Health Law

The Wall Street Journal (3/3, B3, Winslow, Cimilluca) reports, "Genentech Inc.'s top executives gave a spirited defense of the biotechnology company's scientific and commercial prowess at an investors' meeting in New York, arguing that both its track record and its prospects are significantly undervalued in Roche Holding AG's $86.50-a-share hostile takeover offer for the Genentech stock it doesn't own."

        "Genentech said the company is worth at least $112 a share, or 29 percent more than Roche's $42.1 billion...bid, according to a Feb. 23 regulatory filing," Bloomberg News (3/3, Rapaport, Chase) adds. Genentech "may introduce 24 new uses for existing medicines, including its top-selling cancer drug Avastin [bevacizumab], from 2009 to 2011, according to documents posted on Genentech's website today." In addition, the company "is developing 25 drugs that qualify as 'new molecular entities,' or compounds that don't contain molecules previously approved by US regulators, Genentech said" at "its annual business briefing for investors in New York" Monday. However, "while the company is experimenting with new products for cancer, arthritis, and multiple sclerosis, much of its growth will come from new markets for Avastin." The drug, "already approved for advanced colon, lung, and breast cancer, could also be marketed for 20 other uses by 2015, Genentech said."

        "In trying to reinforce its argument for a more valuable offer," the AP (3/3) reports, "Genentech said it expects profit of $12.86 per share by 2018 on revenue of $26.9 billion, a marked increase from 2008's profit of $3.21 per share on revenue of $13.42 billion." Genentech also predicts that US sales of Avastin "could exceed $10 billion by 2015." While sales of the macular degeneration treatment Lucentis (ranibizumab injection) "could reach a peak in US sales of $2.1 billion by 2018 with additional approvals. ... Aside from the revenue boost, Genentech estimates that annual pretax savings could range from $750 million to $2 billion if a Roche deal occurred, along with lower tax expenses, while Roche gets the added commercialization rights to key cancer drugs beyond 2015." The current commercialization agreement, "which gives Roche sales outside the US, is set to expire after 2015." The Wall Street Journal (3/2, Winslow) Health Blog and the San Francisco Business Times (3/2, Leuty) also covered the story.

The Wall Street Journal (3/3, D5) reports, "The Food and Drug Administration [FDA] asked Eli Lilly & Co. and Bristol-Myers Squibb Co., which co-market cancer drug Erbitux [cetuximab], to submit more data before it will approve Erbitux as a first-line treatment for head-and-neck cancer."

        "The companies are seeking approval to market Erbitux as a first-line, or primary, treatment for squamous cell carcinoma of the head and neck," the AP (3/3) adds. The agency "wants a new pharmacokinetic study, or one that evaluates how the body processes the drug. The FDA wants to confirm that clinical studies of Erbitux match the way it is marketed." The Wall Street Journal (3/2, Wang) Health Blog and the Indianapolis Star (3/3) also cover the story.

The New York Times (3/3, B6, Wilson) reports, "Two members of Congress and a public health advocacy group are challenging the way a Food and Drug Administration expert panel approved a drug that Eli Lilly & Company hopes will be its next blockbuster." Dr. Sanjay Kaul, a cardiologist at the Cedars-Sinai Medical Center in Los Angeles, "was removed from the FDA expert committee shortly before its meeting on Feb. 3, when the drug was approved, nine to zero. Dr. Kaul had criticized studies of the drug, questioning the risk of bleeding and safety in elderly patients." In separate letters to the FDA last week, "the chairman of an investigation subcommittee and a member of the Congressional panel that reviews the" agency's budget asked "why a prominent cardiologist had been removed from the expert committee." Dr. Janet Woodcock, director of the FDA's drug center, stated that "'a series of small errors' by agency screeners had allowed Dr. Kaul to be named to the expert review panel despite 'intellectual bias.'" Analysts are speculating that the inquiries may "slow final FDA approval of the drug, prasugrel, a blood thinner intended to replace Plavix."

The Los Angeles Times (3/3) reports, "The Government Accountability Office today released a report urging improvements in how the Food and Drug Administration monitors and governs dietary supplements." The report states that although the FDA has taken action in the past, "certain factors may allow potentially unsafe products to reach consumers." The GAO also found that "some companies are not required to provide the FDA with information on the products they sell," that "the FDA has few resources for oversight," and that the FDA "has insufficient ability to remove a product from the market."

The AP (3/3) reports that on Tuesday, more than a dozen people with marriages recognized in Massachusetts filed a lawsuit against "the federal government, claiming [the federal Defense of Marriage Act] discriminates against gay couples and is unconstitutional because it denies them access to federal benefits that other married couples receive, such as pensions and health insurance." The AP notes that "President Barack Obama has pledged to work to repeal DOMA." Laurence Tribe, a constitutional law professor at Harvard Law School, "said the lawsuit is a 'plausible challenge' to DOMA."

The Detroit News (3/3, Rogers) reports, "Blue Cross Blue Shield of Michigan posted a $144.9 million loss in 2008 on consolidated revenue of $21.2 billion," company officials announced Monday. They attributed the loss "mostly...to red ink flowing from its individual health insurance policies, which racked up a $133.2 million loss in that same one-year period." The company said "its losses in the individual market are significant and accumulating year-by-year, despite having raised rates on individual plans in 2008." In total, the insurer "lost $128.1 million on health underwriting for all of its plans under Blue Cross and subsidiary HMO, Blue Care Network." As a result, "Blue Cross filed a rate increase in January for its individual insurance plans asking for average increases on three types of policies: 56 percent on individual plans; 42 percent on group conversion coverage; and 31 percent for Medicare supplemental plans."

        Blue Cross of Michigan faces competition from two health insurers . The Detroit News (3/3, Rogers) reports, "Michigan-based insurers Priority Health in Grand Rapids and Flint-based McLaren Health Plan are quickly expanding in Metro Detroit, where Blue Cross has its headquarters." In addition, "the two newcomers are rolling out new health plans that give consumers more options and, in some cases, cheaper rates for medical insurance." Priority and McLaren are targeting "the group insurance market, selling benefits to employers in the state's most populous region, but Priority also plans to launch a product line this year for the self-insured." Currently, Blue Cross "dominates the state's medical insurance market with about 4.7 million members." But, "the arrival of new insurance plans could bring healthy competition that drives down rates and results in better service and more options in selecting plans, industry observers say."

In an investigative report, the Los Angeles Times (3/3, Lin) reports that a high-priced psychiatric hospital, Aurora Las Encinas Hospital, "has been inspected at least six times by government regulators who have documented numerous failures in patient care, The Times has found. Despite hospital officials' promises to fix deficiencies, many of the same problems were found by inspectors when they went back late last year to check on progress at the facility." The Times lists some of the problems they discovered, noting that "regulators put Las Encinas officials on notice that the facility was in danger of losing Medicaid and Medicare funding if the problems continued." However, upon re-inspection, government inspectors "found little progress at the 29-acre campus, according to reports obtained last week by The Times." According to Steve Jennings, director of business development for the hospital, Las Encinas "was found to be in full compliance" when inspectors returned Feb. 17.

        In a companion report, the Los Angeles Times (3/3, Lin) reports that "Aurora Las Encinas Hospital is not the only psychiatric hospital under the Aurora brand name that has had problems flagged by government officials." The company's San Diego hospital "also has been investigated for failing to provide appropriate care." In 2007, though, "regulators ultimately deemed the San Diego hospital to be in compliance with Medicare rules."

The Los Angeles Times (3/2, Girion) reported that two new analyses show that the "economic decline is continuing to ravage the nation's hospitals, with half of them operating in the red, and many planning service and staffing cuts." The Times explained that "hospitals are ailing because of a number of problems hitting in close succession." The problems include "investment incomes" plummeting, while more people "put off elective procedures and insurers" tighten "their grip on the length of hospital stays they cover." According to the new data, "an unprecedented 50 percent of the nation's hospitals appear to be losing money." The bottom 25 percent of hospitals "posted margins below minus seven percent, or seven percent worse than the break-even point, while the top performers' margins exceeded 4.5 percent. Even operators of the most robust hospitals are bracing for another difficult year as the effects of layoffs and employer cuts in health-insurance benefits take hold." A second study found that "44 percent of hospitals have seen declines in surgeries, with hip procedures showing the steepest drop-off at 45 percent." This has caused "47 percent of the hospitals surveyed expect to make staff cuts, and 69 percent plan to cancel or delay equipment purchases."

        Modern Healthcare (3/3, Evans) notes that, in the first study, "the median net margin dipped below one percent to 0.12 percent as of Sept. 30, far from the 5.04 percent median net margin reported in the third quarter of 2007." Moreover, "hospitals' cash cushion gradually eroded last year when measured by the number of days a hospital can run on its reserves."

Life Sciences Law

The Wall Street Journal (3/3, McKay) reports, "Influential Georgia lawmakers have introduced a bill that would" limit "the number of embryos that may be implanted in a woman to a maximum of three for a woman age 40 or older and two for" younger women. The proposal is in response to "the high-profile case of a California mother who recently gave birth to octuplets" after having "six frozen embryos...implanted because she didn't want them to be destroyed." State Sen. Ralph Hudgens (R), one of the bill's sponsors, noted that the woman will "cost the state of California millions of dollars over the years," as a result. If adopted, the legislation "would also limit the number of embryos created in one cycle to the number to be transferred." But, the bill is opposed by "several in-vitro fertilization [IVF] experts and scientific organizations" who argue that "a successful pregnancy sometimes can only be achieved by implanting more than two or three embryos."

The AP (3/3, Johnson) reports, "The established products unit at...Pfizer, created as part of its reorganization last fall into more-focused business units, will announce [Tuesday] that it has reached agreements with Aurobindo Pharma Ltd. to produce and sell drugs that have lost patent protection in the United States and Europe." The agreement "includes 39 pills that will be sold in the US, 20 of which will also be sold across Europe, and 12 injectable medicines such as antibiotics. Pfizer will handle the marketing after licensing each product from Aurobindo, which will handle all the steps to get approval to make generic versions, as well as manufacture them." David Simmons, president and general manager of the established products unit, "noted that the marketed for off-patent prescription drugs is now about $270 billion but is expected to nearly double to more than $500 billion in the next five years." MarketWatch (3/3, Kennedy) also covers the story.

The AP (3/3) reports, "State officials say a judge has fined healthcare products maker Johnson & Johnson and a subsidiary nearly $4.5 million for sending misleading information to West Virginia physicians about two prescription drugs." Brooke County Circuit Judge Martin Gaughan ruled that "the defendants sent brochures on the narcotic pain patch Duragesic (fentanyl transdermal) that the Food and Drug Administration had twice warned contained false or misleading statements." Judge Gaughan also said that "the defendants' November 2003 letter on schizophrenia drug Risperdal (risperidone) intentionally modified the FDA's warning language and misled healthcare professionals."

        Attorney General Darrell McGraw filed the case in 2004 under the "West Virginia Consumer Protection Act, which authorizes a penalty of up to $5,000 for each violation," WOWK-TV West Virginia (3/3) reports on its website. The court found "a total of 4,450 violations" where "the message was delivered personally to a West Virginia doctor or by a company sales representative," and "by letter or sales brochure." McGraw noted that "if the FDA has approved a drug for limited purposes and drug manufacturers, in pursuit of profit, market the drug for other purposes, it is false advertising that could put the health and lives of ordinary West Virginians at risk."

Bloomberg News (3/3, Harris) reports, "KV Pharmaceutical Co., a St. Louis drugmaker, agreed to improve its manufacturing processes to resolve a US Food and Drug Administration [FDA] lawsuit filed in the wake of a shutdown of the company's production." In January, KV "announced it was suspending the manufacturing and shipping of all products and recalling most of them, saying then it was acting in accord with the FDA, which had inspected its facilities in December." In a consent decree filed with the "FDA's filing of a St. Louis federal court complaint," the company "and two units promised they will destroy all finished drug products in its possession within 45 days, as well as those that were recalled from May to February."

        The company "said it agreed to have an independent third party review its manufacturing facilities to certify they meet industry standards, which are called current good manufacturing practices," the AP (3/3) adds. "After that review, the Food and Drug Administration will determine if the facilities are compliant." In addition, "after manufacturing resumes, KV will be required to submit to additional independent inspections at least every six months for the next two years, and annual inspections for the following three years, according to the US Department of Justice." The St. Louis Post-Dispatch (3/3, Appleson) also covers the story.

The Wall Street Journal (3/3, B3, Armstrong) reports, "Genzyme Corp. suffered a surprising regulatory setback in plans to expand production of its treatment for Pompe disease, after the company had issued an optimistic outlook based in part on its prediction that the expansion would be cleared. On Feb. 11, Genzyme said it expected the Food and Drug Administration [FDA] to approve a larger production facility for its Myozyme (alglucosidase alfa) drug by the end of February." However, the issues with the agency "weren't resolved by a Feb. 28 deadline."

        "Genzyme must reach an agreement with the US Food and Drug Administration for a post-approval study of the treatment," Bloomberg News (3/3, Pollack) adds. Genzyme "also said it must respond to an FDA warning letter citing deficiencies in its manufacturing plant that would produce the larger batches of the drug." Bloomberg explains that "Genzyme sells Myozyme for children and infants with Pompe disease." Genzyme "said it has asked regulators to approve Myozyme in 2,000-liter containers under the name Lumizyme for adults in addition to the 160 liters now allowed." The company "said the warning letter was 'unexpected' because it had responded Oct. 31, 2008, with a plan to address regulators' requests and was on schedule to finish its corrective actions by March 31."

        The company "said it worked closely with the FDA and was making progress toward those requirements, but was not able to complete them before the FDA was due to rule on Lumizyme," the AP (3/3) reports. The drugmaker "said it is assuming a six-month delay before Lumizyme will be approved."

On the front of its Business section, the New York Times (3/3, B1, Wilson) reports on the apparent conflicts of interest by some members of Harvard Medical Schools' faculty. One incident in particular is highlighted, a "minor stir four years ago" started by a student in a first-year pharmacology class who "grew wary as the professor promoted the benefits of cholesterol drugs and seemed to belittle a student who asked about side effects." The student pointed out that the "professor was not only a full-time member of the Harvard Medical faculty, but a paid consultant to 10 drug companies, including five makers of cholesterol treatments." Medical students argue that the school "should be embarrassed by the F grade it recently received from the American Medical Student Association, a national group that rates how well medical schools monitor and control drug industry money." They are opposed by a "smaller rival faction" that has "circulated a petition signed by about 100 people that calls for 'continued interaction between medicine and industry at Harvard Medical School.'"

Copyright © 2008 by Custom Briefings | 11190 Sunrise Valley Drive, Suite 130 | Reston, VA 20191