Author: Jacob Goldstein

More job cuts in big pharma. This time the news comes from AstraZeneca, which said today it’s going to cut an additional 8,000 jobs over the next few years — a figure Reuters says is about 12% of the company’s workforce. That’s on top of thousands of cuts previously announced by the company.

Some of the cuts will come from R&D. Here’s the company’s explanation of the R&D shift:

These plans include a reduction in the number of disease area targets within our core therapeutic areas, a continued focus on externalisation, some consolidation of our activities onto a smaller R&D site footprint … Based on preliminary estimates, approximately 3,500 positions may be affected by this programme. After taking account of positions that will be retained whilst being relocated to another site, the investment in new skills and capabilities and further expansion of our Biologics activities, the net reduction may be around 1,800 positions.

The news came as the company reported results from the fourth quarter, and projected falling revenues during the coming year. Here’s an earnings story from Dow Jones Newswires

Bonus Cuts: Read more on job cuts at Pfizer, Eli Lilly, Johnson & Johnson and Merck.

Photo: Associated Press

President Obama was more than 3,000 words into his 7,000-word State of the Union speech last night by the time he got to the health-care overhaul.

What’s more, he referred to the health-care overhaul as “health-insurance reform” — a subtle shift from “health-care reform” and perhaps an indication of the Dems’ move toward less-sweeping changes, and their sharpened focus on health insurance regulation.

Here’s a selection of Obama’s comments on the subject. (For the Republican response, scroll down to the bottom of this post.)

And it is precisely to relieve the burden on middle-class families that we still need health insurance reform. …

I took on health care because of the stories I’ve heard from Americans with pre-existing conditions whose lives depend on getting coverage; patients who’ve been denied coverage; and families – even those with insurance – who are just one illness away from financial ruin. …

The approach we’ve taken would protect every American from the worst practices of the insurance industry. It would give small businesses and uninsured Americans a chance to choose an affordable health care plan in a competitive market. It would require every insurance plan to cover preventive care. …

Our approach would preserve the right of Americans who have insurance to keep their doctor and their plan. It would reduce costs and premiums for millions of families and businesses. And according to the Congressional Budget Office –- the independent organization that both parties have cited as the official scorekeeper for Congress –- our approach would bring down the deficit by as much as $1 trillion over the next two decades. …

Still, this is a complex issue, and the longer it was debated, the more skeptical people became. I take my share of the blame for not explaining it more clearly to the American people. And I know that with all the lobbying and horse-trading, this process left most Americans wondering what’s in it for them.

But I also know this problem is not going away. By the time I’m finished speaking tonight, more Americans will have lost their health insurance. Millions will lose it this year. Our deficit will grow. Premiums will go up. Patients will be denied the care they need. Small-business owners will continue to drop coverage altogether. I will not walk away from these Americans, and neither should the people in this chamber.

As temperatures cool, I want everyone to take another look at the plan we’ve proposed. … Do not walk away from reform. Not now. Not when we are so close. Let us find a way to come together and finish the job for the American people.

Virginia Gov. Bob McDonnell gave the Republican response. Here’s what he had to say about health care:

All Americans agree, we need a health-care system that is affordable, accessible, and high quality.

But most Americans do not want to turn over the best medical-care system in the world to the federal government.

Republicans in Congress have offered legislation to reform health care, without shifting Medicaid costs to the states, without cutting Medicare, and without raising your taxes.

We will do that by implementing common sense reforms, like letting families and businesses buy health insurance policies across state lines, and ending frivolous lawsuits against doctors and hospitals that drive up the cost of your health care.

And our solutions aren’t thousand-page bills that no one has fully read, after being crafted behind closed doors with special interests.

On Abbott’s earnings call today, an analyst asked CEO Miles White about the company’s short-term M&A strategy. “Is your plate full?” the analyst asked, according to a transcript from Thomson Reuters.

The company cut a deal last fall to buy Solvay’s vaccines business for about $7 billion. That followed a January deal to buy Advanced Medical Optics, an eye-care company, for more than $1 billion.

But there are still some deals that would interest the company, White said:

I wouldn’t tell you we’re so busy at capacity that we can’t do anything else. … We’re keeping our eyes open for things that would be additions to or expansions of our existing franchises or businesses around the world. We’re mindful of further geographic footprint. I have mentioned before the emerging markets are clearly a priority for us, and our footprint there [is] important to us in a number of businesses.

Abbott may see some familiar faces as it travels to distant lands. In the past few years, Pfizer, Sanofi-Aventis and GlaxoSmithKline have all made acquisitions or licensing deals to expand their business in emerging markets.

Map via Wikimedia Commons

Over the past few years, hundreds of loosely regulated medical marijuana dispensaries cropped up in Los Angeles. It got to the point where even some backers of medical marijuana in New Jersey saw California’s experience as a cautionary tale, and promised that their law would be more restrictive.

Now, even in L.A., the pendulum is swinging back toward a less permissive system. The city council passed an ordinance yesterday that caps the number of marijuana dispensaries at 70, and limits where the shops can be set up — though roughly 150 existing dispensaries that registered with the city clerk before 2007 are likely to be allowed to stay open under an exemption in the ordinance, the Los Angeles Times reports.

Even with that exemption, the number of shops could fall significantly under the ordinance — there somewhere between 800 and 1,000 in L.A. now, the Associated Press says.

Legal challenges from dispensary owners are likely. “I don’t want to say this is an impossible task, but it’s going to take a lot more effort than maybe the city realizes at this point,” a law professor told the AP. “Just because the city says, ’stop what you are doing,’ doesn’t mean [dispensary owners] are going to give up easily.”

Photo: Getty Images

High-tech medical equipment can improve outcomes for patients — but it can also create new complications and safety risks.

This morning’s New York Times makes that point by examining Intensity-Modulated Radiation Therapy — a high-tech system for treating cancer patients with radiation.

IMRT can allow for more highly targeted radiation treatments, sparing healthy tissue. But the systems are complicated, and there have been cases where patients received harmful overdoses of radiation. What’s more, regulation of the devices and certification of the technicians who operate them are spotty, varying greatly from state to state.

Radiation risks aren’t limited to IMRT. As we noted last year, hundreds of patients suffered radiation doses because of a problem with the settings CT scanners. The problem didn’t come to light until a patient reported hair loss after getting a scan.

The FDA approved a new diabetes drug called Victoza, made by Novo Nordisk. It’s in the same class as Byetta, a twice-a-day diabetes drug co-marketed by Eli Lilly and Amylin. Amylin depends on Byetta for most of its revenues — and its shares are up more than 10% this afternoon, to a 52-week high.

Why should a new competitor send a company’s stock soaring? Because Amylin is working on a once-a-week version of Byetta, and the market thinks that FDA approval of Victoza, taken once a day, is a promising sign for long-acting Byetta.

Here’s how Davis Bu, a Goldman Sachs analyst, put it in a note late yesterday:

We expect Amylin shares to trade up significantly, as we believe the news increases the likelihood of approval for EQW. EQW is a long acting form of Byetta, and is partnered with Eli Lilly. We estimate the sales potential to exceed $4 billion.

An FDA decision on long-acting Byetta is expected later this year.

In the meantime, not everyone thinks everything’s rosy for Amylin. Byetta has had some safety issues, and the company’s shares are well below where they were a few years back. And, of course, there’s the fact that Byetta does have a new competitor.

“Byetta sales and prescription trends have remained flat, and we expect this news to further weaken them,” said Adam Cutler, a Canaccord Adams analyst quoted by Dow Jones Newswires.

How tough was 2009?

Consistent, reliable Johnson & Johnson — cited as a model of smart diversification by Pfizer’s CEO, among others — saw its sales fall for the year. It was the first time in 76 years that J&J reported an annual sales decline, CEO Bill Weldon said, according to a live blog from Dow Jones Newswires.

Total sales fell from $63.75 billion in 2008 to $61.9 billion in 2009, according to results the company released today.

J&J’s prescription business was hit hard by generic competition for some of its big brands, including Risperdal and Topamax — a problem facing lots of major drug makers.

On top of that, Weldon said the industry is facing a wide range of pressures, including a shift in consumer buying to private-label products, less willingness to undergo elective surgery or buy contact lenses and diabetes-test strips, pressure on hospital budgets, and persistent unemployment.

Still, fourth-quarter sales did rise compared with the year-earlier period — to $16.55 billion, up from $15.18 billion. And Weldon said he expects the global health-care market to grow by 5% a year for the next five years, reaching $7 trillion by 2014.

Bonus Earnings: Read the full story on J&J’s earnings for the fourth quarter and the year.

Photo: Associated Press

Joe Jimenez will be the new CEO of Novartis, the big Swiss drug company said. Dan Vasella, who has been CEO for 14 years and chairman for 11 years, will stay on as chairman.

Some other Swiss firms — including Nestlé and Roche — have also recently split the chairman and CEO positions, partly in response to a push from corporate-governance activists who favor the split. It’s worth noting, though, that Novartis’s board recommends against a shareholder proposal to make the chairman-CEO split mandatory (see p. 6 of this PDF).

Jimenez has been running Novartis’s prescription drug business since 2007. He spent most of his career in the packaged goods industry, with stints at H.J. Heinz, Clorox and ConAgra. As we noted in 2008, Jimenez brought the “key account management” strategy to the business. In packaged goods, key accounts are big retailers; in the drugs business, key accounts are insurers and other big payers.

Another detail about Jimenez that may interest some drug-industry insiders: He reads Cafepharma, the home of online message boards full of posts from sales reps and others in the industry. “I read it because I like to get information from a lot of different places,” Jimenez told the Health Blog a while back.

For more on Jimenez, Vasella, and the rest of Novartis’s executive shake-up, see this story from the WSJ.

Photo: Associated Press

When we wrote last week about Gov. Paterson’s proposed New York budget, we overlooked an interesting detail: A push to restrict ties between doctors and drug companies. The full proposal starts on p. 42 of this PDF.

Several states have already moved in this direction, and Paterson’s proposal is less restrictive than some. It would still allow drug reps to bring lunch to doctors’ offices, for example, though it would ban taking docs or their staff out to a restaurant.

Other gifts “such as floral arrangements, artwork, compact discs or tickets to a sporting event” would be prohibited under the proposal, which also regulates consulting relationships between doctors and drug companies, and industry funding of continuing medical education.

Companies could be fined between $15,000 and $250,000 per violation, and docs and other health-care professionals could be fined $5,000 to $10,000.

Voluntary guidelines from the pharmaceutical trade group PhRMA also say drug company employees shouldn’t take doctors out for restaurant meals or give them gifts. And the guidelines include restrictions on consulting agreements and medical ed.

But a PhRMA VP told the Associated Press that Paterson’s proposal “calls for unneeded government intrusion into a competitive private marketplace that is already working well.”

The proposal won’t become law unless it’s passed by the Legislature.

Photo: Associated Press

A meteorite crashed through the roof of a family practice in Loudon, Va., last week and landed on the floor of an exam room. No one was hurt.

(Insert joke here about how the sky is falling for primary-care docs.)

Staff at the office heard a boom at around 5:30 in the afternoon last Monday. Then they saw that the floor of an empty exam room was littered with wood plaster, insulation — and three chunks of smooth stone that together made a rock about the size of a tennis ball, the Washington Post said.

A scientist at the Smithsonian confirmed that it was a meteorite that was probably traveling about 220 m.p.h. when it hit the roof of the doctors’ office, the WaPo said.

“It’s beautiful,” the scientist said after examining the rock.

Starting this year, some high-profile Boston hospitals put new rules in place that prohibited their docs from being paid by drug companies to give speeches. One doc recently left one of the hospitals — and a job as an instructor at Harvard med school — in order to keep getting paid by the industry, the Boston Globe reports.

GlaxoSmithKline recently reported its payments to doctors for the second quarter of last year. One doc — Lawrence M. DuBuske, an allergy and asthma specialist affiliated with Brigham & Women’s Hospital — was paid $99,375 during those three months.

DuBuske recently “made decision between terminating the relationship with Glaxo and terminating his relationship with the Brigham, to do the latter,’’ an official at Partners HealthCare, a health system that includes the Brigham, told the Globe. One other doctor affiliated with the system has also left at least partly because of the new rules, but that doc hasn’t been identified, the Globe says.

DuBuske didn’t return calls from the Globe. We tried to reach him this morning through the Immunology Research Institute of New England, a nonprofit he directs, but we haven’t heard back.

We’ve been reporting for a while on moves to limit — or at least add transparency to — ties between doctors and the drug and device industries. Pfizer, Eli Lilly, Merck and Medtronic have all said they’ll start reporting at least some payments to doctors. And some lawmakers have been pushing to require broad reporting of payments by the industry.

Image: iStockphoto

A bit of health-insurance news to kick off the week:

The industry spent roughly $38 million on lobbying last year, up from $31 million in ‘08, the Hill reports. No surprise, given what was at stake in Washington. The spending included nearly $19 million from AHIP and the Blue Cross Blue Shield Association, and millions more from big insurers including WellPoint, UnitedHealth, Humana, Aetna and Cigna. Here’s a list of the top spenders.

UnitedHealth wants Continuum Health Partners, a consortium of New York hospitals, to notify the company within 24 hours of a patient’s admission, the New York Times reports. If a hospital doesn’t do so, the insurer says it will cut reimbursements by half for treatment of the patient. The hospital says the rate cut is too high a punishment for a simple clerical error; the insurer says it needs to be informed soon after a patient is admitted, in order to improve outcomes for patients and rein in health-care costs.

Photo: iStockphoto

The FDA just approved a new multiple sclerosis drug called Ampyra. The drug (also known as Fampridine-SR) helps some patients walk faster.

Trouble walking is a serious problem for many MS patients. But only a minority of patients seem to benefit from Ampyra. In one study, 35% of people who took the drug showed improved walking speed, compared with 8% of those who took a placebo. In another study, 43% of patients showed improvement, compared with 9% who took a placebo.

Still, an FDA advisory panel voted last fall that the drug “demonstrated substantial evidence of effectiveness … as a treatment to improve walking in patients with multiple sclerosis,” and that “there are conditions under which fampridine could be considered safe.”

Side effects include urinary tract infection, insomnia and dizziness, among other problems, the FDA said. Ampyra was developed by a small company called Acorda Therapeutics. Biogen Idec, which also sells the MS drug Tysabri, will sell the drug outside of the U.S.

Biotech research is the sexy thing these days in the drug business, but that kind of buzz isn’t worth much in Hollywood. With the movie Extraordinary Measures opening this weekend, though, biotech gets its glamour moment.

The movie tells the story of a John Crowley, a father who sets out to find a cure for Pompe disease, a rare disease that afflicts his children. The movie is based on a true story — one that appeared in the WSJ in the early aughts, before being turned into a book. Here’s a 2001 WSJ story on Crowley; here’s an excerpt from the book; and here’s a key passage from a story that ran on the Journal’s front page in 2003:

Seeking a treatment, Mr. Crowley, now 36 years old, quit his job as a financial consultant, met with legions of scientists and teamed up with one. He borrowed $100,000 on his home and 401(k) plan to start a biotech company, then raised $27 million in venture capital when the company developed an enzyme that showed early promise. When he thought he needed the muscle of a big company to get a drug into production and testing, he sold his company to Genzyme Corp., of Cambridge, Mass., for $137.5 million — one of the richest deals ever for a biotech drug untested in humans.

Yet even though Mr. Crowley had moved mountains on the scientific and business fronts to get the treatment into testing, he couldn’t seem to speed the drug to his own rapidly weakening children. When he sold his company, he gave up control of the medicine they needed. The shortage of the drug, conflict-of-interest questions and Genzyme’s own internal protocols rose up in his path. His personal goal — getting the drug to his kids — at times conflicted with the company’s view of how to get the drug to market as soon as possible.

“It ripped me apart,” he says. “Many times, I’d be talking aloud about programs and budgets, and at the back of my mind be thinking, ‘Oh my God, this is not good for Megan and Patrick.’ ”

Extraordinary Bonus: The Boston Globe reports on what people at Genzyme think of the movie. The WSJ’s Speakeasy spoke with Brendan Fraser, who co-stars in the movie with Harrison Ford. Here’s a clip:

Image: Everett Collection

California’s state Supreme Court threw out a law that limits how much medical marijuana patients can possess. Here’s the court’s ruling, which was filed yesterday.

The ruling is noteworthy in part because California already had some of the most permissive medical marijuana rules in the country; as we noted recently, the backers of New Jersey’s new medical marijuana law were eager to point out that the drug would be more tightly regulated in their state than in California.

The state’s legislature had passed a law that said patients could have up to eight ounces of dried marijuana could grow as many as six mature or 12 immature plants, the Los Angeles Times says.

But the original measure, passed by voters, didn’t include those limits. The LAT says the legal limit will now go back to an earlier, vaguer standard established in a 1997 court decision: an amount “reasonably related to the patient’s current medical needs.”

Marijuana Bonus: Read up on the evidence (and lack of evidence) for marijuana’s effectiveness as a medical treatment.

Photo: Getty Images

Venture capital funding was way down last year, but health care fell less than other sectors. A few different sets of figures are out today — one from Dow Jones VentureSource, another from the National Venture Capital Association.

The figures from the groups differ a bit, but the broad outlines are similar.

VC deals totaled $21.41 billion last year, down 31% from 2008, according to VentureSource. For the first time, health-care companies got more VC money ($7.73 billion, down 14% from the previous year) than IT companies ($6.07 billion, down 35% from the previous year). The WSJ’s Venture Capital Dispatch blog has more on the VentureSource figures.

The National Venture Capital Association said VCs put $17.68 billion into U.S. companies last year — 37% less than they spent in 2008, and the lowest level of investment since 1997. But biotech fell less than other sectors, and wound up getting the biggest chunk of VC money: $3.54 billion, down 19% from ‘08. Medical device companies got $2.5 billion (down 27%).

Image: iStockphoto

It’s been a tough week for diet drugs. First, there were warnings that some people going to online auction sites to buy GlaxoSmithKline’s Alli weren’t getting the real thing. Instead, they were getting a counterfeit version that actually used the active ingredient from another diet drug — Abbott’s Meridia.

Today, it’s Meridia’s turn for trouble. European regulators said the drug — known generically as sibutramine, and sold in the EU under the brand names Reductil, Reduxade and Zelium — should be pulled from the market. In the U.S., the FDA said the drug shouldn’t be taken by patients with a history of heart disease — a significant limitation for a diet drug, given the link between heart disease and obesity.

At issue is a study that suggested the drug increased the risk of cardiovascular events (heart attack, stroke, that sort of thing) for people who already had heart trouble. Overall, 11.4% of the patients in the study who took the drug had cardiovascular events, compared with 10% who took a placebo. You can see how the subgroups break out in the table at the bottom of this page.

Abbott wasn’t immediately available for comment, Dow Jones Newswires said.

The Bonus Diet: Read about the failure of diet drugs that work on cannabinoid receptors in the brain — a once-promising class of medicines that didn’t work out for Sanofi-Aventis, Merck or Pfizer.

Photo: Bloomberg News

GlaxoSmithKline CEO Andrew Witty swung by Health Blog HQ this week. Given all the M&A action in the industry in the past year (Pfizer-Wyeth & Merck-Schering Plough, to name a few biggies), we asked him about GSK’s acquisition strategy.

“We’re not in the market for traditional, large-scale, premium acquisitions,” he said.

He didn’t focus on the pipeline drugs or growing franchises that acquirers often cite. Instead, he waded into the ramifications of making a big acquisition at a moment when many segments of the industry are contracting.

“People are buying companies and taking costs down,” he said. “You’re paying a 30% or 35% premium to have the opportunity to fire people.”

Instead, he’s looking for “bolt-on acquisitions” — under $5 billion — that add to growing businesses such as vaccines or consumer products, or to key emerging markets. And even those have to be at a the right price; the company walked away from a few deals in the second quarter of last year, because they were too expensive.

Photo: Associated Press

Here’s a quick roundup of some news on experimental drugs:

Two pills for multiple sclerosis fared well in clinical trials published this week in the New England Journal of Medicine. One, Novartis’s fingolimod, was tested against a placebo and against Avonex, a form of interferon sold by Biogen Idec. The other, Merck KGaA’s cladribine, was tested against a placebo. (The main findings of the studies had previously been reported.)

Current drugs for MS are given via injection or infusion, so the convenience of oral drugs would be an improvement for patients. But, as the WSJ notes, the studies of fingolimod and cladribine suggested that the drugs may have serious side effects that will have to be weighed against the potential benefits.

A new approach to treating clostridium difficile showed promise. C. diff is a nasty bug that causes severe diarrhea, and tends to flourish in patients who have previously taken powerful antibiotics. A study in the New England Journal of Medicine found C. diff patients who received combination of two experimental biotech drugs (monoclonal antibodies) in addition to antibiotics were less likely to have a C. diff relapse than patients who received antibiotics and a placebo. The Phase 2 study, which needs to be confirmed by a larger trial, was funded in part by Medarex, a Bristol-Myers Squibb subsidiary that was a developer of the drug. Merck bought rights to the drug in a deal last year.

An HIV drug failed in late-stage trials, Merck said. The drug, vicriviroc, is the same class as Pfizer’s Selzentry. Dow Jones Newswires notes that analysts’ expectations for sales of vicriviroc were modest, because Selzentry’s sales have been relatively low.

Photo: iStockphoto

It’s still unclear what the Dems are going to do about the health-care overhaul, now that they’ve lost their filibuster-proof majority in the Senate. So much of the health coverage this morning (including the lead stories in the WSJ and New York Times) keys on an interview President Obama gave to ABC News on Wednesday.

Here’s a passage from the interview that gets lots of play in the morning news:

I would advise that we try to move quickly to coalesce around those elements of the package that people agree on. We know that we need insurance reform, that the health insurance companies are taking advantage of people. We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up and we know that small businesses are going to need help so that they can provide health insurance to their families. Those are … some of the core elements of … this bill.

As the papers note, this list notably excludes a mandate that everyone buy health insurance — a contentious provision that was included in the health bills passed by both the House and the Senate.

Insurers have argued that the only way they can sell insurance to all-comers — including those with pre-existing medical conditions — is to have a mandate requiring everyone to buy insurance. Otherwise, there’s an economic incentive for people to wait until they get sick to buy insurance.

Obama raised this issue later in the interview:

If you ask the American people about health care, one of the things that drives them crazy is insurance companies denying people coverage because of preexisting conditions. Well, it turns out that if you don’t … make sure that everybody has health insurance, … you can’t stop insurance companies from discriminating against people because of preexisting conditions. Well, if you’re going to give everybody health insurance, you’ve got to make sure it’s affordable. So it turns out that a lot of these things are interconnected.

And he talked about the long slog of trying to get a health-care bill through Congress, and how it’s drawn attention away from other issues:

I wish we had gotten it done faster … I think that what’s happened is, is over the course of this year, there’s been a fixation, an obsession in terms of the focus on the health care process in Congress that distracted from all the other things that we’re trying to do to make sure that this economy is working for ordinary people.

Photo: Associated Press