The never-ending story for anemia drugs is, well, never-ending.

After dealing with the Food and Drug Administration slapping stricter labels on their drugs, now Johnson & Johnson (NYSE: JNJ) and Amgen (Nasdaq: AMGN) are fighting with the Centers for Medicare & Medicaid Services (CMS) over what dosage of their drugs should be prescribed to seniors and low-income patients in their programs.

Yesterday, CMS convened a panel of experts to look at how much of Johnson & Johnson's Procrit and Amgen's Aranesp and Epogen should be used in patients with failing kidneys. The erythropoiesis-stimulating agents (ESAs) stimulate the production of red blood cells that carry iron and decrease anemia, but there's evidence that using high levels of ESAs to really jack up the level of red blood cells may be bad for the heart.

CMS can't actually control what doctors prescribe, but it can set the level of reimbursement. The worry is that any new policy might only pay for the drugs to bring red blood cell levels to the minimum of the range suggested on the label -- or perhaps even lower.

Despite slumping sales from the label change, Aranesp and Epogen are still major drugs for Amgen; both contributed more than $2.6 billion to revenue last year. This isn't the same as Merck's (NYSE: MRK) Vioxx, which got pulled off the market, or GlaxoSmithKline's (NYSE: GSK) Avandia franchise, which went from sales of more than $3 billion in 2006 to being just barely a blockbuster last year. Aranesp and Epogen are still alive and (relatively) well.

That makes the fight with CMS and another upcoming one with the Food and Drug Administration so important. Amgen needs Aranesp and Epogen to hold their own until its osteoporosis drug, Prolia, gets off the ground. And there's also the imminent threat of generic competition for Neupogen from Teva Pharmaceutical (Nasdaq: TEVA).

Keep those boxing gloves on, Amgen, there's still a lot of fight left.

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