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Week Ending
Friday, December 22, 2006
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© 2006 by National Journal Group Inc., 600 New Hampshire Ave., N.W.,
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BUSH: Signs Bill With Medicare MD Reimbursement, HSA Provisions
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President Bush on Wednesday signed into law a tax, trade and health care bill (HR 6111) that includes provisions to reverse a 5.1% reduction in Medicare physician reimbursements scheduled for 2007 and to allow increased contributions to health savings accounts, CQ Today reports (Van Dongen, CQ Today, 12/20). The law maintains the current level of Medicare physician reimbursements in 2007 and provides a 1.5% increase in reimbursements to physicians who agree to report data on certain quality-of-care measures. In addition, the law eliminates a requirement that annual contributions to HSAs not exceed the amount of the annual deductibles for the health plans to which they are linked. The law will increase the maximum annual contribution to HSAs to $2,850 for individuals and $5,650 for families (American Health Line, 12/11). Bush said, "This is a good piece of pro-growth legislation," adding, "With all these steps, we're working to improve the health and prosperity of the American people and to keep our economy growing" (CQ Today, 12/20).
Dialysis Provider Provision
In related news, the Los Angeles Times on Thursday examined a provision in the law that provides a 1.6% increase in Medicare dialysis provider reimbursements. According to the Times, dialysis providers were "among many special interests benefiting from a piece of legislation that was designed to simply extend existing tax cuts and credits -- but ended up freighted with billions of dollars in new spending earmarks for ... various other interests." The provision will cost $400 million over five years, according to the Congressional Budget Office. Lawmakers led by House Ways and Means Committee Chair Bill Thomas (R-Calif.) added the provision to the law during "a secret middle-of-the-night meeting in the waning hours of the session on Dec. 7," the Times reports. Thomas received $84,250 in donations from DaVita, a large dialysis provider, during the last campaign cycle, and his former chief of staff, Cathy Abernathy, serves as a lobbyist for the company. House Ways and Means Committee spokesperson Rob Vanden Heuvel said, "Bill Thomas makes policy decisions based on the merits of policy, not on campaign contributions." However, Sara Rosenbaum, a professor of health law and policy at George Washington University, said that lawmakers added the provision "not because dialysis patients have the most meritorious case" but because lobbyists for dialysis providers are "effective on Capitol Hill" (Hamburger/Roche, Los Angeles Times, 12/21).
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BUSH: Signs Three Health Care-Related Bills
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President Bush on Tuesday signed bills to improve U.S. preparedness for biological threats and disease outbreaks, provide federal funds for autism research and reauthorize a law that funds HIV/AIDS programs, AP/San Francisco Chronicle reports (Riechmann, AP/San Francisco Chronicle, 12/19). The preparedness law (S 3678), sponsored by Sen. Richard Burr (R-N.C.), reauthorizes through 2011 a law designed to increase vaccine production and prepare for other biological threats. The law makes HHS the lead agency in public health and medical response to bioterrorist attacks and disease outbreaks and makes the National Disaster Medical System, currently part of the Department of Homeland Security, part of HHS. The law also requires the HHS secretary to prepare and implement a national preparedness and response strategy and to begin to submit the strategy to Congress in 2009, followed by revisions every four years, and awards $1 billion in federal grants annually to states to establish public health and medical preparedness strategies. In addition, the law establishes the Biomedical Advanced Research and Development Authority. BARDA will coordinate federal efforts to produce countermeasures against biological threats and diseases such as pandemic flu (American Health Line, 12/6). BARDA will distribute $1.07 billion over two years to biotechnology companies for the development of vaccines and treatments. Burr said, "We're becoming their venture capitalist. And the advantage is, we get to look at their data every day if we want to" (Barrett, McClatchy/San Jose Mercury News, 12/20). Sen. Edward Kennedy (D-Mass.) said that the legislation "will increase our preparedness and response capabilities for public health emergencies by increasing our medical surge capacity, strengthening our public health infrastructure and clarifying the responsibilities of federal officials" (AP/San Francisco Chronicle, 12/20).
Autism, HIV/AIDS Bills
The autism law (S 843), sponsored by Sen. Rick Santorum (R-Pa.), authorizes $945 million over five years for autism research, screenings, treatment and education (American Health Line, 12/8). The law calls for $643 million for autism research, screening of all U.S. children, tens of millions of dollars for public education and the presentation of an annual report to Congress. In a statement, Bush said that the law "will increase public awareness about this disorder and provide enhanced federal support for autism research and treatment" (Young, Bergen Record, 12/20). The HIV/AIDS law reauthorizes for three years the Ryan White CARE Act, which provides $2.1 billion annually for HIV/AIDS programs in the U.S. The law shifts more funds to rural areas and the South (AP/San Francisco Chronicle, 12/19).
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FDA: Panel Says Ketek Should Not Be Used for Mild Infections
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An FDA advisory committee on Dec. 15 voted 17-2 that the antibiotic Ketek should not be used to treat bronchitis and sinusitis because the risks of drug outweigh its benefits for those conditions, the AP/Washington Post reports. The panel also voted 16-3 that the benefits of the drug outweigh its risk for the treatment of pneumonia (Bridges, AP/Washington Post, 12/16). FDA in April 2004 approved Ketek, which is manufactured by Sanofi-Aventis, as a treatment for respiratory infections, and the agency since has received a number of reports that link the medication with liver damage. In November, FDA requested the two-day advisory committee meeting, which began Thursday, to examine the risks and benefits of Ketek. In recent months, the Senate Finance Committee has conducted an investigation into allegations of fraud linked with clinical trials of Ketek and concerns about how FDA addressed questions about the safety of the medication. A number of previously undisclosed documents, such as internal FDA e-mails, have prompted concerns about the results of a Ketek trial that involved more than 24,000 participants and was used to support the approval of the medication. Outgoing Senate Finance Committee Chair Chuck Grassley (R-Iowa) on Wednesday released a 53-page report that alleged FDA in 2003 "intentionally withheld" data about problems with a Ketek trial from an advisory committee. FDA officials on Thursday said that the agency privately informed advisory committee members about the problems with the Ketek trial after they had voted to recommend approval of the medication. Although FDA officials have reviewed data on reports of liver damage linked with Ketek in European patients, they have not ordered Sanofi to conduct additional trials of the medication. In June, Sanofi revised the Ketek label to include a warning about rare reports of liver failure linked with the medication. U.S. physicians have written more than 5.6 million Ketek prescriptions since FDA approved the medication (American Health Line, 12/15).
Recommendations
A majority of committee members said that Ketek's label should be changed to include a black box warning about the risks of the drug, but the panel was split over which risks should be listed in the black box. In addition to reports of liver problems, there have been rare reports of blurred vision and loss of consciousness in patients taking Ketek, and the drug has been linked with a severe risk to individuals with myasthenia gravis, a neuromuscular disease. Since the drug was approved, FDA has said it no longer favors the use of comparative studies -- in which a drug is compared with an older medication instead of a placebo -- for treatments for conditions such as sinusitis and bronchitis. Comparative studies were used in Ketek's approval. Committee member Gregory Townsend, an associate professor at the University of Virginia, said he "didn't think there's any compelling evidence the drug is better than placebo" for treating bronchitis. Carl Norden, a professor at the University of Medicine and Dentistry of New Jersey, said, "The risk of the drug seems to me to make it not appropriate to keep on using" for mild infections. Most committee members said they felt that Ketek was effective for treating pneumonia (Wilde Mathews, Wall Street Journal, 12/16). The committee also recommended that Sanofi develop a medication guide for patients who are prescribed Ketek (AP/Washington Post, 12/16).
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EXPRESS SCRIPTS: Announces $26B Offer To Acquire Caremark Rx
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Maryland-based pharmacy benefit manager Express Scripts has announced a $26 billion offer to acquire Tennessee-based PBM Caremark Rx, which has received a rival offer from Rhode Island-based pharmacy chain CVS, the New York Times reports (Ross Sorkin, New York Times, 12/18). CVS in November announced plans to acquire Caremark for about $21.3 billion in stock. Under the CVS offer, Caremark shareholders would receive 1.67 shares of CVS stock for each Caremark share. CVS shareholders would own 54.5% of the combined company -- CVS/Caremark -- and Caremark shareholders would own 45.5% (American Health Line, 11/17). Under the Express Scripts offer, Caremark shareholders would receive $29.25 in cash and 0.426 shares of Express Scripts stock for each Caremark share. The Express Scripts offer represents a 15% premium over the CVS offer and a 22% premium over the average price of Caremark stock since Nov. 1 (AP/Lexington Herald-Leader, 12/18). The Express Scripts offer would value Caremark at $58.50 per share. The price of Caremark stock on Friday closed at $50.30 (Berman, Wall Street Journal, 12/18). The offer, which relies on $14 billion in debt, would make Express Scripts the largest PBM in the nation, but first the company must win a potential "bidding war" with CVS, the Times reports (New York Times, 12/18). Express Scripts Chair, CEO and President George Paz in a statement said, "This opportunity is very compelling as it offers significant value to stockholders, plan sponsors and patients" (AP/Lexington Herald Leader, 12/18). According to the Wall Street Journal, Express Scripts as of Sunday had not proposed "any specific plans to address federal antitrust concerns," although "such issues would surely be of prime concern for Caremark's board of directors" (Wall Street Journal, 12/18).
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MEDICAID: Rule Would Reduce Payments to Pharmacists, Redefine AMP
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The Bush administration on Monday proposed a rule that would reduce reimbursements for prescription drugs for Medicaid beneficiaries, the New York Times reports. The rule, which would implement provisions of the Deficit Reduction Act signed in February by President Bush, would save $8.4 billion over the next five years, including $4.9 billion in federal savings and $3.5 billion in savings for states, federal officials said. The rule is designed to ensure that Medicaid can obtain drug discounts similar to those obtained by private entities, such as pharmacy benefits managers. According to the rule, manufacturers would have to offer the government the best price offered to any buyer, including any "rebates, discounts or other price concessions" offered to PBMs or mail-order pharmacies. HHS estimates that more than 90% of savings from the changes would come from pharmacies, with the remainder coming from drug manufacturers. The rule also would redefine "average manufacturer price" for brand-name and generic drugs. The average manufacturer price is used by states to calculate Medicaid reimbursement rates for drugs. Under the proposed rule, the federal government would post average manufacturer prices on a Web site, which could be accessed by consumers (Pear, New York Times, 12/18). In addition, the rule would limit the federal government's share of the cost of a prescription drug when at least three generic alternatives are available. HHS Secretary Mike Leavitt said the rule would affect about 600 medications accounting for about 8.3% of outpatient drug costs under Medicaid. States would retain their current authority to determine Medicaid reimbursement rates to pharmacists (Freking, AP/Long Island Newsday, 12/18). There is a 60-day comment period on the proposed rule. The government's final rule will have the force of law.
Impact
The Bush administration said the rule could lower revenues for small pharmacies, especially "those in low-income areas where there are high concentrations of Medicaid beneficiaries." Administration officials said small pharmacies could "mitigate the effects" of the lower revenue by purchasing lower-cost drugs. According to the Times, that recommendation "assumes that pharmacies can find another source of supply: generic drug companies willing to lower their prices below the new federal limits" (New York Times, 12/18). Acting CMS Administrator Leslie Norwalk said pharmacists are concerned the rule would lower reimbursements for generic drugs. "We want to make sure pharmacists still have a reason to provide generics," she said, adding that the agency likely would issue a final rule in summer 2007 after obtaining suggestions (AP/Long Island Newsday, 12/18). Bruce Roberts, executive vice president of the National Community Pharmacists Association, said, "The proposed rule would have the perverse effect of discouraging the use of generic drugs," adding, "The new limits on Medicaid reimbursement will be way below what drugstores typically pay for those drugs" (New York Times, 12/18).
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FDA: Proposes More Prominent Warnings for Pain Medications
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FDA on Tuesday proposed new rules that would require more prominent warnings on the labels of nonprescription pain medications about risk for liver problems and gastrointestinal bleeding, the New York Times reports (Saul, New York Times, 12/20). In September 2002, an FDA advisory committee recommended more prominent warnings that nonprescription acetaminophen drugs can cause serious or fatal liver damage and that nonsteroidal anti-inflammatory drugs can cause gastrointestinal bleeding or kidney failure (American Health Line, 9/23/02). FDA regulatory procedures delayed the proposal of the rules until this week, Charles Ganley, director of the Office of Nonprescription Products in the Center for Drug Evaluation and Research at FDA, said (New York Times, 12/20). Under the rules, labels for nonprescription acetaminophen drugs -- such as Tylenol, manufactured by Johnson & Johnson, and many generic medications -- would include warnings about risk for liver damage when taken with moderate amounts of alcohol or with other acetaminophen treatments (Corbett Dooren, Wall Street Journal, 12/20). Each year, more than 200 million U.S. residents take nonprescription acetaminophen drugs. As many as 450 deaths annually result from acute liver failure caused by overdoses of nonprescription acetaminophen drugs, and, although the majority of those deaths are suicides, as many as 200 are caused by unintentional overdoses, according to FDA.
Additional Requirements
The rules also would require labels for nonprescription NSAIDs -- such as aspirin, ibuprofen, naproxen and ketoprofen -- to include warnings about risk for gastrointestinal bleeding, with a focus on patients who are older than age 60, have ulcers or prior stomach bleeding, take blood thinners or steroid medications, consume more than three alcoholic drinks daily or take more than one NSAID (New York Times, 12/20). Reports link nonprescription NSAIDs with more than 200,000 hospitalizations and about 16,000 deaths annually in the U.S., FDA said (Bridges, AP/Detroit Free Press, 12/20). Under the rules, nonprescription acetaminophen drugs and NSAIDs would have to state "acetaminophen" or "NSAID" on the package (Schmit/Appleby, USA Today, 12/20). The rules would take effect one year after publication in the Federal Register on Dec. 26. FDA said that pharmaceutical companies should begin to revise the labels of nonprescription acetaminophen drugs and NSAIDs before the rules become final (AP/Detroit Free Press, 12/20). FDA will accept public comment on the rules for 150 days (Alonso-Zaldivar, Los Angeles Times, 12/20).
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FDA: Issues Warning About Risk for Brain Infection From Rituxan
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Two patients who took Rituxan to treat lupus died after they contracted the viral brain infection progressive multifocal leukoencephalopathy, or PML, FDA and the companies that market the medication warned on Monday, the Wall Street Journal reports (Won Tesoriero/Wilde Mathews, Wall Street Journal, 12/19). Genentech markets Rituxan with Biogen in the U.S., and Roche Holding markets the medication in Europe. FDA in 1997 approved Rituxan as a treatment for rheumatoid arthritis and non-Hodgkin's lymphoma. Since Rituxan reached the market, reports have linked the medication with 23 cases of PML among patients with non-Hodgkin's lymphoma, according to Biogen spokesperson Tim Hunt (Bloomberg/New York Times, 12/19). In a preliminary safety advisory, FDA warned physicians to monitor closely patients who take Rituxan to treat any condition because they might have increased risk for PML (Wall Street Journal, 12/19). FDA said that symptoms of PML include dizziness, difficultly with speech and vision problems. FDA said, "FDA is working to gather more information about Rituxan and PML and to strengthen the warnings about PML in the Rituxan product label" (Heuser, Boston Globe, 12/19). In a letter, Genentech wrote that physicians should monitor closely patients who take Rituxan for lupus or certain cancers. No evidence exists to prove that Rituxan caused the two patients who died to develop PML (Wall Street Journal, 12/19). The virus that causes PML is present but dormant in about 80% of adults, FDA said. "It is not clear whether the virus is triggered by Rituxan, which suppresses a patient's immune system, or by the disease it is supposed to treat," the Los Angeles Times reports (Yi, Los Angeles Times, 12/19). FDA also said that a number of lupus patients who have not taken Rituxan have contracted PML and that many of those patients had compromised immune systems or took immunosuppressants (Wall Street Journal, 12/19).
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BMS: Announces $499M Federal Settlement
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Bristol-Myers Squibb on Thursday announced a proposed $499 million settlement for a federal investigation into the company's pricing and marketing practices, the Newark Star-Ledger reports (Jordan, Newark Star-Ledger, 12/22). The settlement -- which has been tentatively accepted by BMS, the Department of Justice and the U.S. Attorney for the District of Massachusetts -- would cover investigations into BMS' marketing of schizophrenia and bipolar disorder treatment Abilify for off-label uses (Schmit, USA Today, 12/21). BMS spokesperson Jeff MacDonald said the proposed settlement also covers an investigation into alleged overbilling of Medicare and Medicaid through inflating average wholesale prices, which are used by the government to set drug reimbursements. The company has not resolved a private class-action lawsuit related to AWPs, MacDonald added (Newark Star-Ledger, 12/22). The investigations covered more than five years through 2005. Under the agreement, there would be no criminal charges filed against the company (USA Today, 12/21). As a part of the settlement, BMS is expected to sign a corporate integrity agreement with HHS regulators, who will be charged with monitoring industry compliance with federal health care programs. Such agreements typically require companies to train employees about federal rules, establish hot lines for workers to report violations and follow other procedures stated in government compliance guidelines, according to health care lawyer Scot Hasselman (Feder, New York Times, 12/22). The settlement requires final approval from DOJ (Witkowski, AP/South Florida Sun-Sentinel, 12/22). MacDonald said DOJ's final decision likely will take "a couple of months" (Newark Star-Ledger, 12/22).
Financial Moves, Additional Legal Issues
BMS said it will increase the size of reserves set up to cover the cost of the investigations by $353 million, which it will report in the fourth quarter. Separately, the company will take a $220 million charge related to debt restructuring. BMS said its 2006 earnings are now expected to be 72 cents to 77 cents per share, down from previous projections of 97 cents per share to $1.02 per share (Barris/Moore, Wall Street Journal, 12/22). The settlement would "not clear [BMS'] legal slate," the Times reports. The company still faces litigation related to its handling of generic competition for its blockbuster drug Plavix from Canadian drug maker Apotex. In addition, the company signed a settlement agreement in July 2005 over "channel stuffing," in which BMS allegedly inflated sales figures by overselling its products to customers who then stored the drugs in their warehouses. Under that settlement, the charges will be dropped next year if BMS does not commit further violations of the practices outlined in the agreement (New York Times, 12/22).
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