Gene-Spliced Anemia Drug OKd for Sale
A genetically engineered drug expected to relieve the chronic anemia suffered by thousands of people with kidney disease was approved for sale Thursday by the U.S. Food and Drug Administration. The drug also has shown promise in treating anemia in AIDS and cancer patients, but it was not yet approved for those uses by the government.
The announcement capped an eight-year effort by Amgen Inc. of Thousand Oaks to bring to market what is expected to be one of biotechnology’s first blockbuster drugs.
Amgen’s costly drug--known as erythropoietin, or EPO--is a gene-spliced version of a naturally occurring protein in the kidney that triggers production of red blood cells, which in turn transport oxygen throughout the body. Patients suffering from kidney disease do not produce enough red blood cells and often have very little energy, and many of them must endure frequent blood transfusions.
There are about 100,000 kidney dialysis patients in this country, and the 25,000 or so who need frequent transfusions are ideal candidates for EPO, experts say. In clinical tests, most patients given injections of EPO no longer needed blood transfusions and found that much of their old energy returned.
EPO is being tested with the AIDS drug AZT in hopes of minimizing anemia, and is being reviewed for treating the types of anemia suffered by patients with cancer, rheumatoid arthritis and other diseases.
“We feel very strongly that there will be other uses,” said FDA Commissioner Frank Young.
“There’s a tremendous demand from patients for the product,” said David Weber, a securities analyst with the brokerage firm of Alex. Brown & Sons. “There were even stories of people who tried very hard to get into the clinical trials” for EPO, Weber said.
The FDA approved EPO, which will be sold under the brand name Epogen, only for anemia caused by kidney disease. However, once it is on the market, doctors may prescribe it for anemia due to other causes, although that practice has note been endorsed by the FDA.
One drawback of the drug is its cost. It could become one of the most expensive drugs ever reimbursed by the federal government, eventually costing perhaps $200 million to $500 million a year overall for all kidney dialysis patients.
Government’s Costs
The average patient suffering from kidney disease would need $4,000 to $8,000 worth of the drug every year, but Gordon Binder, Amgen’s chief executive, said he expects the federal government to cover most of that expense. Until EPO is approved for other uses, however, it will not be determined how much of the cost would be picked up in those cases.
Rep. Pete Stark (D-Oakland), who is chairman of the health subcommittee of the House Ways and Means Committee, said he is concerned about the hundreds of millions of dollars that the use of EPO could cost the federal government. Some of that concern may stem from the fact that members of Stark’s staff, using data released in a court battle between Amgen and another manufacturer, calculated that it would cost only only $140 to manufacture a year’s supply of the drug for an average patient.
Amgen officials said the high price being charged for the drug would help the company recoup the cost of developing EPO, estimated at $100 million, and would provide money to develop other new products.
Besides Amgen, the winners from the FDA approval are the patients who have been waiting to get the drug. Amgen expected to start selling EPO last winter, but when things were delayed, some frustrated kidney dialysis patients began buying EPO by mail order from Europe.
Patients such as Valerie Buhler of Pasadena were taking advantage of an obscure FDA policy that allows for personal importation of most drugs that are legally available overseas, as long as they are purchased in small amounts and for personal use.
Since March, Buhler, 65, has been spending $650 a month out of her own pocket to buy EPO from a pharmacy in West Germany. Before she began her twice-a-week treatments, “running a few errands just tired me out,” she said. Since then, “The difference has been remarkable.”
She added, “As happy as I’ve been with the results, I can’t help but feel bad for other people who don’t have the drug.” The FDA’s approval, she said, was “fantastic,” and timely as well.
“I was just about to order some more from Germany,” she said.
Kidney disease patients who lack the natural protein would take regular injections of the drug for life to prevent the anemia. “It’s almost like insulin if you’re diabetic,” said Louise J. Keating, director of Northern Ohio Red Cross Blood Services and chairman of the FDA advisory committee that recommended the drug’s approval.
As the first company to win approval to sell EPO, Amgen is expected to win a big chunk of the market for kidney dialysis patients, which is expected to be at least $250 million a year by the early 1990s. For now, there is no alternative to EPO, a fact that has excited the financial community.
The drug, Amgen’s first commercial product, “is clearly a home run” for the company, said Denise Gilbert, a biotechnology analyst with Montgomery Securities.
“We’re very excited. We’ve worked eight years for this day,” Binder said.
Binder said the first shipments of the drug, marketed under the trade name Epogen, will arrive next week in doctors’ offices. By the end of the year, Binder expects Amgen to be selling EPO at a rate of $100 million a year.
Amgen’s stock, traded over the counter, closed Thursday at $41 a share, up 87.5 cents, as 1.1 million shares of stock changed hands.
Amgen has kept the rights to sell EPO to the kidney dialysis market but it has licensed all other uses of the drug in this country to Johnson & Johnson.
How much business Amgen will enjoy is unclear because the company is locked in a major patent infringement lawsuit over EPO with biotech rival Genetics Institute of Cambridge, Mass. Amgen and Genetics Institute hold different patents related to EPO and a patent infringement trial is scheduled to begin Aug. 7 in Boston. In a separate case, the U.S. Patent and Trademark Office will begin hearings this summer to decide which of the two rival companies’ EPO claims have priority.
In the past Amgen officials have refused to consider an out-of-court cross-licensing agreement with Genetics Institute, a tactic some analysts say is risky. Binder said Thursday, however, that an out-of-court agreement “is always a possibility.”
Possible Settlement
Bruce Eisen, chief patent counsel with Genetics Institute, also said that an out-of-court pact is possible before the patent trial begins. “It’s quite common that cases are settled on the courthouse steps. When the moment of confrontation comes, somebody flinches.”
The FDA awarded so-called orphan drug status to Amgen’s EPO, which ordinarily would give the company a seven-year exclusive right to sell the drug to kidney dialysis patients. Orphan drug status covers drugs that treat patients suffering from relatively rare diseases, those with fewer than 200,000 cases.
But the FDA also said it might also award orphan drug status to another version of EPO that has been developed by Chugai-Upjohn using technology licensed by Genetics Institute. Joseph Sobota, chief operating officer at Chugai-Upjohn, said his company hopes to win FDA approval within six months and expects to be “a vigorous competitor” despite Amgen’s head start.
Amgen’s Binder said, “We’ve always been more concerned with patent protection than orphan drug status.”
Spending heavily to prepare for the launch of the drug, Amgen lost $8 million in its fiscal year ended March 31. However, analyst Gilbert expects Amgen to have pre-tax earnings of $70 million from EPO sales by 1993.
RELATED STORY: Part IV, Page 1
