The FTC’s efforts to stop Horizon’s acquisition of Amgen face a difficult situation

Diane Bartz

WASHINGTON (Reuters): The Federal Trade Commission (FTC) is facing an uphill battle against Amgen Inc’s $27.8 billion takeover of Horizon Therapeutics, presenting an unverified argument before a Trump-appointed judge, three antitrust experts said.

Moreover, the FTC complaint, unsealed late Tuesday, raises concerns about agreements between drug companies that provide discounts to pharmacy benefit managers and insurers in exchange for making it easier for customers to access their drugs.

This appears to contradict the FTC’s practice of preventing companies from using market power to raise prices.

“Any time a complaint contains a new theory, it’s an uphill battle,” said Katie Funk, an antitrust attorney with Baker at Donelson, adding that she will have to convince a judge that “the alleged anticompetitive effects are not without merit, but are serious and important.”

The FTC lawsuit has raised concerns among investors who had dismissed the antitrust risks of the Amgen deal because of its limited overlap with Horizon. They now worry that other potential drug deals — in which many smaller companies are being bought by industry giants — could be at risk.

The FTC may also have difficulty convincing the judge hearing the case, Judge John Kness, who was nominated to the bench by former President Donald Trump. While it’s unclear how Kness will view the matter, judges appointed by GOP presidents are generally viewed as more business-friendly.

To be sure, some antitrust experts said they need to look at the FTC’s evidence and assess how well-founded the allegations will be before making guesses about the outcome.

In its lawsuit, the FTC said it believes Amgen could use its top-selling drugs to pressure insurance companies and drug fund managers to favor two of Horizon’s key products — the fast-growing thyroid and eye disease drug Tepezza and gout drug Krystexxa — over potential competitors.

The FTC said it filed the lawsuit on behalf of patients who needed expensive treatments for serious conditions and who could be harmed by the deal. “Our complaint is firmly rooted in long-standing antitrust law, and we look forward to presenting our arguments in court,” an FTC spokesman said.

AMGEN OFFERS A REMEDY

Amgen said Tuesday it had submitted an offer to the FTC in hopes of resolving the issue. “We have committed not to combine Horizon products that have been reported as having problems,” Amgen said in a statement.

This type of commitment, often called a behavioral remedy, is no longer as popular with law enforcement agencies, which view such agreements as ineffective.

According to Andre Barlow of Doyle, Barlow and Mazard, PLLC, the difficulty for the FTC is that negotiations between pharmaceutical benefit administrators and drug manufacturers often result in lower drug prices.

“The FTC will have a big hurdle to clear in filing this complaint,” he said. “Antitrust laws do not condemn lower prices, rather they support 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 legitimate concerns that the FTC has raised, but it’s unclear what the court will do about it,” he said. “The fact that this is a Trump-appointed judge, who you would expect to be more conservative, suggests that the FTC will have a more difficult path.”

(Reporting by Diane Bartz; editing by Sonali Paul)