As its shares continue to tumbled , Amgen has reacted angrily to new Medicare reimbursement rules that will restrict coverage of its anaemia drugs for cancer patients, describing the new policy as unreasonable and impractical.

The company was responding to the final ruling from the US Centers for Medicare & Medicaid Services (CMS) to restrict reimbursement of erythropoiesis-stimulating agents, notably Amgen’s Epogen (epoetin alfa) and Aranesp (darbepoetin alfa), and Johnson & Johnson’s Procrit (epoetin alfa) in patients with cancer. The process was started in May when the CMS proposed limiting payments for the drugs in response to safety concerns voiced by a US Food and Drug Association advisory committee which recommended a further strengthening of the warning labels on ESAs.

Amgen noted that while the CMS’ final decision “makes several positive changes” from the proposals made in May, ESA treatment is now not covered if the patient's haemoglobin (Hb) level is greater than 10 g/dL. Imposing these coverage restrictions “on the FDA-approved indication have no scientific basis and are incompatible with good clinical practice," said Roger Perlmutter, executive vice president of global R&D at Amgen.

He claimed that “ inappropriately limiting coverage for ESAs at haemoglobin levels less than 10 g/dL will both increase blood transfusions and severely compromise the high quality of cancer care delivered by American physicians. In our view, restricting coverage in this way is unreasonable, impractical and unworkable”. He added that through this coverage decision, “the CMS has undermined the ability of physicians to decide how best to administer ESA therapy to their patients through carefully-defined dosing guidance articulated by the FDA."

Amgen noted that the CMS decision is contrary to the FDA’s approved labelling for ESAs, the Oncologic Drugs Advisory Committee's recommendation against changing the upper haemoglobin limit of 12 g/dL in the current label, and clinical practice guidelines from the American Society of Clinical Oncology and the American Society of Haematology. The firm added that “this criterion runs counter to the strongly-held views of many patient groups, physicians, and other members of the oncology community” who argued for a coverage range up to 12 g/dL.

Despite the firm’s objections, there seems little likelihood of the CMS reversing its decision and there is no doubting the negative effect the ruling will have on Amgen as Aranesp and Epogen are very big earners for the firm, jointly bringing in revenues of $6.6 billion last year. Geoffrey Meacham, an analyst at JPMorgan, issued a note saying that “an additional $200 million in US Aranesp sales could be at risk in 2007 as a result of the policy, which could drive potential decreases in market penetration and duration of therapy". Other observers have predicted that the new policy could erode Aranesp sales by as much as 50%.