The Amgen/JNJ "problem" is a bad problem to have right about now with all the generics ramping up, and the Street punishing any and all shortfalls dearly.....Epogen, Aranesp and Procrit franchises in turmoil and trouble as reports flow about efficacy problems as well as Medicare reimbursement issues.......wouldn't touch these stocks now imho, but AMGN was a great short from last week!!
Shares of Anemia Drug Makers Slide as Medicare Threatens to Cut Reimbursement
New York Times Full Feed - May. 16, 2007
Amgen shares were battered again yesterday after Medicare proposed to sharply curtail reimbursement for the company's biggest selling product, the anemia drug Aranesp.
Some analysts said the proposed restrictions, announced late Monday, could cut use of the drug by as much as half. But the Medicare effort is likely to face opposition from some doctors and patient groups, who say such drugs help cancer patients cope with chemotherapy.
Medicare ''has acted prematurely to come out with these coverage policies,'' said Deborah Kamin, the senior director for cancer policy and clinical affairs at the American Society of Clinical Oncology, which represents cancer doctors. She said that some of the recommendations ''seem not to have any basis in scientific evidence.''
The proposals, which would also apply to Johnson & Johnson's anemia drug, Procrit, follow recent reports suggesting that the drugs, widely used to treat anemia in cancer patients, could actually be making the tumors worse or hastening deaths.
Citing such evidence, the federal Center for Medicare and Medicaid Services, proposed limiting the duration of treatment and requiring that anemia reach a certain severity before therapy can be started. The Medicare agency also proposed denying reimbursement for use of the drug for patients with certain types of cancer, including common ones like those of the breast, lung and colon.
Any measure Medicare adopts is certain to strongly influence private insurers.
Last week, an advisory committee to the Food and Drug Administration also recommended restrictions on use of the drugs. But the Medicare proposals, if anything, would be even more restrictive than that committee's recommendation, stunning many Wall Street analysts.
''We could never have anticipated that the extent of regulatory and reimbursement threat could reach these levels,'' Geoffrey C. Porges, an analyst with Sanford C. Bernstein & Company, said in a note to clients yesterday. He estimated that the proposals could cut Aranesp use in half.
Amgen shares closed yesterday down $2.06, or 4 percent, to $54.01. Earlier in the day the shares were as low as $52.36, the lowest level in two and a half years.
Shares of Johnson & Johnson, which is a much more diversified health care company, fell 79 cents, or about 1 percent, to $61.82.
The drugs, genetically engineered versions of a human hormone that stimulates production of oxygen-carrying red blood cells, constitute Medicare's biggest drug expenditure.
Last year Aranesp had sales of $4.1 billion. Sales of Aranesp and Epogen, a similar drug used to treat anemia in kidney dialysis patients, accounted for nearly half of Amgen's $14.3 billion in revenue.
Sales of Johnson & Johnson's Procrit, known as Eprex outside the United States, were $3.2 billion.
Medicare's proposals will be open to public comment for a month and are expected to go into effect later this year.
Amgen, known in Washington as a formidable lobbyist, is bound to fight them. It said in a statement that it planned to work with Medicare officials ''to ensure that coverage decisions are consistent with the available science and in the best interest of patients.''
Stephanie Fagan, a spokeswoman for Johnson & Johnson, said that Medicare should not have acted until a final decision by the F.D.A. on the advisory panel's recommendation.
Dr. George Demetri, an oncologist at the Dana-Farber Cancer Institute and Harvard University, who has also consulted for both Amgen and Johnson & Johnson, said the proposed restrictions ''seem very strict,'' though he added that Medicare might have evidence that he was not aware of.
Still, Dr. Demetri, who is on a committee that develops anemia treatment guidelines for an organization of leading cancer centers, said that solid studies on the safety of the drugs were ''distressingly limited.''
One group of patients likely to object to the new proposals suffer from myelodysplastic syndromes, or M.D.S., a family of bone marrow diseases that can lead to leukemia. The drugs are not approved to treat the anemia that often accompanies M.D.S., but Medicare has been paying for such use. Now, it proposes to stop.
''There's a body of literature that supports their use in M.D.S. even though they don't have the indication,'' said Dr. Mikkael Sekeres, the co-chairman of the medical advisory board of the Aplastic Anemia and MDS International Foundation.
May 16, 2007, Wednesday Late Edition - Final
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