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Updated: 6 hours 24 min ago

Judge: No 1st Amendment shield for Astellas' Prograf petition

6 hours 54 min ago

Japan's Astellas Pharma has to fight antitrust claims related to its transplant drug Prograf. The drugmaker failed to persuade a U.S. judge to dismiss consumer allegations it petitioned the FDA about generic versions of Prograf simply to extend its market exclusivity, rather than out of concern for public health, Courthouse News Service reports.

The consumer lawsuits, consolidated in a Massachusetts federal court, claim Astellas filed a "sham" petition to stop generic Prograf, then proceeded to collect almost $1 billion in exclusive sales while the FDA considered its complaint. Astellas asked U.S. District Judge Rya Zobel to dismiss the cases, citing First Amendment protection for its petition, but Zobel didn't buy it.

"When petitioning conduct is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationship of a competitor, such conduct is not immune," Zobel wrote in denying Astellas' motion (as quoted by CNS). The antitrust allegations were "more than sufficient to withstand a motion to dismiss," she found.

Astellas faces similar claims in a class action filed by insurers in Massachusetts court.

- read the CNS story

Watson chief has big brand plans for $6B war chest

7 hours 36 min ago

Paul Bisaro has made no secret of his branded ambitions for Watson Pharmaceuticals ($WPI). The drugmaker, which now focuses mostly on generics, is looking to remake itself as a brand-and-generics hybrid as the pace of patent losses for blockbuster drugs winds down. And Bisaro, who's been Watson's CEO since 2007, now has $6 billion in hand for a "transformational" branded-drug deal.

A few years ago, as branded drugmakers girded for the patent cliff, several Big Pharmas chose to build up their generics businesses as a way to keep collecting from off-patent products. Whether by selling generic versions in their home markets alongside other copycat drugmakers, or by capitalizing on their corporate name in emerging markets, pharma companies figured diversifying into off-brand products would be a hedge against external generic competition. Generics makers, with their less-risky R&D and preferential treatment from government types, seemed to have the advantage in a post-patent cliff world. That they would choose to make similar moves, but in reverse, didn't seem all that likely.

That's all changed now, as Bisaro attests. The patent cliff is affecting generics makers, too; how can they follow up on that bolus of growth they'll enjoy during these patent-cliff years? "It's a real blurring of the lines," Gabelli & Co.'s Jeff Jonas told Bloomberg. In a few years, he said, big generics players like Watson and Teva Pharmaceutical Industries ($TEVA), which has made its own recent moves into branded territory, may look "a lot more like a brand than a generic."

Bisaro figures Watson has what it takes to be a branded drugmaker: "Everything we need ... except for the sales force," he told Bloomberg. "And we can create that." He's also aware that generics business strategies won't work in the branded arena. "With brands, you have to pass on those things that, even though you like the idea, if it's not in your wheelhouse and you don't have the sales force, you probably ought not to spend the money on it." Which things will he pass on and which will he choose? Bisaro likes urology and women's health, as well as cancers affecting women.

- read the Bloomberg story

FDA panel nixes new use for Amgen's Xgeva

7 hours 55 min ago

The FDA's expert advisors didn't buy Amgen's ($AMGN) argument for earlier use of its bone drug Xgeva in prostate cancer patients. The idea: Treat advanced prostate cancer patients with Xgeva to prevent or delay the disease's spread to the bone. The data: Patients who took Xgeva saw bone tumors crop up an average of 4.2 months later than those on placebo did. Overall survival time didn't differ. The vote: 12-1 against the new use.

The key issues appear to be timing and side effects. Xgeva is already approved to delay fractures and stave off tumor growth in patients who have developed bone metastases. Why not wait until the tumors develop to treat with Xgeva, panelists asked, especially since roughly one in 15 patients in the trial developed osteonecrosis of the jaw? "This isn't a question of whether this drug works," the panel chair, Wyndham Wilson, said. "It's a question of when is the most effective time to give it."

Wilson suggested the most helpful comparison wouldn't be Xgeva versus placebo, both given early on before bone metastases occur. Rather, Amgen should evaluate Xgeva use in preventing metastases versus its use in handling them once they've arisen. But Amgen's Sean Harper pointed out some Xgeva patients went 7.5 months without developing bone tumors, Bloomberg reports, and bone metastases are quite painful.

The FDA is due to decide on the new use by April 26. The agency doesn't always take its advisory committees' advice, although it usually does, and FDA staffers expressed their own reservations about Amgen's application. Analysts' viewpoints on the indication were mixed; some said revenue estimates on Xgeva had already mostly discounted the prospect of prophylactic use, while others figure their peak sales predictions would be cut by as much as $1 billion if the indication doesn't come through.

- see the Bloomberg story
- get more from Dow Jones
- check out the Reuters news

FDA issues safety alert about PPIs and C. diff

Wed, 02/08/2012 - 20:29

The FDA announced that proton-pump inhibitors used to treat heartburn and acid reflux can increase the risk of diarrhea associated with Clostridium difficile, and said it was working with drugmakers on label changes for their PPI products. C. diff disease can be difficult to treat and can lead to serious complications; it's been a growing problem in hospitals for the past several years. Release | Report

Sanofi, BMS collect their $444M in Plavix damages

Wed, 02/08/2012 - 20:19

Apotex has finally paid its Plavix dues. The generics maker has handed over $444 million to Sanofi ($SNY) and Bristol-Myers Squibb ($BMY), as repayment for its premature launch of generic Plavix back in 2006. The payment marks the end of a patent dispute that went on for almost 10 years, and follows Apotex's unsuccessful appeal to a U.S. Circuit Court in October.

The saga began when Sanofi sued Apotex in 2002, alleging the generics company's proposed version of Plavix would infringe upon its patent. The French drugmaker won a preliminary injunction four years later--but only after Apotex had already shipped its copy of the blockbuster blood thinner. The knockoff version quickly flooded the market, costing Sanofi and Bristol-Myers hundreds of millions in lost sales.

In 2007, a U.S. judge upheld Sanofi's Plavix patent and ruled Apotex had violated it. The generic version reaped more than $880 million in sales during its short time on the market. Sanofi asked for half that amount in damages, and the judge agreed. "Sanofi and Bristol-Myers Squibb are pleased that their intellectual property rights have been upheld and that Apotex has made reparation of the harm caused by the at-risk launch," the drugmakers said in announcing the payment.

- read the statement from Sanofi and BMS
- see the Financial Times story

Special Report: Bristol-Myers Squibb - 10 Largest U.S. Patent Losses

Eisai renews focus on 'more attractive' Japan

Wed, 02/08/2012 - 19:47

Eisai is coming to believe that there's no place like home. The Japanese drugmaker says it's planning to pull back in the U.S. and refocus on East Asia, and not just because markets such as China are growing so quickly. It's also because of renewal in Japan.

CEO Haruo Naito told The Financial Times he's looking to grow sales in Japan, Korea, China, Hong Kong and Taiwan to account for more than their current 60% of Eisai's revenues. "There is enormous potential" in the region, he told the FT. And a good part of that potential lies in Japan, which "was mature and stagnating," Naito said, but now "is growing again. It is becoming more attractive."

One thing that's helped the Japanese drug market is the government is now cutting prices at a slower pace than it had been in recent years. Plus, the country is trying to streamline its regulatory process to get new drugs onto the market faster. Japan has been notorious for its "drug lag," which often kept foreign products off the market for years after they launched in the U.S. or Europe. The changes have attracted more interest among western drugmakers as well. Big Pharma companies such as Eli Lilly ($LLY) are putting more emphasis on the Japanese market.

What does this mean for the rest of the world? Well, Eisai won't completely bow out of Western markets. But it plans to leave the aggressive expansion in Europe and the U.S. to other Japanese drugmakers such as Daiichi Sankyo and Takeda Pharmaceuticals. "We are focused on East Asia," Naito said.

- see the story from the FT

Don't look for Lundbeck earnings growth until 2015

Wed, 02/08/2012 - 19:34

You can't accuse Lundbeck CEO Ulf Wiinberg of misdirection. In announcing the Danish drugmaker's latest results, Wiinberg flat-out stated that profits won't be rising anytime soon. "Growth in earnings will come in 2015, realistically," Wiinberg told Reuters.

It's not as if Wiinberg could hide the company's challenges. Lundbeck is heavily dependent on its antidepressant Cipralex, which is sold in the U.S. by Forest Laboratories ($FRX) as Lexapro. And Lexapro falls off patent next month. The company figures it will lose about 80% of its Lexapro sales to generic competition this year, 90% by 2013. Already, it's losing Cipralex revenues to generic competition in three European countries.

Lundbeck has high hopes for a Cipralex successor, LU21004, reports jv.dk. Late-stage trial data on that drug is due during the first half of this year. Sydbank analyst Løntoft Soren Hansen expects the company to file for approval by year's end. Other products that can help fill the gap are Sabril, a seizure drug, and Xenazine, which treats chorea in Huntington's disease patients, Reuters reports.

The company will plow more money into R&D this year than it ever has, Wiinberg told the news service. "We will thereby create the foundation for growth from 2015 and beyond," he said. Hansen concurs with that long-term focus. "There will be no smooth transition" from the old products to the new, he said (as quoted by jv.dk).

- see the Reuters story
- get more from jv.dk

Special Report: Forest Laboratories - 10 Largest U.S. Patent Losses

GSK moves European cash to U.K. nightly 'just in case'

Wed, 02/08/2012 - 19:05

GlaxoSmithKline ($GSK) executives like to sleep well at night, not wake up worrying about a banking crisis. So, the company transfers millions of euros every day into U.K. bank accounts to keep cash out of fragile countries. Since early last year, GSK has been moving its money into Britain this way on a daily basis, CEO Andrew Witty (photo) said.

"We don't leave any cash in most European countries," Witty said in conjunction with yesterday's earnings announcement. "We sweep any cash we raise during the day out of local banks into banks we think are robust and secure." He didn't name those "robust and secure" banks, but he did say he feels comfortable stashing cash in a few eurozone countries, namely Germany.

GSK has also been working to reduce another risk of doing business in Southern Europe these days: bill collections. Over the past two years, GSK has put "a huge focus on getting paid" by the hospitals it supplies in Mediterranean countries, Witty explained. That focus has enabled the company to reduce its receivables in the region.

After outlining GSK's risk-management strategies, Witty emphasized he believes things are looking up in Europe. The European Central Bank has had "a very positive effect on bank liquidity and confidence," he said. GSK is continuing to repatriate cash "just in case," he said. "I just don't think we are one step away from the end of the world," Witty maintained.

- see the Financial Times story
- get more from The Telegraph

The 25 most influential people in biopharma today

Wed, 02/08/2012 - 18:48

The anatomy of influence

On Tuesday, GlaxoSmithKline's Andrew Witty kept two promises he had made to investors and the pharma industry. GSK completed its three-year review of its drug development units, triggering a shake-up as the pharma giant reapportioned its 3.7 billion euro budget to back its most successful groups. And the company boosted its return on investment for late-stage development work, pushing the rate from 11% to 12% as Witty aims at the 14% mark.

Those numbers--which will be studied by every CEO in the industry--reflect what makes Witty one of the most influential players in the biopharma business. He's one of our 25 picks this year, our first look at the movers and shakers around the globe who are pioneering new ideas and pushing for progress in one of the slowest, least productive industries the world has ever seen.

It's no secret that despite a spike in FDA approvals, the biopharma industry has been going through a long and devastating innovation drought. The low rate of new drug approvals threatens the very existence of the pharma business as we know it. Only leaders who can buck that trend--and create one of their own--will survive.

It's against that backdrop that FierceBiotech and FiercePharma present a look at the newsmakers who promise to blaze a trail for others to follow. And it's not just a listing of CEOs. Our report includes an R&D revolutionary, a woman who built her own sizable venture in India, research executives busily mapping new R&D strategies, a developer-turned-university chancellor who has her own views on the brave new world to come and where academics fit into it, along with several others.

I wrote part of this report, with Suzanne Elvidge, Mark Hollmer, Ryan McBride and Tracy Staton shouldering the bulk of the work. I'd like some feedback here from readers for next year, when we'll be back with another annual report on influentials. - John Carroll, editor-in-chief (email | twitter) See the report >>

Sanofi CEO: Look out below, profits are falling

Wed, 02/08/2012 - 17:29

It wasn't Sanofi's fourth-quarter profits, which grew by 13%. Nor was it the 8.8% increase in sales for the period, or the 5.3% increase in 2011 sales, to €33.39 billion ($44.3 billion). The headline number for the French drugmaker's financial report was 15%--the projected drop in earnings for 2012. And the sound-bite statement from CEO Christopher Viehbacher (photo) was this: "2012 has been marked red in my diary for years."

Since he took the helm at Sanofi ($SNY) in 2008, no doubt. Generic competition for its top-selling drug, Plavix, has been Viehbacher's Sword of Damocles, and the blood thinner loses patent protection in May in the U.S., where it's marketed via a partnership with Bristol-Myers Squibb ($BMY). The blockbuster hypertension drug Avapro also falls off patent this year. The patent losses together will cut about $1.86 billion off Sanofi's profits, the company said.

Still, the projected EPS decline of 12% to 15% isn't as severe as Eli Lilly's ($LLY) forecast, which puts this year's EPS at around 18% less than last year's. Nor does it match AstraZeneca's ($AZN) expected decline--to $6 to $6.30 per share, from $7.28 in 2011--or about 13% to almost 18%. Sounding a bit like his former colleague at GlaxoSmithKline ($GSK), Andrew Witty (photo), Viehbacher noted Sanofi is keeping its sales growth forecast for 2012-2015, of 5% per year on average. Better times are just ahead, he said: "Beyond the remaining patent cliff in 2012, the robust performance of our diversified growth platforms, the reduced exposure to future patent expiries and progress on R&D, position Sanofi for a period of sustainable growth."

Hopeful signs? Chiefly, the company's diabetes drug Lantus, which broke €1 billion in quarterly revenues for the first time, on an increase of more than 17%. (Fourth-quarter Eloxatin sales of €325 million pushed the cancer drug past €1 billion for the year, but that drug goes off patent in the U.S. in August.) And then there's Genzyme, the U.S. rare-diseases unit that Sanofi bought last year, which posted sales increases; its brand-new plant outside Boston won key regulatory approvals, clearing the way for steadier supplies of the Fabry disease drug Fabrazyme, and the steady sales that would come with that. Indeed, without Genzyme, 2011 sales would have dropped.

Plus, Viehbacher's diversification strategy is paying off. Sanofi has been buying up companies and striking deals in emerging markets over the past several years, and sales in those regions grew by 10.4% to €10.1 billion, or almost one-third of total sales. Consumer healthcare sales grew by 22.8%, fueled by the new Chattem unit's launch of over-the-counter Allegra in the U.S. Generics grew by 16.2%. "Overall, a solid, quiet quarter which will help build investor credibility in the name," Bernstein analyst Tim Anderson wrote in a note to clients. So far, investors aren't so sure; Sanofi shares were down at press time.

- see the release from Sanofi
- get the news from Dow Jones
- check out the Reuters story

Daiichi shops India for bolt-on deals, ET says

Tue, 02/07/2012 - 19:50

Ranbaxy Laboratories hasn't delivered enough of Indian pharma to its majority owner, Daiichi Sankyo. The Japanese drugmaker is once again kicking tires in India, The Economic Times reports, almost four years after striking its multibillion-dollar deal for 64% of Ranbaxy.

According to the ET, Daiichi is shopping for companies with about $60 million to $100 million in annual revenues. Three companies have caught the company's eye, with products ranging from diabetes drugs to women's health treatments. "Daiichi is looking to expand in the Indian market, and it believes that an acquisition of a company or specific brands will help it gain significant market share," one ET source said.

Daiichi's investment in Ranbaxy hasn't turned out the way any acquirer would have planned. Soon after the deal closed in 2008, U.S. regulators barred 30 Ranbaxy products and ramped up an investigation into manufacturing problems and data-tampering. The dispute with the FDA continued until just recently, when Ranbaxy entered into a consent decree that includes some strict requirements for changes at its problem plants. Acknowledging the ongoing Ranbaxy losses, Daiichi executives recently took hefty pay cuts.

One bright spot for Ranbaxy, however, has been its domestic growth, which outpaced its peers last year. But the company has some holes in its product line-up, analysts told the ET, and so Daiichi's desire to beef up those therapeutic areas makes sense, as does its desire for a deal much smaller than its Ranbaxy buyout.

- see the ET piece
- get more from Dow Jones

What can Big Pharma learn from an NYT bestseller?

Tue, 02/07/2012 - 19:33

What do blockbuster drugs have in common with Harry Potter and Lisbeth Salander? They're all mega-sellers in industries in which only two of every 7 big, risky bets pans out. So, Big Pharma could learn a trick or two from publishers, the Financial Times posits. Report

Reuters: Nestle leads pack of bidders for Pfizer nutrition unit

Tue, 02/07/2012 - 19:28

Nestle is the front-runner for Pfizer's nutrition business, Reuters' sources say. The Swiss company is vying with France's Danone for the Pfizer ($PFE) unit, which the drugmaker marked for sale or spinoff last year. "Assets as good as this do not come along very often," one source told the news service.

Among the Pfizer group's advantages is its strong position in the Chinese infant formula market, Citi analyst Robert Dickinson told Reuters. "The market is unusual in having super-charged Chinese growth rates as well as highly attractive margins," Dickinson said, estimating the value of that market at $6 billion right now; it's expected to growth to $16 billion by 2016.

Currently, Nestle is lagging in the Chinese market, but buying the Pfizer unit could put it in third place. The company and Danone emerged as the two top bidders after first-round offers were submitted before Christmas, Reuters' sources said. However, Mead Johnson is still in the hunt, and the auction process is far from over.

Sixty percent of the Pfizer unit's sales are in Asia, while Europe accounts for 30%, with most of that in the U.K., Reuters says. The rest of the business is concentrated in Latin America. Overall, the unit ranks 5th in the infant formula market.

The nutrition business is only one of the units Pfizer has decided to divest. Its animal health unit is also set for sale or spinoff as CEO Ian Read (photo) pares down to focus more tightly on drugs. The company is hanging on to its generic drugs business, as well as its consumer healthcare group, aiming to grow both units to augment its core branded pharma business.

- read the story from Reuters

Bayer CEO: Shortsighted price cuts lead to long-term pain

Tue, 02/07/2012 - 19:10

Bayer chief Marijn Dekkers (photo) doesn't mind government interference of a sort. When he moved to Germany from the U.S., he found a strong focus on keeping jobs in Germany. "The system in most European countries is designed around job retention," Dekkers told The Wall Street Journal in an interview, "more so than the U.S." And that's fine with him; in fact, the U.S. might have worked a bit harder to retain jobs 15 to 20 years ago, he said.

And in China, the government's new healthcare focus presents a major opportunity, Dekkers said. Bayer has actually teamed up with the Chinese government to train doctors in the rural west. "We have a program where we help physicians in rural areas to train in modern medicine, and we are enabling 10,000 physicians to be trained with a sponsorship of Bayer," he says.

But rising government rebates and proposals to shorten patent life? Forget it. Governments are under pressure, Dekkers acknowledges. Pharma is an easy target, partly because consumers don't give the industry enough credit, he figures. Voters aren't turned off when a politician pressures drug companies to cut their prices, but they don't realize that when profits of current drugs are reduced, it cuts into the amount of money available to invest in development. "It feels good short-term," Dekkers said, "but for society it has consequences for the future."

- see the WSJ interview (sub. req.)

How do the 12 priciest drugs in the U.S. stack up?

Tue, 02/07/2012 - 18:49

Last week, Vertex Pharmaceuticals ($VRTX) got FDA approval for Kalydeco, the first cystic fibrosis drug to address the disease's cause, rather than just its symptoms. The price tag: $294,000. But as observers pointed out at the time, that's not as expensive as it gets. Today's drugs for debilitating and rare diseases command 6 figures almost as a matter of course. Medical Billing & Coding's blog reminds us just how much--and shows where Kalydeco ranks.

Of the 11 most expensive drugs in the U.S., Kalydeco would come in 8th, between Genzyme's Myozyme treatment for Pompe disease, which runs $300,000 a year for an adult, and Regeneron's ($REGN) Arcalyst, for genetic inflammatory disorders, at $250,000 a year. Like virtually every pricey drug on the list, these two are targeted to small populations with life-threatening illnesses--and probably wouldn't exist without the FDA's orphan-drug designation.

Topping the list is the notoriously expensive Soliris, a $409,500 drug used to treat a rare blood disease, paroxysmal nocturnal hemoglobinuria. About 8,000 people in the U.S. have the disease, so the most Alexion Pharmaceuticals ($ALXN) could hope to bring in from Soliris in the U.S. is about $3.2 billion; its 2010 sales had reached $541 million.

Shire's Hunter syndrome drug Elaprase comes in second at $375,000 per year (as Medical Billing & Coding says, some estimates put the actual price of Elaprase therapy, at $4,215 per vial, much higher than that). Third? Naglazyme, a treatment for the metabolic condition Maroteaux-Lamy syndrome. The BioMarin ($BMRN) drug runs $365,000 per year. We'll let you check the list for the rest.

- see the Medical Billing & Coding blog post

Hang on just a bit longer for sales growth, GSK chief says

Tue, 02/07/2012 - 18:26

Things are looking up for GlaxoSmithKline ($GSK)--just not quite yet. We've heard CEO Andrew Witty (photo) talk about "underlying sales growth" for several quarters now, and this earnings announcement was no different in that regard. The company missed forecasts for fourth-quarter earnings and sales, and margins weren't what they might have been for 2011, but all that is about to change, executives said. This year is GSK's year to return to real growth, and operating margins will gradually improve, too, they said.

"This is a time where we should feel optimistic," Witty told MerchantCantos. "We feel like we are moving into a new era for the company, and we now need to focus on absolute disciplined execution to make sure that we take advantage of all of the opportunities that we've worked so hard to try and create for ourselves."

Thing is, analysts appear to believe it. Sanford C. Bernstein and Credit Suisse both said they expect earnings to increase through 2015 as the company replaces sales lost to generic competition (Valtrex), safety questions (Avandia) and global disease patterns (pandemic-flu treatments), Bloomberg reports. Collins Stewart's Emmanuel Papadakis summarized the results in words Witty might have uttered: "While the results were superficially slightly disappointing, Q4's underlying picture is positive and reinforces our view that GSK's structural recovery is on track, with the stock likely just beginning a multiyear re-rating," he told the BBC.

Not that there aren't skeptics--Cenkos Securities' Navid Malik, for instance, told Bloomberg that GSK's guidance "isn't very detailed in terms of the growth they're hoping to deliver." Nor are the company's challenges past. European sales dropped 4%, and pricing pressures there aren't expected to ease up; Witty said he's expecting similar declines in the region for 2012. The company's follow-up to blockbuster respiratory drug Advair, dubbed Relovair, didn't perform well in a recent study.

But much of GSK's patent pain is behind it, Reuters points out. Investments in emerging markets are paying off. Return on R&D investment is up to 12% after a major overhaul, and is on its way to the company's 14% target. Four drug candidates are close to being ready for regulatory submission. "2012's performance is likely to be buoyed by ... positive R&D newsflow," Papadakis said. Perhaps next year, Witty really will have left the "underlying" growth talk behind.

- check out the news from the BBC
- get the Bloomberg coverage
- see the MerchantCantos release
- read the Wall Street Journal piece
- find the article at Reuters

NICE eyes NHS formularies for excluded drugs

Mon, 02/06/2012 - 20:17

The U.K.'s cost-effectiveness watchdog doesn't want its advice to go unheeded. The National Institute for Health and Clinical Excellence will review National Health Service formularies, which vary from locale to locale, to see not only how they're put together, but to iron out differences that may withhold drugs from patients in some areas while providing them in others.

NICE reviews new drugs for cost-effectiveness, and approval is not known as an easy mark. Still, NICE-approved meds aren't always found on local formularies, most often because officials in those areas are trying to cut costs, InPharm reports. The NHS is tasked with cutting almost $570 million from drug spending this fiscal year, and some local trusts are recommending against new and pricey drugs, even when those drugs have been cleared by NICE.

The variance in drug availability--known as "postcode prescribing"--has drawn fire from patient groups, but also from drug companies that have managed to get their products through the NICE process. The Department of Health has officially come out against postcode prescribing, InPharm notes, and that's why NICE has embarked on the formulary review.

"NICE-approved drugs should not be excluded from local formularies on the grounds of cost," NICE's deputy chief executive, Dr. Gillian Leng, said (as quoted by InPharm). "We want all patients to have access to medicines that we consider to be effective."

- get the InPharm coverage

Is Sanofi destined to be 'small player' in MS?

Mon, 02/06/2012 - 19:57

Sanofi ($SNY) CEO Chris Viehbacher (photo) is talking up trial results on his multiple sclerosis hopeful Lemtrada, acquired in his buyout of Genzyme. But advances by other companies are making it difficult for Sanofi to impress analysts with its own prospects. Report

Medicaid proposal would let states figure base prices

Mon, 02/06/2012 - 19:54

Medicaid drug pricing has long been a complicated, murky area. So murky, in fact, that drugmakers found themselves party to dozens of lawsuits alleging that they'd inflated wholesale prices reported to the government program, collecting millions more for drugs than the pricing rules allowed.

Now, a new Centers for Medicare and Medicaid Services rule would unhook Medicaid reimbursements from companies' self-reported wholesale prices. States will be allowed to collect their own wholesale-pricing information from pharmacies, and base their reimbursements on those figures instead. As the Boston Herald reports, the feds project savings of $17.7 billion from the change, along with new, higher rebates over the next 5 years.

The proposed rule, issued to comply with the Affordable Care Act, was inspired by a program used in Alabama. Medicaid officials there rounded up wholesale prices from pharmacies to figure their own averages based on bills those pharmacies actually paid. The state estimates it saved $30 million in one year from the change. Three other states imitated Alabama's efforts, and now, the federal government wants to make it easier for all states do the same thing--and to help the states collect their pricing data by setting up a nationwide database.

The rules proposal also specifies new rebate increases for Medicaid, to 13% from 11% on generics and to 23.1% from 15.1% on branded meds, as specified by the healthcare reform law. The CMS is seeking comment on the rule proposals through next month, with final rules coming in 2013.

- read the Herald piece
- get more from PharmaTimes

Lilly hunkers down for lean years with salary freeze

Mon, 02/06/2012 - 19:32

Eli Lilly ($LLY), languishing in the doldrums of its long-expected "Years YZ," has frozen the salaries of many of its staffers, including those of top management. As Pharmalot reports, the company disclosed in a recent Securities and Exchange Commission filing that employees in "most countries" around the globe "will not receive base pay increases in 2012." And for the third year in a row, CEO John Lechleiter (photo) has asked for no increase in salary or incentives for 2012.

The proxy statement attributes these moves to "the business challenges the company faces." These challenges aren't inconsiderable. Lilly's fourth quarter results showed that losing patent protection on its big-selling Zyprexa antipsychotic pill has hurt more than expected; sales already dropped by 44% to $749.6 million. Its Q4 profits fell by 27%, and earnings for 2012 are expected to take a big hit.

Lilly's patent-cliff "YZ" years were destined to be lean, but some R&D projects haven't panned out as hoped. The employees' hope for raises in 2013 could well depend on two ongoing trials of a potential Alzheimer's treatment. That data "is going to be the biggest thing they are going to report this year," Morningstar's Damien Conover told Bloomberg last week.

- see the SEC filing
- get the Pharmalot post

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