FTC Intervention in Amgen-Horizon Deal Stuns Biopharma
The US Federal Trade Commission’s lawsuit to potentially block the $27.8 merger of Amgen and Horizon Therapeutics is creating heightened concern in the international biopharma sector.
The prospective partners in that deal have already pushed back against the FTC’s legal action launched in late May, calling the agency’s anti-competition arguments “speculation on speculation” that hinges on a number of hypotheticals and “baseless assumptions.” Now Pfizer may be rewriting its plans to acquire cancer drug specialist Seagen.
This even bigger transaction, worth $43 billion, was announced in March this year, but the companies filed the required paperwork only days before the FTC moved against Amgen. In light of this, Pfizer said in a filing with the US Securities and Exchange Commission last week it was withdrawing its prior notification for the Seagen acquisition and would submit another later in the day.
No news has yet emerged as to whether the New York drugs giant has actually submitted a revised plan. The deal requires notification under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976. Under these terms, the initial offer will expire on Jul. 14.
The two US companies have said they intend to close the purchase by the end of 2023 or early 2024. Observers note that though a slight delay probably won’t endanger the Pfizer-Seagen deal it is unclear whether any barriers the US competition watchdog could throw up to thwart the Amgen-Horizon link-up could make this one less palatable.
At the beginning of June, Pfizer applied to the European Commission for approval of the transaction.
Some analysts have suggested that that the FTC — although warning last year that it might get tougher on M&A transactions in biopharma — is more concerned about Amgen’s history of enhancing the monopoly positions of its drugs through product bundling and rebate schemes.
With Pfizer and Seagen, there is little overlap that would allow the companies to conduct such a bundling/rebate strategy, they said.
In the case of Amgen and Horizon, analysts for SVB Securities wrote earlier they believe the FTC is unlikely to win its litigation and that it may simply be acting out of frustration that the US Congress hasn’t enacted stronger laws governing drug pricing.
Drugmakers sue over Medicare price negotiations
US drugmakers are already rolling up their sleeves to fight President Joe Biden’s Inflation Reduction Act (IRA), which gives Medicare – the federal program that covers healthcare for retirees – the power to negotiate lower prices on higher-priced prescription drugs.
Several “Big Pharma” players including US Merck and Bristol Myers Squibb are suing the federal government over the plans. While Eli Lilly has not yet joined the legal action, its CEO, David Ricks, said on US television last week that the provision could endanger drug development.
The “biggest problem” for drugmakers, Ricks explained, stems from a difference in the proposed timeline for negotiating prices on small-molecule drugs. Under the IRA, Medicare can begin negotiations on these as early as nine years after they are approved by the US Food and Drug Administration approval, compared with 13 years for biologics.
Author: Dede Williams, Freealnce Journalist
