Amgen Inc. and Horizon Therapeutics plc; Analysis of Agreement Containing Consent Order To Aid Public Comment, 62786-62791 [2023-19809]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 88, Number 176 (Wednesday, September 13, 2023)]
[Notices]
[Pages 62786-62791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19809]


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FEDERAL TRADE COMMISSION

[File No. 231 0037]


Amgen Inc. and Horizon Therapeutics plc; Analysis of Agreement 
Containing Consent Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis of Proposed Consent Order to Aid Public Comment 
describes both the allegations in the complaint and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before October 13, 2023.

ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write: ``Amgen Inc. and 
Horizon Therapeutics plc; File No. 231 0037'' on your comment and file 
your comment online at https://www.regulations.gov by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, please mail your comment to the following address: Federal 
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, 
Suite CC-5610 (Annex T), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Stephen Mohr (202-326-2850), Bureau of 
Competition, Federal Trade Commission, 400 7th Street SW, Washington, 
DC 20024.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule Sec.  2.34, 16 CFR 
2.34, notice is hereby given that the above-captioned consent agreement 
containing a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of 30 days. The following 
Analysis of Agreement Containing Consent Orders to Aid Public Comment 
describes the terms of the consent agreement and the allegations in the 
complaint. An electronic copy of the full text of the consent agreement 
package can be obtained from the FTC website at this web address: 
https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before October 13, 
2023. Write ``Amgen Inc. and Horizon Therapeutics plc; File No. 231 
0037'' on your comment. Your comment--including your name and your 
state--will be placed on the public record of this proceeding, 
including, to the extent practicable, on the https://www.regulations.gov website.
    Because of the agency's heightened security screening, postal mail 
addressed to the Commission will be delayed. We strongly encourage you 
to submit your comments online through the https://www.regulations.gov 
website. If you prefer to file your comment on paper, write ``Amgen 
Inc. and Horizon Therapeutics plc; File No. 231 0037'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW, Suite CC-5610 (Annex T), Washington, DC 20580.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule Sec.  
4.10(a)(2), 16 CFR 4.10(a)(2)--including competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form,

[[Page 62787]]

must be clearly labeled ``Confidential,'' and must comply with FTC Rule 
Sec.  4.9(c). In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request and must identify the specific portions of 
the comment to be withheld from the public record. See FTC Rule Sec.  
4.9(c). Your comment will be kept confidential only if the General 
Counsel grants your request in accordance with the law and the public 
interest. Once your comment has been posted on https://www.regulations.gov--as legally required by FTC Rule Sec.  4.9(b)--we 
cannot redact or remove your comment from that website, unless you 
submit a confidentiality request that meets the requirements for such 
treatment under FTC Rule Sec.  4.9(c), and the General Counsel grants 
that request.
    Visit the FTC website at https://www.ftc.gov to read this document 
and the news release describing this matter. The FTC Act and other laws 
the Commission administers permit the collection of public comments to 
consider and use in this proceeding, as appropriate. The Commission 
will consider all timely and responsive public comments it receives on 
or before October 13, 2023. For information on the Commission's privacy 
policy, including routine uses permitted by the Privacy Act, see 
https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order (``Consent 
Agreement'') from Amgen Inc. (``Amgen'') and Horizon Therapeutics plc 
(``Horizon'') to remedy the anticompetitive effects resulting from 
Amgen's proposed acquisition of Horizon (the ``Acquisition''). Amgen is 
one of the world's largest biopharmaceutical companies and Horizon 
currently enjoys a monopoly on the medicines that treat thyroid eye 
disease (``TED'') and chronic refractory gout (``CRG''). The Commission 
alleged in its Complaint that the Acquisition, if consummated, would 
violate section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and 
section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 
45, by enabling Amgen to leverage its portfolio of blockbuster drugs to 
foreclose actual or potential rivals to Horizon's top-selling 
medications, thereby substantially lessening competition in the markets 
for the sale of FDA-approved drugs to treat TED and CRG and tending to 
create a monopoly in those same markets.
    The Consent Agreement, which contains the proposed Decision and 
Order (``Order'' or ``D&O'') will remedy the alleged violations by 
preserving the competition that would otherwise be eliminated by the 
Acquisition. Specifically, under the terms of the proposed Order, Amgen 
is prohibited from leveraging its drug portfolio to foreclose or 
disadvantage competitors to Tepezza or Krystexxa for 15 years from the 
date of the issuance of the proposed Order. To protect robust future 
competition in the TED and CRG markets, including due to acquisitions 
by Amgen that may or may not be reportable under the Hart-Scott-Rodino 
(``HSR'') Premerger Notification Act, the proposed Order requires Amgen 
to obtain the Commission's prior approval for the acquisition of any 
product or business interest involved in: (1) the manufacture or sale 
of any drug indicated to treat TED or CRG, or (2) the pre-commercial 
development of any drug in development for TED or CRG that has 
completed an FDA Phase II or Phase III clinical trial until December 
31, 2032.
    The Consent Agreement with the proposed Order has been placed on 
the public record for 30 days for receipt of comments from interested 
persons. Comments received during this period will become part of the 
public record. After thirty days, the Commission will review the D&O as 
well as any comments received, and decide whether it should withdraw, 
modify, or make final the D&O.

I. The Parties and Transaction

    Amgen is a corporation organized, existing, and doing business 
under and by virtue of the laws of the State of Delaware with its 
principal executive offices located at One Amgen Center Drive, Thousand 
Oaks, California. Amgen is a biotechnology company that develops, 
manufactures, and delivers human therapeutics. In 2022, Amgen had 
global product sales of about $24.8 billion (and total revenues of 
about $26.3 billion). The United States is Amgen's largest market, 
representing approximately 72% of its sales. Amgen's current product 
portfolio includes 27 approved drugs, nine of which generated 2022 
sales in excess of $1 billion.
    Horizon is a public limited company organized, existing, and doing 
business under and by virtue of the laws of Ireland with its principal 
executive offices located at 70 St. Stephen's Green, Dublin 2, D02 
E2X4, Ireland. Horizon is a global biotechnology company focused on the 
discovery, development, and commercialization of medicines that treat 
rare, autoimmune, and severe inflammatory diseases. Horizon markets and 
distributes eleven drug products in the United States through its 
wholly owned subsidiary, Horizon Therapeutics USA, Inc. Horizon's U.S. 
headquarters is in Deerfield, Illinois. The company's two leading 
marketed drugs are Tepezza for the treatment of TED and Krystexxa for 
the treatment of CRG. The two drugs accounted for approximately 74% of 
Horizon's approximately $3.6 billion in net sales in 2022, with Tepezza 
generating $1.96 billion and Krystexxa netting $716 million.
    Pursuant to an agreement, dated December 11, 2022, Amgen agreed to 
acquire all the issued and ordinary share capital of Horizon through a 
newly formed, wholly owned subsidiary of Amgen for $116.50 per share in 
cash. The total value of the Acquisition is approximately $28 billion.

II. The Relevant Products and Market Structure

The Sale of FDA-Approved Drugs To Treat Thyroid Eye Disease

    A relevant line of commerce in which to analyze the effects of the 
Acquisition is the sale of FDA-approved drugs to treat TED. TED is a 
serious, progressive, and vision-threatening rare autoimmune condition, 
with a potential patient population of over 60,000 in the United 
States. While TED often occurs in people living with hyperthyroidism or 
Graves' disease, it is a distinct disease that is caused by 
autoantibodies activating an IGF-1R-mediated signaling complex on cells 
within the retro-orbital space. This disease leads to a cascade of 
negative effects that may cause long-term, irreversible eye damage 
including proptosis (eye bulging), strabismus (misalignment of the 
eyes) and diplopia (double vision)--and in some cases can lead to 
blindness.
    Horizon's Tepezza (teprotumumab-trbw), a fully human monoclonal 
antibody and a targeted inhibitor of the insulin-like growth factor-1 
receptor, is the first and only drug approved by the FDA to treat TED. 
The FDA granted Tepezza an orphan drug designation in January 2020. 
Tepezza is administered to patients intravenously by a healthcare 
provider, typically in an outpatient infusion center or a doctor's 
office. The wholesale acquisition cost for a single vial of Tepezza is 
almost $15,000, and a full course of treatment of Tepezza can cost over 
$350,000.
    As the only FDA-approved TED treatment, Tepezza currently faces no

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direct competition in the United States. However, Tepezza's monopoly in 
the TED market is threatened by potential entry in the coming years 
from rivals developing competing drugs. For example, Viridian 
Therapeutics, Inc. (``Viridian'') is advancing multiple candidates 
through clinical programs for the treatment of patients with TED that 
could threaten Tepezza's monopoly. Viridian has initiated a Phase 3 
clinical trial for its leading candidate, VRDN-001, in patients with 
active TED. In addition to its program for intravenously administered 
VRDN-001, Viridian is developing subcutaneous products with the goal of 
providing a more conveniently administered therapy to patients with 
TED.

The Sale of FDA-Approved Drugs To Treat Chronic Refractory Gout

    A relevant line of commerce in which to analyze the effects of the 
Acquisition is the sale of FDA-approved drugs to treat CRG in adult 
patients. Gout is one of the most common forms of inflammatory 
arthritis and is associated with multiple comorbidities. CRG is severe 
chronic gout in adult patients that is refractory to conventional 
therapy. Of the 9.5 million gout sufferers in the United States, more 
than 100,000 patients may have CRG, which frequently causes crippling 
disabilities and significant joint damage.
    Horizon's Krystexxa (pegloticase injection) is the first and only 
FDA-approved drug to treat CRG. The FDA granted Krystexxa an orphan 
drug designation in September 2010, and subsequently approved a 
supplemental Biologics License Application in July 2022, expanding the 
drug's labeling to include Krystexxa co-administered with methotrexate, 
an immunomodulatory therapy. Krystexxa is a PEGylated uric acid 
specific enzyme that is administered intravenously in an outpatient 
infusion center or doctor's office by healthcare providers. The annual 
wholesale acquisition cost of a course of treatment of Krystexxa is 
approximately $650,000.
    As the only FDA-approved CRG treatment, Krystexxa currently faces 
no direct competition in the United States. However, Krystexxa's 
monopoly in the CRG market is threatened by potential entry in the 
coming years. For example, Selecta Biosciences (``Selecta'') initiated 
a Phase 3 clinical program of a candidate, SEL-212, for the treatment 
of CRG. SEL-212 is a combination of Selecta's ImmTOR immune tolerance 
platform and a therapeutic uricase enzyme (pegadricase).

III. The Relevant Geographic Market

    The United States is the relevant geographic market in which to 
assess the competitive effects of the proposed Acquisition. FDA-
approved drugs to treat TED and CRG are prescription pharmaceutical 
products and regulated by FDA. As such, products sold outside the 
United States, but not approved for sale in the United States, do not 
provide viable competitive alternatives for U.S. consumers.

IV. Competitive Effects of the Acquisition

    Emerging competition to Tepezza and Krystexxa promises to generate 
a host of benefits for patients who suffer from TED and CRG, for 
doctors who prescribe treatments for the conditions, and for patients, 
employers, and health plans that ultimately pay for the medications. 
The Acquisition, however, would likely result in substantial 
competitive harm by foreclosing or disadvantaging such emerging 
competition and entrenching Tepezza's and Krystexxa's monopoly 
positions.

Post-Acquisition, Amgen Would Possess the Ability and Incentive To 
Foreclose or Disadvantage Rivals to Tepezza or Krystexxa

    Post-Acquisition, Amgen would have the ability and incentive to 
sustain and entrench its dominant positions in the markets for FDA-
approved TED and CRG drugs by leveraging its portfolio of blockbuster 
drugs to foreclose or disadvantage future rivals in these markets.
    Negotiations with PBMs and payers (i.e., health plans or plan 
sponsors) are crucial to Amgen, as these entities' formulary and 
utilization management decisions effectively determine which 
medications patients can access. Amgen often gives these entities 
substantial rebates in exchange for favorable formulary positions for 
its drugs. Drugs reimbursed through the pharmacy benefit are typically 
self-administered and dispensed through a retail or specialty pharmacy. 
Most of Amgen's blockbuster drugs, such as Enbrel, are covered under 
payers' pharmacy benefits. In contrast, drugs that are administered by 
a healthcare provider, such as Tepezza and Krystexxa, are typically 
reimbursed under payers' medical benefits. Payers typically rely on 
PBMs to negotiate their pharmacy benefit coverage and rebates, while 
medical benefit managers (often owned by the same PBMs) or health plans 
themselves generally negotiate their medical benefit policies and 
rebates.
    With its broad and powerful drug portfolio, Amgen does not limit 
itself to single-product rebate agreements with PBMs and payers. For 
example, one tactic Amgen employs is providing cross-market bundles or 
bundled rebates. Through this strategy, Amgen provides greater rebates 
on one or more of its blockbuster products to secure favorable 
formulary placement for other medications in different product markets. 
Due to the enormous sales and consistent volume of Amgen's blockbuster 
drugs, which last year generated over $4 billion in global sales, even 
small enhancements to rebates can ensure payers accept such contracts. 
Therefore, Amgen post-Acquisition may have the ability to insulate 
Tepezza and Krystexxa from competitive threats through strategies that 
include conditioning rebates on one or more of its must-have 
blockbuster drugs in return for payer agreements to deny coverage to, 
or otherwise disfavor, potential or actual rivals to the two 
medications. That strategy would have the effect of raising rivals' 
barriers to entry and foreclosing them from effectively competing in 
the markets for the sale of FDA-approved drugs to treat TED and CRG.
    A bundle of one of Amgen's blockbuster drugs such as Enbrel with 
Tepezza or Krystexxa would be both a cross-market bundle (i.e., a 
bundle involving drugs in different product markets) and a cross-
benefit bundle (i.e., a bundle that includes drugs managed by a health 
plan's medical benefit with drugs managed by its pharmacy benefit). 
Although payers have historically siloed pharmacy and medical benefits 
from one another, the same payer determines coverage for drugs that are 
reimbursed through its beneficiaries' pharmacy and medical benefits and 
bears the cost of the drug regardless of whether it is reimbursed 
through the pharmacy or medical benefit. Additionally, each of the 
three largest PBMs, in part due to recent consolidation, is now 
vertically integrated with payers that manage patients' medical 
benefits: OptumRx/United Healthcare, CVS Caremark/Aetna, and Express 
Scripts/Cigna. Even non-vertically integrated PBMs are increasingly 
able to combine pharmacy and medical benefit capabilities that allow 
them to market cross-benefit management tools to their clients. These 
industry trends, which are altering a market structure that previously 
siloed pharmacy and medical benefits from one another, would facilitate 
Amgen's ability to implement cross-benefit bundles that link its 
blockbuster pharmacy benefit drugs, like Enbrel, and medical benefit 
drugs acquired through

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the Acquisition, like Tepezza and Krystexxa.
    Post-Acquisition, Amgen also will have the incentive to leverage 
its portfolio to bias decisions about drug coverage to protect the 
value of its newly acquired monopoly products. Multiple rivals are 
developing competitors to Tepezza and Krystexxa, threatening the 
massive profit pools generated by these drugs. Competitive entry would 
likely lead to competition on the merits, with payers leveraging drugs 
off one another to secure lower prices. Thus, the merged firm will have 
an incentive to leverage Amgen's blockbuster drugs to defend the 
monopoly share of the Tepezza and Krystexxa markets.

The Acquisition Would Entrench Tepezza's and Krystexxa's Monopolies

    The Acquisition would entrench and extend Tepezza's and Krystexxa's 
monopolies in the TED and CRG markets by substituting Amgen, with its 
broad and powerful portfolio of blockbuster drugs, for Horizon with its 
smaller portfolio, thus raising entry barriers and dissuading smaller 
firms from aggressively competing. Currently, Horizon has only three 
prominent on-market drugs focused on small patient populations with 
rare diseases. The merged firm, however, would have Amgen's large 
portfolio of blockbuster drugs and ability to contract for cross-
benefit bundles to secure preferential formulary placement, which 
Tepezza's and Krystexxa's impending competitors lack. Any potential 
competitor to Tepezza or Krystexxa would need a similar portfolio of 
highly utilized and rebated blockbuster drugs to compete effectively 
for payer coverage in the TED and CRG markets. As a result, the 
Acquisition could deter future entry and deprive patients, doctors, and 
payers of the benefits of competition and access to new treatments for 
two rare diseases.

V. The Proposed Order

    The proposed Order eliminates the competitive concerns raised by 
the proposed Acquisition by prohibiting the combined company from 
leveraging Amgen's drug portfolio to foreclose or disadvantage 
competitors to Tepezza or Krystexxa for 15 years from the date of the 
issuance of the D&O.
    Pursuant to the proposed Order, post-Acquisition Amgen will be 
prohibited from directly, indirectly, explicitly, or implicitly 
conditioning any product rebate on, or any contract terms related to, 
any Amgen product in exchange for the purchase, coverage, placement, or 
positioning, individually or in any combination, of Krystexxa or 
Tepezza. The proposed Order defines rebates broadly to cover any 
concession or dollar amount provided by Amgen including, rebates, 
administrative fees, volume discounts, patient conversion payments, 
market share-related payments, formulary placement fees, disease 
management program payments, promotional allowances, portal fees, data 
fees, and specialty pharmacy discounts.
    Pursuant to the proposed Order, post-Acquisition Amgen also will be 
prohibited from directly, indirectly, explicitly, or implicitly 
conditioning any product rebate on, or any contract terms related to, 
any Amgen product in exchange for the exclusion, detriment, or 
disadvantage, individually or in any combination, of any competitor to 
Tepezza or Krystexxa. This prohibition applies to both drugs and 
biologics, as well as biosimilars and other drugs that are therapeutic 
equivalents, which share an FDA indication with Tepezza or Krystexxa, 
as well as products which are used as off-label treatments for TED or 
CRG.
    If Amgen believes that a federal, state, or local statute, rule, or 
regulation requires Amgen to enter into a contract which would be 
prohibited by the proposed Order, Amgen is required to provide 30-days 
prior notice to the Commission before entering into such a contract. 
Additionally, because of the concentrated nature of the relevant 
markets, as well as the possibility of future acquisitions by Amgen in 
these markets, the proposed Order includes a prior approval for the 
acquisition of any product or business interest involved in: (1) the 
manufacture or sale of any drug indicated to treat TED or CRG, or (2) 
the pre-commercial development of any drug in development for TED or 
CRG that has completed an FDA Phase II or Phase III clinical trial. 
This provision is effective until December 31, 2032.
    To ensure compliance with the proposed Order, the Commission will 
appoint a monitor to observe and report on Amgen's compliance. Among 
other obligations, the proposed Order requires Amgen to submit to the 
monitor all contracts with payers related to the purchase, coverage, 
placement, or positioning of Tepezza or Krystexxa in the United States 
and to maintain any documents related to any offers, negotiations, 
disputes, or enforcement for such contracts. Additionally, Amgen is 
required to submit regular reports to the Commission to enable the 
Commission to determine independently whether Amgen is complying with 
the proposed Order.
    The purpose of the proposed Order is, among other things, to 
address the theories of harm to competition alleged by the Commission 
in its Complaint, in this matter, and in the Commission's Joint Federal 
Court Complaint for Temporary Restraining Order and Preliminary 
Injunction filed with the states of California, Illinois, Minnesota, 
New York, Washington and Wisconsin (``Interested States'') in the 
United States District Court, Northern District of Illinois, June 22, 
2023, Case # 1:23-cv-03053, by formalizing Amgen's commitment not to 
engage in the leveraging or conditioning of Amgen's drug products with 
Tepezza or Krystexxa, as described above. The Interested States will be 
receiving certain information from Amgen and the monitor as those 
states have had a strong interest in the resolution of the federal 
court complaint, have contributed significantly to the investigation of 
Amgen's potential anticompetitive transaction with Horizon, and will be 
kept apprised of Amgen's ongoing compliance with the proposed Order.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement and proposed Order, and it is not intended to 
constitute an official interpretation of the proposed Order or to 
modify its terms in any way.

    By direction of the Commission.
April J. Tabor,
Secretary.

Statement of Chair Lina M. Khan Joined by Commissioner Rebecca Kelly 
Slaughter and Commissioner Alvaro Bedoya

    All too often, Americans can't afford the medicines they need. Drug 
prices in America are higher than they are anywhere else in the world. 
At the Federal Trade Commission, we hear regularly from people about 
how high drug prices harm, and even wreck, lives. At one of our Open 
Commission Meetings, a parent recounted how high costs forced her son 
to ration insulin, with fatal results.\1\ We've heard from people about 
how high drug prices have forced them to stay in jobs they would 
otherwise leave or stunted the growth of their small businesses.\2\ 
These stories reflect a broader crisis, with around 18 million 
Americans now reporting that high drug prices lead them to routinely

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ration their medicines or skip them altogether.\3\
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    \1\ Fed. Trade Comm'n, Tr. of Open Comm'n Meeting, at 18-19 
(Oct. 21, 2021), https://www.ftc.gov/system/files/documents/public_events/1597522/20211021opencommissionmeetingtranscript.pdf.
    \2\ Id. at 14-19, 18-19; Colo. Dep't of Law, Prescription 
Insulin Drug Pricing Report (Nov. 2020), https://coag.gov/app/uploads/2020/11/Insulin-Report-102020.pdf.
    \3\ Dan Witters, In U.S., an Estimated 18 Million Can't Pay for 
Needed Drugs, Gallup (Sept. 21, 2021), https://news.gallup.com/poll/354833/estimated-million-pay-needed-drugs.aspx.
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    Contributing to the high and rising costs of medicines are business 
practices that may constitute unfair methods of competition, in 
violation of Section 5 of the FTC Act. These practices include schemes 
by pharmaceutical manufacturers to extend or exploit the exclusionary 
power of their patents beyond their lawful patent rights, such as pay-
for-delay agreements, product hopping, and patent thicketing. Other 
practices can impede competition from generics and biosimilars, 
including restrictive agreements that deny critical inputs to generics 
\4\ and kickbacks from brand-name pharmaceutical manufacturers to 
middlemen like pharmacy benefit managers (``PBMs'').\5\ These 
potentially unlawful practices can be enabled by mergers that give 
pharmaceutical companies the power to raise entry barriers and exclude 
rivals in ways that hike prices, inhibit access, and suppress 
innovation.\6\
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    \4\ Statement of Chair Lina M. Khan on the Ruling by Judge 
Denise L. Cote, Federal Trade Commission et al. v. Vyera 
Pharmaceuticals, LLC et al. (Jan. 14, 2022), https://www.ftc.gov/system/files/documents/public_statements/1599663/chair_khan_statement_on_the_ruling_by_judge_cote_regarding_ftc_v_vyera_pharmaceuticals_llc.pdf.
    \5\ Remarks of Chair Lina M. Khan Regarding Policy Statement on 
Rebates and Fees in Exchange for Excluding Lower-Cost Drug Products 
(June 16, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Remarks-Chair-Lina-Khan-Regarding-Policy-Statement-Rebates-Fees.pdf; 
Statement of Chair Lina M. Khan Regarding the Policy Statement 
Concerning Reliance on Prior PBM-Related Advocacy Statements and 
Reports (July 20, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/StatementofChairLinaMKhanrePBMLetterWithdrawal.pdf; Statement of 
Commissioner Rohit Chopra Regarding the Commission's Report on 
Pharmacy Benefit Manager Rebate Walls (May 28, 2021), https://www.ftc.gov/system/files/documents/public_statements/1590528/statement_of_commissioner_rohit_chopra_regarding_the_commissions_report_on_pharmacy_benefit_manager.pdf.
    \6\ Statement of Commissioners Rohit Chopra and Rebecca Kelly 
Slaughter, Federal Trade Commission Report on the Use of Section 5 
to Address Off-Patent Pharmaceutical Price Spikes (June 24, 2019), 
https://www.ftc.gov/system/files/documents/reports/ftc-report-standalone-section-5-address-high-pharmaceutical-drug-biologic-prices/p180101_section_5_report_dissenting_statement_by_chopra_and_slaughter_6-27-19.pdf.
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    Today the Commission announces a settlement of charges that Amgen, 
Inc.'s acquisition of Horizon Therapeutics plc would violate the 
antitrust laws. In its complaint, the FTC charged that this $27.8 
billion deal--one of the largest pharmaceutical deals in recent 
memory--would likely lessen competition in the market for FDA-approved 
drugs to treat two rare diseases and would tend to create a monopoly in 
those markets.\7\ In particular, the complaint stated that the deal 
would enable Amgen to leverage its portfolio of blockbuster drugs to 
protect the monopoly positions of two Horizon drugs. Not only was this 
complaint the Commission's first challenge to an unconsummated 
pharmaceutical merger in over fourteen years,\8\ but it also 
represented a significant advancement in the Commission's 
pharmaceutical merger enforcement program.
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    \7\ Complaint ]] 77 & 79, In re Amgen Inc. & Horizon 
Therapeutics plc, Docket No. 9414 (FTC June 22, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/Amgen-Horizon-Part-III-Complaint-PUBLIC.pdf.
    \8\ Press Release, Fed. Trade Comm'n, FTC Authorizes Suit to 
Stop CSLs Proposed $3.1 Billion Acquisition of Talecris 
Biotherapeutics (May 27, 2009), https://www.ftc.gov/news-events/news/press-releases/2009/05/ftc-authorizes-suit-stop-csls-proposed-31-billion-acquisition-talecris-biotherapeutics.
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    In recent years, the FTC has been examining and updating our 
approach to pharmaceutical mergers. As a growing number of analysts, 
researchers, and advocates have increasingly recognized, pharmaceutical 
mergers can stifle competition and harm patients even where the merging 
parties do not sell or develop any overlapping drugs.\9\ For example, 
consolidation among pharmaceutical companies can facilitate collusion, 
distort incentives to research and develop new drugs, increase the 
bargaining leverage of large incumbents, and reduce potential entrants' 
access to capital. Acquisitions by the largest pharmaceutical companies 
can unlock additional means of profitably exploiting market power, 
especially where the company has a history of illegal behavior. The 
Pharmaceutical Merger Task Force--launched by the FTC, DOJ, and state 
and international competition enforcers during Commissioner Slaughter's 
tenure as Acting Chair--worked to better understand the market 
behavior, incentives, and business decisions of pharmaceutical 
companies and the full set of mechanisms by which mergers and 
acquisitions in the pharmaceutical industry can harm patients and 
competition.\10\
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    \9\ See, e.g., Michael A. Carrier & Gwendolyn J. Lindsay Cooley, 
Prior Bad Acts and Merger Review, 111 Geo. L.J. Online 106 (2023); 
Robin Feldman & Mark Lemley, Atomistic Antitrust, 63 Wm. & Mary L. 
Rev. 1869 (2022); Patricia Danzon & Michael Carrier, The Neglected 
Concern of Firm Size in Pharmaceutical Mergers, 84 Antitrust L.J. 
No. 2 (2022); Justus Haucap, Alexander Rasch, & Joel Stiebale, How 
Mergers Affect Innovation: Theory and Evidence, 63 Int'l J. Indus. 
Org. 283 (2019).
    \10\ Press Release, Fed. Trade Comm'n, FTC Announces 
Multilateral Working Group to Build a New Approach to Pharmaceutical 
Mergers (Mar. 16, 2021), https://www.ftc.gov/news-events/news/press-releases/2021/03/ftc-announces-multilateral-working-group-build-new-approach-pharmaceutical-mergers; Press Release, Fed. Trade Comm'n, 
FTC and Justice Department to Hold Two-Day Virtual Public Workshop 
Examining Antitrust Enforcement in the Pharmaceutical Industry (May 
31, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/05/ftc-justice-department-hold-two-day-virtual-public-workshop-examining-antitrust-enforcement; Fed. Trade Comm'n and U.S. Dep't of 
Justice, The Future of Pharmaceuticals: Examining the Analysis of 
Pharmaceutical Mergers, FTC-DOJ Workshop Summary (June 1, 2023), 
https://www.ftc.gov/system/files/ftc_gov/pdf/
Future%20of%20Pharma%20Workshop%20_%20Summary.pdf.
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    Drawing on this experience and learning, the Commission's lawsuit 
against Amgen and Horizon reflects an advance in our pharmaceutical 
merger program. 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.
    Several of Amgen's major revenue streams could dry up in coming 
years. Patents covering Enbrel, the blockbuster rheumatoid arthritis 
drug that Amgen acquired in 2002 and that generates billions of dollars 
in annual revenue, will expire by 2030. The Inflation Reduction Act of 
2022, which empowers Medicare and Medicaid to negotiate drug prices, 
could further reduce future revenues from Enbrel. Other Amgen drugs 
face similar pressures. Against this backdrop, Amgen sought an 
acquisition that could reliably replace its key moneymakers.
    What Amgen found in Horizon was a pair of ``orphan drugs'' that are 
the only FDA-approved therapies for treating two rare diseases: thyroid 
eye disease and chronic refractory gout. Horizon's monopoly positions 
in these drugs have allowed it to charge monopoly prices: around 
$400,000 for a six-month course of treatment for Tepezza and around 
$650,000 for a course of treatment of Krystexxa. At 72% of Horizon's 
sales, these two drugs comprise the vast majority of Horizon's value. 
The profitability and security of Horizon's monopolies account for the 
premium that Amgen was willing to pay, resulting in the $27.8 billion 
deal value.
    Reaping the full value of this investment, however, would require 
protecting Horizon's monopolies from rivals that could enter these 
markets once Horizon's orphan drug exclusivity ends after 2027. 
Competitors are already actively developing their own drugs to treat 
thyroid eye disease and chronic refractory gout. One exclusionary 
tactic that Amgen has previously deployed is cross-product bundling, 
where it uses its blockbuster drugs to secure from

[[Page 62791]]

PBMs preferential placements or exclusionary access for its non-
blockbuster drugs, thereby excluding rivals. This sort of cross-product 
bundling scheme can lock out new competitors--even if their products 
are more affordable or effective. Based on these facts, the 
Commission's complaint charged that Amgen's acquisition of Horizon 
would give Amgen the ability and incentive to engage in similar cross-
product bundling that would exclude Horizon's rivals and maintain its 
monopolies, harming patients in the long run.
    The order announced today prohibits Amgen from engaging in any 
cross-product bundling or exclusionary rebating schemes involving 
Horizon's monopoly drugs. Several features of this conduct suggest that 
an order alone can effectively halt it. For example, because this deal 
would not give a firm control over products or services that its rivals 
use to compete, it does not raise traditional concerns about degrading 
competitors' access to key inputs or improper information exchange, 
which can be achieved through subtle and varied means that are 
difficult to detect. By contrast, Amgen can only engage in exclusionary 
rebating schemes and cross-product bundling in partnership with PBMs, 
who would need to agree to accept rebates in exchange for privileging 
Amgen's drugs or excluding those of its rivals. Given the significant 
financial sums involved, these agreements would be documented, and the 
FTC's proposed order will require Amgen to regularly submit all such 
agreements and other key documents to aid the Commission in identifying 
even implicit efforts to bundle. Amgen is also required to notify its 
trading partners about the FTC's order, ensuring that market 
participants are on alert about the prohibited conduct and are 
positioned to report any suspected violations.\11\
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    \11\ Any suspicions of order violations by Amgen may be 
submitted to the Bureau of Competition by email at 
[email protected].
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    The proposed order also prohibits Amgen from acquiring any drugs 
that could compete with Horizon's two monopoly drugs without first 
seeking the Commission's approval. Because Amgen could try to 
neutralize Horizon's rivals not just through excluding them but also 
through acquiring them, this prior approval provision will position the 
FTC to block acquisitions that would unlawfully maintain Horizon's 
monopolies.\12\
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    \12\ Statement of the Commission on Use of Prior Approval 
Provisions in Merger Orders, Fed. Trade Comm'n (Oct. 25, 2021), 
https://www.ftc.gov/system/files/documents/public_statements/1597894/p859900priorapprovalstatement.pdf.
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    Critically, the six state attorneys general who joined the FTC's 
complaint will be able to independently monitor Amgen's compliance with 
the proposed order. California, Illinois, Minnesota, New York, 
Washington, and Wisconsin will also have access to Amgen's documents 
and reports and will serve as another key check on any violations. I am 
grateful to our state partners for their close collaboration on this 
enforcement matter, and empowering them to independently monitor 
compliance with our consent orders--and take corrective action as 
appropriate--positions our remedies for greater success.
    The FTC assesses each merger based on the specific facts at hand, 
and there is no guarantee that the relief achieved in this matter would 
adequately resolve concerns about cross-product bundling in any future 
merger actions. A distinct feature of the conduct at issue here is that 
it involves bundling across different insurance benefit arrangements, 
which makes it easier to detect. The conduct also involves orphan drugs 
for rare diseases, the selection and administration of which involves 
providers with incentives to resist and report exclusionary behavior. 
As the Commission evaluates proposals to settle charges in future 
pharmaceutical mergers, we will continue to learn from past experience 
and seek to fully protect the public from deals that violate the 
antitrust laws. The merger guidelines we recently proposed with the 
U.S. Department of Justice further describe how we will assess 
transactions to determine if they may lessen competition or tend to 
create a monopoly.\13\
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    \13\ U.S. Dep't of Justice and Fed. Trade Comm'n, Merger 
Guidelines: Draft for Public Comment Purposes (July 19, 2023), 
https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf; Statement of Chair Lina M. 
Khan Joined by Commissioner Rebecca Kelly Slaughter and Commissioner 
Alvaro M. Bedoya Regarding FTC-DOJ Proposed Merger Guidelines (July 
19, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/p234000_chair_statement_re_draft_merger_guidelines.pdf.
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    Tackling unlawful pharmaceutical mergers is just one aspect of the 
FTC's work addressing high drug prices. 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. The 
FTC continues to scrutinize these practices through its inquiry into 
PBMs.\14\ And our teams will continue to challenge unlawful practices 
that raise drug prices, inhibit access, stifle innovation, or otherwise 
hurt patients.
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    \14\ Statement of Chair Lina M. Khan Regarding 6(b) Study of 
Pharmacy Benefit Managers, Commission File No. P221200 (June 8, 
2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Statement-Khan-6b-Study-Pharmacy-Benefit-Managers.pdf; Press Release, Fed. Trade 
Comm'n, FTC Further Expands Inquiry Into Prescription Drug Middlemen 
Industry Practices (June 8, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/06/ftc-further-expands-inquiry-prescription-drug-middlemen-industry-practices.

[FR Doc. 2023-19809 Filed 9-12-23; 8:45 am]
BILLING CODE 6750-01-P