Biotech giant Amgen Inc.'s turf war with rival Johnson & Johnson in the lucrative anemia drug business is spilling into Congress, where Amgen is aggressively lobbying for higher Medicare payments on its new medication Aranesp.
In January, Medicare slashed reimbursement fees on Aranesp, making it more expensive for hospital outpatients than Procrit, a drug marketed by J&J. Medicare said if it didn't reduce payments on Aranesp, it would have to deeply cut reimbursements on other necessary medical services.
"If we were to pay more, we would have had to make cuts in everything else," said Thomas Scully, Medicare's top administrator. "We would have had to cut mammograms."
Amgen, based in Thousand Oaks, maintains that Medicare slashed Aranesp payments only after being egged on by J&J. Facing a potential loss of $100 million in drug sales, Amgen is lobbying some of Washington's key players, including Sen. Charles E. Grassley (R-Iowa), head of the Senate Finance Committee, which sets Medicare's budget.
"We were outmaneuvered by J&J," said Kevin W. Sharer, Amgen chairman and chief executive. "They got a step ahead of us. Shame on us if it happens again."
J&J spokeswoman Carol Goodrich disputed the notion that Amgen was blindsided. "We believe the process was fair ... and Amgen participated fully."
Medicare said the decision to reduce Aranesp fees came after discussions with Amgen's medical experts and that the agency isn't taking sides in one of the drug industry's most heated rivalries. Scully said he and his staff have held "an enormous number of meetings with Amgen," including one with Sharer that did not go well.
"It is not about not liking Amgen or J&J," Scully said. "They are in a gigantic war. Both companies like to throw bombs around."
Aranesp is a longer-acting version of EPO, the remarkably successful anemia drug invented by Amgen that spurs the production of red blood cells. In the United States, the market for EPO is split between Amgen and estranged business partner J&J.
Medicare does not cover most prescription drugs. But the government-funded health program for the elderly does pay for injectable drugs such as Aranesp and Procrit that are used in hospitals or doctors' offices.
The spat over Aranesp is the first to arise from the government's efforts to rein in drug spending. But the Biotechnology Industry Organization, a Washington trade group, is preparing a lawsuit against Medicare over payment cuts on Aranesp and other biotech drugs.
