Juvan's Health Law & Private Equity Report : Corporate & Health Care Lawyer & Attorney : Jayne Juvan : Benesch Friedlander Law Firm : Private Equity, Corporate Governance

Here's a review of some of the stories that captured the headlines last week:

• Money, Money, Money!  The Joint Commission on Taxation has reported that President Bush's proposal to create a standard tax deduction of either $15,000 for families or $7,500 for health insurance and categorize funds used for health insurance as taxable income would increase taxes paid by nearly $334 billion dollars in ten years.  Responding to the findings, Pete Stark stated that the conclusions "provide ample reason to doubt the plan's effectiveness and raise concerns about its cost." See also the CBO's Analysis of the Proposal. 
• FDA to Toughen Advisory Committee Membership Requirements.  Again taking a defensive posture, the FDA announced last week that it will implement a more stringent protocol to screen advisory committee participants to root out financial conflicts of interest.  Speaking of the new approach, Randall Lutter, the acting deputy commissioner for policy at the FDA, stated, "FDA is committed to making the advisory committee process more rigorous and transparent so that the public has confidence in the integrity of the recommendations made by its advisory committees . . . . Today's draft guidance document should provide more consistency in the consideration of who is eligible to participate in advisory committee meetings and would simplify the process."  See also the Draft Guidance; the FDA's Comment Submission Page; the FDA's Page on Advisory Committees; and Mark Senak's Review of the Requirements.
• Joint Commission.  The Joint Commission has released a report entitled Improving America's Hospitals: A Report on Quality and Safety.  Make sure to check it out!

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On Friday, Michael Leavitt, the Secretary for the Department of Health and Human Services, outlined a plan for "personalized health care," which is defined in the press release as "gene-based medical care combined with health information technology."  Speaking of this new initiative, Leavitt stated, "Personalized health care will combine the basic scientific breakthroughs of the human genome with computer-age ability to exchange and manage data . . . . Increasingly, it will give us the ability to deliver the right treatment to the right patient at the right time--every time."  While Leavitt advocates for advances to this program, privacy rights activists would likely prefer that the phrases "gene-based medical care" and "health information technology" not be used in combination.

Leavitt's announcement also outlined several steps that must be taken to reap the benefits of this powerful combination, including the following:

• reviewing the implications on privacy protection and the "anticipated effect on the confidentiality, privacy and security of individually identifiable health information";
• taking steps to ensure that genetic tests are accurate and reliable;
• developing "consistent policies for [HHS] agencies regarding access to and security of federally supported research"; and
• receiving recommendations from the American Health Information Community for health information technology standards applicable to genetic testing information.

Leavitt called the development of a personalized health care system one of his priorities for the next two years. 

Additional Resources:

United States Department of Health and Human Services Personalized Health Care Page

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FDA News reported last week that Michael Leavitt, the Secretary of the Department of Health and Human Services, speaking at the annual PhRMA board meeting,recommended that the United States health care system be modeled after Medicare Part D, calling the new prescription drug program a "resounding success."  Specifically, Leavitt asserted that competition and quality standards should control and that consumers should have the ability to compare prices.  Moreover, experts "should establish an average price for an episode of care--a combination of procedures that a patient may need."

Leavitt is correct in stating that Medicare Part D has been a success and that competition has driven prices down significantly.  In theory, modeling the entire health care system against Medicare Part D sounds promising.  Nevertheless, Medicare Part D has been criticized because the program's complexity requires that seniors have assistance from someone with significant knowledge of the intricacies to enroll and therefore is a barrier to those who have insufficient resources.  At least arguably, this complexity may only be exacerbated if the same formula is applied to the entire health care system.  While Medicare Part D could serve as a starting point for think tanks, it seems premature to have the program serve as a model for the entire health care system. 

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The Medical Humanities Blog recently featured Juvan's Health Law Update.  The blog is written by Daniel Goldberg, a second-year student in the Ph.D program in medical humanities at University of Texas Medical Branch's Institute for Medical Humanities.  Daniel is also an attorney and currently serves as a Research Professor with the Health Law and Policy Institute at the University of Houston Law Center.  Along with top-notch commentary, the blog  includes links to many worthwhile medical humanities and health law and policy sites.  Here's a look at Daniel's article:

Generic & Brand-Drug Agreements to Delay Market Entry

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Generics--Drug Sales--Quality of Care

Here's a look back at a few noteworthy stories from last week...

• Biotech Generics.  Last week, FDA Commissioner Andrew von Eschenbach delivered a blow to makers of generics when he noted that generic versions of biotech drugs, which are generally more complex than chemical-based drugs and therefore more difficult to copy, will only be considered "similar" to brand name drugs.  As reported by the Washington Post, von Eschenbach stated at the PhMRA annual meeting, "We recognize that the end point would be what could be best described as similarity. Similarity in the sense that when a doctor gives you the product _ delivered it to a patient _ it will achieve an effect that is similar to the effect that we expected from the innovative . . . compound."  While the FDA is developing guidelines to evaluate generic versions, the Generic Pharmaceutical Association pointed out that the FDA does in fact have the "scientific knowledge to approve knockoffs, just as it now can sign off on the changes made by brand-name biotech companies in how they produce their drugs." 
• Drug Sales Increase in 2006.  IMS Health reported a 8.3% increase in drug sales last year and projects growth by 6-9% through 2010.  Diana Commy, corporate director, IMS Market Insights, commented on last year's growth by saying, “This growth was driven by factors that include an aging population and the introduction of the Medicare prescription drug benefit, which increased prescription coverage to the previously uninsured and underinsured, and provided generous plan benefits to seniors.” 
• JAMA Highlights Health Care Access and Quality of Care Issues.  On Wednesday, as reported by the Kaiser Family Foundation, the Journal of the American Medical Association published articles discussing access to health care and quality of care.  Here's a few of the conclusions reached in the articles:
  • "Patients without health insurance are less likely to receive treatment after injuries or diagnoses of chronic diseases."
  • "Patients in many cases do not receive necessary follow-up care, regardless of whether they have health insurance."
  • "Physicians should work in teams and measure the quality of care provided to patients to help reduce costs and reduce other problems in the U.S. health care system."
  • Spending on emergency care for recent documented and undocumented immigrants accounted for less than 1% of the North Carolina Medicaid budget annually between 2001 and 2004."

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Last week, the FDA approved Tykerb, a targeted therapy for the treatment of women with advanced Her-2 positive breast cancer.   While similar Herceptin, Genentech's Her-2 blockbuster, Tykerb differs from Herceptin in a meaningful way.    "Unlike, for example, trastuzumab [Herceptin]--a monoclonal antibody, which is a large protein molecule that targets the part of the HER2 protein on the outside of the cell--Tykerb is a small molecule that enters the cell and blocks the function of this and other proteins."  Tykerb will be distributed by GlaxoSmithKline.

Commenting on the new drug, Steven Galson, Director of FDA's Center for Drug Evaluation and Research, stated, "New targeted therapies such as Tykerb are helping expand options for patients." 

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Welcome to daylight savings time, which has been moved up from April!  Hopefully, the extra sunshine will calm the nerves of those whose blackberries are still an hour behind and whose calendar appointments are incorrect.  My calendar, for example, has shifted all of my lunch appointments to 10:00AM--so I'll either be finding myself drastically early for lunch or having brunch with acquaintances whose calendars are likewise confused.  If only the weather in Cleveland could also be affected by the change and undergo an early 50 degree shift in temperature...

On a more serious note...Generics, Generics, Generics! Generics made news on several fronts last week.  First, on Wednesday, the Senate Committee on Commerce, Science and Transportation Subcommittee on Interstate Commerce, Trade and Tourism reviewed the safety of drug importation.  At the hearing, Billy Tauzin, President and CEO of PhRMA,  stated that the closed system that blocks importation is the only way to ensure a safe supply chain.  Tauzin also launched attacks against those who argue that the cost savings of importation benefits consumers when he stated that "[m]ost of the savings would likely go to third party payers, such as insurance companies and HMOs."  Likewise, Randall W. Lutter, Acting Deputy Commissioner for Policy at the Food and Drug Administration, stated that the risk of receiving counterfeits is drastically increased when drugs are purchased online and that drugs purchased from foreign markets often have similar names but different active ingredients.  So--how is this news item tied to generics?  In his testimony, Lutter emphasized that generics, not imports, are the answer to cost control. 

In related legislation, lawmakers are also continuing to consider whether to ban negotiations between generic drug companies and makers of brand name drugs that effectively delay or prohibit the entry of lower cost drugs to the market.  The details of the hearing are set forth more fully in the post linked to above. 

Finally, lawmakers considered a bill last week that would provide the FDA with the authority to approve generic forms of biotech drugs.  Currently, the FDA lacks this authority because of the difficulty of creating generic equivalents of these drugs, which are made with living organisms.  As reported by the Kaiser Family Foundation, the proposed legislation requires that the drugs be comparable or interchangeable and that the principal molecular features be highly similar to the brand name. 

Merger mania revived!  Caremark RX, Inc. and CVS inched forward toward completion of their merger plan last week when a new proposal offered to increase by an addition $1.50 a special cash dividend, bringing the total to $7.50 per share.  As reported by the Wall Street Journal, the company post-merger would also "commence a cash tender offer for 150 million, or 10% of outstanding shares at a fixed price of $35 each."  The Wall Street Journal views this new offer as bringing "the competing proposals largely in line on a dollar basis" and giving CVS "a significant advantage in its ability to close the deal quickly."  While rival company Express Scripts has also raised its offer, Express Scripts currently does not have regulatory approval of its proposed deal from the Federal Trade Commission. 

Interested in an update on the NLRB's Oakwood decision?  On March 7, the BNA Daily Labor Report, which discussed the early impact of the Oakwood decision, stated that the fallout has thus far not been quite as severe as would have been originally anticipated.  However, while management attorneys speaking at a conference held by the American Bar Association stated that the "decision has not had much impact on supervisory determinations," union attorneys speaking at the same conference claim "that the full impact has yet to be felt." 

As previously discussed on Juvan's Health Law Update,  the NLRB held in Oakwood that charge nurses employed by an acute care hospital executed supervisory authority within the meaning of Section 2(11) of the NLRA because they assigned responsibilities to other nurses and exercised independent judgment in making these assignments.  

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With the Democrats taking over Congress, brand name drug companies could find themselves unable to negotiate with makers of generics to delay market entry, Bloomberg reports.  Consumer focused legislation backed by the Federal Trade Commission is gaining momentum and could potentially prohibit brand name drug companies from settling patent litigation by paying generic drug makers for delaying their products.  The Senate Judiciary Committee recently approved the proposed ban, and the House will soon be taking up the topic. 

Consumer group advocates have argued that the current system favors both generic and brand name companies while detrimentally impacting consumers who are forced to front the high cost of brand named drugs while the delay is in effect.  Others, such as Bill Tauzin, a former Republican congressman from Louisiana, believe that such deals are actually pro-consumer.  In the Bloomberg article, Tauzin is quoted as saying that the payments "can benefit consumers'' by ending costly patent litigation that can cause longer delays in marketing generic drugs and can exhaust the litigants' "valuable resources." 

Perhaps only time will tell whether this legislation can actually get through both the House and the Senate and meet with the approval of the President.

For more information on this topic, make sure to check out the well done Orange Book Blog written by attorney Aaron Barkoff.  The blog highlights stories "at the intersection of  patent law and FDA law."

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As reported by the Kaiser Family Foundation and the American Health Lawyers Association, health care reimbursement and the financing crisis occupied health care news last week.  Here's a look at a few financing/reimbursement related stories: 

(1) New Physician Reimbursement Formula Proposed.  The Medicare Payment Advisory Commission issued a report on physician reimbursement that proposes a shift from the Sustainable Growth Rate formula (which, if continued, would cause a decrease of 40% over the next eight years) to an alternative reimbursement approach.  The Commission also suggested, inter alia, that physicians should receive more information regarding their overuse of procedures, that incentives should be adopted to encourage teamwork between providers, thereby increasing coordination, and that incentives should be adopted to encourage providers to provide more preventive care.

(2) Most Would Pay Increased Taxes to Fund Universal Health Care.  The New York Times and CBS issued results of a survey indicating that at least 60% of  adults would agree to pay higher taxes to fund universal health care.

(3)  9/11 First Responders Should Receive Medicare Benefits.  Lawmakers claimed that additional funding should be allocated to treat first responders to the 9/11 attacks.  To further that end, Senator Clinton and Representative Nadler will propose legislation to provide Medicare benefits to individuals with illnesses resulting from the aftermath of the attacks. 

(4) Spitzer Defends Health Care Cuts.  New York Governor Eliot Spitzer launched an ad campaign that defends his proposal to reduce spending on health care by $1 billion dollars. 

(5)  Medicare Part D Is Financially Irresponsible.  U.S. Comptroller General David Walker discussed the financial irresponsibility of Medicare Part D when he stated that "Medicare--barring vast reform to the program and the nation's healthcare system--is already on course to possible bankrupt the treasury and adding the prescription bill just makes the situation worse." 

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