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SEPTEMBER 18, 2002 THE BIOTECH BEAT By Arlene Weintraub, with Amy Barrett Amgen vs. J&J: Will It Ever End? The drugmakers' long-running feud over an anemia drug is in an arbitrator's hands, but that doesn't mean it's almost over
Anxious for a bigger piece of the pie, Amgen fought back by creating a longer-acting version of EPO, called Aranesp, which hit the market last October. The new drug got a big boost earlier this year, when a dangerous side effect turned up in 141 European and Canadian patients taking J&J's Eprex. The side effect? Pure red blood cell aplasia (PRCA), a rare disorder that causes anemia to worsen to the point that patients need frequent blood transfusions to survive. The cases started to appear in 1999, shortly after J&J changed the manufacturing practices in a Puerto Rican plant that makes Eprex. All U.S. versions of the drug, including J&J's Procrit, are manufactured by Amgen, which has seen only two cases of PRCA in the 13 years EPO has been on the market. ACCURACY AT STAKE. Late last year, the Thousand Oaks (Calif.) company says, it offered to help J&J figure out what was going wrong with Eprex but pulled out after J&J insisted on controlling how the findings were released. "We didn't want to release any information until we knew it was full and accurate," says Per A. Peterson, chairman of research and development for J&J, which is now facing several shareholder lawsuits over the Eprex debacle. But "Amgen could not agree to these restrictive conditions," says Amgen spokesman Jeff Richardson. What happened next made Amgen execs furious. In July, J&J suggested that the side effect could be avoided if doctors give the drug through an intravenous drip rather than by injection. That may not sound like direct attack on Amgen, but it implies that the side effect is the result of how the drugs are administered -- and thus Amgen's versions of the drug might also be connected to the same deadly illness when given by injection. Delivering the drug through a subcutaneous injection is a big part of Amgen's marketing message, because of the convenience factor. Patients have to go to their doctor to get an IV, whereas they could administer injections themselves. HURLING LAWSUITS. Amgen is now trying to get its message out, contending that the problem is unique to J&J's Eprex. "Amgen does not manufacture Eprex," Amgen's R&D chief Roger M. Perlmutter declared in Amgen's second-quarter earnings call. "Amgen's concern is patients' health and safety." If patients outside the U.S. switch from Eprex to Amgen's Aranesp, J&J could lose a significant portion of its $1 billion in foreign sales to Amgen. Amgen has always been the underdog in this rivalry with J&J -- at $4 billion in total sales last year, it's a pipsqueak compared to J&J, which raked in $29 billion. The two have been hurling lawsuits back and forth over the terms of their 1985 marketing agreement. Most recently, Amgen sued J&J, claiming that J&J pitched Procrit to dialysis patients, a market that Amgen is supposed to have exclusive rights to. Amgen hopes to regain all rights to the product in the U.S.-- a lofty goal. Who'll win this bigger battle? Experts say the arbitrator deliberating the case could impose a financial penalty on J&J or impose restrictions on how it markets Procrit, rather than taking the drastic step of giving the drug back to Amgen. Nevertheless, "we don't see anything but upside for Amgen," says Larry N. Feinberg, managing partner at health-care hedge fund Oracle Partners. "A SENSITIVE TOPIC." Indeed, J&J's troubles in Europe and Canada with Eprex' possible side effect may already be giving Amgen a boost. After J&J warned on July 17 that injecting Eprex might increase the risk of PRCA, authorities in France and Germany advised physicians to administer the drug only by IV. No further action has been taken, though "it's a sensitive topic," admits Dr. Francoise Mignon, president of the Nephrology Society in France, which met earlier this summer to discuss PRCA. After a slower-than expected ramp-up last year, Aranesp sales jumped 28% in the second quarter of this year, to $56 million. A bigger increase is expected in the second half, when Amgen will begin marketing the drug to chemotherapy patients and to kidney patients in Canada, where Aranesp was approved on Sept. 4. Amgen's gain in the anemia market is J&J's loss. With a combined haul of $3.4 billion last year, Eprex and Procrit were J&J's best-selling prescription drugs, accounting for 10% of total sales. Despite an industry downturn, the pharmaceutical giant reported profits of $4.8 billion for 2001, up 15% over the previous year. "IT'S COMPLICATED." Amid uncertainty over Eprex, J&J might find it hard to match that growth. It doesn't help that the Food & Drug Administration recently launched an investigation into a suit by a former employee, who claims that J&J ordered him to cover up manufacturing lapses at the Eprex plant. J&J denies any link to PRCA. J&J is now scrambling to save Eprex' reputation. Peterson says J&J is examining every potential factor that might have led to the side effect, including temperature changes during shipping and slight differences between the U.S. and overseas formulations of the drug. "It's complicated," Peterson admits. "We may never find the explanation." And this 17-year battle with Amgen may be far from over.  Weintraub is a correspondent in BusinessWeek's Los Angeles bureau, and Barrett is BusinessWeek's Philadelphia bureau chief Edited by John Carey Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | SEPTEMBER |
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