Amgen Inc. Must Pay $164 Million in Drug Dispute

An arbitrator ruled that Amgen Inc. must pay $164 million to Johnson & Johnson for interfering with that firm’s bid to market a biotechnology drug that treats anemia in patients with kidney disease, the companies announced Monday.

Separately, Genetics Institute Inc., which is trying to market its own version of the drug, said it asked the U.S. Supreme Court to overturn an appeals court decision that upheld Amgen’s patent on the drug--called erythropoietin, or EPO--and invalidated Genetics Institute’s patent.

Those rulings have given Amgen, based in Thousand Oaks, a near monopoly over EPO sales in America. EPO is the nation’s best-selling biotechnology drug with annual sales expected to top $400 million this year.

Although Amgen lost the arbitration case, it does not have to pay the money immediately. The payment was delayed pending the arbitrator’s decision on other claims that Amgen made against Johnson & Johnson involving two other biotechnology drugs, interleukin-2 and a hepatitis B vaccine.

Nonetheless, Amgen said it will take an $88.5-million after-tax charge against its earnings for its fiscal first quarter ended June 30, which will likely give the company a net loss for the period.

But David K. Stone, an analyst with the investment firm Cowen & Co. in Boston, agreed with Amgen’s view that the amount is “immaterial” to the company’s financial health, even though it is more than double the sum he expected to be awarded.

He said the $88.5-million charge should be the only one Amgen has to take in the Johnson & Johnson case, because Amgen “previously had reserved money in anticipation of a charge.” Stone also said he still expects Amgen to earn roughly $65 million in its current fiscal year and an additional $230 million in fiscal 1993.

The stock market likewise took the developments in stride. In national over-the-counter trading, Amgen’s stock closed at $117 a share, down 87.5 cents, while Genetics Institute’s stock slipped 75 cents to $30 a share.

The arbitration case stems from a 1985 marketing agreement between Amgen and Johnson & Johnson’s Ortho Pharmaceutical Corp. unit. In general, the agreement was aimed at enabling both companies to bring their EPO products to the U.S. market at the same time.