Amgen 2007 Annual Report Download - page 27

“bundled arrangement.” (See also “Item 1A. Risk Factors — Our sales depend on payment and reimbursement
from third-party payers, and, to the extent that reimbursement for our products is reduced, this could negatively
impact the utilization of our products.”)
Since April 1, 2006, the Medicare reimbursement for ESAs administered to dialysis patients has been sub-
ject to a revised Hematocrit Measurement Audit Program Memorandum (“HMA-PM”), a Medicare payment
review mechanism used by CMS to audit EPOGEN®and Aranesp®utilization and appropriate hematocrit out-
comes of dialysis patients. This policy, EMP, was revised, effective January 1, 2008, requiring a 50% reduction
in Medicare reimbursement if a patient’s Hb is above 13 g/dL for three or more consecutive months. In addition,
the EMP reduces the monthly dosing limits to 400,000 IUs of EPOGEN®, from 500,000 IUs, and to 1,200 mcgs
of Aranesp®, from 1,500 mcgs.
Changes resulting from the MMA, which beginning in 2005 lowered reimbursement for our products, could
negatively affect product sales of some of our marketed products. However, we believe that our product sales for
2005, 2006 and 2007 were not significantly impacted by the reimbursement changes resulting from the MMA.
However, additional provisions of the MMA and other regulations affecting reimbursement that have gone or
may go into effect could affect our product sales and related sales growth in the future. For example, the MMA
required a report to Congress and a demonstration project with regard to a bundled payment system for dialysis,
including separately billable drugs and EPOGEN®. The report to Congress was issued on February 20, 2008, but
the demonstration project, which was scheduled to start in January 2006, has been delayed with no announced
start date. Bundling initiatives that have been implemented in other healthcare settings have resulted in lower uti-
lization of services that had not previously been a part of the bundled payment. Because CMS is continuing to
study bundled payments in the ESRD setting and legislation is possible, we cannot predict what impact a bundled
payments system would have on sales of EPOGEN®or Aranesp®used in the treatment of persons receiving out-
patient dialysis services.
Other initiatives reviewing the coverage or reimbursement of our products, including those related to safety,
could result in less extensive coverage or lower reimbursement and could negatively affect sales of some of our
marketed products. For example, on July 30, 2007, CMS issued its Decision Memorandum which was sub-
stantially altered from the Proposed national coverage decision (“NCD”). On January 14, 2008, CMS issued
changes to its Medicare National Coverage Determinations Manual, adding the ESA Decision Memorandum, ef-
fective for claims with dates of service on and after July 30, 2007 with an implementation date of April 7, 2008.
In the Decision Memorandum, CMS determined that ESA treatment was not reasonable and necessary for certain
clinical conditions. These conditions include:
• Any anemia in cancer or cancer treatment patients due to folate deficiency, B-12 deficiency, iron defi-
ciency, hemolysis, bleeding or bone marrow fibrosis;
• Anemia associated with the treatment of AML, chronic myelogenous leukemias (“CML”) or erythroid
cancers;
• AoC not related to cancer treatment;
• Any anemia associated only with radiotherapy;
• Prophylactic use to prevent CIA;
• Prophylactic use to reduce tumor hypoxia;
• Patients with erythropoietin-type resistance due to neutralizing antibodies; and
• Anemia due to cancer treatment if patients have uncontrolled hypertension.
Additionally, in the Decision Memorandum, CMS provides coverage for ESA treatment for the anemia sec-
ondary to myelosuppressive anticancer chemotherapy in solid tumors, multiple myeloma, lymphoma, and
lymphocytic leukemia under the following conditions:
• The Hb level immediately prior to initiation or maintenance of ESA treatment is < 10 g/dL (or the hema-
tocrit is < 30%);
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