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Health and Life Sciences Law Daily - February 12, 2009
Anthem Blue Cross settles with California over rescission practices.
Following an article by the Los Angeles Times, the AP (2/12) reports, "California's largest for-profit health provider, Anthem Blue Cross," owned by WellPoint, "has agreed to pay a $1 million fine and take back 2,330 people whose insurance was rescinded after they submitted bills for expensive care." The insurer, in a settlement with the state of California, also agreed to "reimburse the dropped patients for medical costs they've paid since their policies were terminated, which the company estimates will cost it another $14 million." In return, "the state Department of Insurance agreed to stop pursuing allegations that the company broke state law when it dropped patients with preferred provider organization policies between 2004 and 2008."
According to Sarah Rubenstein in the Wall Street Journal (2/11) Health Blog, Anthem's settlement comes after the company "entered a similar settlement with the state's other insurance watchdog, the Department of Managed Health Care," in July. Rubenstein added that "this is the last of California's investigations into insurance cancellations of this type," according to the Los Angeles Times report. "Other companies that have agreed to reinstate coverage are Blue Shield of California, Health Net and Kaiser Permanente." But, the insurers still "remain targets of lawsuits from patients."
In January, the Sacramento Bee (2/11, Calvan) noted, "the Department of Insurance announced that Blue Shield of California was reinstating medical insurance policies to nearly 700 consumers." And "in September, Health Net said it would restore coverage for nearly 1,000 subscribers." In Anthem's settlement agreement the company was also ordered "to change how it handles so-called policy rescissions," or face "additional fines of up to $2 million," according to the state. Los Angeles Business (2/11) also covered the story.
Health Net to pay up to $14 million to settle two rescission lawsuits. In the latest of a string of rescission settlements in California, the Los Angeles Times (2/12, Girion) reports that Health Net "has agreed to pay as much as $14 million to settle a pair of lawsuits brought on behalf of 800 former policyholders whose coverage was dropped after they submitted substantial medical bills." Under the agreement, which "won preliminary court approval" yesterday, individuals "whose health insurance policies were canceled since 2004 are eligible for payments of up to $218,000. The average payment is expected to be $7,836." The Health Net agreement "includes provisions that parallel earlier settlements with regulators, including an offer to extend coverage to the affected consumers without regard to preexisting conditions. It also requires Health Net to reimburse medical expenses paid out-of-pocket by former policyholders after they were rescinded." In addition, Health Net agreed to "extend its self-imposed moratorium on rescissions until lawmakers or regulators establish standards for them -- or until the company establishes a third-party review process that is acceptable to the judge overseeing the case."
General Health Law
Department of Justice special court said to be ready to hand down rulings in vaccine-autism cases.
CNN (2/12) reports that, according to attorney Thomas Powers, "a Department of Justice special court will hand down rulings Thursday in cases asking whether certain vaccines cause autism." Powers, the lead plaintiffs' attorney, said that "a panel of 'special masters' will issue decisions on three test cases heard in 2007 involving children with autism that their parents contend was triggered by early childhood vaccination." In these cases, "the parents seek compensation, saying the 'combined' exposure to thimerosal, a mercury-containing preservative, in some vaccines and the" measles, mumps and rubella (MMR) "vaccine led to autism," Powers said. Powers explained that the three families involved "have been notified of the development, as have the more than 180 lawyers collectively representing the 4,800 families with claims in the Vaccine Court Omnibus Autism Proceeding." Still, "Thursday's rulings will only affect the families that fall under the...category" of those claiming that "MMR vaccines and thimerosal-containing vaccines can combine to cause autism."
Health Business
Firm seeks quick investor returns on new drugs.
In the Wall Street Journal (2/12) Venture Capital Dispatch blog, Scott Austin reports that Fenway Pharmaceuticals Inc. "believes it has a plan to circumvent the whole risky, time-consuming" Food and Drug Administration approval process and "give venture investors quick returns." The company, "started by three former executives of GelTex Pharmaceuticals Inc., which sold to Genzyme Corp. in 2000 for $1.2 billion," will "acquire, develop, and license out" drugs in the renal, metabolic, and gastrointestinal fields. What is "unusual about Fenway Pharma is that venture capitalists and executives, who will own the drugs the company develops, will make money when they are licensed out." Chief Executive Mark Skaletsky said, "Potentially it would be a quicker return than if you took [a drug] all the way through FDA approval or commercialization. VCs are looking for different ways they can get returns." Fenway Pharma "plans to acquire drugs that are nearly ready for the clinic and demonstrate their therapeutic potential in Phase II studies, creating a significant amount of value for the product before selling it to a pharmaceutical company."
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Recession may be driving condom sales, Nielsen report indicates.
USA Today (2/12, Jones) reports that though sales of many consumer goods are retracting given the state of the economy, "sales of condoms in the U.S. rose five percent in the fourth quarter of 2008, and six percent in January vs. the same time periods the previous year, The Nielsen Co. reports. The sales bump squares solidly with one of the nation's most common trends during any recession: nesting. At the same time, condoms make for a relatively inexpensive form of birth control at a time many cash-strapped families are hesitant to grow. 'If people don't have the money to go out to a fancy dinner or are looking to cut back, Trojan gives them some real affordable ways to stay in and make some great memories together,' says Jim Daniels, vice president of marketing for Trojan, the nation's No. 1 condom maker."
Pfizer to focus less on blockbuster drugs, CEO says.
The Chicago Tribune (2/12, Japsen) reports, "The Pfizer Inc. of the future will concentrate less on blockbuster pills like Viagra [sildenafil citrate] and Lipitor [atorvastatin calcium] and more on targeting unmet medical needs through biotechnology." Instead, Pfizer will focus "on biotechnology-derived vaccines and drugs that target such diseases as cancer and Alzheimer's, a change from its focus on routine maintenance pills for cholesterol, blood pressure, and depression." Chairman and Chief Executive Jeffrey Kindler told the Tribune that "the dependence on a couple of large blockbuster products is not a good model." Kindler said that "if Pfizer of the past was best known for a few very large blockbuster drugs, then the new Pfizer is vastly more diversified."
Healthcare Policy/Legislation
Virginia Senate kills bill requiring insurers to cover children with autism.
The Washington Post (2/12, B7, Kunkle) reports that the Virginia Senate "has effectively killed a bill that would have required insurers to cover autistic children." Supported by the advocacy group Autism Speaks, the measure, which won "bipartisan backing from Dels. Robert G. Marshall (R-Prince William) and David E. Poisson (D-Loudoun)," soon "met resistance. The House Commerce and Labor Committee took no action on it, infuriating advocates." But, "Reginald N. Jones, a lobbyist for the Virginia Association of Health Plans, said one estimate suggested that the costs of autism coverage could be as much as $40 million a year in Virginia, despite a provision that would cap expenses at $36,000 per child per year."
"The emotionally fraught measure, Senate Bill 1260," introduced "by Sen. Jill Holtzman Vogel (R-Fauquier), had been watered down," Virginia's Richmond Times-Dispatch (2/12) explains. Sen. Vogel "initially sought mandated coverage through age 21, but it was slashed to age six by the Senate Commerce and Labor Committee." Yet "another blow to the bill came when the Senate Finance Committee tacked on language that said if the state couldn't find the money, it would not provide coverage for government workers." So, "rather than put the bill to vote last night, senators instead buried it on a parliamentary move, returning the measure to the Finance Committee, which no longer can consider Senate-written legislation." WSLS-TV Roanoke (2/12, Halpern), an NBC affiliate, also covered the story.
Nevada Democrats to unveil legislation mandating health-insurance coverage for treatment of autism. The Las Vegas Sun (2/11, Coolican) reported that "Democrats in the" Nevada "state Assembly will unveil legislation this week to force insurance companies to provide coverage for the treatment of autism," and the bill "stands a strong chance of passing, given that it has the support of the leaders of the Senate and the Assembly." According to Ralph Toddre, of the Autism Coalition of Nevada, "the cost of effective treatment can reach $24,000 to $40,000 per year per child, with additional costs resulting from the various medical conditions that usually accompany" the condition. But, "insurance companies have traditionally declined to pay for treatment, which usually involves intensive speech and occupational therapy," arguing that "the care is not strictly medical, even though it arises from a medical condition." For its part, the health-insurance industry maintains that "mandates for coverage invariably increase the price of insurance premiums." The New York Times (2/11, Rabin) mentioned the Nevada legislation in its Morning Rounds column.
Health Information Technology
Stimulus compromise likely to include funding for health IT.
The AP (2/12, Espo) reports, in an article published by over 100 papers and websites, on the compromise between Congress and the Obama administration on a $790 economic stimulus package. "The emerging legislation is at the core of Obama's economic recovery program, and includes help for victims of the recession in the form of expanded unemployment benefits, food stamps, health coverage and more." The measure includes funding for healthcare IT, the AP adds, noting that a $10 billion National Institutes of Health (NIH) research funding measure "appeared likely to survive" the compromise.
The AP (2/12, Feller), in a separate article published by some 34 papers and websites, reports on Obama's praise for the "breakthrough deal," noting that he "said the tax help and investments in healthcare, energy, education and construction projects will fuel the economy."
The AP (2/12) also runs a separate feature highlighting aspects of the compromise, including "$21 billion to provide a 60 percent subsidy of health care insurance premiums for the unemployed under the COBRA program; $87 billion to help states with Medicaid; $19 billion to modernize health information technology systems; $10 billion for health research and construction of National Institutes of Health facilities." The Los Angeles Times (2/12, Levey) has a similar sidebar.
Other news sources that run articles about the stimulus package with tangential references to its healthcare spending provisions include the front page of the New York Times (2/12, A1, Stevenson), the front page of the Wall Street Journal (2/12, A1, Hitt, Weisman), the Los Angeles Times (2/12, Oliphant, Simon), the Financial Times (2/12, Guha, Beattie), NPR (2/11, Halloran) and the Christian Science Monitor (2/12, Chaddock).
Impasse over sale of medical records emerges from stimulus debate. Bloomberg News (2/12, Gaouette, Nussbaum) reports that the stimulus plans' $20 billion for healthcare IT "has unleashed a fight between business advocates who want to sell patient data and consumers who want to keep medical information private." Bloomberg notes that the Senate version "favors industry-backed standards for sale, marketing and storing health data," while the House bill is geared more toward protecting consumers' privacy. "Both versions provide as much as $20 billion to create a national system of computerized records, a central plank in plans to overhaul the health system. ... The differences between the two chambers must be reconciled before a final bill can be signed into law."
MedPage Today (2/11, Walker) reported that the measure includes "$19 billion to implement electronic health records and other information technology. The Senate version would provide $1 billion less for technology upgrades than the House version, but $19 billion is still a significant outlay to make upgrades in the medical record system that many healthcare providers have long been calling for. ... The Senate bill allocated about $19 billion to upgrade hospitals' electronic records systems and limited how much an individual hospital could receive to $1.5 million. The House version allocated $20 billion and contained no cap on individual hospitals' share. Hospitals would be eligible for incentives for using electronic medical records beginning in 2011 and would be penalized if they haven't switched over from paper starting in 2015 in the Senate bill."
Insurance and Managed Care
Class-action lawsuit filed against Kaiser Permanente by parents of children with autism.
The San Francisco Chronicle (2/12, B3, Lee) reports that "a class-action lawsuit" was filed Feb. 11 in Alameda County Superior Court by two Bay Area residents, Lissa Anderson and Paul Santiago, both parents of children with autism, "against Kaiser Permanente, accusing the health maintenance organization of refusing to treat children with autism in order to save costs." According to the suit, the "Kaiser Foundation Health Plan has a legal duty to treat autistic children." The lawsuit also alleges that "Kaiser told" the plaintiffs that "they should pursue their children's issues with local school districts." For its part, "Kaiser said it provides a 'full range of healthcare' for autistic children."
Anthem Blue Cross announces individual policy rate increases in California effective March 1.
On the front page of its Business section, the San Francisco Chronicle (2/12, C1, Colliver) reports, "Anthem Blue Cross, which plans to raise premiums for about four-fifths of the health insurer's individual policyholders effective March 1, has outraged members, many of whom have been hit with price increases of more than 30 percent." The insurer, "formerly Blue Cross of California, covers about 800,000 individual policyholders in California, more individual members than any other insurer in the state." Anthem "officials confirmed the company will raise rates March 1 for about 80 percent of its individual members," and "blamed the increase in health costs for the higher premiums."
Biotechnology
Investigators unable to detect HIV in patient after stem cell transplant.
Bloomberg News (2/12, Waters) reports that a 42-year-old patient with AIDS in Germany "was able to stop drugs he had been taking for 10 years after getting a transplant of stem cells from a donor with a rare gene variant known to resist the deadly disease." The procedure also apparently "cured his leukemia." In an accompanying editorial, HIV/AIDS expert Jay Levy, M.D., of the University of California, said that such results are "going to stimulate a lot of companies to put more emphasis on gene therapy."
The German "case was first reported in November, and the new report is the first official publication of the case in a medical journal," the New England Journal of Medicine, CNN (2/11, Froeber) noted. The team in Berlin was aiming "to treat the [American] man's leukemia, not the HIV itself," however, they "deliberately chose a compatible donor who has a naturally occurring gene mutation" -- CCR5 delta32 -- "that confers resistance to HIV," which is "found in one to three percent of white populations of European descent." Investigators explain that the "mutation cripples a receptor known as CCR5, which is normally found on the surface of T cells, the type of immune system cells attacked by HIV." In fact, "people who inherit one copy of CCR5 delta32 take longer to get sick or develop AIDS if infected with HIV," while those "with two copies...may not become infected at all. The stem cell donor had two copies."
The recipient "has undergone regular checks in the two years since" being "given a bone marrow transplant," and the UK's Independent (2/12, Laurance) reports that doctors "have found no sign of HIV" in his "bone marrow, blood, and tissues."
In vitro procedures resulting in multiple births face renewed scrutiny after birth of octuplets.
In a front-page story, the New York Times (2/12, A1, Saul) reports, "To the government and fertility industry...large multiple births have begun to look like breakdowns in the system." And, "the issue has taken on renewed scrutiny since a California woman, Nadya Suleman, who already had six children conceived through in vitro procedures, gave birth to octuplets...last month." In fact, "the government, along with professional associations, has been pushing fertility doctors to reduce" the number of in vitro births involving twins or more, in light of "the disastrous health consequences that sometimes come with multiple births." Still, "the United States has no laws to enforce...guidelines" set by the American Society for Reproductive Medicine, an association of fertility doctors, which encourage "the transfer of only one embryo for women under 35, and no more than two, except in extraordinary circumstances." According to Suleman, Dr. Michael M. Kamrava "had implanted six embryos," which resulted in eight babies after two of the embryos "divided into twins." Now, the California Medical Board said that it is investigating "Kamrava to determine whether accepted standards of medical practice" were violated.
Fertility clinic says it will soon help couples select babies' gender, physical traits. The Wall Street Journal (2/12, A10, Naik) reports that Fertility Institutes of Los Angeles "says it will soon help couples select both gender and physical traits in a baby when they undergo a form of fertility treatment...based on a procedure called pre-implantation genetic diagnosis, or PGD." In PGD, a technique introduced in the 1990s, "a three-day-old embryo, consisting of about six cells, is tested in a lab to see if it carries a particular genetic disease. Embryos free of that disease are implanted in the mother's womb." Now, however, "PGD is starting to be used to target less-serious disorders or certain characteristics -- such as a baby's gender -- that aren't medical conditions. The next controversial step is to select physical traits for cosmetic reasons." That is because "cosmetic traits are" also "correlated with a large number of DNA variations or markers...that work in combination."
Intellectual Property
Novartis obtains rights to experimental anticlotting drug.
The Wall Street Journal (2/12, B5, Winslow) reports that "Novartis AG plans to announce Thursday it has obtained world-wide rights to an experimental heart drug that it hopes will rival the blockbuster Plavix [clopidogrel] and other medicines in the multibillion-dollar market for anticlotting agents." The drugmaker "will pay Portola Pharmaceuticals Inc....$75 million to license the drug, called elinogrel." Meanwhile, "Portola said it would be entitled to additional payments of as much as $500 million based on meeting certain regulatory and commercial milestones, plus royalties on sales."
The New York Times (2/12, B7, Pollack) reported that "elinogrel, is still in the second of three phases of clinical trials, so it is not yet clear how effective it will be in preventing heart attacks and strokes." And, "if a successful Phase 3 trial is completed and federal regulators approved the drug, it would be unlikely to reach the market before 2013 or later."
International News
Researcher said to have falsified autism study data.
Following a story in the UK's Times, MedPage Today (2/11, Gever) reported that Andrew Wakefield, M.D., the "researcher who first linked childhood vaccines to autism, has been accused of falsifying data in a 1998 study published in The Lancet." On Sunday, the Times reported that Dr. Wakefield "apparently altered clinical findings on eight of 12 children whose cases were the basis for the study." These "allegations follow disclosures in 2004 that Dr. Wakefield's research was partially, and secretly, funded by plaintiffs' lawyers in suits against vaccine makers, and that he had cut procedural corners in the research." For his part, "Dr. Wakefield issued a statement denying the new allegations." Currently, "Dr. Wakefield and two of his Lancet co-authors are...facing misconduct charges before" the UK's "medical licensing board, the General Medical Council, related to the 1998 study and subsequent research."
Canada's federal government approves $500 million for EHRs.
Canada's CBC News (2/12) reports that the country's "federal government confirmed $500 million more in funding Wednesday to support electronic health records [EHRs], a move announced last month in its budget." The move is expected to "save time and lives by reducing duplication, improving the management of chronic disease, improving access to care and boosting productivity," according to Health Minister Leona Aglukkaq. The additional funding follows "$400 million that the federal government pledged to Canada Health Infoway," a non-profit organization aimed at expanding the use of electronic health records, "in the 2007 budget."
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