Deal of the Year Nominee: FDA Makes Amgen An Offer It Can’t Refuse

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

Who said the Deal of the Year has to be a business development transaction between two companies? (Ed. note: nobody!)

At a time when regulatory challenges, reimbursement hurdles and the general political climate is at the top of mind for many biopharma executives and their investors, we think there is a strong argument that the most important deals being struck as 2009 dawns are between industry and government.

And if you are looking for a negotiated agreement involving two or more parties with profound implications for the entire biopharma sector, we think the relabeling of Amgen’s darbepoetin Aranesp and Johnson & Johnson’s competing epoetin brand Procrit more than qualifies. Why this change among all the other labeling changes in the year of “Safety First” at the Food & Drug Administration? Because this was an especially one-sided deal.

The Aranesp relabeling was the the first (and, so far, only) time FDA has used its new power to order sponsors to make specific labeling to changes. FDA gained that with the enactment of the FDA Amendments Act in 2007. So far, the agency has invoked the mandatory labeling authority seven times, but in each of the other cases the sponsor (or sponsors) has agreed to the change. But not with Aranesp.

Talk about an important precedent.

Labeling “negotiations” have always been something of a misnomer, since—from industry’s perspective—it was never exactly a level playing field. Still, at least in theory, manufacturers wrote the label, and FDA approved it. True, when the agency wanted, it could essentially write new labeling by declining any alternative language—but only at the cost of leaving an existing label in force while “negotiations” continued.

The FDA Amendments Act changes all that, giving FDA for the first time the explicit authority to dictate labeling to a sponsor in response to a safety issue.

And with Aranesp, we have the first case study of what FDA can do with that enhanced leverage.

On July 30, FDA announced updated safety labeling for Aranesp to resolve concerns about potential tumor promoting effects of the agent. The agency insisted on two specific provisions that Amgen disagreed with: one restricting use of the products to cancer patients undergoing chemotherapy where a cure is not the expected outcome; the second warning against use when hemoglobin levels are above 10.

What does the FDA action mean? We answer that question at length in an article just published in The RPM Report.

But here are two ways to consider the impact. First, $3 million a week. That is how much Amgen estimates the new restrictions have pinched sales. And remember, this is after an already sharp reduction in the size of the brand after a restrictive coverage policy implemented by the Medicare program. (For a detailed breakdown of the, um, breakdown in Aranesp sales, see the chart below.)


Second, $30 million a week. That is how much Aranesp still generates in revenues—a number that could be much lower if FDA had demanded the withdrawal of the oncology indication altogether (or, even, withdrawal of the product itself.) Before FDAAA, those might have been the only alternatives for FDA. And remember, that is the promise of the new law: FDA has much more authority to dictate who can actually use a drug, but--in theory at least--more drugs make it to market, and those that make it stay.

Coincidentally or otherwise, new drug approvals are up this year, but it is obviously far too early to draw conclusions about how this bargain will actually work out. But one conclusion is clear: labeling negotiations will never be the same...

[Deals of the Year 2009 Bonus Preview: FDA and Amgen are still working out the details of a formal Risk Evaluation & Mitigation Strategy for Aranesp. The agency has already used that authority on several other products, but the Aranesp program must be a doozy: Amgen says it will prompt another 10%-20% drop in sales.]