US regulators sue to block Amgen’s $28.3bn deal for Horizon

The US Federal Trade Commission has sued to block Amgen’s $28.3bn deal to acquire Horizon Therapeutics.

The lawsuit marks the first time in more than a decade that the US antitrust regulator has sought to block a deal in the pharmaceutical sector.

Shares in Horizon, which is based in Ireland, were down nearly 16 per cent on Tuesday morning.

The news also appeared to hit Seagen, which slid more than 5 per cent as investors weighed the possibility of the FTC targeting other deals in the sector. The oncology-focused biotech agreed a $43bn deal to be acquired by Pfizer, which on Tuesday launched a jumbo eight-part bond deal to fund the acquisition.

FTC chair Lina Khan is among a new cohort of progressive antitrust officials appointed by US president Joe Biden, who have vowed to adopt a tougher stance and crack down on anti-competitive conduct in the US.

When announcing the transaction last year, Amgen had said that Horizon’s pipeline of medicines would “strongly complement” its R&D portfolio. The pipeline includes drugs targeting rare inflammatory and autoimmune diseases as well as Horizon’s blockbuster treatment for thyroid eye disease, Tepezza.

“We understand the FTC and current administration is prepared to continue its more aggressive strategy to deter M&A even if legal merits are not strong as Amgen doesn’t have any overlap or anti-competitive dynamics with Horizon,” said Michael Yee, analyst at Jefferies.

The FTC under Khan and the Department of Justice’s antitrust unit under Jonathan Kanter have aggressively challenged deals they deem to be anti-competitive.

One of the biggest tests for Khan will be the FTC’s bid to block Microsoft’s $75bn acquisition of gaming company Activision Blizzard. The deal was cleared by the EU this week, though the UK has decided to block the transaction.

The antitrust watchdog under Khan has also heightened its scrutiny of the pharmaceutical industry beyond corporate tie-ups. The agency launched an inquiry last June into intermediaries in the prescription drug industry. It required the six largest pharmacy benefit managers, which negotiate fees and rebates with drug manufacturers, to share information on their business practices.

Less than 10 days later, the FTC said it would intensify enforcement against illicit rebate plans or bribes to prescription drug intermediaries that block consumers’ access to low-cost drugs.

Upon announcing the FTC’s tougher enforcement stance, Khan warned that this “should put the entire prescription drug industry on notice: when we see illegal rebate practices that foreclose competition and raise prescription drug costs for families, we won’t hesitate to bring our full authorities to bear”.

Additional reporting by Peter Wells in New York