J&J Files Antitrust Complaint Against Amgen For Aranesp Pricing Practice
This article was originally published in The Pink Sheet Daily
Executive Summary
Amgen's bundling of rebates for Aranesp, Neulasta and Neupogen have unfairly increased the anemia therapy's market share, the complaint alleges.
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A Trenton, N.J. federal judge will hear Johnson & Johnson's request for a preliminary injunction against Amgen's Aranesp pricing structure Oct. 14. A complaint, filed Oct. 11, alleges Amgen is unfairly increasing market share of its anemia therapy Aranesp (darbepoetin) in the oncology clinic arena at the expense of J&J's Procrit (epoetin). J&J is also seeking treble damages. According to the complaint, Amgen has grown market share for Aranesp to 66% in this arena by linking rebates for the anemia drug to rebates for its two febrile neutropenia agents Neupogen (filgrastim) and Neulasta (pegfilgrastim). Because the two products have a 98% market share and are needed by oncology clinics to treat cancer patients, the complaint alleges that this linkage constitutes a violation of the Sherman Antitrust Act. "Without the Neulasta rebates (up to 25%), under the government's current reimbursement formula an oncology clinic would have to pay Amgen hundreds of dollars more on each treatment of Neulasta for a Medicare patient than the clinic will receive in reimbursement from the government and patients." When "clinics do not agree to purchase significant volumes of Aranesp, instead of Procrit…Amgen does not sufficiently rebate" them for Neulasta and Neupogen, the complaint alleges. According to the complaint, Amgen has engaged in such pricing practices since approval of Aranesp in 2002. However, the practice became "more coercive" in early 2004. "In the first half of 2004, a large account oncology clinic which purchased roughly 65% of its combined volume of [red blood cell growth factor and white blood cell growth factor] drugs from Amgen received a 13.5% rebate on its Aranesp purchase and a 10.5% rebate on its [febrile neutropenia] drug purchases," the complaint alleges. If a clinic purchased 85% of its combined volume from Amgen, the rebates would increase to 25% for Aranesp and 25% for the febrile neutropenia drugs. A clinic which did not meet its volume requirement would receive a "minimal rebate or discount." In late 2004, Amgen restricted the amount of febrile neutropenia drugs that could be considered for purposes of reaching the specified dollar volume targets and increased rebates offered to oncology clinics. Under this model, a clinic purchasing 65% of its combined volume from Amgen would receive an 18.5% rebate on Aranesp and a 10.5% rebate on febrile neutropenia drugs. However, at 85% of combined volume, Aranesp rebates would total 30% and febrile neutropenia rebates would total 25%. On Oct. 1, 2005, Amgen modified the pricing structure again "to eliminate Procrit from the oncology clinic market," the complaint alleges. "The dollar volume for Aranesp purchases that an oncology clinic must achieve is now based on up to 75% of the oncology clinics' total [anemia] product purchases being Aranesp, i.e. a 75% market share." For a large clinic, the highest predetermined Aranesp rebate is now 26%. However, a clinic can earn an extra four percentage points by taking its Aranesp share up to 90% as well as ensuring that Neulasta represents 90% of its febrile neutropenia drug purchases, the complaint alleges. For the same clinic, the highest predetermined Neulasta rebate is 21% and the highest Neupogen rebate is 20%. The Neulasta rebate can be increased to 25%. A clinic that does not meet its Aranesp volume requirement will only receive a 4% rebate on Neulasta, the complaint states. Under the Centers for Medicare & Medicaid Services' Outpatient Prospective Payment System proposed rule, Medicare would reimburse hospitals for outpatient drugs at average sales price plus 8% (1 (Also see "Hospital Outpatient Drugs To Be Reimbursed ASP+8% Under Medicare In 2006" - Pink Sheet, 19 Jul, 2005.)). "The adoption of an ASP reimbursement system in hospitals will allow Amgen to introduce into hospitals the same pricing scheme it is now using to foreclose competition in the sale of [anemia] products to oncology clinics," the complaint alleges. Amgen said it believes the allegations in the complaint are without merit and that it will vigorously defend its position. - Andrew Shelton |