The US Federal Trade Commission has said it will sue to stop Amgen's $27.8 billion acquisition of Horizon Therapeutics in a rare move to block a large pharmaceutical deal.
In its complaint, the FTC said Amgen would be able to use the powerful position it has with insurance companies and pharmacy benefit managers due to its blockbuster drugs to pressure them into favorable terms for Horizon's two key products - the fast-growing thyroid eye disease treatment Tepezza and gout drug Krystexxa.
FTC Bureau of Competition Director Holly Vedova called the lawsuit "the FTC's first challenge to a pharmaceutical merger in recent memory."
"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," she added.
Amgen said in a statement it was disappointed by the FTC decision and said it believed that it had "overwhelmingly demonstrated" that the deal had no legitimate competitive issues.
"We ... intend to work with the court on a schedule that would allow the transaction to close by mid-December," the California-based biotech said.
Horizon shares were down 15% to $94.98 in New York trading.
It said the acquisition has the potential to accelerate the availability of important rare disease medicines to more patients worldwide.
"The FTC's complaint impacts patients and is rooted in a theory about potential future "bundled" contracts with payors and not competitive overlap concerns," it said.
"Horizon does not and has no plans to bundle any of its rare disease medicines. It is imperative that we continue to advocate for access to innovative treatments for patients who may benefit, particularly in diseases with significant unmet needs, and the proposed transaction with Amgen is part of that mission."
"We firmly believe in the benefits of this acquisition and intend to work with the court on a schedule that would allow the transaction to close by mid-December."
Amgen sees revenue from the Horizon medicines as a bulwark against competition that has eroded sales of its blockbuster rheumatoid arthritis drug Enbrel. Other key drugs in Amgen's product portfolio, such as psoriasis therapy Otezla, face the loss of patent protections over the next few years.
Jefferies analyst Michael Yee said drugmakers may change how they view M&A targets based on this FTC case and would emphasize buying smaller companies or those with products still in clinical trials rather than established in the market.
The FTC, which currently has three Democratic commissioners, voted 3-0 to approve the challenge.
In recent years, the agency has typically identified therapeutic overlaps in the companies involved in deals and required one of the medicines to be divested.
