The Federal Trade Commission is dropping its challenge to Amgen’s $27.8 billion acquisition of Horizon Therapeutics after the drugmaker committed it will not use “bundling” practices to win favorable insurer contracts for Horizon’s gout and thyroid disease medicines, the federal government announced Friday.
A special FTC monitor will review Amgen’s contracts with insurers to ensure that rebates for older Amgen drugs like Enbrel aren’t conditioned on agreements to give Horizon’s products Krystexxa and Tepezza advantageous positions on formularies. The antitrust regulator argues such agreements are anticompetitive and raise prices for consumers.
If confirmed, the proposed agreement would avert a battle in federal court testing the FTC’s new theory of how concentration in the pharmaceutical industry can harm consumers. In the past the FTC typically objected to acquisitions when both the buyer and the target company owned competing drugs, such as when Celgene was forced to sell its psoriasis drug Otezla to merge with Bristol Myers Squibb.
The settlement will likely reassure many in the pharmaceutical sector, as executives and investors had feared an activist FTC might seek to block more acquisitions — one of the key ways big drugmakers build their pipelines and a major draw for investors in pre-commercial biotechs.
“We think the broader industry is breathing a collective sigh of relief that M&A — a critical component of this sector’s innovation recipe — has indeed not been outlawed,” Christopher Raymond, an analyst at Piper Sandler, wrote in a note to clients.
Amgen insisted that it had no plans to use rebates for its other drugs to get Krystexxa, a gout treatment, and Tepezza, for thyroid eye disease, into preferred formulary positions.
“This narrow assurance, formalized in the consent order with the FTC, will have no impact on Amgen’s business,” the company said in a Friday statement. Amgen expects the deal to close sometime in the fourth quarter, hinting at a faster timeline as the company had previously anticipated a mid-December close.
What the FTC won was the ability to verify that pledge, through the appointment of a compliance monitor who will review insurer contracts within 30 days of signing. Amgen employees involved in the commercialization of the two drugs will be required to review the consent order annually and acknowledge that they understand and are in compliance.
Amgen will also need to notify the monitor if Tepezza or Krystexxa, which are intravenous drugs infused at hospitals and other healthcare facilities, gain approval as self-administered drugs and are eligible for coverage under insurers’ pharmacy benefit plans.
The consent order requires Amgen to seek FTC permission to buy any company involved in the marketing of products or development of experimental drugs to treat thyroid eye disease or gout.
The FTC signaled last week that a settlement might be coming when it, urged on by a judge, withdrew an administrative complaint. The agreement announced Friday may have been hastened by an approaching federal court date on a motion by FTC. Some state attorneys general were also seeking an injunction against the merger. As part of the agreement, the FTC and attorneys general will dismiss that court case.