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FTC sues to block Amgen-Horizon Therapeutics acquisition

The Federal Trade Commission on Tuesday said it has south to block amgen‘s $27.8 billion acquisition of Horizon Therapeutics.

Shares of Horizon were down 15% in morning trading. Amgen’s stock dropped about 1%.

The FTC argued that the deal would allow Amgen to “entrench the monopoly positions” of two of Horizon’s fast-growing medications: the thyroid eye disease treatment Tepezza and the gout medicine Krystexxa.

Neither drug has any competition in the pharmaceutical market, the agency noted.

Amgen will specifically be able to offer rebates on its existing drugs to pressure insurers and pharmacy benefit managers into favoring the two Horizon products, the FTC said. The agency claimed Amgen has a history of leveraging its drug portfolio to gain advantages over potential rivals.

“Today’s action – the FTC’s first challenge to a pharmaceutical merger in recent memory – sends a clear signal to the market: The FTC won’t hesitate to challenge mergers that enable pharmaceutical conglomerates to entrench their monopolies at the expense of consumers and fair competition, “FTC Bureau of Competition Director Holly Vedova said in a press release.

Amgen said in a statement it was “disappointed” by the FTC’s decision.

The company “remains committed to completing this acquisition, which will bring significant benefits to patients suffering from very serious rare diseases in the US and around the world.”

Amgen added it has been working “cooperatively” to answer questions raised by the FTC’s investigative staff over the past several months. The company believes it has “overwhelmingly demonstrated” that the merger poses no competitive issues.

Amgen intends to work with the federal court on a schedule that would allow the deal to close by mid-December.

A representative for Horizon Therapeutics did not immediately respond to a request for comment from CNBC. Bloomberg earlier reported the lawsuit could come on Tuesday.

Robert Galbraith | Reuters

The two drugmakers said in February that the FTC sent them a second request for information about the acquisition as part of the agency’s review of the deal.

Thousand Oaks, California-based Amgen struck the deal to buy Horizon Therapeutics in early December and said it expected to complete the sale in the first half of this year.

The move was a bid to strengthen Amgen’s drug portfolio as it prepares to face several patent expirations for key treatments over the next decade.

That includes a patent for a medicine that treats psoriasis, an autoimmune condition that causes inflammation of the skin.

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Horizon, which is based in Ireland, would beef up Amgen’s drug offerings with treatments for rare, autoimmune and severe inflammatory diseases.

Sen. Elizabeth Warren, D-Mass., in January, expressed concern about the deal’s potential impact on competition in the drug market.

The acquisition and the then-proposed merger of Indivior and Opiant could “cause further price increases on lifesaving drugs and prevent affordable alternatives from entering the market,” Warren wrote in a letter to FTC Chair Lina Khan and two commissioners at the agency.

She called on the FTC to “heavily scrutinize” the two deals. The Individual and Opiant deal later closed.

Correction: This story has been updated to correct the spelling of Indivior.

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