High Drug Costs and Medicare

Rep. Fortney H. Stark (D-Oakland) would like to see Americans receive a “fair deal” for their Medicare dollar. We agree. Too bad he didn’t extend the same deal to EPOGEN and its manufacturer, Amgen.

In his Aug. 2 column, “A Miracle Drug for Some but a Tax Drain for All,” Stark charges that Amgen will reap untold profits from Medicare for its drug EPOGEN, a revolutionary treatment for the anemia suffered by kidney dialysis patients. We cannot understand why Stark is vilifying EPOGEN, which he, along with leading nephrologists, calls “a miracle drug.”

First, Stark appears to confuse revenues with profits. It is true that industry analysts projected annual revenues exceeding $100 million for this product. Not all of that money will reach Amgen, of course, because other manufacturers expect to enter the market soon. Stark’s estimate for the cost of EPOGEN is less than the cost of packaging this breakthrough product. More importantly, Amgen’s revenues will be spent largely on research and development.

In fact, Amgen ranks first of all American companies in the amount it spends on research and development both per employee and as a percent of revenue, according to a recent survey in Business Week.

Second, Stark knows that Amgen didn’t “extort” anything from anyone. Medicare didn’t roll over and play dead. Representatives from the Health Care Financing Administration (HCFA) and the company participated in spirited discussions that lasted nearly a year. In the end HCFA established a reimbursement rate the government found to be equitable. (The U.S. price for EPOGEN is more than 30% less than in Europe.)

Third, Stark implies that EPOGEN is not more valuable than gold. A gram of EPOGEN can provide a week’s worth of treatment for 8,000 patients and eliminate 1,000 blood transfusions. Does that make EPOGEN better than pure gold? We say yes, as do dialysis patients.

Amgen is just as concerned as Stark about the rising cost of health care. That is why we presented all of this information to his staff and to Sen. David Pryor (D-Ark.) at his hearings on drug pricing. That is why we worked closely with HCFA. It is difficult to understand Stark’s alarm, and to fathom why he feels a need to belittle the company and the achievement of making EPOGEN a reality.

GORDON M. BINDER

Amgen Chief Executive Officer

Thousand Oaks