Tuesday, July 15, 2008
The Wall Street Journal reports on the $200 million settlement between Amgen and Johnson & Johnson after a two-and-a-half year battle over marketing of rival oncology products. Marilyn Chase writes,
Amgen Inc. agreed to pay $200 million to settle an antitrust lawsuit by Johnson & Johnson's Ortho Biotech Products unit, putting to rest 2 1/2 years of legal wrangling over Amgen's sales of its oncology products.
Ortho, based in Bridgewater, N.J., had filed suit in October 2005 alleging that discounts and incentives offered to oncology clinics buying Amgen's blood-cell-boosting products Aranesp, Neupogen and Neulasta constituted anticompetitive business practices.
Amgen denied and continues to dispute suggestions that such incentives constitute unlawful conduct. Ortho markets Procrit, which competes with Aranesp.
Under the settlement, Ortho's litigation in New Jersey District Court was dismissed. Amgen, based in Thousand Oaks, Calif., admitted no wrongdoing under terms of the agreement.
Ortho in a statement said the settlement will result in an after-tax gain of about $120 million to Johnson & Johnson's third-quarter results.
An Amgen spokesman said the company didn't change its sales practices in response to the lawsuit, but that it reviews its contracts in response to market conditions and will continue to do so to remain competitive.
"We are pleased to have reached a settlement that puts this litigation behind us," said Amgen Chief Executive Kevin Sharer in a statement. Ending the expense and uncertainty of the suit is in shareholders' best interests, he said.
Aranesp, part of a family of drugs known as erythropoietin-stimulating agents, boosts red-blood-cell production in patients with anemia due to chemotherapy and kidney disease. Sales of such products have fallen recently on concerns over cardiovascular risks and cancer progression.
Neulasta and Neupogen are used to treat or prevent a plunge in certain white blood cells and risk of infection due to cancer treatment.
Amgen 's world-wide sales of Aranesp totaled $761 million in the first quarter of 2008. Combined world-wide sales of Neulasta and Neupogen totaled $1.086 billion in the same period.
Under its current contracts, Amgen grants its customers certain Aranesp rebates based on share of sales. Neulasta rebates are also based on meeting a threshold of sales. Customers are offered an opportunity to obtain higher rebates if they purchase both Neulasta and Aranesp under what is called the Amgen Portfolio Contract.
Amgen hasn't made any decision whether to modify its current contracts but is expected to review them.