Amgen Loses Monopoly on Drug for Dialysis Patients

Amgen Loses Monopoly on Drug for Dialysis Patients
By ANDREW POLLACK
Published: March 27, 2012

It has been one of the most lucrative monopolies of all time, yielding the biotechnology company Amgen roughly $40 billion in sales over 23 years.

Now it appears to be over. The Food and Drug Administration on Tuesday approved an alternative to Amgen’s drugs for use in increasing red blood cell levels in anemic patients receiving kidney dialysis.

The new drug, developed by a small company called Affymax, works the same way in the body as Amgen’s anemia drugs do. But it is different enough chemically that it is expected to avoid the patent infringement lawsuits that Amgen has wielded successfully to defend its turf.

The new drug, Omontys, could provide a less expensive alternative for dialysis providers and for Medicare, which pays for most dialysis, even for those under 65 years old.

“We have suffered under a monopoly now for many years, and Amgen has done pretty much whatever they’ve pleased,” said Dr. John H. Sadler, chief executive of the Independent Dialysis Foundation, a small nonprofit dialysis provider in Baltimore.

The prices dialysis providers negotiate with Amgen help determine their profitability, he and other dialysis industry executives say. Without competition, Amgen has been free to set prices and recently raised them significantly, according to some of the executives.

Affymax is entering the market as use of the anemia drugs is declining because of safety concerns and a new Medicare payment system. Sales of Epogen, Amgen’s main drug for dialysis, dropped to $2 billion in 2011 from $2.5 billion in 2010.

Amgen has also taken steps to lock Affymax out of the market, signing contracts with the two big dialysis chains that together treat around two-thirds of the nation’s roughly 400,000 dialysis patients, virtually all of whom have anemia.

In exchange for presumably big discounts from Amgen, one of the chains, DaVita, agreed to use Amgen’s drugs for at least 90 percent of its needs through the end of 2018. Fresenius, the other big chain, signed a three-year nonexclusive deal, according to Amgen’s regulatory filings.

John A. Orwin, chief executive of Affymax, which is based in Palo Alto, Calif., said there was still a substantial market in midsize and small dialysis providers.

“There’s a group of people who are very anxious to talk to us,” he said in an interview this month. Takeda, the big Japanese drug company, will help market Omontys, which is known generically as peginesatide.

Mr. Orwin said Omontys could be given once a month by injection or infusion, while Epogen is typically given three times a week.

He said Tuesday that while the list price for Omontys might not be that different from that of Epogen, Affymax intended to make its product less expensive in its contract negotiations with dialysis providers, after factoring in discounts, rebates and the savings in nursing time from the less frequent dosing.

“We know we need to be part of the solution to lower costs,” he said. He said a typical cost to treat a patient with Epogen was $6,000 a year, though doses vary.

Anemia drugs built Amgen into the world’s biggest biotechnology company. In the early 1980s, as a small start-up, Amgen won a race to isolate the gene for erythropoietin, or Epo, a protein produced in the kidneys that causes the body to produce oxygen-carrying red blood cells. Amgen then spliced the human Epo gene into hamster ovary cells, which were grown in culture and could churn out large quantities of the protein to use as a drug.

Since Epogen’s approval in 1989, Amgen has sold more than $37 billion worth of the drug, all of it to treat American dialysis patients. Johnson & Johnson, under a licensing deal with Amgen, sells the same drug under the name Procrit for other uses.

Amgen has also sold $26 billion of Aranesp, a longer-lasting form of Epo, though only a small part of that has been for American dialysis patients.

Over the years, Amgen has defended its monopoly in patent lawsuits against Genetics Institute, Transkaryotic Therapies and Roche.

Amgen divided its seminal invention into several patents, the first of which expired in 2004. But some of the patents were not granted until years later, giving Amgen protection until as late as 2015, longer than the 20 years envisioned in patent law.

In Europe there was only one patent, and it expired several years ago. Amgen has since faced competition so there are now near-generic versions of Epogen, known as biosimilars, on the market there.

Unlike the drugs found to infringe Amgen’s patent, Omontys is not a version of the Epo protein made in living cells. It consists of two small protein fragments, called peptides, that are made chemically and do not share amino acid sequences with Epo, according to Affymax.

Over the years, financial incentives and heavy marketing by Amgen have turned Epogen into a major moneymaker, and one of the largest pharmaceutical expenses for Medicare.

Dialysis clinics could make a profit from using Epogen because Medicare and private insurers would reimburse them more than they would pay to buy the drug from Amgen. That gave the clinics an incentive to use more of the drug.

But last year Medicare began paying a set fee to cover a complete dialysis treatment, including Epogen. So Epogen has now become a cost that lowers profit, giving clinics an incentive to use as little of the drug as possible. The Food and Drug Administration meanwhile has also increased restrictions on the use of Epo drugs after various studies showed that overuse increased the risk of heart attacks, strokes and other cardiovascular problems.

Omontys has the same safety warnings on its label since it is considered in the same class of drugs. Moreover, in clinical trials involving patients with kidney disease who were not undergoing dialysis, those who got Omontys had a higher rate of certain cardiovascular problems than those who received Amgen’s Aranesp.

Affymax argued that those patients were distinct from those getting dialysis, where the increased incidence of problems was not seen. An advisory committee to the F.D.A. apparently agreed, recommending approval of Omontys in December by a vote of 15 to 1 with one abstention.

But in a post on his blog, the Kidney Doctor, Dr. Ajay K. Singh, an influential nephrologist at Brigham & Women’s Hospital in Boston, questioned whether the division of patients based on whether they undergo dialysis “makes any sense from a safety perspective.”

Affymax shares rose 58 cents, to $14.31, on Tuesday. Omontys is the first product approved for the company, which has a market capitalization of around $500 million. Shares of Amgen rose 29 cents to $67.81.

Safety could be another issue. In clinical trials involving patients with kidney disease who were not undergoing dialysis, those who got Omontys had a higher rate of certain cardiovascular problems than those who received Amgen’s Aranesp.

A version of this article appeared in print on March 28, 2012, on page B1 of the New York edition with the headline: For Amgen, A Monopoly Is Ending.

http://www.nytimes.com/2012/03/28/health/policy/fda-approves-new-anemia-drug.html