Author: James A. White

President Obama is to post his unified proposal for overhauling the health-care systemon the Internet today so it’s time to start getting use to a new acronym: HIRA.

HIRA stands for the Health Insurance Rate Authority, a new seven-member panel that would be set up to determine what’s a reasonable rate increase for health-insurance policies. The proposed authority would include consumer and industry representatives as well as a doctor and others, reports say.

HHS Secretary Kathleen Sebelius would be given the power to curb and potentially block increases deemed out of bounds under the Obama plan. Exactly how all this would work is a bit fuzzy but you get the gist from articles in the Washington Post, New York Times, Los Angeles Times and WSJ.

The overhaul bill already approved by the Senate would give government some increased authority to review and try to control rate increases, the LA Times notes. But adding it to the Obama proposal — which is unveiled ahead of Thursday’s bipartisan health summit — elevates the issue amid a recent backlash over rates sparked by WellPoint’s Anthem Blue Cross of California unit to raise premiums on individual policies by as much as 39%.

The rate-review proposal “could put pressure on Republicans to go along, even though they have decried the Democrats’ health reform efforts as a ‘big government takeover’ of the system and generally resisted any efforts to give the government a greater role in the private insurance market,” Politico said.

And speaking of the health-overhaul proposals (see previous post), we note an armful of stories today dealing with what has become a third-rail issue — the rates at which premiums are going up for individual health plans.

The cost of health policies has been an eye-of-the-beholder issue for a long time in the overhaul debate. There’s been broad agreement that individual rates are headed up, but overhaul opponents have contended they would rise even more under Democratic-backed health-system changes, while the Dems argued that rising rates are evidence of why overhaul measures are needed.

There matters stood pretty much unresolved until complaints surfaced this month about WellPoint’s Anthem Blue Cross of California unit moving to boost policy premiums by as much as 39%. Democrats saw an opening and a chance to build momentum on the cost issue leading up to the Feb. 25 bipartisan health summit.

HHS Secretary Kathleen Sebelius demanded a “detailed justification” for the increases and followed up yesterday with a report that cited other “extreme premium increases,” including requests to raise rates by 56% in Michigan, 24% in Connecticut, 23% in Maine and 20% in Oregon. The Washington Post says this morning that Washington area residents also are being notified of premium hikes of as much as 40%.

Insurers say they are raising prices to keep up with rising medical costs and sicker customers. The customer pool is sicker because as people lose their jobs, younger, healthier individuals are more likely to go without insurance in a difficult economy, skewing the mix of policy holders toward the elderly, a WellPoint executive told the WSJ this morning.

Hope lives on that there might be a chance to cool down this hot-button issue. Karen Ignagni, head of insurers’ lobbying group America’s Health Insurance Plans, told the WaPo: “It’s time to stop the politics of vilification.”

Read more in today’s Los Angeles Times and New York Times.

Photo: Getty Images

President Obama is making headway on coming up with a single Democratic overhaul proposal before next week’s televised health summit with Republicans, according to reports this morning.

The presidential plan is supposed to be posted on the Internet by Monday, which — given the differences between the bills already passed by House and Senate Democrats — is taking some doing. Nonetheless, “There will be one proposal” with “some of the best ideas” form both bills, HHS Secretary Kathleen Sebelius said yesterday.

The New York Times reports Democratic officials say the Obama proposal would add coverage for more than 30 million Americans and have a price-tag of about $900 billion over a decade, in line with both congressional bills. It also would mandate most individuals have coverage and health insurers couldn’t cite pre-existing conditions for denying coverage.

To help pay for it, the combined plan would include a version of the Senate proposed tax on high-value policies, according to the article. How to handle the tougher restrictions on insurance coverage for abortions contained in the House bill but not approved by the Senate hasn’t been resolved, it said.

The Los Angeles Times says top Dems are close to dropping the idea of special federal Medicaid money for Nebraska included in the Senate bill. The paper says low- and moderate-income Americans would be able to get health policies through new insurance exchanges, and uncovered costs in Medicare’s drug coverage for seniors known as the “doughnut hole” would be plugged.

Obama wants to give Republicans a chance to digest his proposal before the Feb. 25 summit in Washington. But lots of Republicans want to start with a clean slate and the NYT notes some unhappiness in the Democratic ranks about the presidential drive to hammer together one plan. “There has not been a collaborative process,” one congressional Democrat told the Times.

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We end the day with this warning from the FDA: Consumers should “steer clear of ear candles — hollow cones that are about 10 inches long and made from a fabric tube soaked in beeswax, paraffin, or a mixture of the two.”

Indeed, there are people who stick the candles in their ears, light them, and wait for the warmth of the candle to draw out wax and other gunk from the ear canal. (You get the idea from the illustration at the right, taken from a candle package by the FDA.) In addition to claims of relieving ear-wax buildup, the candles are supposedly good for sinus infections, hearing loss, headaches, colds, flu and sore throats, according to their promoters.

The candles are also a good way to get wax burns, whether doing the candle drill standing up or lying on your side, the FDA says. The agency didn’t give overall numbers but in addition to burns, but it said it has gotten reports over the last decade of people puncturing their eardrums and ending up getting their ears plugged with — wait for it — candle wax. The FDA adds that injuries stemming from sticking a burning candle in your ear are “likely underreported.”

The regulators said today they have seized some ear candles and sent warning letters to three big manufacturers saying that such products weren’t approved in the U.S. Canada is also stepping up enforcement. Here’s more FDA info for consumers.

The WSJ has reported on the use of ear candles, which is sometimes called candling or coning and has its roots in folk medicine. A 2008 article noted such candle use at home as well as at some spas and acupuncturists, but said there was no evidence the practice worked:

One of the only published human studies of ear candling tested the waxy substance removed using mass spectroscopy and found it all came from the candle, not the ear, says study author otolaryngologist Daniel R. Seely.

The FDA said it was particularly concerned that children could be harmed using ear candles.

Image: FDA Web site

Safety experts advising the FDA have been sending up flares about various asthma drugs for several years. In 2007, a panel said GlaxoSmithKline’s Serevent and Advair should carry a warning about risks to children. In 2008, experts said Serevent and Norvartis’s Foradil shouldn’t be used for asthma any more.

Today, the FDA itself said it had heard enough. The agency said it plans to impose new “safety controls” over those three drugs as well as AstraZeneca’s Symbicort, warning that they should be for the shortest time possible to obtain asthma control and then discontinued. Here’s the FDA announcement and a Q&A from the agency.

The drugs are so-called long-acting beta-agonists that are used by about six million asthma patients. The FDA said single-agent LABAs should be taken along with other inhaled drugs called corticosteroids. Advair and Symbicort come with LABAs and steroids combined.

The medications already carry various warnings but the new wording will be tougher in a bid to cut down on overall use and avoid improper usage that can cause hospitalizations and death, the FDA said. Some 22 million Americans have asthma, a chronic condition marked by narrowing of the airways.

Dow Jones Newswires and Reuters have more details.

Photo: AstraZeneca

The World Health Organization’s influenza experts have finished a four-day meeting and decided that protection against H1N1 swine flu should be included in the next regular flu-season vaccine.

The virus causing the current swine-flu pandemic surfaced too late last year to be included in the most recent seasonal-flu vaccine, so a separate vaccine was ordered up. But next time around for the Northern Hemisphere flu season, WHO is recommending H1N1 to be one of the strains added to the new seasonal protection.

The flu experts for the U.N. health agency get together about eight months in advance of each cold season to decide which three strains should go into the latest seasonal-flu vaccine. They decided in September that the next Southern Hemisphere cocktail should include swine-flu protection. Here’s more from Associated Press and Agence France-Presse, and you can listen to the WHO briefing here.

Still to be decided is whether the H1N1 pandemic, declared in June, has reached its peak after killing more than 15,000 people. Reuters says WHO experts are supposed to come to a decision on that next Tuesday.

Photo: iStockphoto

Sam Waksal, the founder of ImClone Systems who fell from grace before the company became $6.5 billion takeover property for Eli Lilly, is back in the biotech world, trying to raise $50 million for a start-up, according to TheStreet.com.

Waksal (pictured at right in 2003) has an up-and-down bio highlighted by getting Imclone’s cancer drug Erbitux on the road to market. His lowlight came with a guilty plea to insider-trading charges for selling ImClone shares knowing FDA was going to issue a negative report on the drug before the agency’s eventual approval of it. Lifestyle diva Martha Stewart also avoided losses by selling ImClone shares, leading to her conviction on obstruction of justice charges.

Now Waksal wants to buy, develop or license new drugs aimed at cancer or infectious diseases, according to a prospectus being circulated to potential investors, according to TheStreet. It says $50 million would buy a 50% stake in the venture, which is called Kadmon.

Kadmon spells out its plans this say, TheStreet says:

We intend to replace the traditional, quantitative development paradigm of the pharmaceutical industry with a model that seeks out the most innovative elements of academia, and innovative activities in the private sector, dramatically increasing the number of high-value drugs we discover and develop, while keeping costs to a fraction of the industry mean.

Meanwhile, Lilly and Bristol Myers, which co-markets the drug, are trying to get it approved for an expanded list of uses. Erbitux produced 2009 revenue of $390.8 million of Erbitux, Lilly says.

Photo: Bloomberg News

Manufacturing setbacks put a big dent in Genzyme’s fourth-quarter profit and the company’s outlook for 2010 earnings was lower than analysts had expected. If that wasn’t enough to worry about, Carl Iachn has upped his stake in the biotech.

Well-chronicled problems with viral contamination shut down a Massachusetts manufacturing plant last year, causing shortages of Genzyme’s top products, including the Gaucher’s disease treatment Cerezyme and Fabrazyme, for Fabry disease. That prompted a 73% drop in fourth-quarter earnings and a 43% sales drop for its genetics disease business, the company said this morning.

Officials said Genzyme expects to recover and post growth this year but the company forecast current-year earnings of $2.80 to $3.20 a share on revenue of $5.23 billion to $5.53 billion, short of the Street’s expected profit of $3.34 a share and $5.28 billion in revenue. See more from Dow Jones Newswires.

On the Icahn front, the billionaire activist raised his stake in Genzyme to 4.8 million shares as of Dec. 31 from 1.5 million three month earlier, Reuters said Friday. That gives him a little under a 2% stake in the company.

Icahn is a veteran at shaking up biotechs, including most recently landing director seats at Biogen Idec and seeking to add more.

Photo: Associated Press

A global shortage of a medical isotope used in diagnostic tests for heart disease and cancer has vacillated from bad to worse over the last couple of years. Output has dwindled as the two nuclear reactors supplying the bulk of radioactive material — one in Chalk River, Ontario (pictured at right) and the other in Petten, the Netherlands — have been closed for repairs or maintenance.

But now a new source — Poland — is appearing on the horizon. Covidien, a U.S. company that purifies isotope material, said this morning it has reached a deal with the operators of a reactor near Warsaw. Read the announcement for details.

The deal is far from a complete solution. The Polish plant can fill only a fraction of the demand and just getting the isotope from the former Soviet bloc country to the Netherlands for processing requires 20 permits from five countries, the New York Times notes.

The FDA also won’t given its blessing until it sees samples. But the NYT quotes an expert at the University of Iowa as saying the new supply channel “could make the difference between being able to limp along and shutting down” because of a lack of the isotope.

The Canadian and Dutch reactors normally supply two-thirds of the world’s supply of the isotope — molybdenum-99, which decays to technetium-99m. The material is used in tests that help determine such things as whether cancer has spread to lymph nodes.

Here’s more on the isotopes and their use. Covidien also has a Web site giving updates on the supply efforts.

Photo via Chalk River Labs

Paper medical records can easily go missing, contain bad or missing information and undermine patient care. But consider the alternative, says Alexander Friedman, a fellow in maternal-fetal medicine at the University of Pennsylvania.

As a resident fresh out of medical school, Friedman was working an an ememrgency room switching over to electronic medical records, he writes in a guest column on WSJ.com. Checking boxes and inserting codes required by the new system became the focus rather than tending to the patient, he says. As a result, he adds:

I often stood turned away, typing on the computer mounted against the wall, occasionally turning my head over my shoulder to make eye contact. I used a pre-emptive apology — “I’m sorry. I apologize for having my back to you” — but knew the excuses didn’t make up for the rudeness. A patient in pain or worried about her pregnancy deserves attention.

Friedman says EMRs are designed to communicate with insurers, not for care providers to communicate with each other. At the same time, he notes the success of the Veterans Administration’s electronic system in producing dramatic care improvements, as cited in a 2003 NEJM study.

But he sees the VA’s broad effort to apply electronics for improving accountability, integrating services and improving patient safety as an exception to how most systems are designed. “If electronic records are only used to optimize billing and improve chart audits, patients will see little benefit,” he says.

Image: iStockphoto

Generic maker Teva Pharmaceutical posted higher quarterly results that included stronger sales of its branded multiple sclerosis treatment Copaxone.

The Israeli company will save “hundreds of millions of dollars” starting later this year after it ends royalty payments of 25% on U.S. sales of Copaxone that it has been making to Sanofi-Aventis, Teva’s CFO told Reuters. Sales of Copaxone, the top-selling MS therapy, rose 25% to $747 million in the quarter and to $2.8 billion for the year. (Generics remain its chief business but about 30% of Teva’s product mix is from branded drugs.)

The company reported a net profit of $379 million, or 42 cents a share, compared with a loss of $694 million, or 88 cents a share, a year earlier. Sales rose 33% to $3.8 billion. See here for more on the quarterly numbers and here for the company’s forecast.

The takeover of Barr, which it acquired in 2008 for about $7.5 billion, helped boost Teva’s sales total and the company remains on the acquisition prowl, especially outside the U.S. Teva is bidding for German generic maker Ratiopharm, competing with Pfizer, Swedish private equity firm EQT and Iceland’s Actavis.

Image: iStockphoto

India has become a hot market for multinational drug companies since it revised its patent laws to give more protection to brand-name medicine. But to hear the branded makers tell it, the patent welcome mat has some holes in it, a WSJ report recounts this morning.

The drug makers point to three top-selling medicines that have failed in their efforts to win protection either through India’s patent office or the country’s court system. Most recently, Delhi’s High Court Tuesday dismissed an appeal by Bayer to block copies of its cancer medicine Nexavar, calling the appeal “a speculative foray,” the article said.

Last year, the patent office decided that Novartis’s patent application for Glivec (sold in the U.S. as Gleevec) didn’t demonstrate improved efficacy over an earlier version of the cancer treatment. Meanwhile, a patent was approved for Roche’s cancer drug Tarceva, but the company has lost bids to block sales of copycat versions of the drug.

The rub is that 2005 changes that expanded patent protections also set higher standards than are used in the U.S. or Europe for approving patents. “The U.S. would grant a patent to a piece of toilet paper,” the CEO of Indian generics maker Cipla told the WSJ. “Just because the U.S. granted a patent, doesn’t mean it should be valid.”

Multinational pharma companies have been saying for a while that this makes doing business in India tougher. As far back as 2007, Novartis said it was scrapping plans to invest hundreds of million of R&D dollars in India in the wake of its Glivec setbacks.

A Roche spokesman told the WSJ this week that the failure of its efforts to protect Tarceva means “any research-based company will need to consider carefully what this ruling means for future investments in this country.”

Not surprisingly, food companies and doctors’ groups rushed to back Michelle Obama’s new campaign targeting improved eating habits and more exercise for kids.

But the most bubbly statement we spotted came from the American Beverage Association — a trade group that’s been trying to quell ideas of putting a tax on sugary drinks.

The association today pledged to put calorie counts for its members’ products on the front of containers, soda fountains and vending machines they control. “The more easy-to-use information we give consumers, the better they’ll be able to choose the refreshing beverage that best meets their tastes and needs,” it said.

Coca-Cola (which, like archrival Pepsi, is a member of the American Beverage Association) said last year that it would start putting calorie counts on the front of its packages.

Here’s the WSJ story on the First Lady’s program.

And here, complete with the requisite acoustic-guitar backing track, is a YouTube video the White House put out today:

Photo via Business Wire

Cell Therapeutics’ experimental lymphoma drug pixantrone faces rough sledding from an FDA advisory committee after an agency staff review raised questions about the drug’s effectiveness and side effects. The news sent the company’s shares sharply lower.

One of the chief studies of the drug was supposed to involve 320 patients but only 140 were enrolled. Cell Therapeutics told the FDA it had trouble finding participants for the study because doctors preferred to use multiple chemotherapy drugs or supportive care, Reuters said, citing the FDA staff summary. Here’s the full FDA briefing document.

The study period was also cut short. The FDA said “a higher level of evidence is usually required in trials which discontinue prior to final analysis,” Dow Jones Newswires said.

Following the FDA staff comments, shares of Cell Therapeutics were trading down more than 25% around midday.

Cell Therapeutics hopes to sell the drug, pixantrone, under the brand name Pixuvri to treat non-Hodgkin’s lymphoma that has stopped responding to other treatments. The oncology advisory panel is to meet Wednesday. The FDA doesn’t have to follow the advice of its advisory panels, but it usually does.

The latest unemployment rate reported by the government today was unexpectedly good — 9.7% in January, down from 10% the previous two months — and health-care hiring was again on the plus side, with the sector adding 14,500 jobs. Here’s the WSJ story.

The health-care category showing the largest employment gain in January was ambulatory health-care services, up 15,300 jobs. Physicians’ offices added 5,600 and hospitals, 5,000. Nursing and residential-care facilities shed 5,800 positions. Here’s the full BLS breakdown.

Economists still found plenty to worry about. Some said that the still-unresolved status of such things as the health-care overhaul (remember that?), not to mention the strength of the economic recovery as a whole, were continuing to weigh on employers. “Until some of these uncertainties from Washington get cleared up, businesses, particularly small businesses, are going to be loath to do any additional hiring,” Hank Smith, chief investment officer at Haverford Investments, told the Associated Press.

Another economist quoted by our colleagues at Real Time Economics noted the latest report shows a continuing surge in temporary hiring. “Perhaps once the health care debate is settled some of these jobs will swap into permanent employment, but in the meantime firms are willing to take on workers but not at the expense of benefits on the way in or severance on the way out,” said Steven Blitz of Majestic Research.

Image: iStockphoto

Gov. Arnold Schwarzenegger decided last year to allow nurse anesthetists in California to work without a supervising physician. Now two doctors’ groups are challenging the move in court, according to HealthLeaders Media.

The fight centers over 2001 Medicare rules that usually require a doctor to supervise when nurses administer anesthesia, but allow states to op out of the requirement if a governor sends a letter to the feds. California did that in June.

But the California Medical Association (membership: 35,000 docs and med students) and the California Society of Anesthesiologists (4,000) claim in state court that Schwarzenegger didn’t consult in advance with the Medical Board of California, as required by the federal rules. Here’s the suit, which also details other issues.

The governor’s office says everything was done properly, according to HealthLeaders Media.

An article in Anesthesiology News last month notes that California has the largest number of anesthesiologists in the U.S., at 5,400. Fourteen states have opted out of the Medicare rules involving physician supervision for anesthesia, but none had done so for four years until Schwarzenegger stirred up the issue again last summer, according to the article.

Photo: Associated Press

Medical evacuation flights from Haiti to the U.S. started up again after HHS officials said hospitals can receive federal payments equal to 110% of Medicare rates for providing care to Haitians.

A flight last night took 17 patients to Palm Beach, according to the Miami Herald. (That’s one of the arrivals in the photo.) The medical evacuations had stopped last Wednesday after Gov. Charlie Crist had said that Florida hospitals – the destination of the vast majority of Haiti earthquake victims – were reaching the saturation point.

The feds yesterday activated more provisions of the National Disaster Medical System to help U.S. hospitals provide care to “critically ill survivors” from Haiti. The NDMS is a voluntary system under which U.S. hospitals set aside some of their acute-care beds for NDMS patients and are guaranteed federal reimbursement at 110% of Medicare rates. Here’s the HHS announcement and more on the NDMS.

Since the Jan. 12 earthquake, Florida hospitals have treated 526 earthquake victims, Florida officials said yesterday. The largest number — 413 — have received care at hospitals in South Florida. While the flights were suspended, there was concern that patients would die if they didn’t reach U.S. hospitals. Here’s more on the situation from this morning’s WSJ.

Photo: Associated Press

Cephalon said this morning it will buy the Swiss generic drug maker Mepha in a deal that will double the size of the U.S. company’s international business and enlarge its hand in generics. The price-tag was set at about $590 million.

It seems like everybody wants to get into the global generics business these days. Sanof-Aventis has been making acquisitions to that end, and Pfizer created a new “established products” unit and cut a few deals with Indian manufacturers to grow its generics business.

Cephalon, whose biggest seller Provigil will face its own generic competition in 2012, will gain 120 products sold in 50 countries through the deal, which should start adding to earnings this year. With the additions, the company will be in 100 countries and about 30% of its overall sales will be international.

Mepha sells generics, branded generics and modified-release versions of branded generics producing sales of about $377 million. Its medicines are used for a long list of ailments, including anemia, schizophrenia, bacterial infections, pain, heart disease, allergies, hypertension, malaria, ulcers, cough and mood and anxiety disorders, Reuters notes. Cephalon also gets rights to sell generic copies of Amgen’s Neupogen, also called filgrastim, used to offset depletion of white blood cells caused by chemotherapy, according to Bloomberg. Neupogen generated $1.29 billion in Amgen sales last year.

Mepha is owned by Germany’s Merckle family, which is also trying to sell Ratiopharm, a bigger generic maker, to repay debts. Pfizer, Teva Pharmaceutical and EQT Partners AB of Sweden are among those vying for the company (see our post last month for more).

Image: iStockphoto

There’s more research out today indicating that being overweight can be less harmful for the elderly than for younger people and saying that dieting may not be helpful for the post-70 crowd.

An Australian study published in the Journal of the American Geriatric Society tracked the number of deaths over 10 years in 9,200 people who were aged 70 to 75 at the start of the study. Study participants rated as overweight were found to have the lowest risk of dying during the period from cardiovascular disease, cancer and chronic respiratory disease and also ran the lowest overall death rate among those in the group.

“Our study suggests that those people who survive to age 70 in reasonable health have a different set of risks and benefits associated with the amount of body fat to younger people,” the lead researcher from the University of Western Australia told the BBC.

The study said that body-mass index, a common tool for determining obesity, needs some rethinking when it comes to measuring fatty mass in older people.

The researchers also concluded that physical exercise benefits both young and old. Lack of activity doubled the risk of mortality for women during the period studied and raised it by 25% for men. See this recent WSJ article for more on the dangers of a sedentary life.

Bonus Weight: A 2007 study published in JAMA found that being overweight increases the risk of death from diabetes and kidney disease, but not other conditions, such as cancer and heart disease. Being slightly overweight may help protect against Alzheimer’s and Parkinson’s, the JAMA study found. See more here.

Biogen Idec has invested heavily in drug research. Genzyme has snapped up smaller companies. Neither approach has worked particularly well, this morning’s WSJ notes, and both companies under pressure from activist shareholders to beef up their performance.

Perennial activist Carl Icahn yesterday gave notice that he intends to nominate three directors to Biogen’s board, following up his success last year in landing two director slots on the board. The company it would evaluate the Icahn candidates, according to Reuters. Icahn and affiliates hold less than a 6% stake in the company, Biogen says. There’s more on the latest Biogen-Icahn faceoff here.

Meanwhile, Genzyme yesterday announced revised terms for its executive compensation plans. The move followed criticism that Genzyme’s old plans were tied to operating income and allowed execs to receive as much as 80% of their bonuses even if the company missed some traditional performance targets, Dow Jones Newswires reports.

If other measures fail to bolster their performance, major biotechs like Genzyme and Biogen could look to a traditional pharma to open up its pocketbook, the Heard on the Street column says. It mentions Johnson & Johnson as a usual suspect on the potential buyer list, but notes that with J&J and most other pharmaceutical shares trading at modest multiples, “it’s hard for them to justify issuing stock needed to fund large deals.”

Image: iStockphoto