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Amgen Plans Charge to Cover Drug Settlement

September 16, 1997|From Bloomberg News

Amgen Inc. said it will take a third-quarter charge of 35 cents a share to pay Johnson & Johnson a $96-million settlement over Amgen's marketing of a drug.

Amgen had been expected to earn 68 cents a share in the quarter, based on the average estimate of 23 analysts surveyed by IBES International Inc.

The case stemmed from a 1985 agreement between Thousand Oaks-based Amgen and the Ortho Pharmaceutical division of Johnson & Johnson over sales of Epoetin Alfa to hospitals. The medicine helps cancer and AIDS patients produce red blood cells when illness has damaged their bone marrow, company executives say.

Both companies hold rights to the drug. Amgen is entitled to sell Epoetin Alfa to dialysis patients while Johnson & Johnson can sell it to all other patients, Amgen said. Dialysis treatment can take the place of functioning kidneys.

Johnson & Johnson filed suit against Amgen for selling Epoetin Alfa to non-dialysis hospital patients. Johnson & Johnson demanded a share of Amgen's profit from those sales.

Arbitrator Frank J. McGarr ruled Friday that Johnson & Johnson was entitled to $96 million in lost sales, Amgen said.

That number was based on Amgen's audit of sales, said Amgen spokesman David Kaye. Johnson & Johnson's damage estimate was $423 million, he said.

"Based on their filed claim, a judgment of $96 million, minus significant expenses, we regard as a significant victory," Kaye said.

New Brunswick, N.J.-based Johnson & Johnson representatives also said they were happy with the decision.

Shares of Amgen fell 80 cents to close at $47.44 on Nasdaq; Johnson & Johnson rose 31 cents to close at $57.81 on the New York Stock Exchange.

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