* Amgen, J&J likely may face pressure over kidney use
* Medicare agency's panel to meet March 24
* Some analysts see sales of anemia drugs slipping (Adds Amgen comment)
By Susan Heavey
WASHINGTON, March 19 (Reuters) - Closer government scrutiny of controversial anemia drugs made by Amgen Inc (AMGN.O) and Johnson & Johnson (JNJ.N) is likely to reopen debate on how much the drugs should be used and could further depress sales.
Next week, the Centers for Medicare & Medicaid Services (CMS) plans to seek advice from a panel of outside experts over use of the blockbuster drugs in patients with chronic kidney disease, given concerns over possible heart dangers.
The drugs, known as erythropoiesis-stimulating agents (ESAs), have already weathered recent warnings and restrictions over their use in cancer patients that have caused doctors to lower doses and sales to slump.
On Wednesday, the agency will ask its panelists how confident they are that current data supports use of the drugs -- Johnson & Johnson's Procrit and Amgen's Aranesp and Epogen -- in a smaller group of patients with all stages of kidney disease.
CMS, which insures more than 45 million elderly, disabled and poor Americans, currently has no formal reimbursement policy for such use, leaving it to vary region by region.
Analyst Joshua Schimmer, managing director of biotechnology research at Leerink Swann, said CMS is ultimately likely to push for less use of the drugs nationwide.
"It's probably going to clip sales to some extent," said Schimmer, who estimates sales could dip 15 percent to 20 percent. "At the end of the day, we're all expecting it."
ESAs have come under scrutiny in recent years after studies emerged showing high doses could lead to heart complications or even death. While dosing has been affected, the costly drugs are still widely used.
The drugs -- synthetic versions of the hormone erythropoietin -- aim to boost red blood cells hampered by anemia in patients who have kidney disease or are undergoing chemotherapy, giving them more energy and reducing weakness.
CMS officials declined to talk ahead of the meeting. But in an agency notice announcing Wednesday's meeting, CMS noted that ESA use has greatly expanded since the drugs were introduced in 1989 for patients at risk for blood transfusions.
Today, more than 95 percent of kidney patients undergoing dialysis are prescribed the injectable drugs. "It is unclear how many" receive them before dialysis, it wrote.
Duke University medical professor Lynda Szczech said before ESAs were introduced, anemia patients given blood transfusions suffered iron overload that could trigger heart disease.
"It went from the dark ages to the renaissance when (they) came on board," said Szczech, president-elect of the corporate-funded patient group the National Kidney Foundation, who has also served as a consultant for Amgen, among others.
But now there are concerns that the pendulum might have swung too far and that too much use could pose other risks.
CMS has already taken action to change the way it pays for ESAs in kidney patients already undergoing dialysis, calling for doctors to receive one "bundled" payment for each patient's care rather than paying for each drug separately.
While aimed at saving money, the move is also directed at giving doctors an incentive to use safer amounts of the drugs.
Officials at the Food and Drug Administration, which oversees the medicines themselves, also plan to hold a separate meeting on ESA use in kidney disease later this year.
Trials -- either voluntary by the companies or mandated by U.S. regulators -- are needed to find "the sweet spot" for dosing and treating different types of patients, Szczech said.
Wall Street has already factored in much of the regulatory pressure on ESAs, and their use in kidney patients is dwarfed by that in cancer patients.
Still, potential remains for shares to fall further -- particularly for Amgen -- as Medicare and the FDA take a closer look, according to some analysts.
ESAs are a core franchise for Amgen, bringing in $2.7 billion in worldwide Aranesp sales and $2.6 billion in U.S. sales of Epogen in 2009.
Any change in use weighs less on Johnson & Johnson, a diversified healthcare company that sells a wide variety of other health products. It had $2.25 billion in global anemia drug sales in 2009.
Most of the data expected to be presented at the government meetings has already been made public, and both companies plan to make public comments at the CMS meeting backing continued use of their ESAs.
"We can demonstrate that the drug is effective in raising hemoglobin levels and is safe," said Marsha Wolfson, senior medical director at Johnson & Johnson's Centocor Ortho Biotech Products unit.
Amgen said it appreciated CMS' review of the evidence and it expected the upcoming FDA meeting to "provide important insight that will inform decisions about coverage and reimbursement policies."
CMS has not officially said whether the agency is weighing a formal nationwide coverage decision, and FDA has yet to announce details for its public meeting. But both agencies will have to weigh the drugs' risks with testimony that the drugs help patients feel better and more energetic.
"CMS is going to be in a really difficult position to impose rules that can be applied across the board when it's not everybody that feels the benefits," Szczech said. (Reporting by Susan Heavey; additional reporting by Deena Beasley; Editing by Gerald E. McCormick and Steve Orlofsky)