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Medicare Urged to Reimburse More for Anemia Drugs

Tuesday is a big day for Amgen, the world's biggest biotech company. A Food and Drug Administration panel will decide whether to recommend doctors use less of Amgen's top-selling and most profitable drugs, Aranesp and Epogen.

As the committee meets to examine the multi-billion dollar anemia drug market for kidney dialysis patients, lawmakers are putting pressure on Medicare policymakers to loosen up the purse strings.

Is the Senate coming to the rescue of patients, investors or both? That's the question being raised after the passage of a non-binding resolution telling Medicare to "immediately reconsider" its new policy to cut anemia drug use and reimbursement. Analysts are stunned by the move.

"It's certainly an unprecedented action,” says Ira Loss with Washington Analysis Corporation. “I've been following this area for many years and I do not remember Congress ever intervening on such a specific level."

And Geoffrey Porges with Sanford C. Bernstein said “I think it's unfortunate that drug regulation and drug reimbursement is being politicized. I think that is to the detriment of the industry."

After reports surfaced that doctors were using potentially dangerous doses of the anemia drugs, Medicare severely cut back on how much it pays for them. The agency spends more on Aranesp, Epogen and Johnson & Johnson's Procrit than any other drugs.

“I think they felt they had an opportunity to lower the use of the single biggest budgetary item in Part B," Loss said.

Critics claim Medicare went too far. Amgen and Johnson & Johnson certainly pushed back, but analysts believe it was the country's biggest cancer doctor lobby, the American Society of Clinical Oncology, that ultimately swayed the Senate. That, and the calendar.

“Headed into an election year, the last thing members of Congress want is to have the Medicare population upset about possible restrictions on access to a widely used medicine which is viewed to be a positive in peoples' lives," Loss said.

Analysts say the confluence of the Medicare decision, the lobbying and the pending election makes this an exceptional situation -- that drug and biotech companies will not be able to run to Capitol Hill every time a policy decision doesn't go their way.

It's not going to be a precedent for the future,” Porges said. “In fact, it will remain unprecedented and we'll go back more to business as usual."

In an e-mail, Medicare's chief medical officer told CNBC that, after a thorough review that will include a serious consideration of the Senate resolution, the agency will decide whether it "misinterpreted any evidence" or whether there's new evidence that would change its policy.

But Jeffries analyst Adam Walsh says a former high-level Medicare adviser gives a 30 percent chance for the agency reversing itself.

The FDA Advisory Committee meeting starts at 8 am New York time Tuesday, but voting usually occurs in the late afternoon. And while the advisory committee can only make recommendations, the FDA usually, but not always, follows the panel’s advice.

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