The biggest pharmaceutical operation of 2022 is up in the air. The Federal Trade Commission (FTC), the United States’ competition regulator, has filed a lawsuit to block Amazon’s purchase of Horizon worth $27.8 billion (about 25.6 billion euros). For now, it has decided to request a temporary restraining order and preliminary injunction to prevent it from shutting down the operation.
Horizon, headquartered in Dublin, Ireland and Deerfield, Illinois, USA, is a global biotechnology company with sales of approximately $3.6 billion that focuses on drugs to treat rare, autoimmune and severe inflammatory diseases. Their purchase was the largest transaction of 2022 to date, more than twice the size of Pfizer’s next purchase of Biohaven. This year it has been overtaken by Pfizer’s purchase of CGen for $43,000 million.
While it is not often that the regulator rules out a concentration operation in the pharmaceutical sector, in this case the three commissioners have taken a unanimous decision. Horizon shares are plunging more than 15% in the stock market after learning about the protest from the regulator. The ones at Amgen have also reacted with downside, but with a fall of 1%-2%. The operation was announced in December.
The FTC has filed a lawsuit in federal court to block the merger, alleging that it would allow Amgen to use discounts on its best-selling drugs to pressure insurance companies and pharmacy managers to Horizon’s two major products are favored: Tepezza, used to treat ocular thyroid. Rog, and Crystexxa, used to treat refractory chronic gout. None of these remedies have any competition in the pharmaceutical market.
In its filing with the Securities and Exchange Commission (SEC), Horizon bragged that its drug Tepezza has “no direct competition” and Crystexxa has “limited direct competition.” As a result, Horizon charges very high prices for these drugs: about $350,000 for a six-month course of Tapezza and about $650,000 for a year’s supply of Crystexa, according to the FTC.
“Massive consolidation in the pharmaceutical industry has given powerful companies the opportunity to skyrocket prescription drug prices, deny patients access to more affordable generics, and hinder life-saving innovation in markets,” he said. Holly Vedova, director of the FTC’s Competition Office, via a statement. “Today’s action, the FTC’s first challenge to a pharmaceutical merger in recent memory, sends a clear signal to the marketplace: The FTC will not hesitate to challenge mergers that allow pharmaceutical groups to strengthen their monopolies at the expense of consumers and fair competition.” allows for”. He added.
Amgen is one of the world’s largest biopharmaceutical companies, with worldwide sales of some $24.8 billion and a portfolio of 27 approved drugs, including best-sellers Enbrel (for rheumatoid arthritis), Otezla (psoriasis) and Prolia (osteoporosis) Are included. Over the years, Amgen has built up its pharmaceutical portfolio through acquisitions, increasing its influence over insurers and pharmaceutical benefit managers who negotiate reimbursement for its products.
Amgen’s and Horizon’s drugs are prescribed for different diseases and there is almost no competition between them, so they do not strengthen a company’s position in treating a particular disease in a monopolistic fashion, which has traditionally posed a threat in regulatory industry. The bell has rung. This case is different. What the FTC fears is that the operation will strengthen the resulting company’s bargaining power and impose barriers to entry.
“The transaction may give the merged company the ability and incentive to strengthen the Tepezza and Crystex monopolies through their multi-product contracting strategies. This could effectively deprive patients, physicians, and health plans of the benefits of competition and access to important new options for the treatment of refractory chronic gout and thyroid eye disease,” the FTC says.
The US competition regulator has taken a more hostile stance towards mergers and acquisitions operations under Leena Khan. The regulator filed a lawsuit last December to block Microsoft’s purchase of Activision.