Global Insight Perspective | |
Significance | Amgen is to end its practice of offering rebates to oncology clinics in exchange for their purchasing certain amounts of anaemia drug Aranesp (darbepoetin alfa). |
Implications | The practice will mainly affect Aranesp sales, although rebates for neutropaenia drug Neulasta (pegfilgrastim) and Neupogen (filgrastim) could also suffer. Amgen has been under pressure from Congress for a year to call time on drug bundling, with complaints that it encourages the unnecessary prescribing of anaemia drugs to cancer patients despite safety concerns. |
Outlook | Of the three drugs affected by the move, Aranesp will be hit the hardest, and Johnson & Johnson's rival drug Procrit could be given the upper hand in what remains a competitive but shrinking therapeutic area of the U.S. pharma market. |
U.S. biotech Amgen is to abandon pricing practices on several of its leading drugs from 1 October, and has started to inform doctors at oncology clinics around the United States of the impending changes. The pricing practices in question relate mainly to anaemia drug Aranesp (darbepoetin alfa), and until now have been aimed specifically at cancer-care clinics that prescribe anaemia treatments to chemotherapy patients with a low haemoglobin count. According to the New York Times, Amgen has decided to stop the "bundling" of Aranesp—offering a rebate based on the share of Aranesp in a clinic's total purchases of anaemia drugs—following accusations from several members of the U.S. Congress that the practice incited excessive use of Aranesp at a time when it was being closely scrutinised for safety reasons.
Amgen maintains that the practice never led to the over-consumption of Aranesp or other anaemia drugs, despite one claim made in April that the bundling scheme had provided rebates of US$800 million to U.S. oncology clinics in 2006. The biotech says that its decision to call time on rebates was made to put an end to "those possible misconceptions." In the meantime, Amgen has decided to maintain another pricing practice on its top-selling anaemia drug; specifically, it will offer a large discount to clinics that purchase at least half of their anaemia drugs from Amgen rather than from rival U.S. firm Johnson & Johnson, which produces competitor drug Procrit (epoetin alfa).
Besides the end of rebates on Aranesp, Amgen is also ending its rebates on two more drugs: neutropaenia drug Neulasta (pegfilgrastim) and Neupogen (filgrastim). Both drugs help to prevent infections by boosting the white blood-cell count of patients on chemotherapy, and are consequently frequently used in oncology clinics. Since February, Amgen's bundling policy for Neulasta and Neupogen has been to offer discounts on the two drugs based on clinics' purchases of Aranesp as a share of total anaemia drugs bought. This practice—which led to a lawsuit from Johnson & Johnson—will also be discontinued from 1 October (see United States: 14 July 2008:J&J Settles Anaemia Drug Anti-Trust Lawsuit with Amgen).
Outlook and Implications
The most immediate effect of Amgen's decision will be that physicians at U.S. oncology clinics will no longer have the same financial incentives to prescribe Aranesp, Neulasta or Neupogen over rival treatments. As Neulasta and Neupogen have a near monopoly on the U.S. market for neutropaenia drugs, they should escape the worst of the fallout, although less well-funded clinics may choose to limit their purchases to a certain extent. Aranesp, meanwhile, will be more vulnerable to competition from Procrit; J&J has been known to use similar bundling tactics for its own anaemia drug, and as yet the company has not revealed any plan to halt the practice. For Amgen, it all amounts to the likelihood of doctors being even more reticent to prescribe Aranesp for chemotherapy patients, this time for financial reasons. Previously revealed safety concerns over a risk of tumour growth in patients taking Aranesp have already led to restrictions being imposed on the drug's prescribing and reimbursement in the United States, causing a dramatic slump in sales. Aranesp's full-year U.S. turnover for 2007 was down by 22.8% year-on-year (y/y) at US$2.2 billion, while sales recorded during the first six months of 2008 contracted by 32.5% y/y to reach US$832 million. Amgen could also face a further setback to its marketing of Amgen if a proposal by the Centers for Medicare and Medicaid Services (CMS) issued last year is implemented; the proposal recommends restricting the practice of bundling for anaemia drugs in a separate setting, for kidney dialysis patients (see United States: 4 July 2007: Proposed CMS Change to Challenge Bundled Drugs Reimbursement).