FTC effort to stop Amgen's Horizon takeover faces uphill fight

Horizon Therapeutics

18/05/2023 11:00

By Diane Bartz
       WASHINGTON, May 18 (Reuters) - The Federal Trade
Commission (FTC) faces an uphill battle in its fight against
Amgen Inc's  AMGN.O  $27.8 billion acquisition of Horizon
Therapeutics  HZNP.O  with an untested argument before a
Trump-appointed judge, three antitrust experts said.
    Furthermore, the FTC's complaint, unsealed late Tuesday,
expresses concern about deals struck between drug companies that
give discounts to pharmacy benefit managers and insurers in
return for making their medicines easier to get for their
customers. 
    That would appear to contradict the FTC's practice of
preventing companies from using market power to push up prices.
    "Any time a complaint is putting forth a novel theory it's
an uphill battle," said Katie Funk, an antitrust attorney at
Baker, Donelson, adding that they will need to convince the
judge that "the alleged anticompetitive effects are not
baseless, but are serious and substantial."
    The FTC lawsuit spurred concern among investors who had
brushed off the antitrust risk in Amgen's deal because of its
limited business overlap with Horizon. They now fear other
potential deals in the drug sector - where many smaller firms
are bought up by sector giants - may be imperiled.
    The FTC may also struggle to convince the judge hearing the
case, Judge John Kness, who was nominated to the court by former
President Donald Trump. While it is uncertain how Kness will
view the case, judges appointed by Republican presidents are
generally seen as more business-friendly in their approach.
    To be sure, some antitrust experts said they needed to see
the FTC's evidence and how well it would stand up its complaint
before guessing at the outcome. 
        In its lawsuit the FTC said it believed Amgen could
leverage its big selling drugs to pressure insurance companies
and pharmacy benefit managers to favor Horizon's two key
products - the fast-growing thyroid eye disease treatment
Tepezza and gout drug Krystexxa - over potential competitors. 
        The FTC said it filed the lawsuit on behalf of patients
who needed costly treatments for serious conditions who may be
hurt by the deal. "Our complaint is firmly rooted in
longstanding antitrust law and we look forward to making our
argument in court," an FTC spokesperson said.
    
    AMGEN OFFERS REMEDY
    Amgen said on Tuesday it had made an offer to the FTC in
hopes of resolving the issue. "We committed that we would not
bundle the Horizon products raised as issues," Amgen said in a
statement. 
    That sort of commitment, often called a behavioral remedy,
has fallen out of favor with antitrust enforcers who do not view
such agreements as effective.
    The difficulty for the FTC is that the negotiations between
pharmacy benefit managers and drug makers often result in lower
prices for the drugs, said Andre Barlow of Doyle, Barlow and
Mazard, PLLC. 
    "The FTC will have a high hurdle to overcome with this
complaint," he said. "The antitrust laws do not condemn lower
prices, rather they embrace them."
    Seth Bloom of Bloom Strategic Counsel agreed that the FTC's
theory was novel but said it was unclear how the case would be
decided.
    "These are valid concerns that FTC has raised but what a
court will do about it is uncertain," he said. "The fact that
it's a judge appointed by Trump who you would expect to be more
conservative suggests that the FTC will have a more difficult
road here."    

 (Reporting by Diane Bartz; Editing by Sonali Paul)
 ((Diane.Bartz@thomsonreuters.com))