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Week Ending
Friday, January 05, 2007
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DEMOCRATS: Bills To Address Stem Cell Research, Rx Benefit
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House Democrats on Friday plan to introduce bills that would reduce restrictions on federal funding for embryonic stem cell research and allow HHS to negotiate directly with pharmaceutical companies on prices for medications under the Medicare prescription drug benefit, incoming House Majority Leader Steny Hoyer (D-Md.) said on Wednesday, CQ Today reports. House Democrats have promised to pass both bills within the first 100 hours of the 110th Congress, which begins on Thursday (Ferrechio, CQ Today, 1/3). House Democrats plan to address the embryonic stem cell research bill on Jan. 11 (Weisman, Washington Post, 1/4). Sen. Tom Harkin (D-Iowa) on Thursday plans to introduce the legislation in the Senate, although the Senate might wait to address the bill until late January or early February, Harkin aides said. President Bush vetoed similar legislation last year (Norman, Des Moines Register, 1/4). According to CQ Today, because Democrats "have nowhere near the two-thirds majority of both chambers needed to override a presidential veto, ... they will have to decide fairly quick whether they want to enact laws or make political points" (Kady, CQ Today, 1/2).
Medicare Rx Drug Benefit Bill
House Democrats plan to address the Medicare prescription drug benefit bill on Jan. 12 (Washington Post, 1/4). The legislation would provide the HHS secretary with broad flexibility in negotiations with pharmaceutical companies on prices for medications, according to a Democratic aide familiar with the legislation. According to CongressDaily, the HHS secretary would only have to negotiate with pharmaceutical companies on prices for medications with "outlandish" costs to meet the requirements of the bill. Under the legislation, the HHS secretary could not restrict access to certain medications for Medicare beneficiaries. The bill would require the HHS secretary to report his progress in negotiations with pharmaceutical companies on prices for medications to Congress on June 1 and six months later (Johnson, CongressDaily, 1/4). House Democrats plan to avoid the committee process and limit the ability of Republicans to amend the legislation. Incoming House Speaker Nancy Pelosi (D-Calif.) likely will "make it nearly impossible for drug makers, health insurance companies and lobbies to stop the bill from passing," according to The Hill. Prospects for passage of similar legislation in the Senate are less certain. Incoming Senate Finance Committee Chair Max Baucus (D-Mont.) last year voted against a similar bill, and he "has not endorsed the leadership's plan," The Hill reports. Bush and HHS Secretary Mike Leavitt also oppose the legislation (Young, The Hill, 1/4).
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EDWARDS: Announces 2008 Presidential Bid, Health Care Stance
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Former Sen. John Edwards (D-N.C.) last week announced his candidacy for president in 2008 and said he would support efforts to invest in universal health care and other initiatives over efforts to reduce the national budget deficit, the AP/Los Angeles Times reports (Margasak, AP/Los Angeles Times, 1/2). Edwards said that he is evaluating two universal health care plans, one that is more ambitious and costly and another that, according to the Washington Post, might be more "politically achievable" (Balz, Washington Post, 12/30/06). According to Edwards, "there is a tension" between investing in universal health care coverage and reducing the deficit, but if "I were choosing now between which is more important, I think the investments are more important" (AP/Los Angeles Times, 1/2). He said, "If we do energy, health care, serious middle-class poverty proposals, then I think we're talking about just trying to keep the deficit in check" instead of drastically lowering it (Washington Post, 12/30/06).
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CAREMARK Rx: Shareholders Asked To Vote Against CVS Offer
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Pharmacy benefit manager Express Scripts on Thursday sent a letter to shareholders of PBM Caremark Rx to request that they vote against an acquisition offer from CVS, the AP/South Florida Sun-Sentinel reports (Rucker, AP/South Florida Sun-Sentinel, 1/5). CVS in November 2006 made an offer to acquire Caremark for about $21.3 billion. Under the offer, which has received approval from the Federal Trade Commission, 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%. Express Scripts in December 2006 made a rival offer to acquire Caremark for about $26 billion. Under the offer, Caremark shareholders would receive $29.25 in cash and 0.426 shares of Express Scripts stock for each Caremark share. Caremark shareholders would own about 57% of the combined company, and Express Scripts shareholders would own about 43% (American Health Line, 12/22/06). The letter -- signed by Express Scripts Chair, CEO and President George Paz -- states, "Express Scripts believes that the proposed acquisition of Caremark by CVS will have a lasting negative impact on your investment in Caremark." The letter adds, "Before voting your shares, carefully consider whether a combination of CVS and Caremark is really in your best near- and long-term financial interests as a Caremark shareholder." According to the AP/Sun-Sentinel, analysts "say Caremark managers prefer the CVS offer, while shareholders like the Express Scripts deal better." Caremark and CVS officials on Thursday said they remain committed to their agreement (AP/South Florida Sun-Sentinel, 1/5). CVS officials also said that antitrust concerns likely would delay the acquisition of Caremark by Express Scripts (Bloomberg/New York Post, 1/5).
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MEDICARE: Some Rx Plans Missed Deadline for Explaining Coverage Changes
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Medicare beneficiaries who did not receive timely information about benefit and cost changes for their Medicare prescription drug plans will have until Feb. 15 to select coverage for 2007, Reuters reports (Reuters, 12/29/06). Beneficiaries had until Dec. 31, 2006, to enroll in or change Medicare drug plans, although administration officials had urged beneficiaries to act by Dec. 8, 2006, to avoid problems. Federal officials told private insurers that sponsor Medicare drug plans that they had to send "annual notice of change" documents to beneficiaries by Oct. 31, 2006, informing them of any changes to their plans (Pear, New York Times, 12/27/06). UnitedHealth Group, one of the largest sponsors of Medicare drug plans, and possibly other insurers did not send the documents on time, acting CMS Deputy Administrator Herb Kuhn said. About 250,000 beneficiaries were affected and will have until Feb. 15 to make changes to their drug plans, Kuhn said (Reuters, 12/29/06). CMS spokesperson Jeff Nelligan said the extended deadline applies to beneficiaries who did not receive the documents by Nov. 15, 2006, the start of the open-enrollment period (Erikson, Arizona Daily Star, 12/28/06). UnitedHealth spokesperson Peter Ashkenaz said that about 200,000 of the insurer's enrollees did not receive the documents by Oct. 31, 2006. Ashkenaz said the documents were delayed because some of the notices contained erroneous information that had to be corrected and because there was "a fire that delayed production" at a facility that printed the documents (New York Times, 12/27/06). Kuhn said CMS is working to identify other insurers who might not have sent the documents on time (Reuters, 12/28/06). Nelligan said, "There could be penalties for plans that did not send out the annual notice of change on time" (New York Times, 12/27/06). CMS sent a letter to insurers that sponsor Medicare drug plans notifying them that they have until Jan. 5 to inform affected beneficiaries of the extended deadline, Nelligan said (Querna, Bergen Record, 12/29/06).
Other Issues
Drug plans reported other problems in the last days of the open-enrollment period, the Times reports. Some insurers said they have not received guidance from the government on how to calculate late-enrollment fees for beneficiaries. Under the drug benefit, beneficiaries who are eligible to join a plan but choose not to do so must pay a permanent 1% increase in their premiums for each month of delayed enrollment once they do sign up. Insurers have sought guidance on whether the federal government will calculate the late-enrollment penalty or whether the plans should determine it themselves based on the number of uncovered months reported by the beneficiary. In addition, Medicare and the Social Security Administration still are working to resolve problems related to withholding premiums from beneficiaries' Social Security checks. Some insurers reported long delays in corrections to Medicare records that determine the payments, the Times reports (New York Times, 12/27/06).
Additional Coverage
The AP/Houston Chronicle on Monday examined beneficiaries' opinions about the Medicare drug benefit after one year of the program. According to the AP/Chronicle "millions of seniors ... say [that] they are happy with the benefit" and that it has saved them money. However, many beneficiaries "believe the program could be improved," particularly citing the so-called "doughnut hole" coverage gap (Freking, AP/Houston Chronicle, 1/1).
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CANCER: Treatment Costs $2.3B in Time in First Year, Study Finds
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The time that cancer patients nationwide spend when they travel to, wait for and receive inpatient and outpatient treatment costs an estimated $2.3 billion in the first year after diagnosis, according to a study published on Wednesday in the Journal of the National Cancer Institute, the AP/South Florida Sun-Sentinel reports. For the study, National Cancer Institute epidemiologist Robin Yabroff and colleagues examined the records of 763,000 Medicare beneficiaries with cancer. Researchers estimated the time that participants spent on treatment and compared the results with the time spent by one million Medicare beneficiaries without cancer. Researchers assigned a monetary value to the time that participants spent on treatment -- $15.23 per hour, the median U.S. wage range in 2002 -- and estimated the nationwide cost based on the number of patients diagnosed with cancer in 2005. According to the study, participants with ovarian cancer spent 368 hours on treatment in the first year after diagnosis. Participants with lung cancer spent 272 hours on treatment in the first year after diagnosis, and those with kidney cancer spent 193 hours, the study found. The study also found that participants with cancers often diagnosed early spent less time on treatment. Participants with prostate cancer spent 55.3 hours on treatment in the first year after diagnosis, and those with breast cancer spent 66.2 hours, according to the study (Neergaard, AP/South Florida Sun-Sentinel, 1/2). The results of the study do not include the time that participants spent on recovery from treatment, researchers said (Washington Post, 1/3).
Reaction
Len Lichtenfeld of the American Cancer Society said the study indicates that research into early detection of cancer "has real benefits." He added, "Cancer is more than the just the dollars and cents for the medicines and the treatments and the doctors. It's also the lost opportunities for the patients." In an editorial that accompanied the study, Larry Kessler of FDA and Scott Ramsey of the Fred Hutchinson Cancer Center wrote, "What we see here is a measure of the patient's burden of commitment." They added that the study highlights the importance of "targeted" treatments with fewer side effects (AP/South Florida Sun-Sentinel, 1/2). An abstract of the study is available online.
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ELI LILLY: Settles 18,000 More Zyprexa Lawsuits
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Eli Lilly on Thursday agreed to pay as much as $500 million to settle 18,000 lawsuits filed by people who claim they developed diabetes or other diseases after taking the antipsychotic Zyprexa, the New York Times reports (Berenson, New York Times, 1/5). The Times reported last month that Lilly over the past 10 years has attempted to conceal the potential side effects of Zyprexa. The report was based on documents provided to the Times by an attorney who represents mentally ill patients in a lawsuit against the company (American Health Line, 12/18/06). In 2005, the Indianapolis-based company agreed to pay about $700 million to resolve more than 8,000 lawsuits concerning Zyprexa (Callahan, AP/Washington Post, 1/5). Many of the plaintiffs involved in the settlement agreement reached Thursday claimed that before Zyprexa's label was changed in 2003, information on the package insert did not adequately display the risk of high blood-sugar levels and diabetes. After September 2003, FDA mandated label changes for Zyprexa that gave additional information about diabetes risks (Russelland/Lee, Indianapolis Star, 1/5). Lilly, which did not disclose the amount of the settlement, in a statement said it would take a fourth-quarter settlement charge not expected to exceed $500 million (AP/Washington Post, 1/5). Including earlier settlements, Lilly now has agreed to pay at least $1.2 billion to 28,500 people who said they were harmed by the drug. The claims settled on Thursday amount to about $27,000 per plaintiff, compared with previous settlements of $90,000 per plaintiff. The lower amounts come "in part because of the FDA label change, which has allowed Lilly to say that it adequately warned doctors of the risks of Zyprexa after 2003," the Times reports.
Comments
In a statement, Lilly said Zyprexa is an effective treatment for mental illness (New York Times, 1/5). Lilly spokesperson Sidney Taurel said, "While we remain confident that these claims are without merit, ... we wanted to reduce significant uncertainties involved in litigating such complex cases." John Lechleiter, Lilly president and CEO, said, "We know some physicians have been concerned about the lawsuits and about being dragged into them. This is not to say we were under pressure by the medical community (to settle), but it was a factor in our consideration" (Indianapolis Star, 1/5). Lechleiter added that the settlement is "in the best interest of Lilly, and physicians and patients." Zyprexa was Lilly's best-selling drug in 2005, with $4.2 billion in revenue. Melvyn Weiss, chair of the plaintiffs' steering committee, said, "Zyprexa is taken by people who are seriously ill with complicating diseases and trying these cases can be a daunting task, but I am confident there are cases that are triable" (Wall Street Journal, 1/5).
Pending Litigation
Lilly still faces separate lawsuits filed by the attorneys general of Alaska, Louisiana, Mississippi, New Mexico and West Virginia. The cases allege that Lilly marketed Zyprexa for unapproved uses or hid the risks of weight gain and diabetes, according to Lilly spokesperson Carole Witsken Puls (AP/Washington Post, 1/5). In addition, at least 1,200 suits filed by patients who took Zyprexa still are pending, the company said (New York Times, 1/5).
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UNITEDHEALTH: SEC Formalizes Stock Options Investigation
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The Securities and Exchange Commission on Dec. 19, 2006, upgraded its inquiry into UnitedHealth Group's stock options program from informal to formal, indicating that federal investigators might have enough evidence to file civil or criminal charges, the Minneapolis Star Tribune reports (Phelps, Minneapolis Star Tribune, 12/27/06). SEC in April 2006 began an informal inquiry (Simison, Bloomberg/St. Louis Post-Dispatch, 12/27/06). In November 2006, UnitedHealth then-CEO William McGuire and then-Chief Operating Officer Stephen Hemsley agreed to return about $390 million in stock option compensation. McGuire in October 2006 agreed to resign after the release of a report that found he likely received backdated stock options. McGuire resigned as chair immediately and has since resigned as CEO. Hemsley replaced McGuire as CEO. The report, part of an internal investigation conducted by the law firm Wilmer Cutler Pickering Hale & Dorr at the request of the UnitedHealth board, found that 1.5 million stock options, most of which McGuire received from his 1999 contract, were "likely backdated" (American Health Line, 12/20/06). The formal federal inquiry, which requires approval from SEC commissioners, gives the agency the power to subpoena documents and compel witnesses to testify (Bloomberg/St. Louis Post-Dispatch, 12/27/06).
Comments
UnitedHealth in an SEC filing said, "The company has cooperated and will continue to cooperate with the SEC" (Wall Street Journal, 12/27/06). Former federal prosecutor Doug Kelly said SEC's move was "not unexpected." Rajesh Aggarwal, an associate professor of finance at the Carlson School of Management at the University of Minnesota, said, "We don't know whether or not charges will be brought. This could last several years." He added, "This is a notice from the SEC to the company that 'this is more serious, and now you should be thinking about this in terms of depositions and what kind of statements you make in court'" (Minneapolis Star Tribune, 12/27/06).
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