FTC Challenges Amgen Acquisition of Horizon: More to Come Under Broadened Section 5


The Federal Trade Commission (“FTC”) has petitioned to block the proposed $27.8 billion acquisition of Horizon Therapeutics by Amgen Inc., one of the world’s largest biotechnology companies. The FTC cited concerns that the acquisition would enable Amgen to leverage its product portfolio to foreclose potential rivals to Horizon’s blockbuster drugs through cross-market bundling. The FTC’s complaint is part of its broader approach of challenging conduct beyond the bounds of the Sherman or Clayton Acts under Section 5 of the FTC Act.

Amgen is complying with the complaint filed by the FTC on May 16, 2023 (Federal Trade Commission v. Amgen Inc., Case No. 1:23-CV-03053)pursuant to Section 13(b) of the FTC Act, which authorizes the commission to seek preliminary injunctive relief when it has reason to believe a proposed merger is unlawful. The lawsuit serves to prevent the consummation of a merger through a temporary restraining order until its legality is adjudicated in an administrative proceeding. To succeed on merits, the FTC must now prove that Amgen’s acquisition of Horizon is in violation of Section 7 of the Clayton Act, which prohibits mergers that would substantially “lessen competition, or to tend to create a monopoly.”

The FTC complaint argues that the proposed acquisition would “substantially [lessen] competition in the markets for the sale of FDA-approved drugs” to treat thyroid eye disease (“TED”) and chronic refractory gout (“CRG”), for which it claims Horizon currently holds monopolies as the only FDA-approved treatment in each respective market. One of the FTC’s concerns is cross-market bundles or bundled rebates, a tactic it claims Amgen already employs. Under this strategy, the FTC argues that Amgen would negotiate larger rebates for one product in exchange for preferred formulary placement for another, a practice called cross-bundling. Specifically, the FTC alleges that Amgen’s acquisition would enable it to cross-bundle Horizon products by making rebates to pharmacy benefit managers (“PBMs”) or payers (e.g., health plans) on Horizon’s blockbuster drugs contingent upon favorable formulary placement of Amgen’s drugs. The complaint cites this strategy as particularly appealing for Horizon’s TED drug, Tepezza, and CRG drug, Krystexxa, as they have “limited direct competition” and account for a large portion of Horizon’s net sales – 54% and 20%, respectively. The concern also arises out of the FTC’s contention that Amgen has a history of offering rebates for its rheumatoid arthritis medication Enbrel in exchange for preferred formulary placement.

In Amgen’s response, it explains that Amgen and Horizon “treat different diseases and patient populations” with “no overlaps of competitive concern.” Specifically addressing the FTC’s claim that Amgen may bundle its drugs in the future, Amgen calls it “entirely speculative and does not reflect the real-world competitive dynamics.” Notably, the complaint does not include allegations of the traditional horizontal effects such as attempted monopolization of a product market. Additionally, Amgen offered a consent decree that it would not “bundle the Horizon products raised as issues;” however, the FTC did not accept this proposed remedy. Amgen’s press release also states that it is “unaware of any prior acquisition that has been blocked under a bundling theory.” This is the first time the FTC has challenged a merger for reasons beyond specific product overlaps. If the expected negotiation between Amgen and PBMs leads to lower prices, the FTC will have to tackle the fact that courts have found that bundling is not always anti-competitive, in addition to proving how this merger would harm competition. 

This suit marks the first FTC challenge of a pharmaceutical merger in recent memory and according to FTC Bureau of Competition Director Holly Vedova, “sends a clear signal to the market: The FTC won't hesitate to challenge mergers that enable pharmaceutical conglomerates to entrench their monopolies…” This is part of a broader approach of the FTC’s enforcement of Section 5 of the FTC Act. In November 2022, the FTC rescinded and replaced its previous 2015 Statement of Enforcement Principles Regarding “Unfair Methods of Competition.” The new Policy Statement states that Section 5 allows the agency to challenge conduct outside the bounds of the Sherman or Clayton Acts. The statement includes a non-exhaustive list of types of claims the agency intends to challenge, called “standalone Section 5” cases, including bundling, tying, and loyalty rebates. Additionally, the FTC contends that Section 5 does not require the conduct to “directly [cause] actual harm,” rather it examines whether the conduct “has a tendency to generate negative consequences.” Section 5 also allows the agency to challenge conduct without a showing of market power or market definition. Moreover, the “rule of reason” analytical approach that is the focus of most challenges under the Sherman Act is not required under Section 5.

Amgen’s statement reinforces its commitment to the acquisition and states that it intends to work to close the transaction by mid-December. However, this move by the FTC may signal more scrutiny of M&A in the pharmaceutical industry to come.


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