Top Stories in Business & Health for May 1, 2017
Fresenius will spend more than $5 billion to buy U.S. drugmaker Akorn, Merck KGaA’s biosimilars portfolio
Europe’s largest publicly traded health care provider, German health care group Fresenius SE, has agreed to buy Akorn Inc., a niche pharmaceutical company that specializes in “difficult-to-manufacture sterile and nonsterile dosage forms” of generic and branded prescription drugs, for $4.75 billion, as well as Merck KGaA’s biosimilars business for an estimated upfront payment of $185 million plus licensing fees and up to approximately $545 million in milestone payments. In addition to specialty segments such as ophthalmics and sterile injectables, Akorn’s portfolio includes branded over-the-counter consumer health products and drugs for veterinary use. The purchase of Akorn will expand the product lines of Fresenius’ Kabi unit, which has its U.S headquarters near Akorn’s corporate offices in northern Illinois. Fresenius Kabi makes generic drugs and products for infusion, transfusion and clinical nutrition support. Fresenius CEO Stephan Sturm suggested that the two transactions have synergistic value: “Akorn brings us additional U.S. market access to small and mid-sized clinics and retail pharmacies,” he said. “And that access will be important for our biosimilars.”
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Sanofi sues Mylan over ‘illegal conduct’ to suppress EpiPen competition
Pharma giant Sanofi wants a piece of the legal action against Mylan. The French drugmaker filed a lawsuit in a federal district court in New Jersey claiming that Mylan “engaged in illegal conduct to squelch … competition” and maintain the market monopoly of its EpiPen epinephrine auto-injector, thereby “harming both Sanofi and U.S. consumers.” Sanofi contends that Mylan took underhanded steps to “squelch” competition from Auvi-Q, a rival product Sanofi marketed in the U.S. from 2013 until 2015, when it was pulled from the market because of possible dosing issues. Sanofi said Mylan also used “unprecedented” price rebates to persuade insurers, state Medicaid agencies and PBMs not to reimburse patients for Auvi-Q. Given Mylan’s virtual lock on the market, after the recall Sanofi returned the rights to Auvi-Q to Kaleo, the company that developed the product. Kaleo addressed the dosing concerns and reintroduced Auvi-Q in February—with an even steeper list price than EpiPen’s.
Amgen and Sandoz head to Supreme Court
Attorneys for Amgen and Sandoz presented arguments before the Supreme Court in a biosimilars case that could have significant impact on the industry. At the center of the case are two predominant issues. The first is whether biosimilar companies should have to give makers of the original branded product the abbreviated Biologics License Application (aBLA) they file with the FDA. The second is when biosimilar companies are permitted to give notice of intent to market a biosimilar product—i.e., can pre-marketing notice be given before the FDA approves the aBLA. That notice triggers a six-month waiting period before the biosimilar can be launched, so the makers of biosimilars would gain by being able to give notice ahead of the FDA approval, whereas the makers of branded biologics would gain from having additional market exclusivity if the pre-marketing notice can’t be given until FDA approval is granted. The court is not expected to render a decision until June or July, according to FiercePharma.
Global foundation to launch value-based cardiac care pilot in Atlanta
The World Economic Forum (WEF), an international foundation based in Geneva that promotes cooperation among the public, private, academic and other sectors, will launch a series of value-based pilots around the world under its Value in Healthcare initiative. The first pilot, to be rolled out in Atlanta, will focus on coordinating care for patients with heart disease. The goal of the overall project is to show the value of a new health care model that tracks and pays for treatment based on outcomes, instead of the volume of care provided. Although the concept is certainly not new, and in fact is one of the underlying tenets of the Affordable Care Act, Michael Porter, an economist and a Harvard Business School professor, said the “push back” in transforming health care in this manner is on the implementation, not the ideas. While more than 50 stakeholders are involved with the Value in Healthcare initiative, Novartis AG, Takeda Pharmaceuticals, Kaiser Permanente, Medtronic, Qualcomm’s health data unit and health officials from the Netherlands and Britain are among those that will participate in the first pilot.
C.R. Bard to be acquired by Becton, Dickinson & Co
Global medical technology company Becton, Dickinson & Co. agreed to pay $24 billion to buy C.R. Bard Inc., a company based in Murray Hill, N.J., that manufactures and sells medical technologies in the fields of vascular, urology, oncology and surgical specialty products. The transaction is expected to close this fall, marking the 12th acquisition Franklin Lakes, N.J.-based Becton has made since Vincent Forlenza became CEO in 2011. The purchase price reflects approximately a 25 percent premium to the closing price of Bard shares on April 21, the last business day before the deal was announced. The boards at both companies unanimously approved the acquisition.
Appellate court upholds ruling against Anthem-Cigna merger
Two of the three judges on a panel from the U.S. Court of Appeals for the District of Columbia agreed that U.S. District Judge Amy Berman Jackson was correct when she ruled in February that the proposed merger between Anthem and Cigna Corp. would harm competition in the national accounts market in the 14 states in which Anthem does business. The dissenting opinion came from Judge Brett Kavanaugh, who stated that he believed the merger would result in cost savings of $1.7 billion to $3.3 billion annually for large employers. Friday’s decision can be appealed—Anthem and Cigna could request a hearing en banc at the D.C. Circuit Court, or take the case to the Supreme Court.
Trinity to leave BPCI Model 3
Trinity Health at Home has decided to drop its model 3 bundles in the Medicare Bundled Payments for Care Improvement (BPCI) program. Trinity Health participates in more than 300 bundles, and its home health business participates in three initiatives: BPCI models 2 and 3, and the Centers for Medicare and Medicaid Services’ Home Health Value-based Purchasing in Maryland and Iowa. Overall, Trinity Health at Home lost money on its bundles in 2016 and will have to pay CMS back for some bundles that did not achieve cost-saving goals, Home Health Care News reported. Although Trinity at Home anticipates better results this year, it will drop bundles in its freestanding home health locations. Trinity said lack of physician engagement was one of the primary reasons for the losses in 2016, noting that managing the physicians in its remaining bundles has become a primary focus this year.
CMS to increase payments to hospice
Total Medicare payments to hospice will increase by an estimated $180 million in fiscal year 2018, based on a proposed CMS rule to update the hospice payment rate by 1 percent. The increase, mandated under the Medicare Access of CHIP Reauthorization Act, is significantly less than the total $350 million increase in payments in the FY 2017 update. According to Home Health Care News, the number of Medicare beneficiaries receiving hospice services increased from 513,000 in FY 2000 to almost 1.4 million in FY 2016, while hospice expenditures during that same period rose from $2.8 billion to approximately $16.5 billion. CMS estimates that hospice expenditures will continue to rise approximately 7 percent per year.
BCBSM medical home program a success
A statewide patient centered medical home (PCMH) incentive program sponsored by Blue Cross Blue Shield of Michigan reduced hospital and emergency department (ED) utilization, along with costs—especially for patients with chronic illnesses targeted for management by the PCMH, according to a study published in Health Services Research. The analysis included data for all adult patients in 2,218 primary care practices that participated in the PCMH program during the period from 2009 to 2012. Hospital utilization decreased 13.9 percent for conditions targeted by the PCMH (asthma, angina, diabetes, chronic obstructive pulmonary disease, high blood pressure and congestive heart failure) versus 3.8 percent for other conditions. ED utilization decreased 11.2 percent for the targeted conditions versus 3.7 percent for other conditions. The hospital per member per month (PMPM) cost was reduced 17.2 percent for the targeted conditions versus 3.1 percent for other conditions, and the ED PMPM cost was reduced 9.4 percent versus 3.6 percent.
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