Regeneron boss backs bid to block $28bn Horizon Therapeutics deal

The chief executive of Regeneron has backed an attempt by US regulators to block Amgen’s $28 billion (€25.85 billion) acquisition of Irish-headquartered rare disease specialist Horizon Therapeutics, as he accused some pharmaceutical companies of abusing their market power to prevent competition.

The Federal Trade Commission (FTC) warned that “rampant consolidation” in the pharmaceutical sector was pushing up prices for patients as it filed the lawsuit against the Amgen deal.

Amgen won out in a three-way tussle with Sanofi and Johnson & Johnson when it announced what was the biggest pharmaceutical deal of the year last December, and the largest to date for Amgen.

It was seen as giving the US group a new pipeline of drugs for rare autoimmune and inflammatory diseases as well as adding a blockbuster drug to Amgen’s portfolio and helping to counter the impact from rising competition for its top-selling arthritis drug, Enbrel, from newer treatments and the expected expiry of patents for the therapy in 2029.

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The announcement of the FTC lawsuit hit shares in Horizon, which tumbled as much as 18 per cent on Tuesday. They have since rallied but are still more than 10 per cent down on their position in advance of the FTC announcement. Shares in oncology-focused biotech Seagen, which Pfizer has agreed to buy for $43 billion, also fell amid fears the agency could target other deals in the sector. It has since recovered half of the 6 per cent it shed on the Horizon news.

Regeneron boss Leonard Schleifer said he supported the FTC’s decision to tackle a “new area” after the agency made its first attempt to block a pharma deal in over a decade by filing a novel lawsuit against the Amgen transaction.

In the past, regulators have tended to focus their energies on drugmakers that try to corner the market by buying up lots of medicines that treat the same disease. However, the FTC’s case against Amgen is targeted at the power the company allegedly wields more broadly with health insurers and middlemen in the US healthcare system, known as pharmacy benefit managers.

Mr Schleifer said it can be hard to for a drugmaker get a treatment covered by payers if they are receiving “billions and billions of dollars” in rebates from a rival company. Drugmakers pay rebates to ensure their treatment is placed on the lists of drugs covered by insurance companies.

“I’m glad the FTC is looking at this,” Mr Schleifer told the Financial Times US Pharma and Biotech Summit in New York. “In some respects, [it’s] the worst thing for our industry and we’ve got to shine a brighter light on it.”

[ Amgen agrees €26.8bn deal for Dublin-based Horizon Therapeutics ]

Regeneron is in a long-running legal dispute with Amgen centred on accusations the company violated antitrust laws in the way it marketed a cholesterol drug. Regeneron claims Amgen incentivised payers to buy its drugs by “bundling” it with other popular treatments.

Amgen declined to comment on Mr Schleifer’s remarks.

Large pharmaceutical companies are sitting on piles of cash that many plan to spend on deals for innovative drugs to replenish their pipelines as existing treatments go off patent.

The FTC argued that Amgen could use the rebates it pays on its existing “blockbuster” drugs to press insurance companies and pharmacy benefit managers into paying for two of Horizon’s medicines: Tepezza for an autoimmune condition that affects the eyes; and Krystexxa for a rare type of gout.

If Amgen were to own these medicines and use its market clout to convince payers to cover them, it could discourage other companies from launching rival medicines that would eventually bring down the price, the FTC said.

Tepezza costs approximately $350,000 for a six-month course of treatment while an annual supply of Krystexxa costs $650,000, according to the agency.

Amgen said it was disappointed by the FTC’s decision but remains committed to completing the acquisition. It said it had already committed to not “bundle” Horizon’s drugs with its own. Amgen also said the FTC’s claim that it would do this in the future was “entirely speculative”.

“We are unaware of any prior acquisition that has been blocked under a bundling theory,” the company added.

The Amgen move on Horizon came shortly after the Irish-domiciled group had established its first in-house manufacturing facility with the takeover of Eirgen’s Waterford plant in a $65 million deal.

The company, which employs close to 200 people here, also opened a new corporate headquarters on Dublin’s St Stephen’s Green earlier in 2022, and announced a six-year sponsorship of the Irish Open, rumoured to be worth in the region of €50 million, running up to Ireland’s next hosting of the Ryder Cup at Adare Manor in 2027.

Amgen currently employs 450 people in Ireland at its plant in Dublin.

– Copyright The Financial Times Limited 2023