Amgen gets US FTC’s go-ahead for $27.8 billion Horizon deal

By Manas Mishra and David Shepardson

(Reuters) -The U.S. Federal Trade Commission has allowed Amgen to go ahead with its $27.8 billion acquisition of Horizon Therapeutics under a settlement that prevents the drugmaker from using anticompetitive practices.

The agreement, announced on Friday, ends months of uncertainty over the deal since the FTC in May filed a lawsuit over concerns that Amgen would leverage its drugs to secure favorable insurance coverage terms for Horizon’s thyroid eye disease treatment Tepezza and gout drug Krystexxa.

Under the FTC settlement, Amgen is prohibited from bundling any of its products with Tepezza or Krystexxa, and from using any product rebate or contract term to exclude or disadvantage products that would compete with those drugs.

It also prevents Amgen from buying any competitors to the two Horizon drugs without the FTC’s permission.

“While the companies do not have drugs that directly compete with one another, Commission staff focused on the deal rationale and assessed how the acquisition would change the combined firm’s power and incentive to thwart competition,” FTC Chair Lina Khan said in a statement.

The FTC filed a lawsuit on May 16 in a rare move to block a large pharmaceutical deal, but suspended its challenge in late August, enabling the agency to consider whether it should settle the case.

The lawsuit had raised concerns over increased oversight on mergers and acquisitions in a sector that often turns to consolidation to power future growth as patents on older treatments expire.

“We believe this (settlement) is not a surprise and that it is a positive for the M&A space in the sector; however, we also believe this could be a theme in future M&A wherein such restrictions … will apply to all future transactions,” said Truist analyst Robyn Karnauskus.

Consolidation in the industry has given companies the power to engage in exclusionary practices that can cause prices for essential medications to surge, the FTC said.

“The bundling and exclusionary rebating practices at issue in this matter highlight deeper concerns about how pharmaceutical companies and pharmacy benefit managers may work together to deprive Americans of access to affordable drugs,” said Khan.

The companies expect the deal to close early in the fourth quarter.

Horizon’s shares rose nearly 3% in early trading, while Amgen’s shares were marginally higher. Shares of Seagen Inc, which is in the process of being acquired by Pfizer, rose 1.5%.

(Reporting by Manas Mishra in Bengaluru and David Shepardson in Washington; Editing by Devika Syamnath)