Juvan's Health Law Recap--March 11, 2007--Generics, Drug Importation, Caremark and Oakwood
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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.
