Johnson & Johnson is modifying its pricing practices for Procrit (epoetin alfa) to compete with Amgen's Aranesp (darbepoetin alfa).

"While our positioning for Procrit continues to focus on the clinical benefits of our product, we are implementing actions to ensure that we are on a level playing field with respect to customer economics," J&J VP-Investor Relations Helen Short said.

"We do not want to find ourselves in a situation where we're disadvantaged on the economic side. And there are various strategies one can employ to resolve those issues, and we will employ those," J&J Company Group Chairman in Charge of Biologics Franchise Joseph Scodari explained.

J&J has seen Procrit's market share decrease in light of discounts on Aranesp. "The initial focus of our competition has been on capturing existing share from us through the implementation of discount...programs in both clinics and hospitals," Short said.

Procrit has an average wholesale price markup of 20% compared to Aranesp's markup of 25%, Short said, creating an incentive for customers to try Aranesp.

In January, Amgen implemented performance-based contracts with hospital customers that drive Aranesp business.

Amgen's pricing strategy followed a determination by the Centers for Medicare & Medicaid Services in November that Aranesp is "functionally equivalent" to Procrit and did not warrant higher reimbursement (¹ Also see "Amgen Discounting Aranesp After Medicare Reimbursement Cut" - Pink Sheet, 27 January, 2003., p. 24).

First quarter Procrit sales grew by 5% to $723 mil. in U.S. up from $691 mil. "In the past, we saw demand for erythropoetin growing strongly," Short said.

"Market growth has...been impacted as the focus has shifted to market share acquisition and protection rather than market development," she said.

Procrit sales have also been hurt because of Amgen's research activities, Short acknowledged. "They're conducting numerous clinical trials aimed at modifying existing usage in existing indications. As a result, we've seen their product garner significant trial, resulting in share declines for Procrit."

J&J is conducting three Phase IV trials studying different dosing levels and frequencies and will file a supplemental NDA to expand Procrit's labeling to include alternate dosing regimens. The submission will take place in the second half of this year.

J&J is also conducting a Procrit/Aranesp head-to-head trial that started in the first quarter.

Overall, J&J's first quarter pharmaceutical sales were $3.26 bil. in the U.S., an increase of 10.3%.

Internationally, Rx sales grew to $1.4 bil., up 10.3% in spite of a negative performance by Eprex (erythropoetin's non-U.S. brand), which experienced an operational decline of 22%.

"Market share for Eprex has been negatively impacted by the steps we have taken to ensure that patients received Eprex utilizing the safest method of administration," Short said.

In response to several cases of pure red cell aplasia associated with Eprex use in the chronic renal failure indication, J&J issued a "Dear Doctor" letter in July noting that labeling no longer recommends subcutaneous administration over intravenous (² Also see "J&J Eprex EU Label Changed; FDA Investigating Manufacturing Fraud" - Pink Sheet, 22 July, 2002., p. 11).

J&J also instituted a "best handling practices" program in December (³ Also see "J&J Eprex “Best Handling Practices” Program Aims To Reduce PRCA Cases" - Pink Sheet, 9 December, 2002., p. 23).

"I think it's fair to say that we are now very much moving to the point where we're moving beyond the PRCA issue and beginning to focus our reorganization on reinvigorating demand for the product on a going forward basis," Scodari stated.

PRCA has not affected Eprex in its oncology indication, however. "When you look at the aggregate performance of Eprex, the product is clearly continuing to grow at what we think are fairly sizable double-digit growth in the oncology area. So, we really haven't seen a major impact of the PRCA issue in the oncology indication," Scodari said.

Internationally, Eprex/Procrit sales were $274 mil., a 9% decline from sales of $300 mil. in last year's first quarter.

J&amp;J Modifies Procrit Pricing Practices To Compete With Amgen’s Aranesp&nbsp;

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J&J Modifies Procrit Pricing Practices To Compete With Amgen’s Aranesp