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Amgen to Pay Johnson & Johnson $205 Million in Drug Dispute

Thousand Oaks-based Amgen Inc. will pay Johnson & Johnson $205 million to compensate for Amgen sales of an anemia drug for uses reserved to Johnson & Johnson in a licensing agreement.

The arbitration ends an eight-year dispute stemming from a 1985 sales agreement that limits Amgen’s U.S. sales of its Epogen drug to use in kidney dialysis patients.

Johnson & Johnson, maker of Band-Aids, and Amgen, one of the world’s largest biotechnology companies, each sells a version of the drug known chemically as epoetin alfa. Johnson & Johnson sells it as Procrit in the United States for such uses as anemia caused by cancer treatment, AIDS therapy and surgery.

The $205-million payment is for Amgen sales for uses other than kidney dialysis from 1991 to 1994.

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An arbitrator chose Amgen’s method in deciding how to calculate sales of the drug. The decision from the arbitrator, retired federal judge Frank J. McGarr, is a “huge legal victory” for Amgen, company spokesman David Kaye said. Amgen probably won’t owe Johnson & Johnson for so-called spillover sales in the future, he said.

Because McGarr chose Amgen’s system for auditing sales, Johnson & Johnson was ordered to pay Amgen’s attorneys’ fees and costs, which might go as high as $100 million over eight years.

With $1.16 billion in Epogen sales, the drug generated about half of Amgen’s $2.4 billion in 1997 revenue. For Johnson & Johnson, Procrit sales made up about $1 billion of its $7.7 billion in 1997 pharmaceutical sales.

In the early 1990s, Amgen had paid $22.4 million to Johnson & Johnson voluntarily for spillover sales, officials said.

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