Healthy Skepticism Library item: 1075

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Publication type: news

Hallam K.
Amgen Becomes No. 2 Grassley Donor as Aranesp Debated
2003 Apr 24

Full text:

Washington, April 24 (Bloomberg) — Amgen Inc., the world’s
No. 1 biotechnology company, became the second-biggest contributor
in the last election cycle to Senate Finance Committee Chairman
Charles Grassley, who has questioned a Medicare decision to reduce
payments for Amgen’s Aranesp anemia treatment.
Grassley became head of the committee that oversees Medicare
in 2000. Between 1997 and 2002, Amgen and its employees gave more
than $37,000 to the Republican senator, second only to Verizon
Communications Inc., records show. Amgen donated some $25,000 to
seven other lawmakers who signed letters criticizing the policy,
according to the Center for Responsive Politics. A Grassley
spokeswoman said the donations didn’t affect his activities.
Maintaining control over Aranesp pricing is crucial for
Amgen, as it seeks to dominate the anemia market, investors said.
Aranesp and an older version of the drug, Epogen, compete against
Johnson & Johnson’s Procrit. Amgen on Tuesday raised its 2003
forecast for Aranesp and Epogen sales to as much as $3.6 billion.
``The minute you cede control over pricing, you lose a lot of
leverage,’‘ said Jon Fisher, a fund manager for Fifth Third Bank,
which owns about 3 million Amgen shares. ``That’s why Amgen is
making this such a big point.’‘
In the previous two election cycles, Amgen wasn’t in the top
20 donors to Grassley, who represents Iowa. He became committee
chairman in 2000 after Senator William Roth lost a re-election
bid. When Democrats took control of the Senate in mid-2001, he
lost the chairmanship, regaining it after the 2002 elections.
`Supportive’
Amgen and its employees gave more than $912,442 to campaigns
for last fall’s elections, according to the Center for Responsive
Politics, which tracks campaign finance. Contributions weren’t
tied to the Aranesp Medicare cut, said Amgen spokeswoman Barbara
Bronson Gray. She said the Thousand Oaks, California-based
company’s political contributions rise in election years.
``We do support and we have supported for years members of
the House and Senate who are supportive of enterprise and
supportive of the biotechnology industry,’‘ Gray said.
Shares of Amgen rose 19 cents to $63.99 as of 4 p.m. New York
time on the Nasdaq Stock Market. They’ve gained 32 percent this
year, the third best performance on the 17-member Bloomberg U.S.
Biotechnology Index.
The Centers for Medicare & Medicaid Services on Oct. 31 set a
new rate that reduced the amount it paid for Aranesp for
outpatient care by 53 percent. About 10 percent of the drug’s
revenue comes from U.S. hospital outpatient reimbursements.
Fighting the Ruling
Grassley signed at least two letters, dated Nov. 1, 2002 and
Jan. 16, that questioned the agency’s decision and sought meetings
with U.S. Centers for Medicare and Medicaid staff to discuss the
matter. The agency’s head, Thomas Scully, met with Senate aides
last month.
``It is critical that the agency provide an opportunity for
public input when making significant policy changes,’‘ Grassley
and four other senators from both parties wrote in the Jan. 16
letter to the agency.
Amgen has fought the Medicare ruling on several fronts. In
December, a federal judge refused to block the payment cut,
dismissing the company’s case against the U.S. government. Amgen
has since appealed.
Officials at the company are making progress with the
government, said Chief Executive Officer Kevin Sharer.
``We’re having a very constructive dialogue between their
medical and scientific experts and ours,’‘ Sharer said in an
interview on Tuesday. ``We’ve presented them with patient data on
actual usage that was not available at the time of last year’s
rule making.’‘
Amgen also may be catching up to Johnson & Johnson in sales.
While combined Aranesp and Epogen revenue climbed 45 percent to
$802 million during the first quarter, Johnson & Johnson said its
Procrit sales rose less than 1 percent to $997 million.
Campaign Event
Amgen sponsored an event at the company’s headquarters that
raised $23,800 for Grassley on March 26, 2002, campaign finance
records show. That day, 45 Amgen employees made contributions,
records show.
The company says such fundraisers aren’t uncommon, either for
Amgen or the industry. Amgen was the 11th biggest donor to
lawmakers among pharmaceutical companies last year, according to
the Center for Responsive Politics. The company ranks 12th by U.S.
pharmaceutical sales among world drugmakers.
Jill Gerber, a spokeswoman for Grassley, said the lawmaker’s
policy work isn’t tied to campaign contributions. The senator
isn’t advocating a policy change that would favor Amgen, she said.
``He’s interested in the process of how CMS arrived at its
policy, and whether CMS plans to follow the same process for the
2004 round of considering the rule,’‘ Gerber said. Major policy
changes ``require input from all stakeholders, and CMS didn’t
allow for ample public comment in this case,’‘ she said.