Grassley Questions Increases in Drug Maker Rebates to Physicians Prescribing Anti-Anemia Drugs

WASHINGTON April 3, 2008 — 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

For Immediate Release
Wednesday, May 16, 2007
Grassley seeks to empower FDA to access drug-risk information from drug makers
WASHINGTON — Sen. Chuck Grassley wants to make sure drug makers fully disclose
data from their drug studies to the Food and Drug Administration, and he’s asking the
drug-safety agency if it needs new power to collect such information and a major drug maker to
account for how it handled requests from the FDA for information about anti-anemia drugs given
to kidney and cancer patients.
In letters sent this week, Grassley has asked the FDA to identify any new tools it might
need to gain access to necessary information from drug makers. He also has asked Amgen to
respond to allegations that it limited FDA access to the results of company studies and did not
provide complete responses to the agency’s requests for data.
“The Senate has already passed its FDA revitalization legislation, but the House of
Representatives hasn’t acted yet, so there’s still time for congressional leaders to consider new
and important measures to strengthen the hand of the FDA in looking out for American
consumers,” Grassley said. “There could be important lessons to learn from this particular case,
and since Congress doesn’t act very often on FDA legislation, so we ought to focus on what
happened in a very time-sensitive way.”
Amgen is the maker of erythropoisesis-stimulating agents, which are used for the
treatment of anemia in patients with chronic kidney failure as well as chemotherapy-induced
anemia. Last week an FDA advisory panel recommended that more information should be
provided about the risks of these drugs and new studies should be conducted to assess the drugs’
safety. In addition, news organizations reported assertions that Amgen had not provided study
data to the FDA upon request and had not been up front about safety risks.
Last month, Grassley asked the Centers for Medicare and Medicaid Services to address
reimbursement and drug safety concerns related to the use of these anti-anemia drugs. Grassley
said he has received a preliminary response to this inquiry and will continue to pursue a payment
policy that guards both tax dollars and patient safety.
The text of Grassley’s letters to the FDA, Amgen and CMS follows here.

May 16, 2007
The Honorable Andrew C. von Eschenbach, M.D.
Commissioner
U.S. Food and Drug Administration
5600 Fishers Lane
Rockville, MD 20857
Dear Commissioner von Eschenbach:
The United States Senate Committee on Finance (Committee) has jurisdiction over the
Medicare and Medicaid programs and, accordingly, 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, including the payment for prescription drugs regulated by the
Food and Drug Administration (FDA).
Last Thursday, FDA's Oncologic Drugs Advisory Committee (Advisory Committee) met
to discuss the use of erythropoiesis-stimulating agents (ESAs) in cancer patients. As you know,
the Advisory Committee recommended new restrictions on prescribing information for ESAs
and additional clinical trials to assess the drugs' safety in light of reports of increased risk of
cardiovascular disease, tumor growth, and even death associated with higher than recommended
doses of the drugs.
I read with great concern the Los Angeles Times article, dated May 11, 2007, which
noted that some members of the Advisory Committee suggested that Amgen Inc. (Amgen),
manufacturer of the ESAs, Aranesp, Epogen and Procrit, the latter of which is marketed by
Ortho Biotech Products, L.P., a subsidiary of Johnson & Johnson, "was not being upfront about
all the drug's risks." What further troubled me was a Bloomberg article, also dated May 11,
2007, which reported that that the FDA was given limited access to results from company studies
and Amgen did not provide complete responses to the FDA's requests for data. This troubles me
because the FDA cannot do its job well if it lacks complete and accurate information.
According to Bloomberg, Amgen responded that academic researchers often do not make
full results available to the FDA. Through my investigations, I also have learned that there are
certain types of information that manufacturers are not required to provide to the FDA, although
they may submit such information voluntarily. However, FDA should have access to any data or
information that is relevant to its assessment of the safety and efficacy of a drug.
In other letters to you, I have emphasized the importance of providing FDA's advisory
committees with the relevant and truthful information they need to perform their advisory
function. It is even more essential that the FDA works with a full deck of cards because it
decides what safety actions to take based on the data and information available to the agency.
In light of the concerns raised during the Advisory Committee meeting on ESAs, it
appears that the FDA may need tools that will enable the agency to obtain access to additional
data and information from manufacturers so that informed decisions can be made about a drug's
safety and efficacy. The U.S. Senate passed the Food and Drug Administration Revitalization
Act last week, but the House of Representatives has not yet acted, which gives Congressional
leaders another opportunity to consider new and important measures to strengthen the hand of
the FDA in looking out for American consumers.
Accordingly, I am requesting that the FDA arrange a meeting with my Committee staff
by no later than May 31, 2007, to discuss ways to ensure that the FDA receives all of the
relevant and truthful information that it requires to perform its duties. Please have your staff
prepared to discuss FDA's data needs and the issues and concerns raised in this letter. In
particular, they should be prepared to respond to the following questions:
1. What data or information that is not already available to the FDA does the agency believe
should be available for purposes of evaluating a drug's safety or efficacy or the integrity
of the data that is submitted to the FDA?
2. Please describe the type(s) of data that the FDA requested from Amgen regarding ESAs
and discuss the manufacturer's explanation for not providing that data to the FDA and
submitting incomplete responses. What is the relevance of the data to FDA's assessment
of the safety of ESAs?
3. The FDA announced that its Cardiovascular and Renal Drugs Advisory Committee
would meet this fall to discuss the safety of ESAs in the ESRD setting. Given the
reported incomplete responses to the FDA's data request, do you anticipate similar
problems with obtaining data from the manufacturer for the Cardiovascular and Renal
Drugs Advisory Committee meeting?
4. Last month, the Wall Street Journal reported that Amgen may have promoted use of
Aranesp and Epogen to improve a patient's quality of life and that the manufacturer had
conducted some studies in that area. When did the manufacturer inform the FDA of
those studies? Has the FDA requested data from the manufacturer regarding those
studies, and if so, has the manufacturer submitted the data as requested to the FDA?
I look forward to your cooperation and assistance on this important matter. Please have
your staff contact my Committee staff to schedule a meeting.
Sincerely,
Charles E. Grassley
Ranking Member
Committee on Finance

May 16, 2007
Mr. Kevin 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 and, accordingly, 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, including the payment for prescription drugs regulated by the
Food and Drug Administration (FDA).
Last Thursday, FDA's Oncologic Drugs Advisory Committee (Advisory Committee) met
to discuss the use of erythropoiesis-stimulating agents (ESAs) in cancer patients. As you know,
the Advisory Committee recommended new restrictions on prescribing information for ESAs
and additional clinical trials to assess the drugs' safety. In addition, on May 14, 2007, the
Centers for Medicare and Medicaid Services (CMS) released its proposed coverage decision
memorandum regarding the clinical conditions for Medicare reimbursement for ESAs.
Several news articles have raised concerns not only about Medicare's payment system
creating incentives for using higher doses of ESAs than are necessary, but also the impact of
marketing and supply contracts between ESA manufacturers and dialysis providers on the
utilization of ESAs. The Wall Street Journal reported that Amgen Inc. (Amgen) may have
promoted the use of Aranesp and Epogen for improving a patient's quality of life without
sufficient evidence for the claim. The New York Times reported on profits that doctors make
through rebates they may receive from purchasing the drugs from Amgen and Johnson &
Johnson and collecting payments from Medicare and private insurers, which are often above the
purchase price.
In addition, I read with great concern the Los Angeles Times article, dated May 11, 2007,
which noted that some members of the Advisory Committee suggested that Amgen "was not
being upfront about all the drug's risks." What further troubled me was a Bloomberg article,
also dated May 11, 2007, which reported that the FDA was given limited access to results from
company studies and Amgen did not provide complete responses to the FDA's requests for data.
It is essential that the FDA receive complete and accurate information in order for the agency to
take appropriate and timely actions in response to emerging safety concerns.
Accordingly, I am requesting that Amgen arrange a briefing for my Committee staff by
May 31, 2007, to discuss the issues and concerns that have been reported in the media over the
last several weeks regarding the marketing and safety of ESAs. In addition, please be prepared
to address the following questions:
1. Please describe the type(s) of data that the FDA requested from Amgen. Were the data
related to the safety and/or efficacy of the ESAs?
2. Did Amgen provide complete responses to FDA's data requests? If not, please provide
an explanation for submitting incomplete responses.
3. In its proposed coverage decision memorandum, CMS expressed concern that a number
of trials of ESA treatment have been terminated, suspended, or otherwise not completed.
Has Amgen sponsored any trials of ESA treatment that have been terminated, suspended,
or otherwise not completed that showed evidence of serious adverse effects? If so, have
the results from those trials been made available to the FDA? If not, please explain why
study results were withheld from the FDA.
4. On April 10, 2007, The Wall Street Journal reported that Amgen conducted some studies
related to the use of Aranesp and Epogen to improve a patient's quality of life. When did
Amgen inform the FDA of those studies? Has the FDA requested data regarding those
studies? If so, did Amgen submit the data as requested?
5. The Wall Street Journal also reported $500 million a year in sales from doctors who
prescribed Aranesp "off label" to treat anemia in cancer patients who were no longer
receiving chemotherapy. In light of the increased risk of serious adverse effects,
including death, associated with the use of ESAs in this patient population, what actions,
if any, has Amgen taken to ensure that doctors and patients are informed of the new
safety risks?
Any documents responsive to the issues and questions to be discussed at the briefing
should be sent to the Committee prior to the briefing via electronic transmission in PDF format.
In cooperating with the Committee's review, no documents, records, data or information related
to these matters shall be destroyed, modified, removed or otherwise made inaccessible to the
Committee.
I look forward to your cooperation and assistance on this important matter. Thank you in
advance for providing the name and contact information, including an e-mail address, for a
person who will act as the point of contact for Amgen during the Committee's review by no later
than May 22, 2007.
Sincerely,
Charles E. Grassley
United States Senator
Ranking Member of the Committee on Finance

April 10, 2007
Leslie Norwalk
Acting Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Dear Acting Administrator Norwalk:
The United States Senate Committee on Finance (Committee) has jurisdiction over the
Medicare and Medicaid programs and, accordingly, a responsibility to ensure that drugs and
services provided to the 80 million beneficiaries of these programs are safe and effective and are
purchased in a fiscally responsible manner.
The Centers for Medicare and Medicaid Services (CMS) is responsible for making
coverage determinations for a wide variety of drugs, biologics, devices, and medical services.
One of the most significant expenditures within the Medicare program is for end-stage renal
disease (ESRD) related care. ESRD spending accounted for nearly $7.9 billion of total Medicare
spending in 2005. One of the central services within the ESRD program is the administration of
erythropoiesis-stimulating agents (ESAs) for the treatment of anemia in patients with chronic
kidney failure. Outside of the ESRD program, Medicare and Medicaid also make significant
expenditures on ESAs for chemotherapy-induced anemia in cancer patients. According to the
Government Accountability Office (GAO), Medicare spent $2 billion in 2005 for Epogen alone,
an ESA manufactured by Amgen, Inc. (Amgen). Amgen also manufactures two other ESAs,
Aranesp and Procrit, the latter of which is marketed by Ortho Biotech Products, L.P., a
subsidiary of Johnson & Johnson.
Although ESAs have improved the quality of life for thousands of kidney patients, the
GAO report cites concerns that the Medicare payment system has created incentives for using
more doses of ESAs than are necessary. Medicare pays one rate for dialysis and other ESRD
services; however, it pays for ESAs separately on a per service basis. According to the GAO,
bundling all ESRD drugs and services under a single rate would encourage more prudent use of
ESAs. The Medicare Payment Advisory Commission (MedPAC) also recommends that payment
be bundled to control costs and promote quality care. In addition, MedPAC has recommended
implementation of a quality incentive payment policy for providers of outpatient dialysis
services.
An overuse or inefficient use of ESAs is not only a financial concern to the Committee,
but also a major patient safety concern. I am troubled by the findings in recent clinical studies of
increased risks of death, blood clots, strokes, heart attacks, and tumor growths when ESAs are
given in higher than recommended doses. As a result of these studies, on March 9, 2007, the
FDA issued a public health advisory to inform doctors and patients of the new safety information
regarding Aranesp, Epogen, and Procrit. Furthermore, the product labeling for ESAs have been
revised to include new warnings and modifications to the dosing instructions.
Accordingly, I am requesting that CMS arrange a briefing for my Committee staff by no
later than April 27, 2007, to address the following questions, among other things:
1. In light of new warnings from the FDA regarding ESAs, CMS announced that it would
closely review all Medicare policies related to the administration of ESAs. What is the
status of CMS's review and what specific actions are being considered to ensure the
safety of Medicare and Medicaid beneficiaries and prevent the overuse of ESAs?
2. Medicare Part B currently requires that physicians report hemoglobin or hematocrit
levels for certain chronic kidney disease patients, but not for cancer patients. Section 110
of the Tax Relief and Health Care Act of 2006 requires that all Part B claims submitted
for drugs that are furnished to individuals on or after January 1, 2008, in connection with
chemotherapy include the hemoglobin or hematocrit levels for those individuals. What is
the status of implementation of this new requirement?
3. On April 1, 2006, CMS implemented a national monitoring policy for use of ESAs in
Medicare beneficiaries with ESRD. According to information posted on CMS's website,
the previous methodology for monitoring ESA claims "was implemented with limited
scientific analysis." What was the scientific support for CMS's current monitoring
policy? Did CMS consider the funding source of the studies and/or other scientific
support upon which the agency relied in developing the current monitoring policy? Did
CMS review the validity and impartiality of the scientific evidence?
4. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required
CMS to issue a report and conduct a demonstration of a system for bundling payment of
ESAs with other ESRD items and services under a single rate. CMS's report was due in
October 2005, but according to GAO testimony dated December 6, 2006, both the report
and the demonstration testing of the feasibility of a bundled rate have been delayed.
What is the status of the report and demonstration? What are the reasons for the delays?
Thank you for your prompt attention to this matter.
Sincerely,
Charles E. Grassley
United States Senator
Ranking Member of the Committee on Finance

Posted: April 2008


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