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Amgen Plans Charge to Cover Drug Settlement

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From Bloomberg News

Amgen Inc. said it will take a third-quarter charge of 35 cents a share to pay Johnson & Johnson a $96-million settlement over Amgen’s marketing of a drug.

Amgen had been expected to earn 68 cents a share in the quarter, based on the average estimate of 23 analysts surveyed by IBES International Inc.

The case stemmed from a 1985 agreement between Thousand Oaks-based Amgen and the Ortho Pharmaceutical division of Johnson & Johnson over sales of Epoetin Alfa to hospitals. The medicine helps cancer and AIDS patients produce red blood cells when illness has damaged their bone marrow, company executives say.

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Both companies hold rights to the drug. Amgen is entitled to sell Epoetin Alfa to dialysis patients while Johnson & Johnson can sell it to all other patients, Amgen said. Dialysis treatment can take the place of functioning kidneys.

Johnson & Johnson filed suit against Amgen for selling Epoetin Alfa to non-dialysis hospital patients. Johnson & Johnson demanded a share of Amgen’s profit from those sales.

Arbitrator Frank J. McGarr ruled Friday that Johnson & Johnson was entitled to $96 million in lost sales, Amgen said.

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That number was based on Amgen’s audit of sales, said Amgen spokesman David Kaye. Johnson & Johnson’s damage estimate was $423 million, he said.

“Based on their filed claim, a judgment of $96 million, minus significant expenses, we regard as a significant victory,” Kaye said.

New Brunswick, N.J.-based Johnson & Johnson representatives also said they were happy with the decision.

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Shares of Amgen fell 80 cents to close at $47.44 on Nasdaq; Johnson & Johnson rose 31 cents to close at $57.81 on the New York Stock Exchange.

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