High Court Weighs Drug Companies' Generics Policy

Federal regulators are pressing the Supreme Court to stop big pharmaceutical corporations from paying generic drug competitors to delay releasing their cheaper versions of brand-name drugs. They argue these deals deny American consumers, usually for years, steep price declines that can top 90 percent.

The Obama administration, backed by consumer groups and the American Medical Association, says these so-called "pay for delay" deals profit the drug companies but harm consumers by adding $3.5 billion annually to their drug bills.

But the pharmaceutical companies counter that they need to preserve longer the billions of dollars in revenue from their patented products in order to recover the billions they spend developing new drugs. And both the large companies and the generic makers say the marketing of generics often is hastened by these deals.

The justices will hear the argument Monday.

Such pay-for-delay deals arise when generic companies file a challenge at the Food and Drug Administration to the patents that give brand-name drugs a 20-year monopoly. The generic drugmakers aim to prove the patent is flawed or otherwise invalid, so they can launch a generic version well before the patent ends.

Brand-name drugmakers then usually sue the generic companies, which sets up what could be years of expensive litigation. When the two sides aren't certain who will win, they often reach a compromise deal that allows the generic company to sell its cheaper copycat drug in a few years — but years before the drug's patent would expire. Often, that settlement comes with a sizable payment from the brand-name company to the generic drugmaker.

Numerous brand-name and generic drugmakers and their respective trade groups say the settlements protect their interests but also benefit consumers by bringing inexpensive copycat medicines to market years earlier than they would arrive in any case generic drugmakers took to trial and lost. But federal officials counter that such deals add billions to the drug bills of American patients and taxpayers, compared with what would happen if the generic companies won the lawsuits and could begin marketing right away.

A study by RBC Capital Markets of 371 cases during 2000-09 found brand-name companies won 89 at trial compared to 82 won by generic drugmakers. Another 175 ended in settlement deals, and 25 were dropped.

Generic drugs account for about 80 percent of all American prescriptions for medicines and vaccines, but a far smaller percentage of the $325 billion spent by U.S. consumers on drugs each year.

Generics saved American patients, taxpayers and the healthcare system an estimated $193 billion in 2011 alone, according to health data firm IMS Health.

But government officials believe the number of potentially anticompetitive patent settlements is increasing. Pay-for-delay deals increased from 28 to 40 in just the last two fiscal years and the deals in fiscal 2012 covered 31 brand-name pharmaceuticals, Federal Trade Commission officials said. Those had combined annual U.S. sales of more than $8.3 billion.

The Obama administration argues the agreements are illegal if they're based solely on keeping the generic drug off the market. Solicitor General Donald Verrilli, speaking at Georgetown Law School recently, noted that once a generic drug gets on the market and competes with a brand-name drug, "the price drops 85 percent." That quickly decimates sales of the brand-name medicine.

"These agreements should actually be considered presumptively unlawful because of the potential effects on consumers," Verrilli said.

In the case before the court, Brussels, Belgium-based Solvay — now part of a new company called AbbVie — reached a deal with generic drugmaker Watson Pharmaceuticals allowing it to launch a cheaper version of Solvay's male hormone drug AndroGel in August 2015. Solvay agreed to pay Watson, now called Actavis, an estimated $19 million-$30 million annually, government officials said. The patent runs until August 2020. Watson agreed to also help sell the brand-name version, AndroGel.

Actavis spokesman David Belian disputed the government's characterization of the agreement with Solvay. Belian said that in addition to licensing agreement over Solvay's Androgel patents, Watson was being compensated for using its sales force to promote AndroGel to doctors.

AndroGel, which brought in $1.2 billion last year for AbbVie, is a gel applied to the skin daily to treat low testosterone in men. Low testosterone can affect sex drive, energy level, mood, muscle mass and bone strength.

The FTC called the deal anticompetitive and sued Actavis.

The 11th U.S. Circuit Court of Appeals in Atlanta rejected the government's objections, and the FTC appealed to the Supreme Court.

The federal district and appellate courts both ruled against the government, AbbVie, which is based in North Chicago, Ill., said. "We are confident that these decisions will be upheld by the Supreme Court."

The Generic Pharmaceutical Association's head, Ralph Neas, said the settlements are "pro-consumer, pro-competition and transparent." He said every patent settlement to date has brought a generic drug to market before the relevant patent ended, with two-thirds of the new generic drugs launched in 2010 and 2011 hitting the market early due to a settlement.

"By doing what the FTC wants, you're going to hurt consumers rather than help them," said Paul Bisaro, CEO of Actavis of Parsippany, N.J.

Bisaro said consumers will save an estimated $50 billion just from patent settlements involving Lipitor, the cholesterol-lowering drug made by Pfizer of New York that reigned for nearly a decade as the world's top-selling drug.

Lipitor's patent ran until 2017, but multiple generic companies challenged it. Pfizer reached a settlement that enabled Actavis and a second company to sell slightly cheaper generic versions starting Nov. 30, 2011, and several other generic drugmakers to begin selling generic Lipitor six months later. The price then plummeted from Pfizer's $375 to $530 for a three-month supply, depending on dosage, to $20 to $40 for generic versions.

Because generic companies tend to challenge patents of every successful drug, the FTC's position would impose onerous legal costs on brand-name drugmakers and limit their ability to fund expensive research to create new drugs, said the Pharmaceutical Research and Manufacturers of America, which represents brand-name drugmakers.

According to the 2010 RBC Capital Markets study, when trial victories, settlements between drugmakers and dropped cases are combined, generic companies were able to bring their product to market before the brand-name drug's patent expired in 76 percent of the 371 drug patent suits decided from 2000 through 2009.

Consumer, doctor and drugstore groups have lined up to support the Obama administration in this case.

"AARP believes it is in the interest of those fifty and older, and indeed the public at large, to hasten the entry of generic prescription drugs to the marketplace," said Ken Zeller, senior attorney with the AARP Foundation Litigation. "Pay-for-delay agreements such as those at issue in this case frustrate that public interest."

The American Medical Association, the giant doctors' group, believes pay-for-delay agreements undermine the balance between spurring innovation through patents and fostering competition through generics, AMA President Dr. Jeremy A. Lazarus said. "Pay for delay must stop to ensure the most cost-effective treatment options are available to patients."

Drugstores also believe pay-for-delay deals "pose considerable harm to patients because they postpone the availability of generic drugs which limits patient access to generic medications," said Chrissy Kopple of the National Association of Chain Drug Stores.

Eight justices will decide this case later this year. Justice Samuel Alito did not take part in considering whether to take this case and is not expected to take part in arguments.

The case is Federal Trade Commission vs. Actavis, Inc., 12-416.

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District Of Columbia Prohibits Insurance Companies From Discriminating Against Transgender People

Today, the DC Department of Insurance, Securities, and Banking (DISB) issued a bulletin clarifying key protections for transgender people in the District of Columbia. The bulletin provides a clear directive to insurers that discrimination on the basis of gender identity or expression is not an acceptable business practice in Washington.

The bulletin prohibits insurance companies from some of the most egregious practices that have been used to lock transgender people out of health care coverage, including:

Denying, cancelling, limiting, or refusing to renew an insurance policy.Limiting insurance coverage on the basis of gender identity or expression.Denying coverage for a procedure that is provided for the treatment of other conditions of illness. For example, if a plan covers hormone therapy for some diagnoses, it cannot categorically exclude coverage for hormone therapy related to gender identity disorder or other transition-related diagnosis.

DC joins a growing number of states, municipalities, and employers who recognize that equal access to health coverage is supported by medical science, improves the health of transgender people, and does not significantly increase costs. Ending arbitrary insurance discrimination against transgender people simply supports what expert medical bodies have been saying for years: transition-related health care is medically necessary for many transgender individuals whose health and well-being depends on bringing their physical body into alignment with their gender identity, and determination of what care an individual patient needs properly rests with medical providers, not insurance companies.

Read the full bulletin and the joint announcement from the Mayor’s Office of Gay, Lesbian, Bisexual, and Transgender (GLBT) Affairs and the Department of Insurance, Securities, and Banking.

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How These Companies Are Keeping Employees Healthy

The Canadian phone company has approximately 26,000 employees in 13 locations across the country and offers internal fitness facilities with cardio equipment, weight rooms and group fitness classes, on-site massage and reflexology practitioners, active living challenges and mental health support.

Janet Crowe, director of wellness and work-life solutions, says encouraging employees to adopt healthy lifestyle habits is part of the culture of TELUS. "It's the overall strategy of TELUS to have a healthy work environment," she says.

Don't worry if these kinds of programs seem out of reach for your business. You don't have to build a gymnasium to encourage a healthy workforce. Crowe says wellness initiatives are possible no matter how big or small a company is and says having a healthy workforce begins with making health a priority in the workplace.

She encourages small businesses to begin by asking employees what initiatives would help them. "Don't assume what your team wants, ask them what they need to reach their goals," she says. Sraeel says reaching out to local gyms to negotiate a discount rate or hosting group lunch hour walks is something every company can do no matter the size.

Celebrating business goals with a healthy cooking class or another activity staff has identified as something they'd like to try is another way to incorporate a healthy lifestyle into the office environment, plus "group activities can be empowering and team-building," says Sraeel.

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Chinese Companies Projected To Make Solar Panels for 42 Cents Per Watt In 2015

Future cost drops from Chinese crystalline silicon solar producers will not be as steep as recent years, but they will still be significant.

Stephen Lacey, via GreenTechMedia

The cost of producing a conventional crystalline silicon (c-si) solar panel continues to drop. Between 2009 and 2012, leading “best-in-class” Chinese c-Si solar manufacturers reduced module costs by more than 50 percent. And in the next three years, those players — companies like Jinko, Yingli, Trina and Renesola — are on a path to lower costs by another 30 percent.

Check out [the above] chart outlining projected costs, which comes from GTM Research’s Global Intelligence PV Tracker.

“Clearly, the magnitude of cost reductions will be less than in previous years. But we still do see potential for significant cost reductions. Going from 53 cents to 42 cents is noteworthy,” says Shayle Kann, vice president of research at GTM Research.

With plenty of innovation still occurring in crystalline silicon PV manufacturing — including new sawing techniques, thinner wafers, conductive adhesives, and frameless modules — companies are able to squeeze more pennies off the cost of each panel. However, as the chart above shows, innovating “outside the module” to reduce the installed cost of solar will be increasingly important as companies find it harder to realize cost reductions in manufacturing.

Related Post:

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Obama Medicare rebate plan could hurt drug companies

Feb 13 (Reuters) - President Barack Obama's decision to spotlight drug rebates as a way to save money on Medicare is likely to be opposed by the pharmaceutical industry, which could potentially lose billions of dollars in profits.

In his annual State of the Union speech on Tuesday, Obama said he would "reduce taxpayer subsidies to prescription drug companies" to rein in the rising cost of Medicare, the $600 billion healthcare program for the elderly and disabled.

Administration officials say the President was talking about requiring pharmaceutical manufacturers to offer rebates on drugs for 10 million people known as "dual eligibles" because they qualify for Medicare and Medicaid, and receive drug benefits through Medicare's Part D prescription drug program. Medicaid is the federal and state funded healthcare program for the poor.

The nonpartisan Congressional Budget Office estimates that requiring rebates for dual eligibles would save $137 billion in Medicare spending. Often the oldest and sickest beneficiaries, dual eligibles account for fewer than 20 percent of Medicare beneficiaries, but more than 30 percent of program spending.

Damien Conover, an analyst with the Morningstar investment research firm, said requiring Medicaid-level rebates for dual eligibles could trim 2 percent to 7 percent from the profits of drug manufacturers. The impact would vary depending on how much of a company's business is in the United States and how much is dependent on Medicare reimbursement, he said.

The U.S. pharmaceutical industry takes in about $300 billion a year in revenue.

"For most companies, it's probably a couple of percent hit to earnings, which is something clearly negative for the industry but manageable," said Barbara Ryan, a long-term pharmaceutical industry analyst, who now runs her own consulting firm. "Whether it could happen or not is another question, but it's unequivocally going to be the hot potato that's thrown around for the industry."

The rebate proposal, which has been circulating among policymakers and think tanks in Washington for years, had drawn industry ire before Obama's remarks on Tuesday.

Eli Lilly & Co Chief Executive John Lechleiter estimated it would cost the industry $112 billion over 10 years and reduce the number of new drugs developed.

"I think this would be disastrous for patients. It would be disastrous for pharmaceutical research. We think it's bad policy and we are going to fight it," he told a biotech conference in New York on Monday.

Other major drug companies contacted by Reuters, including Merck & Co and Pfizer Inc, declined to comment on the potential impact.

Pharmaceutical Research and Manufacturers of America, the industry's chief Washington trade group, warned that the proposal could "up-end" the successful Medicare Part D program that allows beneficiaries to purchase private drug coverage priced through competition.

It was unclear whether the proposal would ever succeed as legislation, given a bitterly divided Congress and predictions by some lobbyists that Medicare would see reforms only under a broad agreement that would require Republicans to accept higher tax revenues.

But analysts say the President, who this week backed away from a separate proposal to raise Medicare's eligibility age to 67 from 65, has few alternatives for wringing fiscal savings from the program. One option is raising costs for wealthier Americans eligible for Medicare benefits, which he also highlighted in his speech on Tuesday.

"Those two ideas are among the most palatable ideas for getting savings from the Medicare program," said Drew Altman, president and chief executive of the nonpartisan Kaiser Family Foundation, which tracks healthcare issues.

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Health Insurance Companies Get in Shape for Obamacare

"“The A.C.A. disrupts their business model totally, and they’re scrambling around."

Dr. Kent Bottles, about Affordable Care Act effects on insurance companies.

Since joining the company as chairman and chief executive — he came to Florida from Minnesota, where he ran another nonprofit Blue Cross plan — he has held about 50 town hall meetings across the state to talk with employees about the future. "We've got to be smart and to be quick," he said in an interview in his office on the eighth floor of a sprawling headquarters complex. "In the past, we've been slow and hanging out."

But the Affordable Care Act and the increasing pressure on the nation's health care system to become more efficient represent a major departure for insurers — particularly those, like Florida Blue, that have enjoyed leading positions within their states. Florida Blue has more than four million health plan customers, giving it some 30 percent of the state's insurance market and about $8 billion in annual revenue.

"No question, the pace and magnitude of change are immense," said Catherine P. Bessant, a Bank of America executive who is the lead director on Florida Blue's board. The goal, she said, is to make sure the insurer is positioned "not in a defensive crouch, but very much a foot-forward position."

Although some of its profit-making rivals, like Cigna, have been diversifying their business into overseas ventures, or into related areas like health technology, like UnitedHealth and Aetna, Mr. Geraghty said Florida Blue remained committed to its core business, through insurance and new models of care. "We know the margins in health care are shrinking," he said, referring to insurers' projected profitability. "This is where we are."

Florida Blue was ahead of many of its competitors in seeing the need to appeal directly to the people it was covering. In 2006, it set up its first retail store, where people can shop for coverage, ask a question about a claim or see a nurse to check their blood pressure.

The company has 11 stores today. It says it has sold tens of thousands of policies and established the locations as places where customers like Mary Duke, who said she came to the Jacksonville store once a month, can ask the same representative questions about a bill. "I don't like to handle these things on the phone," Ms. Duke said recently. "It is so much better face to face."

The new health care law also promises an expansion of Medicaid, although some Republican governors, like Florida's Rick Scott, have not yet decided whether to take the federal money because they worry about the long-term cost of enrolling more people.

Insurers, however, see the change as an opportunity for growth, especially since so many low-income people will move back and forth between the exchanges and Medicaid to find coverage. "There's a lot of maneuvering to get into the Medicaid space," said Jack A. Rovner, a Chicago lawyer who advises health care clients on the changing dynamics of the industry.

Some companies, like WellPoint and Aetna, recently bought insurers specializing in the Medicaid market, and Florida Blue is working with AmeriHealth Mercy, a company affiliated with Blue Cross plans that specializes in Medicaid and operates in 14 states. The two recently invested in a provider network that focuses on low-income clients, and they are bidding with the group for a contract to manage some of the state's three million Medicaid beneficiaries.

Like many insurers, Florida Blue has also been experimenting with various ventures with hospitals and doctors. While UnitedHealth had difficulty several years ago starting a so-called medical home program, in which doctors would be paid to be responsible for better care and coordination of a group of patients, the Blue plan has already enlisted nearly 2,400 of Florida's doctors in the program, making it one of the largest in the nation.

"Florida Blue has the same problems everyone else has," said Dr. Michael A. Wasylik, an orthopedic surgeon in Tampa who works with insurers through the Florida Medical Association, but "they have a better trust relationship with doctors." The local representatives are better able to address doctors' concerns, he said.

The insurer has also announced plans to work with a number of health systems to improve the quality of care while reducing costs. Mr. Geraghty, for example, is working with executives at Moffitt Cancer Center in Tampa on an accountable care organization, in which the two would save money by, say, reducing scans or choosing an equally effective but less expensive chemotherapy treatment. "We're trying to work on a variety of different levels here," he said.

Florida Blue also recently acquired the Diagnostic Clinic Medical Group, a large medical group in Largo, Fla. Some of the insurer's ventures are unlikely to work in every area of the state, Mr. Geraghty said, but it is content to experiment with different programs in different regions. "What we know doesn't work is unilateral, and we're going to take things and cram them into the marketplace," he said.

"Nobody has the perfect crystal ball," Mr. Geraghty said. "We are trying to have some very rich pilots to see what works."

And Florida Blue has had some missteps. Working with Disney, it developed Habit Heroes, an exhibit at Epcot where children could learn healthy habits, like exercising. But the decision to develop characters like the chubby Lead Bottom led to criticism that the program was a slight to overweight children, and a new exhibit was introduced last month.

Even the way insurers offer plans to people covered by their employer is expected to change, as some companies look to private exchanges, where they may contribute a fixed amount toward the policy but let the worker choose the plan and even the insurer.

While it is far from clear that these private sector exchanges will take off, Florida Blue decided to participate in one. "There's a lot of unknown there," said Jon Urbanek, a senior vice president at the insurer. "There's a lot of risk there."

So far, the experience has been positive: the insurer says it was chosen by 90 percent of the full-time Florida employees of Darden Restaurants, owner of Olive Garden and Red Lobster, who joined in the exchange.

But Mr. Geraghty's most immediate challenge is to prepare Florida Blue for 2014, even as he worries that the logistics will become increasingly hard as critical decisions remain unmade.

While he acknowledged that the insurer had "a lot of legwork to do" to be able to start offering plans for the exchange this October, he said he wasn't losing sleep over the uncertainty. "I don't rattle easily," he said.

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American Action Forum Survey Of Insurance Companies Warns Of 2014 Premium Sticker Shock

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WASHIGNTON – A new survey of major health care insurers, representing the vast majority of covered individuals in the U.S., conducted by the American Action Forum (AAF) answers the question: what impact will the Affordable Care Act (ACA) have on premiums in 2014? This survey aimed to illustrate real cases in a variety of regulatory environments, representing the spectrum of rate changes cross any given geographic area, rather merely average changes across demographics.

The findings highlight the sticker shock in health care premiums that awaits the relatively young and healthy in both the small group and individual markets as the ACA is fully implemented. The survey finds cost of premiums for this group will increase by an average of 169 percent. Conversely, the survey found that the premiums of older and sicker individuals in these markets will be relatively subsidized by the ACA, with that group seeing an average decrease in premium costs of just under 25 percent.

Summary Table: Average Premium Impacts for Individual and Small Group in 2014

Younger and Healthier Individuals and Small Employers

Older and Less Healthy Individuals and Small Employers

Note: Changes due to insurance market reforms alone and do not include annual medical trend increases.  It also does not include the fact that some individuals and small employers experiencing these changes will be eligible for taxpayer subsidies through insurance exchanges.

Read the complete results and survey methodology here.

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McKibben To Wall Street Journal: ‘Fossil-Fuel Companies Have Become Outlaws Against The Laws Of Physics’

Bill McKibben has a letter responding to an error-riddled Wall Street Journal op-ed — though I guess that’s redundant. This one attacks clean energy and the fossil-fuel divestment effort McKibben supports.

McKibben writes:

Robert Bryce’s Dec. 17 op-ed (“Harvard Needs Remedial Energy Math“) attacking campus efforts to have universities divest themselves of holdings in fossil-fuel companies is interesting for what it omits: even the slightest attempt to rebut the mathematical logic that shows fossil-fuel companies have become outlaws against the laws of physics. Here are the numbers: In order to prevent the two-degree Celsius rise in temperature that even the most conservative governments on earth have committed to avoiding, scientists tell us we can burn enough coal and oil and gas to produce 565 gigatons of CO2. Unfortunately, the planet’s fossil-fuel companies, and the countries that operate like fossil-fuel companies (think Venezuela and Kuwait), have five times that much in their reserves. It’s what their share prices are based on; they obviously plan to burn it; indeed, they spend hundreds of millions of dollars daily looking for more. If their business plan is carried out, the planet tanks.

Mr. Bryce is entirely correct that it will be hard to move away from fossil fuels, an enormous engineering challenge. But the Germans are demonstrating it can be done, and the most recent studies shows that we could rely on renewables for our power upwards of 99% of the time as early as 2030 if we got to work. Which we won’t, if the fossil-fuel industry continues to exert its massive financial muscle to block change. That’s why students in 189 campuses have so far risen up to demand divestment—this is the great moral challenge of our time, and maybe, given the stakes, of all time.

Bryce, of course, is one of the most debunked disinformers on the face of the Earth, who famously wrote (in the WSJ of course), “If serious scientists can question Einstein’s theory of relativity, then there must be room for debate about the workings and complexities of the Earth’s atmosphere” (see “Robert Bryce Makes Mockery of Science, Is Mocked in Return“). Hmm, if Bryce can be dead wrong about Einstein, then he’s probably dead wrong about everything else.

Bryce works for the Manhattan Institute, which “has received millions of dollars from donors tied to the fossil fuel industry” and the Kochs to spread pro-fossil-fuel messages.  Media Matters’ post, “Who Is Robert Bryce?” has more detail.  See also

Bryce’s nonsense is not worth debunking in detail — one could waste a lifetime doing that. But given that he claims “Harvard Needs Remedial Energy Math,” it’s worth noting one of his own countless instances of innumeracy, the tired “wind power uses too much land” myth:

Here’s where the math becomes college-freshman obvious: In 2011, the world had 240,000 megawatts of wind-generation capacity. That fleet of turbines produced 437 terawatt-hours of electricity. Therefore, just keeping up with the growth in global electricity demand—while not displacing any of the existing need for coal, oil and natural gas—would require the countries of the world to install about as much wind-generation capacity as now exists, and they’d have to do so every year.

Put another way, just to keep pace with demand growth, the wind industry will need to cover a land area of some 48,000 square miles with wind turbines per year, an area about the size of North Carolina. Even if that much land were available, no humans would want to live on the land because of the irritating noise generated by those turbines.

That paragraph would get any student in remedial energy math an ‘F’. The actual footprint used up by the wind turbines is quite tiny — so most of the land they occupy can be used for other purposes, notably farming.

Let’s go into the National Renewable Energy Laboratory’s wind farm area calculator, plug in 0.25 acres per turbine and 240,000 megawatts (240,000,000 kW), and use 2 MW for wind turbines since “most of the commercial-scale turbines installed today are 2 MW in size. “The estimated land area required is: 30000 acres.” [For more detail, see Land-Use Requirements of Modern Wind Power Plants in the United States.]

As one can quickly find out on Google, “1 square mile is equal to 640 acres.”  So these wind turbine would take out of use about 50 square miles of land. And that doesn’t even count offshore wind.

Most of the best wind is not where many people live, so his non-issue about noise is, well, a non-issue.

Of course, global warming will devastate North Carolina and indeed all coastal areas and much of the cropland in this country and around the world — so using up a little land to save the rest seems like the smart choice.

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