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.

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.