STUDY: CVS, Rite Aid, And Other Chain Pharmacies Sell Generic Drugs At Up To 18 Times Their Cost

According to a new Consumer Reports investigative study published Thursday, there is rampant variation in the price of generic drugs as large U.S. pharmacy chains — including CVS, Rite Aid, and Target — mark up the prices of generic drug versions for common medications by as much as 18 times what wholesale chains like Costco charge. That price variance ends up costing Americans, who spend an average of $758 out-of-pocket on drugs every year, hundreds of dollars in unnecessary spending each month.

Consumer Reports compiled the data by contacting hundred of pharmacies throughout the country and asking what their drug prices were for generic versions of Lipitor, Plavix, Actos, and other common medications. The results were striking, with pharmacy representatives claiming that the higher prices were necessary for covering overhead, and considering that selling medication constitutes most of their revenue and profit margins:

Costco was the least expensive overall, and you don’t need to be a member to use its pharmacy. A few independent pharmacies came in even cheaper, though their prices varied widely, as did grocery-store pharmacies. The online retailers Healthwarehouse.com and FamilyMeds.com also had very low prices. On the other end of the spectrum, CVS, Rite Aid, and Target had the highest retail prices. [...]

A representative of CVS told us that its retail drug prices reflect other services offered by the chain, including drive-through windows, automated prescription refill systems, free outreach programs to help make sure patients are taking their prescriptions correctly, and 24-hour pharmacies. Costco pharmacies, the cheapest overall, are open only from 10 a.m. to 7 or 8:30 p.m. and are typically closed on Sundays.

“Big-box stores such as Costco and Walmart use the pharmacy as a traffic builder for their stores, whereas traditional chain stores, such as CVS, Rite Aid, and Walgreens, make the majority of their revenue and profits from the pharmacy,” says Stephen W. Schondelmeyer, Ph.D., Pharm.D., a professor of pharmacy economics at the University of Minnesota.

The study’s full findings are illustrated in this chart:

The use of generic drugs — rather than their brand name counterparts — actually drives down spending on medications, consequently lowering Americans’ out-of-pocket costs and government spending on public insurance programs such as Medicare and Medicaid. But the Consumer Reports investigation suggests there are significantly more savings to be had.

This isn’t the first time generic drug makers have been in the news this week. On Monday, the Supreme Court took up Federal Trade Commission (FTC) v. Actavis — which one expert dubbed “the health care reform case of 2013? — a case centering on the legality and antitrust implications of so-called “pay for delay” arrangements in which brand name drug makers pay off their generic drug counterparts to delay a drug’s generic version from entry into the market. If the FTC winds up winning that case, it could save Americans and the government billions of dollars on drug costs every year. But as this new report demonstrates, they could save much more if pharmacies stopped jacking up their rates to startling degrees.

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PREVIEW-Top U.S. court to decide on deals to delay cheaper drugs

WASHINGTON, March 22 (Reuters) - The U.S. Supreme Court will hear arguments on Monday over whether big drug companies can settle patent litigation with generic rivals by making deals to keep cheaper products off the market.

U.S. and state regulators say the practice costs consumers, insurers and government billions of dollars annually.

The Federal Trade Commission, which has dubbed these arrangements "pay for delay," has fought them in court for more than a decade with mixed success, culminating in the case now before the Supreme Court.

"The continuing stream of monopoly profits is large enough to pay the generic competitors more than they could hope to earn if they entered the market at competitive prices," the FTC said in a brief.

At the same time, the brand-name manufacturer receives greater profits than it could earn in the face of generic competition, the regulatory agency argued.

The Justice Department, the European Union and more than two dozen U.S. state attorneys general view the deals as illegal, but drug companies defend them as a way to avoid potentially lengthy patent litigation.

"In every case that we've been in involved in that resulted in a settlement, it has resulted in years being taken off the patent life," added Paul Bisaro, chief executive of generic drug maker Actavis, Inc. Actavis was formerly Watson Pharmaceuticals.

"It's very unsophisticated to say 'Oh, they get paid a bunch of money to stay off the market,"' said Bisaro.

In the case before the court, Solvay Pharmaceuticals Inc, now owned by AbbVie, sued generic drug makers in 2003 to stop cheaper versions of AndroGel, a gel used to treat men with low testosterone.

These payments, as high as $30 million annually, went to rivals Watson, Paddock Laboratories Inc and Par Pharmaceutical Cos, and were intended to help Solvay preserve annual profits estimated at $125 million.

Under the deal, the three would stay off the market until 2015. The patent expires in 2020.

AbbVie was confident that it would win.

"The federal district and appellate courts have both previously ruled that the plaintiff's allegations lacked merit. We are confident that these decisions will be upheld," Adelle Infante, an AbbVie spokeswoman, said in a statement.

The Supreme Court is expected to issue a decision by the end of June.

AbbVie's arrangement is similar to the 40 deals made in the 2012 fiscal year, which ended on Sept. 30. That was up from 28 the previous year despite FTC efforts to stop them. The FTC said the agreements involved 31 different brand name drugs with total U.S. sales of more than $8.3 billion annually.

The FTC sued to stop the AndroGel arrangement, arguing that it was illegal under antitrust law because the companies divided up the market.

The FTC lost at the district court level and lost an appeal as well. But another appellate court has said the deals were illegal, prompting the Supreme Court to step in to resolve the split.

The FTC also sued Cephalon Inc, accusing it in 2008 of blocking a generic version of the anti-sleep drug Provigil. The case has been stayed pending the Supreme Court's decision.

In 2001 the FTC sued Schering-Plough Corp., later bought by Merck and Co Inc, because of payments to rivals to delay generic versions of its potassium supplement, K-Dur 20. The FTC lost that case.

But in a private case that also involved K-Dur, the U.S. Court of Appeals for the Third Circuit, in New Jersey, backed the FTC position and found the deals to be illegal.

BATTLES ON CAPITOL HILL, EUROPE

Opponents of pay-for-delay deals in the United States and Europe are not waiting for a high court decision, though.

Senator Amy Klobuchar, a Democrat from Minnesota and chairwoman of the Senate Judiciary Committee's antitrust panel, and Senator Chuck Grassley, a Republican from Iowa, introduced legislation in February to make the deals illegal.

Previous bills have failed in part because of opposition from the drug industry, both branded and generic.

In Brussels, EU regulators have eight investigations under way involving more than a dozen drugmakers. The European competition regulator says the deals violate antitrust law.

The decision will be made by an eight-member court. Justice Samuel Alito recused himself, without giving a reason.

The case is Federal Trade Commission v. Watson Pharmaceuticals Inc et al, U.S. Supreme Court, No. 12-416.

(Reporting By Diane Bartz; editing by Ros Krasny and Kenneth Barry)

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UPDATE 1-Amid revamp, U.S. FDA names acting head of generic drugs office

* Dr Kathleen Uhl to replace Dr Gregory Geba

* Geba abruptly resigned last week

* Generic drug trade group has concerns about revamp

(Adds details of generic drug office realignment)

By Toni Clarke

March 19 (Reuters) - The U.S. Food and Drug Administration has named Dr Kathleen Uhl acting director of its generic drugs division as it implements the biggest revamp of the department in more than a decade.

Uhl replaces Dr Gregory Geba, who resigned abruptly last week after just eight months on the job, saying the reorganization will change the scope and responsibilities of the office in a way that no longer made his position attractive.

Uhl was previously Geba's senior adviser, according to Dr Janet Woodcock, director of the FDA's drugs division, who announced the news in a memo to staff.

In his own farewell memo to staff, Geba said that over the past five months, since the agency began collecting fees from generic drugmakers to speed up drug reviews, the office approved nearly 200 applications and sent back 600 more, reducing the backlog of pending applications to 2,166 from 2,762.

The realignment, whose details are still being finalized, is designed to sharpen the agency's focus and "bolster our resources around pharmaceutical quality," according to a September note to staff from Woodcock.

Generic drugmakers are unsettled by the changes.

In a statement last week, the Generic Pharmaceutical Association (GPhA) said it was "disappointed" to learn of Geba's departure from the office of generic drugs (OGD).

"Today, 80 percent of prescriptions dispensed in America are generics," the organization said, adding that it and its members "rely on the strength and continuity of the OGD on critical matters such as regulations governing the entry to market of new, cost-saving generic versions of critical medicines."

Geba's departure is particularly jarring since it took the FDA two years to find a permanent replacement for the previous director of OGD, Gary Buehler, who left in late 2010 to become vice president for regulatory strategic operations at Teva Pharmaceutical Industries Ltd , the world's biggest generic drugmaker.

"These vacancies and changes hold the potential to distract from the critical mission of the OGD," GPhA said, "and slow the flow of information, guidance, and approvals."

Uhl, who obtained a medical degree from the Medical College of Pennsylvania, joined the FDA in 1998 in a clinical pharmacology division. She spent five years as assistant commissioner for women's health and as director of FDA's Office of Women's Health.

In 2010, Uhl became deputy director in the office of medical policy. Woodcock said in her memo to staff that Uhl provided "exemplary leadership" of that office as it underwent a major organizational change by becoming a "Super office," or one that houses subordinate offices.

Part of the current realignment of the generic drugs office involves it too becoming a "Super Office."

(Reporting by Toni Clarke in Washington; editing by Gerald E. McCormick and Matthew Lewis)

((toni.clarke@thomsonreuters.com)(202 898-8340)(Reuters Messaging: toni.clarke.thomsonreuters.com@reuters.net))

Keywords: FDA GENERICS/DIRECTOR

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FDA names Kathleen Uhl acting director, office of generic drugs

March 19 (Reuters) - The U.S. Food and Drug Administration has named Dr. Kathleen Uhl acting director of its Office of Generic Drugs as it initiates a nationwide search for a full-time replacement for Dr. Gregory Geba, who resigned last week.

The announcement was made on Tuesday in a note to staff from Dr. Janet Woodcock, director of the FDA's Center for Drug Evaluation and Research. Dr. Uhl most recently served as Geba's senior adviser.

(Reporting by Toni Clarke in Washington; Editing by Gerald E. McCormick)

((toni.clarke@thomsonreuters.com)(617-856-4340)(Reuters

Messaging: toni.clarke.reuters.com@reuters.net))

Keywords: FDA GENERICS DIRECTOR/

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UPDATE 2-FDA studies possible pre-cancerous link with diabetes drugs

* Studying unconfirmed findings from researchers

* Says has asked for samples of pancreatic tissue

* Says agency has not reached new conclusions on drugs

* Suggests patients remain on therapies

(Adds details on Victoza, drug class, diabetes, updates share prices)

By Ransdell Pierson

March 14 (Reuters) - The U.S. Food and Drug Administration is studying unconfirmed reports that a widely used class of diabetes drugs, which includes Merck & Co's

Januvia, may cause inflammation of the pancreas and pre-cancerous changes to the pancreas.

The agency, in a notice on its website on Thursday, said this is the first time it has communicated potential pre-cancerous links to the medicines, known as incretin mimetics.

The drugs for type 2 diabetes also include Victoza from Danish drugmaker Novo Nordisk

and Onglyza from Bristol-Myers Squibb Co and AstraZeneca Plc .

Patients should continue taking their medicines as directed until speaking with healthcare professionals, the agency said. The FDA said it is investigating findings from academic researchers that highlighted the potential risk.

"These findings were based on examination of a small number of pancreatic tissue specimens taken from patients after they died from unspecified causes," the agency said.

The FDA has asked the researchers to explain how they collected and studied the specimens and to provide tissue samples so the agency can further assess any possible risks.

In the meantime, the FDA said it has not reached any new conclusions about safety risks of the class of drugs.

The agency noted it has previously warned the public about acute pancreatitis, including fatal and nonfatal cases, seen with the medicines. Package insert labels for the class of drugs already warn about risk of the potentially dangerous inflammation.

"It's too early to tell, but we'll keep an eye on it," Edward Jones analyst Judson Clark said, when asked about the significance of the potential safety issues in Thursday's FDA advisory.

But Clark said he did not expect any immediate changes in prescribing habits for the drugs because the pancreatitis risk is already noted on the drug labels.

The class of medicines, which mimic a natural hormone called incretin, prompt the pancreas to release insulin when blood sugar is rising. They are approved to treat type 2 diabetes, the most common form of diabetes which usually develops in adulthood and is closely linked to obesity.

Merck's Januvia and its related drug, Janumet, had combined sales last year of almost $6 billion, making them by far the company's biggest product franchise. Onglyza and a related drug called Kombiglyze had sales last year of $709 million.

Shares of Merck were down 1.1 percent at $44.08, while Bristol-Myers shares were down 0.8 percent at $38.18 on Thursday afternoon on the New York Stock Exchange. Shares of AstraZeneca were up 1 percent at $46.31, also on the NYSE. Novo Nordisk shares closed down 1 percent in Copenhagen.

(Reporting by Ransdell Pierson in New York; Editing by Sofina Mirza-Reid and Matthew Lewis)

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Keywords: DIABETES PANCREAS/FDA

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GlaxoSmithKline boss says new drugs can be cheaper

* Improved R&D productivity can be passed on as lower prices

* GSK CEO says $1 bln drug development cost a "myth"

By Ben Hirschler

LONDON, March 14 (Reuters) - The pharmaceutical industry should be able to charge less for new drugs in future by passing on efficiencies in research and development to its customers, according to the chief executive of GlaxoSmithKline Plc .

"It's not unrealistic to expect that new innovations ought to be priced at or below, in some cases, the prices that have pre-existed them," Andrew Witty told a conference on healthcare in London.

"We haven't seen that in recent eras of the (pharmaceutical) industry but it is completely normal in other industries."

High prices for new medicines, most notably in cancer care, are a growing challenge for healthcare providers, particularly in austerity-hit Europe where government budgets are under pressure.

Traditionally, drug companies have argued that premium prices are needed to pay for the $1 billion-plus cost of developing a single new medicine.

But Witty said the $1 billion price tag was "one of the great myths of the industry", since it was an average figure that includes money spent on drugs that ultimately fail.

In the case of GSK, a major revamp in the way research is conducted means the rate of return on R&D investment has increased by about 30 percent in the past three or four years because fewer drugs have flopped in late-stage testing, he said.

"If you stop failing so often you massively reduce the cost of drug development ... it's why we are beginning to be able to price lower," Witty said.

"It's entirely achievable that we can improve the efficiency of the industry and pass that forward in terms of reduced prices."

The average cost of developing a new medicine, including failures, is now $1.1 billion, according to a December study of R&D productivity among the world's 12 top drugmakers by Deloitte and Thomson Reuters.

But the performance of individual companies varies widely. For the most successful company in the group studied, the average cost was just $315 million, while at the other extreme one firm spent $2.8 billion.

Overall, the industry is having more success in bringing new drugs to market, with 39 new drug approvals in the United States last year - a record only beaten in 1996.

In addition to improvements in research, global demand for medicines is increasing and the explosion in the volume of products sold in emerging markets should contribute to lower unit costs, Witty said.

GSK has for some years adopted a strategy of offering lower prices in less-developed markets in a bid to balance volume against price and maximise overall sales.

(Editing by David Holmes)

((ben.hirschler@thomsonreuters.com)(+44 20 7542 5082)(Reuters Messaging: ben.hirschler.thomsonreuters.com@reuters.net))

Keywords: GLAXOSMITHKLINE PRICES/

View the original article here

UPDATE 2-FDA studies possible pre-cancerous link with diabetes drugs

* Studying unconfirmed findings from researchers

* Says has asked for samples of pancreatic tissue

* Says agency has not reached new conclusions on drugs

* Suggests patients remain on therapies

(Adds details on Victoza, drug class, diabetes, updates share prices)

By Ransdell Pierson

March 14 (Reuters) - The U.S. Food and Drug Administration is studying unconfirmed reports that a widely used class of diabetes drugs, which includes Merck & Co's

Januvia, may cause inflammation of the pancreas and pre-cancerous changes to the pancreas.

The agency, in a notice on its website on Thursday, said this is the first time it has communicated potential pre-cancerous links to the medicines, known as incretin mimetics.

The drugs for type 2 diabetes also include Victoza from Danish drugmaker Novo Nordisk

and Onglyza from Bristol-Myers Squibb Co and AstraZeneca Plc .

Patients should continue taking their medicines as directed until speaking with healthcare professionals, the agency said. The FDA said it is investigating findings from academic researchers that highlighted the potential risk.

"These findings were based on examination of a small number of pancreatic tissue specimens taken from patients after they died from unspecified causes," the agency said.

The FDA has asked the researchers to explain how they collected and studied the specimens and to provide tissue samples so the agency can further assess any possible risks.

In the meantime, the FDA said it has not reached any new conclusions about safety risks of the class of drugs.

The agency noted it has previously warned the public about acute pancreatitis, including fatal and nonfatal cases, seen with the medicines. Package insert labels for the class of drugs already warn about risk of the potentially dangerous inflammation.

"It's too early to tell, but we'll keep an eye on it," Edward Jones analyst Judson Clark said, when asked about the significance of the potential safety issues in Thursday's FDA advisory.

But Clark said he did not expect any immediate changes in prescribing habits for the drugs because the pancreatitis risk is already noted on the drug labels.

The class of medicines, which mimic a natural hormone called incretin, prompt the pancreas to release insulin when blood sugar is rising. They are approved to treat type 2 diabetes, the most common form of diabetes which usually develops in adulthood and is closely linked to obesity.

Merck's Januvia and its related drug, Janumet, had combined sales last year of almost $6 billion, making them by far the company's biggest product franchise. Onglyza and a related drug called Kombiglyze had sales last year of $709 million.

Shares of Merck were down 1.1 percent at $44.08, while Bristol-Myers shares were down 0.8 percent at $38.18 on Thursday afternoon on the New York Stock Exchange. Shares of AstraZeneca were up 1 percent at $46.31, also on the NYSE. Novo Nordisk shares closed down 1 percent in Copenhagen.

(Reporting by Ransdell Pierson in New York; Editing by Sofina Mirza-Reid and Matthew Lewis)

((ransdell.pierson@thomsonreuters.com)(646 223 6030)(Reuters Messaging: ransdell.pierson.thomsonreuters.com@reuters.net))

Keywords: DIABETES PANCREAS/FDA

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UPDATE 1-Mylan to buy injectable drugs unit of India's Strides for $1.6 bln

Feb 27 (Reuters) - Generic drugmaker Mylan Inc said it would buy the injectable drugs unit of India's Strides Arcolab Ltd for $1.6 billion to expand its presence in the fast-growing generic injectables market.

The deal for Agila Specialities, a wholly-owned subsidiary of Strides, caps months of uncertainty regarding its sale, with reports suggesting Pfizer Inc and Japan's Otsuka Holdings Co Ltd as other potential buyers.

The deal will help Mylan, one of the world's largest generic drugmakers, double its injectable drugs portfolio.

A raft of patent expiries that will stretch until 2016 is expected to drive growth in the global generic injectables market. Also, many generic injectable drugs, which tend to be administered in hospitals, have been in short supply in the United States, including treatments for cancer.

"Together we will have more than 700 marketed injectables products and a global pipeline of more than 350 injectables products pending approval," Mylan President Rajiv Malik said.

Mylan said the acquisition of Bangalore, India-based Agila is expected to immediately add to its adjusted diluted earnings per share following closing.

"We expect the transaction to have a greater than 10 percent return on invested capital by the third full year from closing," CFO John Sheehan said in a conference call.

Mylan will also pay Strides Arcolab $250 million in potential milestone payments, it said.

Mylan said it will not assume any outstanding debt for the deal, which was unanimously approved by its board.

Separately, Mylan reported a 25 percent rise in fourth-quarter results profit, helped by sales of its Epipen auto-injector for the treatment of severe allergic reactions.

Mylan's shares were up 2 percent in extended trading after closing at $28.57 on Wednesday on the Nasdaq.

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GlaxoSmithKline unit joins patent pool for AIDS drugs

* ViiV Healthcare places paediatric abacavir in patent pool

* Move follows earlier sign-up to pool by Gilead Sciences

LONDON, Feb 27 (Reuters) - GlaxoSmithKline's HIV/AIDS drugs business is to share intellectual property rights on children's medicine in a patent pool designed to make treatments more widely available in poor countries.

ViiV Healthcare, majority-owned by GSK, is the second research-based pharmaceutical business to sign up to the new Medicines Patent Pool, following a lead set in 2011 by Gilead Sciences.

Although more than half of people living with the human immunodeficiency virus (HIV) that causes AIDS now get the drugs they need - thanks to a major roll-out of treatment in Africa - an estimated 6.8 million still go without, according to UNAIDS.

The Medicines Patent Pool (MPP), launched in 2010 by the UNITAID health financing system that is funded by a levy on airline tickets, aims to address the remaining gap by getting patent holders to share know-how with makers of cheap generic drugs.

In the case of ViiV, a key paediatric medicine known as abacavir will be made available to generic manufacturers which will be able to take a licence to make and sell it in 118 poor countries, the patent pool said on Wednesday.

ViiV and the patent pool have also agreed to negotiate further licences that will allow generics firms to manufacture low-cost versions of an experimental drug, dolutegravir, that is currently awaiting regulatory approval in Western markets.

There are 3.4 million children living with HIV worldwide but only 562,000 have access to medicines. Treating them is challenging because many drugs are not adapted for use in children.

Abacavir and dolutegravir are both seen as priority products for fighting HIV in poor countries. ViiV also sells other older drugs, some of which are already off patent and available as cheaper generics.

ViiV - which is owned 76.5 percent by GSK, 13.5 percent by Pfizer and 10 percent by Shionogi - only signed up to the patent pool after lengthy negotiations.

Some other major drugmakers have yet to join.

Bristol-Myers Squibb, Roche and privately owned Boehringer-Ingelheim are currently discussing plans to join the scheme, but Abbott, Johnson & Johnson and Merck have so far remained outside.

J&J decided in November to take unilateral action by not enforcing its patents on HIV drug Prezista in a limited number of poor countries, in a move that disappointed campaigners who argued joining the pool would have been more effective.

(Reporting by Ben Hirschler, Editing by Kate Kelland and Mark Potter)

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Mylan, Biocon help market generic insulin drugs

PITTSBURGH -- Mylan Inc. said Wednesday it will help market generic versions of some of the biggest-selling insulin drugs in the world under a new agreement with Biocon Ltd., India's largest biotechnology company by revenue.

The companies did not disclose terms of the deal.

Mylan said it will have the right to develop Biocon's generic version of Sanofi's drug Lantus, Eli Lilly and Co.'s Humalog, and Novo Nordisk AG's NovoLog. Mylan said combined worldwide sales of Lantus, Humalog and NovoLog totaled about $11.5 billion in 2012.

Mylan and Biocon will share some of the costs involved in developing the generics, and Mylan will have the exclusive rights to sell them in the U.S., the European Union and European Free Trade Association, Canada, Australia, and New Zealand. The companies will share profits on those sales. Mylan will have the right to work with Biocon to sell the drugs in some other markets.

Mylan shares rose 6 cents to $28.86 during regular trading, then fell a penny to $28.85 in after-hours trading.

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U.S. FDA outlines path to test Alzheimer's drugs earlier

* FDA encourages testing drugs before dementia strikes

* One prevention study to focus on family in Colombia

* U.S. aims to find effective treatment by 2025

CHICAGO, Feb 7 (Reuters) - Proposed U.S. guidelines may make it easier for drug companies to test Alzheimer's treatments in people at an earlier stage, when scientists think they may have the best shot at working.

The draft guidance document, issued on Thursday by the U.S. Food and Drug Administration, reflects changes in scientists' understanding of Alzheimer's. They now believe the disease begins at least a decade before symptoms appear.

"The scientific community and the FDA believe that it is critical to identify and study patients with very early Alzheimer's disease before there is too much irreversible injury to the brain," said Dr. Russell Katz, director of the Division of Neurology Products in the FDA's Center for Drug Evaluation and Research.

Current Alzheimer's drugs treat symptoms, but none has been proven to interrupt the steady destructive course of Alzheimer's that robs sufferers of their memories and independence.

"I think this will be hugely useful to the pharmaceutical industry," said Dr. Paul Aisen of the University of Southern California San Diego and director of the Alzheimer's Disease Cooperative Study, a joint effort between the university and the National Institute on Aging focused on identifying the earliest signs of Alzheimer's.

Aisen said the draft document will help companies design clinical trials to test drugs in people before dementia strikes, such as prodromal disease, a precursor to Alzheimer's in which mild cognitive changes have occurred and there is some biomarker evidence, such as a brain scan, that suggests the changes are related to Alzheimer's disease.

The need for new treatments is great and growing. A study on Wednesday suggested that the number of Americans with Alzheimer's disease would triple to 13.8 million by 2050.

Drug companies have been working for years to develop so-called disease-modifying drugs, but so far, with little success.

Last summer, a promising drug called bapineuzumab being developed by Johnson & Johnson, Pfizer and Elan, failed to show a benefit in large trials of patients with mild to moderate Alzheimer's.

And a drug by Eli Lilly and Co known as solanezumab also failed to meet the main goals of two large trials in this same population. But the drug did appear to show a slight benefit in mild patients when results of both studies were pooled.

Researchers now plan to study Lilly's drug in patients with earlier-stage disease, including a trial known as the "A4" prevention study, which will study 1,000 volunteers aged 70 to 85 with pre-symptomatic disease, who have not yet developed significant memory problems.

The trial will be managed by the Alzheimer's Disease Cooperative Study under Aisen's direction.

Several other so-called prevention studies are testing drugs in people who are genetically predisposed to develop Alzheimer's at an early age. In one study, members of a large family in Colombia will test a drug from Roche Holding AG's Genentech unit known as crenezumab.

Maria Carrillo of the Alzheimer's Association, which has worked with the National Institute on Aging to develop new guidelines for identifying Alzheimer's at an earlier stage, said the proposed changes "open the door wider for those of us working on and thinking about prevention trials."

The FDA said the move is part of the government's efforts to respond to Alzheimer's as part of the National Alzheimer's Plan signed by President Obama last year. The plan aims to find an effective way to prevent or treat Alzheimer's by 2025.

The draft document can be found at:

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UPDATE 2-Roche flags further growth as new drugs deliver

* 2012 sales up 7 pct, core earnings up 11 pct

* To pay 7.35 Sfr per share dividend for 2012

* Some investors had speculated about special dividend

* Shares fall 1.3 percent, underperform sector

BASEL, Jan 30 (Reuters) - Swiss drugmaker Roche forecast a rise in sales and profits this year, helped by new cancer medicines it hopes will shield it from the patent expiries ravaging many rivals.

Roche, the world's largest maker of cancer drugs, said on Wednesday it hoped sales would grow in line with 2012, when they rose 7 percent to 45.5 billion Swiss francs ($49 billion).

The Basel-based group also said it was aiming for core earnings, up 11 percent in 2012, to increase ahead of sales.

That assessment was more upbeat than cross-town rival Novartis, which last week guided for a fall in profit in 2013 as it grapples with competition from cheaper copies of its top-selling product.

Roche has been spared the pain from a wave of patent expiries hitting many rivals, as most of its medicines do not face imminent generic competition.

It also has high hopes for new treatments like skin cancer drug Zelboraf and breast cancer medicine Perjeta, and some analysts predicted its guidance for 2013 would prove cautious.

"In our opinion, sales in 2013 should pick up more strongly; we see the guidance as conservative as usual," said ZKB analyst Michael Nawrath.

Roche proposed a dividend of 7.35 francs per share, compared with 6.80 francs a year ago, and pledged to keep hiking shareholder payouts.

This wasn't enough for some investors, though, who had speculated the group might pay a special dividend.

Roche Chief Executive Severin Schwan dismissed this, pointing out the group's net debt to assets ratio of 16 percent was still above its 0-15 percent target range.

At 0900 GMT, shares in Roche, which have gained 9.5 percent so far this year, were down 1.3 percent at 198.8 francs compared with a 0.1 percent weaker European healthcare index.

The group said 2012 core earnings per share reached 13.62 francs, in line with analyst forecasts, helped by cost cutting and sales of its three biggest-selling cancer medicines - Rituxan, Herceptin and Avastin.

DEFEND AND GROW

Some analysts have raised concerns about the loss of market exclusivity on chemotherapy drug Xeloda at the end of 2013 and possible competition for hepatitis C drug Pegasys from other oral treatments, which they say could drag on Roche's medium-term growth.

However, the group is developing follow-on medicines to try and fend off anticipated competition from so-called biosimilar copies of its cancer drugs.

Sales of Perjeta, a treatment for women with a particularly aggressive form of breast cancer, were 56 million francs so far, up from 26 million in the third quarter.

Perjeta is a follow-on to Roche's current second-biggest seller Herceptin and part of its strategy to develop new drugs to extend the longevity of its best-selling brands. It won approval from U.S. regulators in June.

U.S. regulators are expected to decide on Feb. 26 whether to approve another new breast cancer drug called T-DM1, which Roche hopes will be used in combination with Perjeta, giving further protection against the biosimilar threat.

"We do not only believe that we will defend the franchise, we believe that with those two important new medicines we will actually grow the franchise in the medium to long term," Schwan told journalists in Basel.

Roche is hoping to duplicate this defence strategy with GA101 - a treatment for chronic lymphocytic leukaemia which it bills as a better product than its original Rituxan.

Key data due later this year will provide clues as to whether Roche will be able to convince doctors to move patients to GA101 from Rituxan, which had sales of 6.7 billion francs in 2012 but loses patent protection in Europe at the end of 2013.

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FDA approves 3 new diabetes drugs from Takeda

WASHINGTON -- The Food and Drug Administration on Friday approved three new formulations of a Takeda Pharmaceuticals Co. Ltd. diabetes drug designed to help patients control their blood sugar.

The common ingredient in all three drugs is a new compound called alogliptin, which stimulates the release of insulin, a hormone that controls blood-sugar levels. The FDA approved the drug in stand-alone form under the brand-name Nesina. The drug will also be sold in combination with metformin, under the name Kazano, and with pioglitazone, as Oseni. Metformin is a diabetes drug that has been used for decades. Pioglitazone is a newer diabetes drug sold by Takeda as Actos.

All three new drugs were approved for patients with type 2 diabetes, the most common form of the disease that affects about 24 million Americans. People with the disease have excessive levels of sugar in their blood, which can lead to heart attacks, kidney problems, blindness and other serious complications.

The FDA created tougher cardiovascular-safety standards for diabetes drugs in December 2008 after concerns were raised about certain treatments such Avandia, which was found to increase the risk of heart attacks.

Last year the patent on Takeda's best-selling diabetes drug Actos expired, allowing generic drugmakers to market cheaper versions. Nesina gives the company a new exclusive medicine in the diabetes market.

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FDA head and company CEOs cheer bumper haul of new drugs

* Approvals in past 2 years "cause for optimism" -FDA head

* Scientific progress, better diagnostics help productivity

* Pick-up follows lean period for drug industry R&D labs

DAVOS, Switzerland, Jan 25 (Reuters) - Pharmaceutical industry productivity is improving as a more targeted approach to drug development yields dividends and regulators offer speedier decisions on medicines that make a real difference to patients.

That is the view of both the head of the U.S. Food and Drug Administration and drug company CEOs meeting in Davos this week at the World Economic Forum.

"The products that we have approved in the last two years do give us real cause for optimism," FDA Commissioner Margaret Hamburg told Reuters.

A total of 39 new drugs won approval last year - a record only beaten in 1996 - up from 30 in 2011, which itself was a marked improvement on the 21 cleared in 2010.

The industry badly needs a winning streak after delivering poor returns for several years due to a wave of patent expiries on older products and a notable failure to bring enough new drugs to market to replace them.

The advance reflects progress in understanding the basic science of many diseases - notably some types of cancer - as well as smarter use of tests to target treatments to specific patient groups based on genetic profile.

"Not only have we been able to approve more new drugs that have real benefits for patients but also classes of drugs that signal where we are going in areas like personalised medicine, where we've been able to use diagnostics to target sub-populations of responders," Hamburg said.

The attitude of the FDA has also helped, according to Novartis CEO Joe Jimenez.

"The FDA has really shifted back to a very disciplined scientific approach to drug approvals, so we are starting to see more drug approvals come through," he said.

These days, however, winning approval for a new medicine is not the whole story. Drug manufacturers also have to fight hard to win a place for their usually pricey new products on lists of treatments covered by insurers or state health services.

The rigour of having to prove the value, as well as clinical effectiveness, of new medicines is helping to make companies more targeted in developing drugs that have a clear edge - even is this involves zeroing in on small, niche markets, said Sanofi Chris Viehbacher.

Discovering new medicines and progressing them through the three required stages of clinical development remains, however, a complex business with a fair dose of serendipity.

"It's not like engineering where the iPhone 5 follows on from the iPhone 4. Coming up with a new drug requires skill, insight and luck," said Merck & Co Ken Frazier.

"But we are on the verge, potentially, of a new wave of pharmaceutical innovation - and I think Merck stands to be at the forefront of that new wave."

(Reporting by Ben Hirschler; Editing by Peter Graff)

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Merck CEO: Significant Need for New Blockbuster Drugs

 Highlight transcript below to create clipTranscript:  Print  |  Email Go  Click text to jump within videoWed 23 Jan 13 | 05:30 AM ET Ken Frazier, CEO of Merck, tells CNBC about the challenges of finding new blockbuster drugs and how any change to Medicare funding must have a sustainable benefit.

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Senate Judiciary Chair Declares Defeat In War On Drugs

The Senate’s most senior member lamented the utter failure of the so-called “War on Drugs” and other draconian criminal justice policies Wednesday morning. During an address on the Senate Judiciary Committee’s 2013 agenda, Committee Chairman Patrick Leahy (D-VT) expressed alarm over high rates of imprisonment, harsh mandatory minimum sentences and federal crackdowns of marijuana laws legal under state law. “We have imprisoned people who should not be there and we have wasted money that should be spent on other things,” he said.

There are too many people, too many young people, too many minorities, too many from the inner city who are serving time in jail for people who might have done the same thing but have the money to stay out and are not there. What I say is if you have a youngster in the inner city buying $100 worth of cocaine for example could end up going to prison for years. If you have somebody on Wall Street buying the same 100 dollars from their local dealer, if they’re caught, they’ll be reprimanded and they may even have to do on Park Avenue a week of public service. That’s not right.

Responding to a question on the acclaimed War on Drugs documentary The House I Live In, he added:

[T]he fact that so many people, especially young people, go to prison for a relatively minor thing, a drug offense. And then you ask, why can’t they get jobs afterward? Why do they have problems from then on?

I think we have spent tens of billions, hundreds of billions of dollars on the so-called War on Drugs. Well, we’ve lost.

After laying out Judiciary Committee plans to effectively protect public safety by prioritizing the immediate reauthorization of the Republican-obstructed Violence Against Women Act and holding hearings on gun violence prevention, Leahy focused on those elements of the criminal justice system that send the wrong people to jail – and for too long.

“I say this as a former prosecutor … I think the reliance at the state and federal level on mandatory minimums has been a great mistake,” he said. “I’m not convinced that it has lowered crime, but I know it has imprisoned people who should not be there.”

He also advocated for national standards and oversight of forensics testing, saying, “If you have labs that do not give you right results, and you think you can close a case by sending the wrong person to prison, you’ve done nothing for the safety of people” and “you have tragedy of having an innocent person in prison.”

Responding to a question about federal enforcement of marijuana laws, Leahy reiterated his concern that federal resources are misallocated to marijuana crackdowns while murders and robberies go unsolved. “It was also my feeling as a prosecutor,” he said. “I found more important things to do.” President Obama expressed a similar sentiment recently when he told Barbara Walters the administration has “bigger fish to fry” than target marijuana users, but that has not stopped prosecutors from cracking down on medical marijuana distributors in seeming compliance with state law.

Leahy joins a number of world leaders, including Bill Clinton, who have recently blasted the failed War on Drugs approach. Mandatory minimum sentences, discriminatory crackdowns and criminalization of public health issues are all a part of the tough-on-crime system that has sent more of our own to prison than any other country, under the guise of improved public safety.

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UPDATE 2-Shire confident on 2013 as it boosts genetic drugs unit

LONDON, Jan 8 (Reuters) - British drugmaker Shire reassured investors that it was on target to meet 2013 earnings expectations and said it was boosting its genetic drugs line with a new acquisition.

The company, which has expanded by acquiring late-stage or already marketed drugs in niche areas, had a weak third quarter, missing market expectations as it faced increased generic competition for its hyperactivity drug.

However, outgoing CEO Angus Russell will tell investors at a healthcare conference in San Francisco that the company "is now increasingly confident of meeting current consensus earnings expectations for 2013", Shire said in a statement on Tuesday.

Analysts forecast earnings per share of $2.20 in 2013, according to Thomson Reuters I/B/E/S estimates.

The company also reiterated that it would post double-digit earnings growth in 2012.

Earlier on Tuesday Shire said it had agreed to buy Lotus Tissue Repair, a U.S. biotechnology company developing the first treatment for a rare genetic disorder that causes extremely fragile skin and recurrent blister formation.

Shire said the purchase, for an undisclosed sum, would boost the pipeline of its Human Genetic Therapies unit, which makes protein therapies for genetic conditions such as Hunter's Syndrome and Fabry and Gaucher diseases.

Lotus Tissue Repair's lead product candidate, which is in late pre-clinical development, is a protein replacement therapy for the treatment of dystrophic epidermolysis bullosa (DEB), Shire said.

"DEB ... (impacts) the lives of patients and their families, many of whom have few or no treatment options other than palliative care," said Philip J. Vickers, head of R&D at Shire Human Genetic Therapies.

Shares in FTSE 100-listed Shire closed up 2.6 percent at 1,963 pence, their highest level since September.

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China to cut prices of more than 400 drugs from February

HONG KONG, Jan 8 (Reuters) - China will cut prices of about 400 drugs for respiratory diseases, fever and pain by up to 20 percent from February, in a move to make medicines, including some products from Pfizer, GlaxoSmithKline and Novartis, more affordable.

It will be the fourth such price cut since 2011 and is part of reforms since the early 2000s to make healthcare cheaper and more accessible.

China's National Development and Reform Commission (NDRC) said in a statement on Tuesday the latest round of price cuts involved 20 broad classes of medicines and would include speciality drugs.

As the government cracks down on costs, more Chinese drugmakers are fighting thinning margins.

Sinopharm Group Co Ltd - China's largest drug distributor - and smaller rivals like Sihuan Pharmaceutical Holdings Group Ltd are expanding their distribution networks to get bigger slices of the market to offset increasing pressure on margins.

Faced with patents running out in the West, bigger foreign pharmaceutical companies, such as Pfizer and AstraZeneca , have hitched their futures largely to sales in developing markets including China, India, Eastern Europe and South America.

The average reduction in the latest round of price cuts will amount to 15 percent, although the cut will be as high as 20 percent for the most expensive drugs.

Earlier rounds of price cuts included antibiotics, anti-tumour, hormonal and blood-related medicines, and drugs for the circulatory, nervous, digestive and immune systems.

Health Minister Chen Zhu told a health conference on Monday that healthcare was still too expensive and there was still inadequate control over the improper use of drugs.

China, with an ageing population, is overhauling its health system and has made big strides since 2003. It now has a basic universal medical insurance system and heavily subsidises a growing list of essential drugs.

But many challenges remain in the country of 1.3 billion people, including a lack of state funding for hospitals, where drug sales, often at inflated prices, remain a major source of income.

(Reporting by Tan Ee Lyn and Donny Kwok; Editing by Robert Birsel)

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UPDATE 1-Shire adds to genetic disorder drugs with U.S. deal

LONDON, Jan 8 (Reuters) - British drugmaker Shire has agreed to buy Lotus Tissue Repair, a U.S. biotechnology company developing the first treatment for a rare genetic disorder that causes extremely fragile skin and recurrent blister formation.

Shire said on Tuesday the purchase, for an undisclosed sum, would boost the pipeline of its Human Genetic Therapies unit, which makes protein therapies for rare genetic conditions like Hunter's Syndrome and Fabry and Gaucher diseases.

Cambridge, MA-based Lotus Tissue Repair's lead product candidate, which is in late pre-clinical development, is a protein replacement therapy for the treatment of dystrophic epidermolysis bullosa (DEB), Shire said.

"DEB ... (impacts) the lives of patients and their families, many of whom have few or no treatment options other than palliative care," said Philip J. Vickers, head of R&D at Shire Human Genetic Therapies.

He said protein replacement therapy had the potential to provide a first-in-class disease-modifying treatment for children with DEB.

Shares in London-listed Shire were trading up 1.9 percent at 1,951 pence by 1252 GMT.

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Number of new drugs picks up in Europe and U.S.

* EU agency sees more new drug applications in 2013

* U.S. new drug approvals running at eight-year high

* Encouraging signals for industry as patent losses peak

LONDON, Dec 18 (Reuters) - The number of new medicines approved or pending approval is on the rise on both sides of the Atlantic, painting an encouraging picture for the global drugs industry as it emerges from a wave of patent expiries.

European regulators said on Tuesday that they expect an increase in new drug applications to about 54 in 2013. In the United States, a total of 34 new drugs have been approved for sale so far in 2012 - the highest level in eight years.

The sector badly needs a pick-up in productivity as companies try to refill their medicine chests after a wave of patient expiries that have peaked this year, depriving leading U.S. and European drug companies of more than $30 billion of revenue.

"It bodes well," said Standard & Poor's (S&P) analyst Olaf Toelke, who predicts that strong pipelines will allow most large drugmakers to emerge unscathed from the spike in sales losses.

"It shows that companies are addressing the need to find new drugs to replace those facing patent expiration. They have done their homework and it looks as if the industry will be at least stable in future and not fall off the threatened patent cliff."

The U.S. Food and Drug Administration (FDA), gatekeeper to the world's biggest pharmaceuticals market, still has just over a week to add more approvals to this year's tally - and there are signs that the number will increase further.

Three new products for leukaemia, anthrax and Cushing's disease from Ariad Pharmaceuticals, GlaxoSmithKline and Novartis were approved last Friday alone, and the FDA is scheduled to hand down decisions on a further four drugs before the end of the month.

FEWER GENERICS

A green light for all these would take the 2012 tally of new molecular entities (NMEs) approved by the agency's Center for Drug Evaluation and Research to 38 - two more than the 2004 total of 36.

The European Medicines Agency painted a different picture of improving productivity by announcing that its work programme for the year ahead included a forecast for 54 new drug applications, up from 52 in 2012, 48 in 2011 and 34 in 2010. These figures exclude medicines designated for "orphan", or rare, diseases.

Significantly, the London-based agency is also expecting a sharp drop in the number of applications from companies to sell generic versions of drugs, to 20 in 2013 from 39 in 2012, given the slowdown in patent expiries next year.

Major U.S. drug companies will lose a total of about $21 billion in revenue this year from lucrative medicines coming off patent, while the hit for European businesses is about $10 billion, according to S&P.

This year's expiries have included Sanofi and Bristol-Myers Squibb's heart drug Plavix and AstraZeneca's antipsychotic Seroquel.

Winning approval from regulators, however, is only part of the battle for drugmakers.

Investors will also be watching closely to see how the new drugs perform commercially once they reach the market, since securing payment for innovative medicines is an increasingly tough fight - especially in austerity-hit Europe.

An analysis by Deloitte and Thomson Reuters this month found that while new drug approvals were increasing, this was offset by lower expected revenues from many individual products.

(Editing by David Goodman)

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