bundling the two Horizon products.

The proposed merger, announced in late 2022, was anticipated to be one of the largest deals in the pharmaceutical industry in recent history.

While the FTC has often required merging pharmaceutical companies to divest drugs treating similar diseases, it is less common for the commission to attempt to halt a merger entirely.

This case is atypical because Amgen and Horizon do not offer competing products.

A Shift in FTC approach under the Biden administration

Under the Biden administration, the FTC has been challenging corporate mergers based on concerns beyond traditional antitrust considerations related to overlapping products.

FTC Chair Lina Khan has exhibited a skeptical stance towards mergers in the tech industry.

For instance, the agency previously sought to block Meta’s acquisition of a small virtual reality start-up, marking a rare attempt to challenge an acquisition in an emerging market for an unproven product.

The FTC’s move to impede the Amgen-Horizon merger due to bundling concerns is also unique. This indicates that the FTC is exploring new theories of harm that have not been prominently addressed in the past, signaling potential shifts in their regulatory approach.

Linking bundling concerns to high drug prices

The FTC’s apprehension regarding bundling in the Amgen-Horizon merger is intertwined with concerns about soaring drug prices.

Increasing attention has been directed towards the rebates offered by drug companies to insurers and pharmacy benefit managers in exchange for promoting their drugs.

Through deep discounts facilitated by bundling, a company can hinder competitors from gaining market share or dissuade them from entering the market altogether. Consequently, this contributes to sustained high drug prices.

In the case of Amgen and Horizon, the FTC argues that the merger would empower Amgen to exert pressure on insurers and pharmacy benefit managers to prioritize two costly Horizon drugs used to treat autoimmune disease and chronic refractory gout.

These rare condition medications would benefit from preferential treatment, potentially creating obstacles for competitors.

Enforcing Amgen’s commitment not to bundle the two Horizon products poses a challenge for regulators.

Amgen and Horizon have affirmed their determination to proceed with the merger, vowing to take the matter to court with the goal of finalizing the deal by mid-December.

The most recent significant pharmaceutical merger approved by the FTC occurred in April 2021 when AstraZeneca acquired Alexion Pharma for US$39 billion, just prior to Lina Khan’s appointment by the Biden administration as FTC Chair.

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