The US Federal Trade Commission (FTC) has granted approval for a monumental $27.8 billion acquisition of Horizon Therapeutics by Amgen, allaying concerns about potential market dominance while safeguarding access to critical drugs. The long-anticipated agreement, unveiled on Friday, puts an end to months of uncertainty surrounding this significant merger. In a prelude to the approval, the FTC had filed a lawsuit in May, citing apprehensions that Amgen might exploit its product portfolio to secure preferential insurance coverage for Horizon’s thyroid eye disease treatment, Tepezza, and gout drug, Krystexxa.
Under the terms of the FTC settlement, Amgen is expressly prohibited from bundling any of its products with Tepezza or Krystexxa. Moreover, the pharmaceutical giant is barred from employing product rebates or contract terms that would exclude or obstruct competing products for the two aforementioned medicines. Additionally, Amgen must refrain from purchasing any rivals of the Horizon drugs without first obtaining explicit FTC permission.
FTC Chair Lina Khan articulated the agency’s stance in a statement, underscoring that while Amgen and Horizon do not possess directly competing products, “Commission staff delved into the core of the deal’s rationale and assessed how the acquisition would alter the conglomerate’s authority and motivation to stymie competition.”
In response to the FTC’s actions, Amgen emphasized its unwavering stance that it had neither the motive nor the means to bundle Tepezza and Krystexxa with its product offerings. The company stated that this “narrow assurance, formalized within the FTC’s consent order, will exert no impact on Amgen’s operations.”
Industry analysts, however, have voiced concerns that this settlement could potentially impede future deals within the sector. Mohit Bansal, an analyst at Wells Fargo, opined that the FTC has intensified its scrutiny of larger deals, prompting pharmaceutical companies to opt for less conspicuous acquisitions. The FTC’s lawsuit has underscored the pressing need for heightened oversight of mergers and acquisitions in a pharmaceutical sector that frequently turns to consolidation as a growth strategy, especially as patents for older treatments expire.
The consolidation trend within the pharmaceutical industry could inadvertently confer significant market power to companies, enabling exclusionary practices that might lead to soaring medication prices, cautioned the FTC. Chair Khan further remarked, “The bundling and exclusionary rebate practices under examination here underscore profound concerns about how pharmaceutical firms and pharmacy benefit managers may collaborate to obstruct Americans’ access to affordable medications.”
Both Amgen and Horizon have expressed optimism regarding the acquisition’s imminent closure, anticipating a successful conclusion in the early part of the fourth quarter. In response to the FTC’s decision, Horizon’s stocks experienced a notable upswing of 2.5% during morning trading. Similarly, Seagen, presently undergoing acquisition by Pfizer, witnessed a 1.5% rise in its stock value.
The FTC’s rigorous settlement serves as a stark warning to pharmaceutical companies and pharmacy benefit managers about the repercussions of industry consolidation. With these stringent conditions now in place, Amgen can forge ahead with its acquisition of Horizon Therapeutics, potentially opening avenues for Americans to access more affordable medications.
Source: Reuters
