Amgen Looking Anemic

"Because there is a preponderance of emerging data for ESA use in the oncology setting, we have narrowed the focus of ... ESA use in cancer and related [tumor] conditions," Dr. Barry Straube, chief medical officer for the Medicare and Medicaid agency, said Monday.

The public has 30 days to comment on the proposal, and then the agency has 60 days to prepare final regulations.

Following the action, two investment banking firms cut their ratings on Amgen, bringing the number of downgrades this month to six.

Calling the government's decision a "surprisingly tough stance," the Robert W. Baird investment banking firm lowered its opinion to neutral from outperform. Analyst Christopher Raymond wrote in a research report that if the proposal is adopted, it could cut the use of Amgen's anemia drugs in cancer-chemotherapy patients by 20% to 30%.

"We see this development as a watershed event, possibly opening the door to significant ... private payer pressure for years to come," said Raymond. His firm expects to seek or receive investment-banking compensation from Amgen in the next three months.

The earlier downgrades came after an advisory panel to the Food and Drug Administration recommended stricter limits on prescribing the medications. The panel also said the companies should conduct more tests to assess the risk of side effects.