In a commentary in the Tennessean (12/31), Dick Cowart, past president of the American Health Lawyers Association, wrote that the Congressional Budget Office (CBO) recently "provided the third installment in a trifecta of position papers regarding healthcare reform," Earlier, the Obama transition "team had identified its health-reform principles, followed by Senate Finance Chairman Max Baucus' (D-MT) November release of his vision for the health-reform debate." In the meantime, the CBO released a report analyzing "the six major policy options Congress would have regarding employer and employee incentives for health-insurance coverage," including "tax credits, individual coverage mandates, employer coverage mandates with pay-or-play features, capping employer deductions for employee health coverage, as well as other issues." A second CBO report "discussed 115 options to reduce federal spending for healthcare." Cowart concluded that healthcare reform "is clearly on the hearts and minds of the leaders of the new administration, and these key analyses provided a good frame of reference for what lies ahead."

Health Law

The Salt Lake Tribune (12/31, Rosetta) reported that the "Utah Department of Health estimates that up to 57,000 enrollees could be affected by" cuts to the state's Medicaid budget. In September, the Legislature approved "a 1.5 percent budget cut," and stopped covering "some services considered optional by Medicaid." And, because "the federal government contributes $3" for every "$1 Utah spends on Medicaid," the Utah Health Policy Project (UHPP) "estimates the Legislature's $9 million trim of optional services will translate to a loss of $22.7 million in federal Medicaid funding for fiscal year 2010." The UHPP noted that the loss would otherwise support "927 Utah jobs that generate about $47.4 million in economic activity." The state is expected to cut "another seven percent of its fiscal year 2010 budget," and "a growing number of Medicaid enrollees could feel the pain." The state may also "tighten its income threshold for pregnant women to receive prenatal care and for poor families to receive Medicaid, reduce the amount it pays pharmacies to fill Medicaid prescriptions, and scale back the dental benefits for children on the Children's Health Insurance Program."

The Wall Street Journal (1/2, A9, Favole, Dooren) reports that the Food and Drug Administration (FDA) "approved more new drugs in 2008 than in any of the prior three years, a consolation of sorts to an industry struggling with greater scrutiny, thousands of layoffs, and thinning drug pipelines." Specifically, the agency "approved 24 first-of-a-kind drugs in 2008, compared with 18 in 2007, 22 in 2006, and 20 in 2005." In addition, FDA officials "approved dozens of other applications for new formulations or new uses of existing drugs." But, "few of the drugs approved in 2008 are likely to be blockbusters." And, while the "pharmaceutical industry welcomes the approvals, industry analysts say 2008 will be remembered more for delays in the approval process." The "agency missed its deadlines on 32 out of 159 drug applications through Oct. 31." That may change, however, because "legislation passed last year gave the FDA more money to hire additional drug reviewers along with other kinds of employees." Yet, the legislation "also imposed new requirements on the agency that are now being implemented and are temporarily contributing to the slowdown in drug-approval times."

The Legal Intelligencer (1/2, Elliott-Engel) reports, "A Philadelphia judge has asked the Pennsylvania Superior Court to uphold a series of rulings dismissing the claims of plaintiffs who allege that the manufacturers of their hormone replacement therapy (HRT) drugs," Wyeth Pharmaceuticals, Inc., Pharmacia, and Pfizer, "are liable for their breast cancer." A Superior Court panel is now considering "fourteen cases decided by Philadelphia Common Pleas Judge Allan L. Tereshko" that "have been consolidated." Citing "product package inserts" that "warned of an increased risk of breast cancer" from the drugs, "Tereshko granted defense motions for summary judgment in all of the cases." He said that "there was sufficient public information at the time" about the "risk of developing breast cancer." Tereshko also indicated that "all of the plaintiffs' claims were time-barred by the statute of limitations," which "had expired within two years of their diagnoses." The plaintiffs contend that it was not until "the release of the Women's Health Initiative study July 9, 2002," that they became "aware of the increased risk."

The AP (12/31, Perrone) reported, "Healthcare stocks are typically seen as a hedge against financial downturns, but medical-device shares declined steeply in 2008 as broader economic worries exacerbated declines linked to product-safety concerns." In fact, the Dow Jones "US Medical Equipment Index fell 38 percent for the year, roughly even with the 40 percent drop seen by the broader Dow Jones Total Market Index." And, although "companies that sell lifesaving medical implants outperformed more discretionary parts of the economy," some device makers "performed far worse than their peers in the biotech industry." Tightened consumer spending "on nonessentials" also hurt "parts of the sector," including "demand for...breast implants and Botox (botulinum toxin type A) anti-wrinkle injections." Still, those that "fared better tended to specialize in inexpensive products sold directly to hospitals." Aaron Vaughn, an Edward Jones analyst, noted that "the effect on sales of pacemakers, knee replacements, and other items is still not clear."

MSNBC /Tampa Tribune (1/1, Dolinski) reported that Florida state Rep. Ed Homan (R-Tampa), "a physician whose adult son has bipolar disorder," is "trying for a third year to force insurers to cover mental-health treatment at the same level that they cover other health services." Currently, "Florida law sets minimum requirements for mental-health benefits, but does not require parity; as a result, insurers typically offer less coverage of those illnesses." On Dec. 18, "Homan filed the original version of his bill again." Meanwhile, "insurers consistently fight mental-health parity, arguing that requiring those benefits could dramatically raise their business costs." But, Rep. Homan "continues to argue that covering mental-illness treatment increases worker productivity and reduces absenteeism, offsetting any increase in insurance costs for employers." Under Homan's bill, insurers "would have to offer mental-health benefits equal to the physical health coverage they provide. If it passes, the tougher state mandate would supersede the more modest federal requirement."

The AP (1/2) reports, "Healthcare coverage for all West Virginians has long been the Holy Grail of health policy in the state, and if the optimism of advocates and policymakers is any guide, 2009 could see them advance closer to that goal." The governor has pledged "to find coverage for all working residents," and lawmakers are aiming to "devise a 'road map' for a restructured healthcare system kicking off in January." In May, the Legislature convened "four working groups...charged with re-examining" the state's "healthcare delivery system," and their "recommendations will be made public" in January. In addition, some advocates of reform have "pushed for complete coverage of West Virginians through some combination of public and private insurance plans." One proponent, Perry Bryant, executive director of West Virginians For Affordable Health Care, "wants to see the state revise its eligibility requirements for adults receiving Medicaid, which would open the door to more federal dollars providing coverage."

The AP (1/1, Le) reported that Washington state Rep. Dawn Morrell (D) "wants to make drug companies responsible for disposing of unused medicine that could end up in the environment or be abused by teens." Rep. Morrell "says she'll push legislation requiring pharmaceutical companies to set up and pay for a statewide drug-disposal program." Already, "a pilot program has collected 15,000 pounds of prescription and over-the-counter pills at participating Bartell Drugs and Group Health Cooperative clinics." But, facing a shortage of public funding, "a coalition of local governments, pharmacists, environmentalists, and others," is now aiming for "a permanent statewide solution" from drug manufacturers. Meanwhile, "the Pharmaceutical Research and Manufacturers of America says regulatory agencies already have established ways to safely dispose of drugs in the household trash." The group "opposes take-back programs," stating that such efforts "would be an unnecessary burden on patients when safe and environmentally friendly methods...already exist," according to Ken Johnson, the group's senior vice president.

The Boston Globe (1/1, Wangsness) reported, "As Barack Obama prepares to spend billions on health-information technology as part of his plan to revive the US economy, some specialists are warning against investing too heavily in existing electronic recordkeeping systems." In fact, David Kibbe, a "top technology adviser to the American Academy of Family Physicians," and Bruce Klepper, a healthcare market analyst, highlight "the challenges confronting Obama's proposal to digitize an enormous and fragmented healthcare system" in "a recent open letter to the President-elect." Klepper argued that "current systems are expensive, cumbersome to use, and cannot easily exchange information about patients' health histories and treatments among different hospitals, labs, and doctors' offices." And, although "Obama and many health-policy analysts support a large investment in electronic health records," Klepper and Kibbe advocated for spending "the bulk of" the package on "simpler and cheaper technology."

        Report projects 14.1 percent annual growth in EMR market through 2012. Healthcare IT News (12/31, Monegain) reported that, according to a report by Kalorama Information, the electronic medical record (EMR) market is expected "to grow by 14.1 percent annually through 2012, from $9.5 billion in 2007." This "trend will have a vast impact on the electronic medical records market and on healthcare in the upcoming year," Kalorama said. The report "examines how the focus of ownership of medical records is shifting from one that is distributed among various healthcare providers to one that is shared and controlled by both the patient and the provider." Kalorama estimated that "the total EMR implementation costs are...between $68 billion and $255 billion," for the "787,000 office-based physicians and 5,708 hospitals in the United States." The report also "discusses developments in EMR use in healthcare, trends driving the market, [and] regulatory issues," as well as providing "a comparison of EMR vendor offerings, types of systems being requested by hospitals and physicians, and the costs of installing an EMR system."

The AP (1/1) reported, "Connecticut regulators have disciplined Bristol Hospital after state inspections revealed various violations." As a result, "the hospital has agreed to pay a $4,000 fine and make changes to its policies and training."

        The Hartford Courant (1/1, Becker) added that the hospital's violations included "cases in which a patient received 10 times the ordered dose of medication, a man was severely burned in an MRI machine, and a woman died after being taken off a ventilator when her advance request for ventilation was changed without evidence that she agreed." An inspection report also found problems in "keeping proper records, preventing bedsores, and making sure that staff who used imaging machines were properly trained." Still, "the hospital did not admit any wrongdoing." In a written statement, Bristol Hospital President and CEO Kurt Barwis said that the hospital "will see to it that the opportunities for improvement directly benefit our patients and our community."

The South Florida Business Journal (12/31, Morrison) reported that the US Bureau of Labor Statistics found "that mass layoffs in healthcare reached a 10-year high by the end of November," with Florida as one of the leading states "for year-over-year increases in mass layoffs, defined by the agency as a staff reduction of at least 50 people, trailing behind California and Indiana." The layoffs come "at a time when Floridians and medical officials are concerned about the impact of potential physician shortages on healthcare access," with "64 percent of Florida doctors older than age 45." Furthermore, 11 "percent of emergency-room doctors have reduced their hours in the last two years." In fact, the "state's overall emergency care grade was a C -- thanks to a large proportion of uninsured patients, fewer than half" the "psychiatric-care beds than the US average, and a shortage of primary-care doctors that is five times higher than the nation." This is all "evidence of an erosion in the state's healthcare system that isn't expected to improve in 2009."

The Boston Globe (1/1, Krasner, Kowalczyk) reported, "Governor Deval Patrick (D) will convene a panel of top state officials Monday to look into whether a recently disclosed, eight-year-old agreement between Partners HealthCare System Inc. and Blue Cross Blue Shield of Massachusetts drove up healthcare costs, making it harder to extend healthcare insurance to all residents." Officials said the panel will also examine "current contract negotiations between Partners...and healthcare insurers to see whether the negotiations might also create artificially high rates." The move comes after a Boston Globe article revealed that an agreement between Partners and Blue Cross "gave the state's largest hospital system its biggest price increase in years and protected it from competition." The panel was asked to "explore what coordinated actions, if any, the state should take to address the issues raised by the story," focusing specifically on "costs, not competition." One official noted that "the emphasis is on the impact of that deal, not the players involved."

The AP (12/31, Murphy) reported, "Managed-care stocks were hammered in 2008, as higher-than-expected medical costs burned up health insurers' profits, and skittish investors wrung their hands over the companies' potential exposure to failed investment banks." In fact, some "of the nation's largest health insurers saw their stock prices fall an average of 58 percent in 2008, with Cigna Corp. shares tumbling a whopping 70 percent." The declines were even "steeper than the 45 percent drop seen in the Dow Jones US Healthcare Providers Index." Dave Shove, an analyst for BMO Capital Markets, noted that "insurers set themselves up for a rough 2008 by pricing premiums too low to cover medical cost outlays." Insurers also faced "higher-than-expected claims levels in areas like Medicare Advantage products." In addition, "the presidential election also hung a question mark over health-insurance stocks," as the possibility "of a national healthcare plan that might drain insurers' pricing power loomed."

Modern Healthcare (12/31, Carlson) reported, "A longtime critic of Tenet Healthcare Corp. is dissolving his whistle-blowing group, the Tenet Shareholder Committee, but not without taking one last shot at the large hospital operator." M. Lee Pearce created "a lengthy online posting" that criticizes "Tenet executives and board members for taking home six-figure salaries even as the company paid out billions in litigation settlements and lost billions more from the company's bottom line." Pearce wrote that "$25 billion in shareholder value vanished in six years as the company's book value dropped from $12.44 per share at the end of Nov. 2002 to $0.29 at the end of Dec. 2008." Company officials, meanwhile, claim that his "real goal was to hector the company into buying Florida land from him at inflated prices."

Life Sciences Law

The AP (1/2, Troise) reports, "Sharp gains in shares of biotechnology heavyweights mitigated the wider sector's decline in 2008." In fact, "biotech stocks proved to be one of the safest investments this year, as strong drug sales and the potential for large buyout deals defended the sector from broader market collapse." Typically, "biotech products are...considered lifesaving necessities by patients, and thus not likely to get cut out of a budget because of a weak economy." And, the fact that a "development path" has yet to be "paved...for generic biologics," spares biotech companies from facing the kind of competition "their big pharma cousins" do. Meanwhile, "the sector far outperformed the Dow Jones Total Market Index, which is off 40 percent for the year, and the Standard & Poor's 500 index which is down 39 percent." Meanwhile, "one industry-wide theme in 2008 was buyout activity. In large part, it helped reverse the previous year's downward slide."

        Pharmaceutical industry weathers market collapse better than other sectors. The AP (1/2, Johnson) reports, "Stricter regulation, a dearth of new blockbuster drugs, increased pressure to lower prices, and more intense generic competition hammered the pharmaceutical industry in 2008, but its stocks still weathered the market collapse better than many other sectors." Although the "industry's ills predate the financial crisis," and are sure to be "exacerbated as the recession pushes poor patients to delay refills, trade down to generics, and split pills," the majority of drugmakers "took the surest steps in 2008 to improve their bottom lines -- slashing thousands of jobs, halting R&D projects, and selling real estate." In addition, the firms "re-engineered their sales machines, with fewer sales reps calling on harried doctors," and "there was a huge push to boost sales in big-population emerging markets like India." Nonetheless, "looking ahead, drugmakers' biggest problem remains a limited supply of hot, late-stage drugs to replace the 1990s' blockbusters which are facing a 'patent cliff.'" Therefore, "to fill the gaps in their pipelines quickly, some companies are buying up biotechs and smaller partners."

The Wall Street Journal (1/2, A10, Rockoff) reports that "drugmaker Pfizer, Inc. is joining with two Boston hospitals to test whether computerized patient records can be used in helping federal regulators detect dangerous drug side effects." The two "hospitals are encouraging 30 of their doctors to report serious side effects to the Food and Drug Administration by making the reports part of their normal routine filling out electronic patient charts." The program, "if successful...could point the way for increasing the number of side-effect reports filed and for improving their quality." In addition, it "could offer drugmakers a relatively inexpensive way to meet mounting demands they do more monitoring of new drugs after they are on the market."

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