The  Federal Trade Commission (FTC) on Tuesday filed a lawsuit to block Amgen's $27.8 billion  acquisition  of Horizon Therapeutics, arguing the deal would allow Amgen to build monopolies around two of Horizon's drugs.

Details on the lawsuit

In its suit, FTC argued that Amgen's acquisition of Horizon — which was announced last year — would prevent other medicines from competing with Horizon's Tepezza, a treatment approved by FDA for moderate to severe thyroid eye disease, and Krystexxa, a gout therapy.

In a  statement, FTC noted it hadn't recently challenged a deal in the pharmaceutical industry. It said the deal "would enable Amgen to use rebates on its existing blockbuster drugs to pressure insurance companies and pharmacy benefit managers into favoring Horizon's two monopoly products."

FTC added that Amgen "has a history of leveraging its broad portfolio of blockbuster drugs to gain advantages over potential rivals" and that it "has strong incentives post-acquisition to raise Tepezza and Krystexxa rivals' barriers to entry or dissuade them from competing as aggressively if and when they gain FDA approval."

"Rampant consolidation in the pharmaceutical industry has given powerful companies a pass to exorbitantly hike prescription drug prices, deny patients access to more affordable generics, and hamstring innovation in life-saving markets," said FTC Bureau of Competition Director Holly Vedova. "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."

In a  statement, Amgen said it "is disappointed by the FTC's decision and remains committed to completing this acquisition, which will bring significant benefits to patients suffering from very serious rare diseases in the U.S. and around the world."

Amgen added that FTC's claim that the company would "bundle" its medications, offering a discount for multiple products, was "entirely speculative and does not reflect the real-world competitive dynamics behind providing rare-disease medicines to patients." Amgen said it would not bundle Horizon's products.

Expert reaction

Some experts were skeptical of FTC's arguments in the case. Evan Seigerman, an analyst at BMO Capital Markets, said FTC's arguments are "overly broad and at best hypothetical," and that he expects the deal will eventually close.

Brian Skorney, an analyst at Baird, said he believes targeting illegal bundling practices "likely oversteps" the scope of the role held by the division within FTC that regulates mergers.

"There may be a case for the FTC to make against Amgen, but we think this would have more chance of success as an action under the Anticompetitive Practices division of the FTC targeting Amgen's internal business practices," he said. "It seems like a tough legal argument to intervene in an otherwise legal deal based on the, yet unproven, hypothesis that the acquirer may do something illegal with it."

For this reason, Skorney said he believes FTC is "doomed to failure," but added he believes the focus on bundling is "likely to reflect poorly on Amgen," which may have to tone down its commercial efforts to avoid scrutiny from the government. As a result, Amgen "will counter with everything they have, given what losing or admitting defeat would mean for any future deals," Skorney said.

FTC's suit also raises concerns about mergers in the future and "presents a new and unprecedented challenge to biotech investing," according to Christopher Raymond at Piper Sandler.

Josh Schimmer of Evercore ISI argued the suit may shift consolidation toward smaller and earlier-stage biotech companies rather than one large drug company buying another. It could also force large drug companies to become more active and nimble when acquiring smaller companies, and they could take bigger risks when doing so.

"It's not like pharma is going to stop relying on biotech companies to help drive sustainable growth," Schimmer said. "It's just going to force them to look earlier in development, which is where most of the biotech industry currently exists." (Joseph, STAT+ [subscription required], 5/16; Bartz/Leo, Reuters, 5/16; Silverman, "Pharmalot," STAT+ [subscription required], 5/16)