1st-Month Sales of Drug Help Amgen Record $835,000 Profit

Amgen sold about $16 million worth of its new anti-anemia biotechnology drug in June, the first month of its introduction, enabling the Thousand Oaks biotechnology company to post a $835,000 profit for its first quarter that ended June 30.

The drug, erythropoietin (EPO), is considered by many financial analysts as the next blockbuster biotech drug because of its impressive results in combating chronic anemia in patients suffering from kidney disease.

But some physicians warn that sales of the drug may be slower than expected because EPO is expensive and Medicare has agreed to pick up only a portion of the cost.

“Very few people are getting the drug unless they are buying it on their own,” said Kenneth Kleinman, a Van Nuys physician. At one local kidney dialysis clinic, he said, only about 15 of 50 patients who need the drug are receiving it, and only because they are wealthy enough to afford it.

Ideal Candidates

About 25,000 kidney dialysis patients in this country suffer from chronic anemia and are considered ideal candidates for EPO. The typical dialysis patient would need three injections of EPO a week, which would cost from $4,000 to $8,000 a year.

Last month, Medicare agreed to pay $32 per dose of the drug (up to 10,000 units of EPO). But many patients face paying out of their own pocket another $10 to $40 or more per treatment to receive the full dosage, Kleinman said.

Physicians said it is unlikely that Medicaid will pick up another 20% of the cost of EPO, and so some clinics have been reluctant to order the drug.

“Clinics are afraid they’ll get stuck with the cost. Maybe Amgen isn’t selling as much of the drug as they think,” Kleinman said.

Millions in Sales

Analysts expect Amgen to sell from $80 million to $97 million worth of EPO in its present fiscal year that will end in March.

Denise Gilbert, biotechnology analyst with Montgomery Securities, said “it’s very difficult to draw conclusions” about whether Amgen’s sales will fall below expectations. “Distributor shelves are empty and they want to stockpile three to four weeks worth” of the drug, she said.

In Anchorage, Dr. Steven Tucker said none of the 50 dialysis patients at his nonprofit center have been treated with EPO, partly because of the uncertainties over how the drug would be paid for.

Medicare’s reimbursement plan also raises an important medical dilemma. The government’s $32-per-dose payment would cover the retail cost of about 3,000 units of the drug, only enough to treat a typical patient who weighs no more than 130 pounds, said Dr. Raymond Hakim, clinical director of nephrology at the Vanderbilt Medical Center in Nashville, Tenn.

“The choice dialysis centers face is to give the drug to everybody who is supposed to get it and eat the costs. Nobody in their right mind will do that. Second choice is not to give anybody the drug till Amgen and (Medicare) battle things out over price. The third is to give a smaller dose,” Tucker said.

Indeed, Tucker’s clinic has decided to start treating patients with a lower dose of EPO than is often recommended by Amgen, and hope that the drug will work effectively.

Kleinman says his patients “are furious” about not getting the drug. “They are writing their congressmen.”

December Review

The federal government plans to review its EPO payment plan in December. “The drug company isn’t going to make any money if it isn’t prescribed,” Tucker said. “Amgen will either drop its price or the government will raise its price. It’s a matter who is going to blink first.”

Vector Securities analyst Peter Drake said it is likely that Medicare will step up its EPO reimbursement because the drug is so important.

Amgen spokesman Mark Brand said: “We are very pleased in terms of how sales are going.” But he declined to comment on any potential slowdown in EPO sales.