Amgen: Private Insurers Aren't So Worrisome

The biotech was doing damage control today, trying to reassure investors that commercial insurers aren't likely to cut coverage for its Aranesp and Epogen anemia meds in the same way that Medicare did so for elderly and disabled cancer patients. Speaking on a conference call hosted by Deutsche Bank, Amgen execs maintained private insurers, who account for about 60 percent of Amgen's anemia business, have been reluctant to cut coverage for cancer-related treatments, Reuters reports.

In other words, Amgen execs - who last week announced a 14 percent job cut, facilities closings and reduced earnings this year - are trying to say that the worst may be over. Then again...European Commission regulators are considering a label change for the drugs, much as the FDA did last March, and a decision is expected by year's end.

Amgen has seen sales of its best-selling products drop after the agency that runs Medicare and Medicaid tightened usage and dosing allowances, and scaled back reimbursements, last month due to concerns over safety and overuse. The rules are more restrictive than what's recommended by the FDA. Last year, Medicare accounted for roughly 40 percent of Amgen's $6.6 billion anemia business, and investors fear private insurers may also cut back.

But private insurers are reluctant, Amgen exec argue, partly because insurers rely on guidelines from groups such as the American Society of Clinical Oncology, which are less severe than the new CMS National Coverage Determination regulating use of anemia meds in cancer patients. Jim Daly, senior vp of Amgen's North American commercial operations, says the balance of power is different between oncologists and Medicare, and oncologists and insurance companies.

Insurers, he insisted, are worried about having large groups of cancer docs drop their plans. "We don't expect commercial payers to rapidly adopt the NCD guidelines," Daly told the call.

Amgen execs say the changes are likely to be most pronounced among the many Medicare patients who receive treatment in outpatient clinics rather than in hospitals, where it is more difficult to segment patients according to coverage, Reuters writes.

Amgen saw US sales of Aranesp, its newer and longer-lasting red blood cell booster, fall 19 percent to $578 million in the June quarter as doctors cut use due to the new FDA label. During the same period, Johnson & Johnson's rival drug, Procrit, saw sales fall 14 percent to $449 million. Amgen stock has lost more than one-fourth of its value this year.