Case 1:05-cv WGY Document 1651 Filed 01/28/2008 Page 1 of 4 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

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1 Case 1:05-cv WGY Document 1651 Filed 01/28/2008 Page 1 of 4 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS AMGEN INC., Plaintiff, v. CIVIL ACTION No.: 05-CV-12237WGY F. HOFFMANN-LA ROCHE LTD ROCHE DIAGNOSTICS GmbH and HOFFMANN-LA ROCHE INC. Defendants. MEMORANDUM IN SUPPORT OF ROCHE'S PROPOSAL PURSUANT TO THE COURT S INSTRUCTION OF DECEMBER 7, 2007 Defendants F. Hoffmann-La Roche Ltd, Roche Diagnostics GmbH, and Hoffmann-La Roche Inc. (collectively Roche submit this memorandum pursuant to the Court s instruction of December 7, 2007, when during the remedy phase of the trial, the Court invited Roche to submit a proposal for economic terms under which the Court might allow Roche, consistent with its FDA approval, to make MIRCERA available to United States patients. Roche s proposal is attached hereto. Having met the Court s request, Roche is looking toward an early decision from the Court on the outstanding issues. Roche believes that having MIRCERA available to patients in the United States, as it is already available to patients outside the U.S., is emphatically in the public interest. Moreover, MIRCERA will benefit patients and health insurance reimbursers such as Medicare by lowering prices and fostering the most cost-effective medical treatment. The medical evidence

2 Case 1:05-cv WGY Document 1651 Filed 01/28/2008 Page 2 of 4 and testimony presented to this Court, and the recent FDA approval of MIRCERA, make this point. Roche firmly believes that it is in the public interest to have MIRCERA available to U.S. patients as soon as possible. Roche submits what it earnestly believes is an aggressive plan for economic terms that will aid the Court in allowing MIRCERA on the market, assuming that the Court denies Roche s motions for JMOL and enters judgment in Amgen s favor. Following the Court s observations, this plan incorporates a royalty rate about double that paid currently by Johnson & Johnson for its Procrit product, and also sets an initial WAC price for MIRCERA that is below the existing Aranesp ASP. These terms are even more aggressive that the Court posited as options during the remedy hearing. It is projected that under this current proposal that the savings to Medicare and the U.S. Government and taxpayers for reimbursement for treatments with these pharmaceuticals will be substantial, and easily in the billions of dollars. The obligations on Roche under this proposal are, of course, contingent upon the entry of final judgment in favor of Amgen on at least one patent claim and the affirmation of Amgen s judgment after all appeals have been exhausted; whatever conditions imposed by the Court allowing MIRCERA to be sold in the United States would terminate should asserted claims of the Amgen patents-in-suit be found not to be infringed, invalid or unenforceable and Roche would continue to be able to sell its product in the United States. Roche s decision to stay out of the US market to date was predicated on the Court quickly resolving all issues remaining in this dispute allowing for a prompt appeal. Roche relied on statements from the Court such as I want to keep all of our feet to the fire because I would like to resolve my part of this and get you on to another court. Not selling in the United States, 2

3 Case 1:05-cv WGY Document 1651 Filed 01/28/2008 Page 3 of 4 although permitted to do so by the FDA, has and continues to impose a significant hardship on Roche, as well as U.S. patients. Roche has delayed launching its approved product now for almost three months. Roche cannot continue to stay off the market voluntarily if a decision on the outstanding issues, particularly on the permanent injunction, is not to be expected shortly. Based on the Court s statements, Roche anticipated a decision on the outstanding issues around the end of February. Roche respectfully wants to inform the Court that should the Court not be in a position to resolve the pending issues, including the issue of Amgen s request for a permanent injunction, by early March 2008, then Roche will be compelled to reconsider its options and its decision to voluntarily stay off the U.S. market with its approved MIRCERA product. The Court has now received all the evidence and argument on the remedy issue. On February 28, 2008, the Court will hear final oral argument on the parties JMOL motions. Roche respectfully requests that at that February 28, 2008 hearing, the Court rule on Amgen s application for a permanent injunction, and resolve the other outstanding issues. Failing that, Roche respectfully informs the Court that Roche will thereafter take steps to commence marketing MIRCERA in the U.S. 3

4 Case 1:05-cv WGY Document 1651 Filed 01/28/2008 Page 4 of 4 Dated: January 28, 2008 Boston, Massachusetts Respectfully submitted, F. HOFFMANN-LA ROCHE LTD, ROCHE DIAGNOSTICS GMBH, and HOFFMANN-LA ROCHE INC. By their Attorneys CERTIFICATE OF SERVICE /s/ Lee Carl Bromberg Lee Carl Bromberg (BBO# Timothy M. Murphy (BBO# Julia Huston (BBO# Keith E. Toms (BBO# Nicole A. Rizzo (BBO# BROMBERG & SUNSTEIN LLP 125 Summer Street Boston, MA Tel. ( lbromberg@bromsun.com Leora Ben-Ami (pro hac vice Mark S. Popofsky (pro hac vice Patricia A. Carson (pro hac vice Thomas F. Fleming (pro hac vice Howard S. Suh (pro hac vice Christopher T. Jagoe (pro hac vice KAYE SCHOLER LLP 425 Park Avenue New York, New York Tel. ( I hereby certify that this document filed through the ECF system will be sent electronically to the registered participants as identified on the Notice of Electronic Filing (NEF. Pursuant to agreement of counsel dated September 9, 2007, paper copies will not be sent to those indicated as non registered participants / /s/ Lee Carl Bromberg Lee Carl Bromberg 4

5 Case 1:05-cv WGY Document Filed 01/28/2008 Page 1 of 1 ROCHE S PROPOSAL FOR ENTERING THE U.S. MARKET WITH MIRCERA In the event that Roche s motions for JMOL are denied, Roche submits the below proposal to this Court to be able to market and sell MIRCERA in the United States. Roche is prepared to: 1. offer MIRCERA at an initial Wholesale Acquisition Cost (WAC which is equal to the present Average Selling Price* (ASP of ARANESP less five percent (5%. This per unit WAC would be calculated based on the conversion of monthly MIRCERA dosing to the equivalent monthly Aranesp dosing. * Present Aranesp ASP defined as the ASP that underlies the 1 Q 2008 CMS published Aranesp Medicare Part B reimbursement rate 2. pay Amgen a royalty of twenty percent (20% of the Net Sales, as commonly defined, of MIRCERA in the United States for the duration of those of Amgen s patents that this Court found were not invalid and were infringed by Roche. The above only describes the initial list WAC price for MIRCERA. Roche will likely engage in contractual discounting to customers as necessary to compete effectively in dialysis and CKD markets. These discounts and the competition they will engender, coupled with the ASP reimbursement mechanism itself, will likely deliver lower net costs to providers and payers. Roche s above proposal to the Court is the result of Roche completely rethinking its marketing and sales approach for MIRCERA given the jury verdict and the Court s observations during the remedy phase. Roche has provided an aggressive proposal that, now more than ever, serves the public interest by bringing the benefit of competition to the present monopolistic ESA market and by making this unique and necessary medicine available to U.S. patients. This radically different marketing paradigm reduces sales and marketing costs (including sales persons and advertising far below what we believe our competitors invest in similar functions and services. Roche is not sure how the non-traditional marketing plan will succeed in the face of a longstanding monopoly, or if it will be sufficient to secure significant market share for Roche s product. However, even with such risks and uncertainty, Roche is prepared to employ this plan as it believes it is important that this novel medication reach U.S. patients who need it, and also that the availability of this medication will otherwise serve the public interest by creating opportunities for significant government savings /