Amgen's Epogen Medicare Rate Cut Plan Being Developed
Washington, Nov. 16 (Bloomberg) -- The Clinton administration is developing a regulation that would slash Medicare payments for Amgen Inc.'s anti-anemia drug, Epogen, according to the Federal Register.
The payment cut is listed in a U.S. Department of Health and Human Services report outlining dozens of regulations that are either in the works or have already been proposed. The agenda of regulations is in the Nov. 9 Federal Register.
The notice means the administration plans to proceed with drawing up a proposal on reducing Medicare's reimbursement for Epogen, a Clinton administration spokesperson for the Medicare program said.
Investors and analysts says the Clinton administration is going to keep pushing for this rate cut as part of its effort to control exploding Medicare costs.
''Did investors really think this is going to be put away forever'' after Congress failed to act on it this year, asked Marian Kessler, a fund manager with Crabbe Huson who holds some 540,000 Amgen shares.
Still, Amgen shares fell 1 1/2 to 78 7/8 in trading of 2.8 million shares, about the same as its three-month average daily trading volume.
The Epogen listing in the Federal Register does not say how much the administration would propose cutting Epogen reimbursement or when it would do so.
Industry analysts played down the possibility that the administration will itself introduce a rate-cut regulation. Instead, the administration may use the threat of a regulation to try to get the Republican-controlled Congress to cut Medicare payments for Epogen, analysts said.
In Lap of Congress
''This is its (the Clinton administration's) way of signaling to Congress it (the issue) is going to be back on its lap again,'' said Ira Loss, health industry analyst with HSBC Washington Analysis.
Last year, U.S. President Bill Clinton asked Congress to cut by 10 percent Medicare payments for Epogen. The drug accounted for about half of Amgen's 1997 revenue, much of which was reimbursed by the government Medicare health insurance program for the elderly.
Inspector General Recommendation
The Clinton request came after the Inspector General of the Department of Health and Human Services recommended the cut in payments for Epogen, which treats anemia in Medicare patients with chronic kidney failure.
Congress, however, did not include the Epogen pay cut in the 1999 budget signed by Clinton last month. Amgen spokesman David Kaye said a Medicare Epogen cut proposal ''could well be'' an issue next year, but ''we haven't heard anything about it.''
The Clinton administration can draft a regulation cutting Epogen payments without congressional approval, and the announcement in the Federal Register shows that is still considering doing so. Clinton can also include an Epogen pay cut proposal in his year 2000 budget request to Congress, which is due early next year.
Epogen generated $1.16 billion in revenue last year for Thousand Oaks, California-based Amgen. The company sells the drug to kidney dialysis providers, who buy it at a discount from Amgen and then get a higher reimbursement from Medicare.
So any cut in Medicare rates also has a potential to hurt the finances of dialysis companies such as Total Renal Care Holdings Inc. and Renal Care Group Inc.
Shares in Total Renal Care dropped more than a point on the news, paring the stock's gains on the day. It closed up 9/16 at 27 3/8. Renal Care shares finished up 7/16 at 28 1/4.
19:31:17 11/16/1998 |
