FTC v Amgen: The Economics of Bundled Discounts, Part One
The Federal Trade Commission (FTC) recently announced that it would seek to block Amgen’s proposed $27.8 billion acquisition of Horizon Therapeutics. The move was the culmination of several years’ worth of increased scrutiny from both Congress and the FTC into antitrust issues in the biopharmaceutical industry. While the FTC’s move didn’t elicit much public comment, it raised considerable alarm in various corners of the biopharmaceutical industry—specifically, that it would chill beneficial biopharmaceutical M&A activity.
This piece, which aims to shed light on the FTC’s theory of the harm in the case and its consequences for the industry, will be divided into two parts. This first post will discuss the overall biopharmaceutical market and the FTC’s stated theory of harm. In a subsequent post, I will dive more deeply into the economic theories that underpin the case and the risk-benefit tradeoff inherent in the FTCs decision to challenge the merger.