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Maria Vogel-Short

New Jersey Law Journal

11-09-2007

A putative class-action suit in New Jersey's federal court accuses the maker of a cancer-treatment drug of cornering the oncology clinic market with an anti-competitive tying arrangement and pricing scheme.

According to the suit, Amgen Inc. of Thousand Oaks, Calif., requires oncology clinics to buy Aranesp, a red blood cell stimulant, if they want better prices for the company's two white blood cell stimulants, Neulasta and Neupogen. The two drugs hold 98 percent of the market in sales to oncology clinics.

Aranesp competes primarily with Procrit, made by Ortho Biotech Products LP of Bridgewater, N.J.

"A clinic that purchases a higher percentage of Amgen products gets higher rebates, and Amgen imposes restrictions that force clinics to purchase more Aranesp and not Procrit," says plaintiffs lawyer David Cohen, of Saltz Mongeluzzi Barrett & Bendesky in Philadelphia and Voorhees, N.J.

"The pricing is designed to eliminate Procrit from the clinic, and ultimately, the end users suffer because they are forced to pay more for it," he says. "The result has been less price competition, less physician and patient choice and an increased expense to the public health system."

The plaintiffs allege that as a result of the pricing scheme, Procrit's share of sales to oncology clinics dropped from 55 percent to 34 percent between the first quarter of 2004 and October 2005. During the same period, Aranesp's share went from 45 percent to 66 percent.

The suit, Sheet Metal Workers National Health Fund v. Amgen Inc., filed Nov. 2, seeks injunctive relief for alleged violations of the Sherman Act, 15 U.S.C. §1, and of antitrust laws in every state.

The named plaintiff, Sheet Metal Workers National Health Fund of Alexandria, Va., is a third-party payer of the costs of Aranesp and the suit identifies the putative class as including anyone who paid all or a portion of the cost for Aranesp at an oncology clinic since April 2004. Patients who made co-pays or whose co-pays were reimbursed by an insurer or third party are excluded.

The suit notes that the effect of Amgen's arrangement of tying access to rebates for Neulasta and Neupogen to sales of Aranesp can be seen in a market where tying was not used -- sales to retail drug stores. There, Procrit's sales remained at about 70 percent.

In October 2005, Amgen allegedly tightened its squeeze by requiring a higher dollar volume of Aranesp sales to qualify for the rebates.

"Few oncology clinics are able to bear the cost and financial risk of also stocking Procrit given the level of Amgen’s dollar volume requirements for Aranesp," the suit says. As a result, class members "paid more for the drugs at issue than they would have paid absent the defendant's unlawful conduct," the suit continues.

Generally, patients take red and white cell growth drugs because of anemia caused during chemotherapy therapy for cancer. The drugs also are used after zidovudine treatment for HIV or dialysis for kidney problems.

Sales of Procrit and Aranesp to oncology clinics exceeded $2.8 billion in 2005.

The suit says Procrit is cheaper and more effective and has been on the market since 1991, 11 years before Aranesp.

Because of Amgen's pricing arrangement, clinics are forced to pay higher prices for Aranesp, says Cohen. Procrit costs $80 to $100 per dose, Aranesp $100 to $300, says Cohen.

Mary Klem, a spokeswoman for Amgen, which had revenues of $12.4 billion in 2006, declines to comment. David Polk, Amgen vice president of communications, did not return a call seeking comment.

Amgen and Ortho Biotech Products have been litigating in federal court in Trenton, N.J., for two years. Ortho Biotech filed an antitrust suit against Amgen, alleging a monopoly, bundled pricing and unfair business competition in sales of Procrit. That suit, Ortho Biotech Products, L.P. v. Amgen Inc., 05-04850, is assigned to U.S. District Judge Stanley Chesler in Newark, N.J.