\n\tArthur Allen<\/span><\/p>\n

The new drug looked so promising \u2014 except for that one warning sign.<\/p>\n

At the American College of Rheumatology\u2019s annual meeting in 2008, Duke University\u2019s Dr. John Sundy proudly announced that pegloticase, a drug he\u2019d helped develop, was astoundingly effective at treating severe gout, which affects perhaps 50,000 Americans. In about half of those who had taken it, the drug melted away the crystalline uric acid deposits that encrusted their joints to cause years of pain, immobility, or disfigurement.<\/p>\n

But Sundy also disclosed an unsettling detail: In one clinical trial, patients who got the drug were more likely to develop heart problems than those who didn\u2019t. The day after Sundy\u2019s talk, the stock price of Savient Pharmaceuticals, which developed the drug with Duke scientists, plunged 75%.<\/a><\/p>\n

That danger signal would disappear in later studies, and the FDA approved pegloticase, under the trade name Krystexxa, two years later. But the small biotech company never recovered. In 2013, Savient was sold at auction to Crealta, a private equity venture<\/a> created for the purpose, for $120 million.<\/p>\n

Two years later, a young company now called Horizon Therapeutics bought Crealta and its drug portfolio for $510 million.<\/p>\n

Even at that price, it proved a good deal. Krystexxa brought in $716 million in 2022 and was expected<\/a> to earn $1 billion annually in coming years.<\/p>\n

Although Horizon says it now has 20 drugs under development, in its 15 years of existence it has yet to license a product it invented. Yet the company has managed to assemble a war chest of lucrative drugs, in the process writing a playbook for how to build a modern pharmaceutical colossus.<\/p>\n

As the White House and both parties in Congress grapple with reining in prescription drug prices, Horizon\u2019s approach reveals just how difficult this may be.<\/p>\n

Horizon\u2019s strategy has paid off handsomely. Krystexxa was just one of the many shiny objects that attracted Amgen, a pharmaceutical giant. Amgen announced in December that it intends to buy Horizon for $27.8 billion, in the biggest pharmaceutical industry deal announced in 2022.<\/p>\n

Horizon\u2019s CEO, Tim Walbert, who will reportedly get around $135 million<\/a> when the deal closes, has mastered a particular kind of industry expertise: taking drugs invented and tested by other people, wrapping them expertly in hard-nosed marketing and warm-hued patient relations, raising their prices, and enjoying astounding revenues.<\/p>\n

He\u2019s done this with unusual finesse \u2014 courting patients with concierge-like attention and engaging specialist clinicians with lunches, conferences, and research projects, all while touting his own experience as a patient with a rare inflammatory disease. Walbert\u2019s company has been particularly adept at ensuring that insurers, rather than patients, bear the costly burdens of his drugs.<\/p>\n

A federal prosecutor in 2015<\/a> began examining allegations that Horizon\u2019s patient assistance program had worked with specialty pharmacies to evade insurers\u2019 efforts to shun Horizon\u2019s expensive drugs. A separate probe opened in 2019<\/a> over alleged kickbacks to pharmacy benefit managers, companies that negotiate to get Horizon\u2019s drugs covered by insurers. Those investigations appear to be no longer active, Horizon spokesperson Catherine Riedel said. The company this year disclosed a third probe,<\/a> concerning methods the company allegedly used to get prior authorization of its drugs. Justice officials did not respond to requests for comment on the investigations.<\/p>\n

An Injection of Marketing<\/strong><\/p>\n

To help sell its drugs, Horizon blankets specialist physicians with marketing and peer-to-peer appeals. Its payments to physicians<\/a> for things like consulting, speeches, and meals totaled $8.7 million in 2021, compared with the $10 million it paid them for research, federal records show. By contrast, Seagen, a biotech company of roughly the same size, paid doctors a total of $116 million<\/a>, with nearly $112 million of that pegged for research. Riedel said Horizon\u2019s marketing and educational approaches were \u201cnecessarily unique\u201d because of the challenges of treating rare and neglected diseases.<\/p>\n

Walbert launched Horizon in 2008 in the Chicago area by combining and refashioning generic drugs into single pills. Duexis, Horizon\u2019s first drug, is a mixture of generic Motrin and Pepcid. Its Vimovo combines generic Aleve and Nexium. In a 2017 article,<\/a> a ProPublica reporter described being prescribed Vimovo for a shoulder injury. It cost him nothing, but his insurer was billed $3,252 for pills that together cost about $40 for a month\u2019s supply in generic form. Horizon sold more than $57 million worth of Vimovo that year.<\/p>\n