Judge Dismisses Amgen’s Lawsuit Against Medicare
A federal judge Tuesday dismissed Amgen Inc.’s lawsuit against Medicare that sought to stop the federal agency from lowering reimbursement for the company’s anemia drug Aranesp. The ruling could shift about $100 million a year in drug sales to Amgen archrival Johnson & Johnson.
Amgen, based in Thousand Oaks, had no immediate comment on the ruling by U.S. District Judge Emmet G. Sullivan in Washington. The world’s largest biotechnology company is expected to appeal the decision, which makes Aranesp more expensive for hospital outpatient treatment than J&J;’s anemia drug Procrit.
Amgen sued the Centers for Medicare and Medicaid Services and the Department of Health and Human Services last month after Medicare cut Aranesp’s reimbursement rate by half.
At stake is a portion of the Medicare market for anemia drugs worth nearly $1 billion annually. In its suit, Amgen said that it could lose as much as $119 million in 2003 sales if the reimbursement cuts take effect Jan. 1 as scheduled. The hospital outpatient business covered by Medicare accounted for 10% of Aranesp sales in 2002.
However, Merrill Lynch analyst Eric Ende said he expected Amgen to retain most of its patients by offering hospital discounts.
Aranesp and Procrit, which produce red blood cells, are used to treat anemia in patients suffering from kidney disease and for cancer patients undergoing chemotherapy. Amgen considers Aranesp, launched just a year ago, its most important drug and the key to regaining business it long ago ceded to J&J.;
Procrit is J&J;’s brand of EPO, the red blood cell drug invented by Amgen. J&J; has an exclusive license from Amgen to sell Procrit outside the kidney dialysis market, in which Amgen sells its own EPO brand.
Aranesp is a modified version that Amgen claims is more potent than its original red blood cell drug and does not have to be taken as often. Aranesp is not covered by Amgen’s 17-year-old licensing deal with J&J.;
Amgen’s dispute with Medicare centers on an arcane pricing mechanism that assigns higher reimbursement rates to new drugs. Medicare tentatively proposed covering Aranesp at the higher rate, making it a more economical drug choice for hospitals than J&J;’s Procrit.
But J&J; argued that Procrit and Aranesp are “functionally equivalent” drugs and they should be reimbursed at the same rate. After reviewing 40 scientific studies, Medicare agreed with J&J.;
A representative for J&J; had no comment Tuesday and a Medicare spokesman couldn’t be reached.
Before Congress recessed for the holidays, Amgen lobbied lawmakers for legislation that would overturn Medicare’s action. Sen. Charles E. Grassley (R-Iowa), incoming chairman of the Finance Committee, issued a statement saying that Congress may have to examine the issue.
Amgen shares fell 19 cents to $51.45 Tuesday on Nasdaq.
