Amgen Wins Part of Dispute With Ortho Pharmaceutical
Amgen Inc. has won the second part of a contract dispute with a unit of Johnson & Johnson.
The victory is expected to result in the J&J; unit, Ortho Pharmaceutical Corp., being ordered to pay Amgen about $90 million in damages, Amgen said. Amgen, based in Thousand Oaks, is the nation’s leading biotechnology firm. But that award would only reduce the $164 million that Amgen, after losing the first round of the dispute in June, 1991, has been ordered to pay Ortho.
Indeed, Johnson & Johnson said it expects the net result of the hearings to be Amgen paying more than $85 million to Ortho.
“Now that the arbitrator’s decision has been rendered, it should clear the way for Amgen’s payment to Johnson & Johnson of the difference in the two damage awards,” Johnson & Johnson said.
If so, the payment is not expected to have a serious effect on Amgen’s financial condition. After losing the first part of the case, Amgen took an $88.5-million after-tax charge against earnings to help cover its liability.
The rulings were made by Frank J. McGarr, an arbitration judge in Chicago. In McGarr’s second ruling, Ortho was found to have defaulted on certain terms of a 1985 marketing agreement between the companies by failing to develop two biotechnology-derived drugs, a hepatitis B vaccine and interleukin-2, from which Amgen was entitled to get sales royalties.
In the earlier part of the case, McGarr found that Amgen interfered in Ortho’s bid to market a brand of erythropoietin (EPO), an anti-anemia drug that was Amgen’s first blockbuster product. Amgen’s EPO, sold as Epogen, is used by patients with kidney disease. Ortho’s version was intended for other therapeutic uses in the United States.
EPO is a biotechnology-engineered copy of a protein found in the body. Patients with kidney disease are chronically anemic because they suffer from a shortage of red blood cells, and EPO triggers the cells’ production.
