Health Law

The Wall Street Journal (1/30, Goldstein) reports that Congress and the Obama administration are considering changing the procedures surrounding Medicare reimbursement, noting that "critics of the current system, in which most doctors are paid for each procedure they perform, say it creates a financial incentive for unnecessary treatments. Alternatives such as paying a fixed annual rate for each patient have been criticized for giving providers an incentive to withhold potentially helpful treatments. In search of a middle road, policy makers and some private insurers may opt to make a single, blanket payment for such things as implanting an artificial hip or providing a few months of cancer treatment, which currently can involve many separate billable procedures." The Journal adds that HHS Secretary-designee Tom Daschle and Senate Finance Committee Chairman Max Baucus (D-MT) are both on record as favoring this approach as an efficient compromise for both patients and providers, noting however, that implementing such a scheme into the "fragmented healthcare world" could prove "tricky."

The Christian Science Monitor (1/30, Marks) reports, "For the first time ever, newly unemployed workers and their families will be eligible for Medicaid coverage and healthcare subsidies" under the stimulus bill passed Wednesday in the House. The bill includes other healthcare related measures including boosted state Medicaid funding, $20 billion for electronic medical records, and other subsides for coverage for the unemployed, to a total of some $117 billion for healthcare spending. "The provisions that would make Medicaid available to the uninsured and the subsidies for private healthcare are being described as temporary. But some healthcare reform advocates hope they will serve as building blocks to bring about a reform of the healthcare system. Opponents worry they could be the start of the nationalization of healthcare."

        Rural states concerned over Medicaid formula in stimulus package. The Wall Street Journal (1/29, Rubenstein) Health Blog reported that President Obama's $819 billion economic stimulus package "now heads to the Senate, where one of the sticking points is expected to be how funds for Medicaid will be distributed." Democrats from rural and urban areas "are wrestling over the formula to divvy up $87 billion in Medicaid funding. In the House bill, 52.5 percent of the funds would be doled out under the typical formula that's used annually, and the rest would be given out under a new 'bonus' program that favors states with high unemployment rates." This is "worrying the folks in poor rural states where the unemployment numbers are already high, but where the rate of decline in jobs isn't as steep as in urban areas." The Senate version "doles out 80 percent of the funds under existing rules and the rest under the 'bonus' plan."

The Wall Street Journal (1/30, Dooren) reports, "The Food and Drug Administration [FDA] is asking a panel of medical experts to decide [today] whether it thinks pain pills commonly known as Darvon [propoxyphene] and Darvocet [acetaminophen and propoxyphene] and used by millions of Americans should remain on the market."  The agency's "action was prompted by a petition and then lawsuit from Public Citizen...that cited data from the Drug Abuse Warning Network, which uses a sample of nationwide autopsy information from medical examiners -- implicating propoxyphene in 5.6 percent of drug-related deaths from 1981 to 1999.  Public Citizen also said the network reported 2,110 accidental deaths related to propoxyphene over the same period."  In 2008, "Public Citizen sued the FDA for failure to act on its 2006 petition.  Now the agency is taking the matter to an outside panel of medical experts for advice."

The Wall Street Journal (1/30, Whalen) reports, "GlaxoSmithKline PLC warned that its 2008 earnings will be hit by a $400 million legal charge, in a sign that the pharmaceutical company could be approaching a settlement in a five-year-old federal investigation into marketing of antidepressants and other drugs."  The company "said the charge was related to the ongoing investigation, which is looking at 'marketing and promotional practices for several products for the period 1997 to 2004.'"  A spokesperson for Glaxo "declined to comment on the status of the investigation or the drugs involved."

        In the Wall Street Journal (1/29) Health Blog, Sarah Rubenstein wrote that "according to Glaxo's most recent annual report, the company received a subpoena from the Colorado U.S. attorney's office in 2004 around promotion of nine of its top-selling products."  Investigators "inquired about alleged off-label marketing, as well as medical education programs for doctors, 'other speaker events, special issue boards, advisory boards, speaker training programs, clinical studies, and related grants, fees, travel and entertainment.'  Though the subpoena came from Colorado, the inquiry is 'nationwide,' the filing says."  Rubenstein wrote that "part of the investigation concerns a response the company provided to [a Food and Drug Administration] inquiry of alleged off-label promotion of antidepressant Wellbutrin SR [bupropion Hydrochloride]."

Bloomberg News (1/30, Pettypiece) reports, "Pfizer Inc. must pay a $4.5 billion breakup fee if banks decide against lending the drugmaker enough to complete its $68 billion acquisition of Wyeth."  The New York-based company "agreed to pay Wyeth the $4.5 billion if the lenders pull out, if Pfizer's operations decline a significant amount, or if its credit rating falls below A2, the sixth-highest ranking, as determined by Moody's Investors Services.  It is now Aa1, the second-highest rating."

        According to a regulatory filing submitted to the Securities and Exchange Commission yesterday, the AP (1/30, Johnson) adds, "Wyeth would have to pay a breakup fee of $1.5 billion to $2 billion, depending on the timing and circumstances under which its terminates the deal.  The higher fee for Wyeth would apply after 30 days from when the agreement was reached on Jan. 25, or Feb. 24."  In addition, "Wyeth cannot actively solicit a competing proposal from another potential acquirer."  Earlier this week Pfizer announced "that it had an agreement to acquire Wyeth...for just under $68 billion, although the value of the deal has since declined with Pfizer's share price, to about $64.8 billion."

The AP (1/30, Murphy, Seaman) reports, "Eli Lilly & Co. beat Wall Street's fourth-quarter expectations Thursday, but analysts say they're waiting for a regulatory hearing next week to gauge the company's near-term health."  The Indianapolis-based company "said it swung to a loss in the quarter due to a $4.73 billion charge for the purchase last fall of cancer-drugmaker ImClone Systems Inc."  The pharmaceutical "company lost $3.63 billion, or $3.31 per share. That compares with earnings of $854.4 million, or 78 cents per share, a year ago."

        Bloomberg News (1/30, Randall) adds that "revenue from the depression medicine Cymbalta [duloxetine hcl] rose 15 percent in the quarter to $721 million.  The Cialis [tadalafil] impotence pill generated $368 million in sales, a 6.5 percent increase."  In addition, sales of antipsychotic Zyprexa [olanzapine] "fell 10 percent in the quarter to $1.15 billion."  The cancer drug "Erbitux [cetuximab], which Lilly markets in the U.S. with...Bristol-Myers Squibb Co., generated sales of $35.6 million after the ImClone acquisition.  Bristol- Myers reported on Jan. 27 that Erbitux sales declined two percent for the quarter after a study found that the medicine didn't work in patients with a gene mutation."

        Next week, "a U.S. Food and Drug Administration [FDA] advisory panel of experts is set to discuss Lilly's blood thinner prasugrel," Forbes (1/30, LaMotta) reports.  Prasugrel "which has already been delayed twice by the FDA, is expected to be a blockbuster, with anticipated sales of over $1.0 billion.  Lilly hopes that prasugrel will replace the rapidly declining sales of Zyprexa, which is set to face generic competition as early as October 2010."

        Eli Lilly shopping for acquisitions much smaller than Pfizer acquisition of Wyeth, CEO says. Bloomberg News (1/30, Randall) reports, "John Lechleiter, chief executive officer of Eli Lilly & Co., said he is shopping for acquisitions much smaller than Pfizer Inc.'s $68 billion offer to buy Wyeth, adding that large purchases don't boost profits."  The company "is looking to buy companies with small to mid-sized market values, Lechleiter said."  Lechleiter said that "we have been clear that we do not believe these large combinations in the long term have sustained value."  Lechleiter added that "consolidation is obviously happening and there may be additional consolidation. If we see a small or mid-cap opportunity, like ImClone, we'll go for it."  Bloomberg News added that he "declined to comment on the potential cost of pending claims over illegal sales practices Zyprexa."  Lilly "may face another $2 billion in lawsuits after it pleaded guilty to criminal charges of improper marketing and agreeing to spend more than $2.6 billion to settle claims, according to Taxpayers Against Fraud, which tracks the suits."

Bloomberg News (1/30, Olmos) reports, "Alexza Pharmaceuticals Inc. said it will cut 52 jobs and is ending a pain-drug partnership with Endo Pharmaceuticals Inc. in the latest sign of the financial crunch facing small biotechnology companies."  The cuts "involve 33 percent of its workforce."  By "reducing the payroll [Alexza] will save...a total of $33.6 million for 2009 and 2010.  Alexza had $78 million in cash and investments as of Sept. 30, 2008, enough to fund operations through the second quarter of 2010," according to a statement released by the company.  In order "to preserve cash, the company is narrowing its research efforts to focus on its most promising product, an experimental treatment for severe agitation in people with schizophrenia and bipolar disorder, Thomas King, Alexza's chief executive officer," explained.  The drugmaker, "which has developed an inhalable device for use with generic drugs...has no products on the market."

        Alexza and Endo Pharmaceuticals announced yesterday that "they have ended 'by mutual agreement' a research collaboration aimed at developing an inhaled fentanyl product for the treatment of breakthrough pain," the Philadelphia Business Journal (1/30) adds.  "As a result of our ongoing strategic review initiated last year, we have terminated certain research and development programs," Endo's executive vice president of research and development said.

Bloomberg News (1/30, von Schaper) reports, "Novartis AG is injecting more money into its hunt for acquisitions and licensing deals as competitors Pfizer Inc. and GlaxoSmithKline Plc snap up companies and products."  Novartis "needs to replace income from the heart medicine Diovan [valsartan] and the Gleevec [imatinib mesylate] cancer treatment when patents expire starting in 2012."  Joe Jimenez, head of the pharmaceutical division, told Bloomberg News that Novartis "plans to make more acquisitions in the next 12 months than the three purchases it made last year."  The drugmaker "is looking to acquire health companies and buy marketing rights for drugs," being specifically "interested in experimental drugs in the second and final stages of human trials."  He would not "name any potential targets."

Bloomberg News (1/30, Kelley) reports, "AstraZeneca Plc, the U.K.'s second- biggest drugmaker, said it has no plans to pursue a mega-merger to offset flat revenue as the global recession crimps prices."  Chief Executive Officer David Brennan says that "he prefers smaller purchases and licensing deals to a large transaction like Pfizer Inc.'s takeover of Wyeth to overcome sales declines.  The company will add new technologies and compounds, not scale or capacity, Brennan" added.

The AP (1/30) reports, "Roche Holding made a fresh bid to buy U.S.-based Genentech Inc. Friday by offering $86.50 per share -- $2.50 less than its previous offer."

        "The cash offering replaces the original $89-a-share proposal that was intended to lead to a negotiated merger," Roche said in a statement, Bloomberg News (1/30, Doherty) adds.  The Switzerland-based company "will begin a tender offer within two weeks."

        "The new level reflects the immense market volatility since last July," the Financial Times (1/30, Simonian) notes.  "Analysts say Genentech shares, which closed at $84.09 on Thursday, have been supported by the Roche bid against sharp falls in prices for many other biotech companies.  The group has a market capitalization of $461.8m at Thursday's closing price."

        Dow Jones Newswires (1/30, Greil), the Canadian Press (1/30), MarketWatch (1/30, Goldstein), and TheStreet.com (1/30, Woelfel) also cover the story.

The AP (1/30) reports that the Virginia "Senate committee Thursday passed a legislative package to ban smoking in restaurants and most other public places statewide," a measure Gov. Tim Kaine (D) supports because he maintains that "the government must protect guests from unhealthy secondhand smoke." But "opponents say the government has no right to make decisions for private businesses and that such a ban could further damage businesses already crippled by a crumbling economy." Nonetheless, "if an all-out ban fails to become law, the Senate Education and Health Committee included in the package bills to at least give localities the choice of enacting smoking bans."

MedPage Today (1/29, Walker) continued Thursday's coverage of the $20 billion in health information technology funding proposed under the House economic stimulus bill, noting that it "did not win a single Republican vote, setting the stage for tense negotiations in the Senate where Democrats hold a slimmer majority." MedPage adds that "the bill provided $2 billion in infrastructure upgrades and in Medicare and Medicaid incentives to launch and operate electronic health information technology systems. Specifically, physicians who demonstrate that they are 'meaningfully using heath information technology' would be eligible for $40,000 to $65,000 through Medicare and Medicaid. Likewise, hospitals that demonstrate similar information technology-friendly practices would also qualify for incentive payments. The incentive payments would be phased out over time and eventually a stick will replace the carrot so that physicians and hospitals not using an electronic system would be paid less by Medicare."

Life Sciences Law

Bloomberg News (1/30, Waters) reports, "Patients in the early stages of multiple sclerosis [MS] had their disability reversed" by Northwestern University scientists who used the study participants' "stem cells to 'reset' their malfunctioning immune system." According to the paper appearing online Jan. 30 in The Lancet Neurology, the "vast majority" of patients with MS "are first diagnosed with the relapsing-remitting form and some progress to more serious stages." Investigators decided to focus their efforts on the former, "whose flare-ups continued after being treated with protein-based drugs known as interferons."

        This is of note, BBC News (1/30) points out, because the "treatment -- known as autologous non-myeloablative haemopoietic stem-cell transplantation -- has been tried in people with MS" before, including patients "with secondary-progressive MS where the damage had already been done." And, "there has not been a great deal of success."

        The Northwestern team, however, had a different experience, according to the U.K.'s Independent (1/30, Laurance). They recruited 21 patients, mean age 33, "with the commonest form of the disease (about 80 percent of all cases) and treated them with stem cells extracted from their own bone marrow."

        Specifically, the "patients received a median infused dose of hematopoietic stem cells of 11·40x106 CD34+ cells per kg, mobilized with 2 g/m2 of cyclophosphamide and 10µg/kg/d filgrastim [Neupogen]," MedPage Today (1/29, Bankhead) reported. "The conditioning regimen for the cells consisted of 200 mg/kg cyclophosphamide and either 20 mg alemtuzumab (Campath) or 6 mg/kg rabbit antithymocyte globulin." The team noted that "engraftment of white cells occurred a median of nine days after transplantation, and hospital length of stay averaged 11 days." In short, "after three years of follow-up, 17 of 21 patients maintained at least a one-point improvement in a standard disability scale," and "all patients were progression free at last follow-up," while "16 were relapse free."

        Still, "specialists are curbing their enthusiasm until further results are seen," HealthDay (1/29, Gardner) explained. Patricia O'Looney, "vice president of biomedical research at the National Multiple Sclerosis Society," said, "We need to see a larger number of samples...and [we need to] know if the benefit they're seeing is due to the immune system being reset or because the immune system has been suppressed and will return as the way it was." Notably, "a larger, randomized trial is under way in the United States, Canada, and Brazil."

        The Los Angeles Times (1/29, Roan) Booster Shots blog, the U.K.'s Times (1/30, Lister), Daily Mail (1/30, Hope), and Press Association (1/30), and AFP (1/30) also covered the story.

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