On Tuesday, May 16, the US Federal Trade Commission (FTC) filed a lawsuit to block Amgen Inc.’s US$27.8 million acquisition of Horizon Therapeutics PLC.

Unlike most merger challenges, the FTC did not allege that Horizon and Amgen sold competing products or were likely to become competitors in the absence of a merger. Instead, the FTC alleged that the acquisition would hurt future competition against Horizon’s block-buster drugs by allowing Amgen to add those drugs to its rebate program.

The FTC’s complaint focused on two Horizon products, Tepezza and Krystexxa. Tepezza is the only FDA-approved treatment for thyroid eye disease (TED) and Krystexxa is the only FDA-approved treatment for chronic refractory gout (CRG).

While both products currently face little to no competition, the FTC alleges that Horizon expects to face increased competition from clinical-stage rivals in the coming years and that Amgen’s acquisition would insulate Horizon from that competition. Amgen is one of the world’s largest biopharmaceutical companies with a wide portfolio of products, including nine products that each generated sales in excess of US$1 billion in 2022.

The FTC alleges that Amgen leverages its product portfolio in negotiations with pharmacy benefit managers (PBMs) and payers by offering cross-market rebates on bundles of products in which it includes products facing no competition in exchange for favorable formulary positions.

Large rebates generally reflect procompetitive price competition and often lead to lower prices, but the FTC alleges that Amgen’s product portfolio is so significant and its rebates so high that Amgen would be able to secure a favorable formulary position at every major PBM and payer. Smaller companies, the FTC claims, such as potential developers of alternative treatments for TED and CRG, would not be able to match Amgen’s cross-market rebates and would be foreclosed from effectively competing against Tepezza and Krystexxa.

This is not the first antitrust complaint to allege that generous rebates can be anticompetitive. Within the last year, Applied Medical Resources Corporation sued Medtronic for violating antitrust laws by entering into exclusive rebate bundles with GPOs, and the US District Court for the District of Delaware denied Amgen’s motion to dismiss a separate lawsuit filed by Regeneron last year alleging that Amgen’s rebate program violated antitrust laws. But it is unusual that the FTC has used this theory to attempt to block a merger.

What does it mean?

The FTC’s lawsuit demonstrates that an acquisition isn’t safe from challenge just because there are no actual or potential horizontal overlaps. The current administration is willing to challenge transactions based on novel theories of harm and indirect risks to competition. Companies should revisit and reconsider their bundling programs in light of the current trend in challenging these types of programs both by private plaintiffs and government enforcers and obtain advice on the antitrust implications. This is particularly true for pharmaceutical and medical device companies.

While large companies certainly appear to be in the cross-hairs of this administration, not every acquisition made by a large company will be challenged. The FTC’s complaint suggests a few relevant factors increase the likelihood of a challenge.

Big companies beware: The FTC has demonstrated a focus on exploring unconventional means by which larger firms can abuse their dominance and FTC Chair Lina Khan has argued that modern antitrust law does not fully account for the subtle ways that large platforms can hurt competition. Smaller companies are unlikely to receive the same type of scrutiny.

Customer concentration matters: Part of the FTC’s analysis is based on the fact that Amgen and Horizon’s customers’ markets are highly concentrated. The fewer potential customers there are, the easier it is for the seller to foreclose a competitor from the market. Large companies may not experience the same type of scrutiny as long as they have many potential purchasers.

High entry barriers create higher burdens: The FTC emphasized the high cost needed to develop an alternative FDA-approved drug to compete against TED and CRG. Foreclosure is a greater risk in markets with high entry barriers because competitors are less willing to go through the hurdles required to enter a market if part of the market appears to be foreclosed.

Conduct allegations create merger risks: Part of the FTC’s concerns about Amgen’s potential rebate strategy may stem from the fact that Amgen’s rivals claim to be harmed by Amgen’s rebate program. The FTC is more likely to sue where competitors and customers allege potential harm from existing practices or the potential transaction.

Conduct remedies are likely insufficient: The FTC typically requires structural remedies over conduct or behavioral remedies. Transacting parties may think that the agencies will be more willing to consider conduct remedies in the case of merger challenges that do not allege direct overlaps. But the FTC’s challenge to the Amgen-Horizon acquisition suggests otherwise given Amgen’s “committ[ment] that [it] would not bundle the Horizon products raised as issues.”

Robin Adelstein is the Global Head of Antitrust and Competition and US Co-Head of Commercial Litigation at Norton Rose Fulbright. Prior to joining the firm, Robin was the North American General Counsel of Sandoz, a division of Novartis.

Mark Angland is a senior associate in the Antitrust and Competition Group at Norton Rose Fulbright.


Global Head of Antitrust and Competition Co-Head of Commercial Litigation, US
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