Medicare Ruling on Epogen Drug Boosts Earnings for Amgen

Amgen reported better-than-expected second-quarter earnings, citing eased restrictions on Medicare payments for its drug Epogen.

Medicare said last year it would not pay for Epogen to treat anemic kidney-dialysis patients whose red-blood-cell count exceeded a certain level. That hurt sales of Epogen, which is paid for almost entirely by Medicare and made up half of Amgen’s $2.4 billion in revenue for 1997. A U.S. government decision to ease those restrictions boosted second-quarter profit, the company said.

“People were very worried about Epogen,” said Charles Engelberg, an analyst with Americal Securities. “It turns out the worst is behind the company.”

Thousand Oaks-based Amgen said second-quarter net income rose 7.9% to $216.3 million or 82 cents a diluted share. Analysts had expected the company to earn 74 cents a share. Revenue rose 5.9% to $656.9 million.

The loosening of the Medicare payment restrictions in March and the end of June will lift 1998 earnings to “a few cents” above $3.05, currently the highest of any analyst’s forecast, Amgen chief executive Gordon Binder said.

“It’s going to make it easier for physicians to prescribe Epogen without getting their knuckles banged on,” he said.