Letter to Kevin Sharer, Chairman, and CEO and President of Amgen Inc., Re: Increased Rebates to Physicians Prescribing Anti-Anemia Drugs

Letter

Letter to Kevin Sharer, Chairman, and CEO and President of Amgen Inc., Re: Increased Rebates to Physicians Prescribing Anti-Anemia Drugs

GRASSLEY QUESTIONS INCREASES IN DRUG MAKER REBATES TO PHYSICIANS PRESCRIBING ANTI-ANEMIA DRUGS

Senator Chuck Grassley is asking Amgen Inc. to account for notably high rebates to some physician groups for purchasing the prescription drug Aranesp, an anti-anemia therapy given to kidney and cancer patients.

In a letter sent to the drug maker today, Grassley describes data he obtained through an earlier inquiry and requests additional information about Amgen's drug rebate and discount calculations. "The information raises questions," he said. "Some oncology practices in some states are receiving unusually high rebates for purchasing Aranesp. These trends underscore the need for greater transparency in the financial relationships between drug makers and doctors. Patients deserve to know what's going on as they make decisions about their health and safety based on the advice of their doctors."

Last year Grassley sought to increase access by the Food and Drug Administration to drug study results for anti-anemia drugs. Last month, an FDA advisory committee recommended more limited use of anti-anemia drugs due to safety concerns.

The text of the letter he sent today, along with last year's inquiry, follows here.

April 3, 2008

Mr. Kevin W. Sharer
Chairman, Chief Executive Officer and President
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320-1799

Dear Mr. Sharer:

The United States Senate Committee on Finance (Committee) has jurisdiction over the Medicare and Medicaid programs. Accordingly, the Committee has a responsibility to the more than 80 million Americans who receive health care coverage under those programs to oversee the proper administration of the programs and ensure that taxpayer and beneficiary dollars are appropriately spent on safe and effective drugs and devices.

Last May, I wrote to you regarding a New York Times article that doctors were profiting through rebates they received from purchasing erythropoiesis-stimulating agents (ESA) directly from Amgen, Inc. (Amgen) and then collecting payments from Medicare and private insurers, often above the price they paid for the drugs. Three weeks ago, during the Oncologic Drugs Advisory Committee discussion of the safety of ESAs, the panelists raised concerns that ESAs may be doing more harm than good in patients with certain cancer types and questioned whether or not Amgen's practice of discounting the price of its drugs for doctors who buy large quantities of ESAs may be encouraging overuse of these drugs.

As part of the Committee's inquiry into the potential impact of pricing practices on the utilization of ESAs, I sent a letter in August requesting that Amgen provide information regarding rebate payments/discounts to physicians, group practices, and others who purchased Aranesp and/or Epogen. A review of the information provided by Amgen raises some questions regarding the rebate arrangements between Amgen and physicians/group practices.

According to Amgen, almost $800 million in rebates were paid in calendar 2006 to more than 6000 facilities, including group practices, hospital inpatient and outpatient departments, home health agencies and skilled nursing facilities. About 80 percent of that total went to physicians, group practices, and physician clinics. In addition, with the exception of three states, the total amount of rebates paid to facilities in each state increased each year from calendar year 2004 through calendar year 2006, in some cases doubling in total amount.

For example, about 90 facilities in Alabama received about $7 million in total amount of rebates for Aranesp in calendar year 2004. That amount increased to more than $17 million to about 100 facilities in calendar year 2006-an increase of about $10 million. Similarly, the total amount in rebates paid to facilities in South Carolina almost doubled from more than $7.5 million to about 70 facilities in calendar year 2004 to more than $14.5 million to about 80 facilities in calendar year 2006.

When one examines the five group practices/physician clinics that received the most rebates from Amgen during calendar years 2004-2006 in a specific state, some of the payments to the same group practices also increased over time. For example, in Alabama the rebates to one cancer center more than doubled over the three-year period from $1.3 million in calendar year 2004 to almost $2 million in calendar year 2005 to more than $3 million in calendar year 2006. Based on information provided on the center's Website, there are about 10 oncologists on staff, which translates to about $300,000 in rebates per oncologist in calendar year 2006.

In Indiana, more than $15 million in rebates were paid to about 220 facilities in calendar year 2004, more than $27 million in 2005, and more than $34 million in 2006. Rebates to one 5-physician practice increased from more than $500,000 in calendar year 2004 to almost $1.3 million in calendar year 2006. Rebates to another group practice increased more than fourfold from about $1.5 million in calendar year 2004 to about $6.5 million in calendar year 2006. According to that practice's Website, there are about 10 oncologists on staff, which translates to about $650,000 in rebates per oncologist in calendar year 2006.

I have cited only a few examples in this letter, but based on the information submitted by Amgen, it seems that group practices/physician clinics in some states are receiving significant amounts of rebates for purchasing Aranesp. To understand what accounts for these rebate totals, I would appreciate a discussion of the factors that are considered in determining the rebates/discounts Amgen pays to physicians, group practices, and physician clinics. For example, do the rebates/discounts take into account the purchase of another drug and/or other product(s) from Amgen or are rebates related to amounts purchased in certain time frames? Please also describe any factors specific to individual states that may impact Amgen's rebate/discount calculations.

Thank you in advance for your continued cooperation and assistance.

Sincerely,

Charles E. Grassley
United States Senator
Ranking Member of the Committee on Finance

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