Eli Lilly: Hope To Talk To FDA On Arxxant

Drug Pipeline report

Eli Lilly & Co. (LLY) hopes to meet with the U.S. Food and Drug Administration in the next few weeks to clarify what new data is necessary to gain approval for Arxxant, a medication to treat a diabetic eye disease, the drug maker's chief executive said Thursday.

"We do not have a meeting scheduled but I am hoping for (a meeting)" in the next few weeks, Chairman and Chief Executive Sidney Taurel told Dow Jones Newswires in an interview.

The FDA said that there was "very good initial data to make the product approvable" but that the regulatory agency needed more, he said.

It's unclear whether that means more mining of the data from existing trials, waiting for data from existing trials or totally new trials, Taurel said. "They have not yet asked for specific extra information," he said.

As the first oral treatment for diabetic retinopathy, Arxxant has the potential to be a big seller for Eli Lilly. The disorder can cause blindness and affects at least a third of the world's estimated 230 million diabetics.

Arxxant is the only drug the company currently has in the FDA approval process. Others are in late-stage clinical trials, including prasugrel, which the firm expects to submit for approval in the second half of next year.

The company, maker of the popular antidepressant drug Prozac, had almost $15 billion in sales last year.

Taurel later said, according to an executive, it's uncertain what, if any, impact the additional data requirement will have on the commercial launch of Arxxant, known scientifically as ruboxistaurin mesylate. When Eli Lilly applied for FDA approval in February, the start was originally set for 2007. Then in April, the agency put it on a fast track vetting process that could have seen the drug hit the market as early as this year.

The Indianapolis-based drug maker received the additional requests from the FDA in an approvable letter Aug. 18, indicating the agency might authorize the drug.

Developing Blood Thinner With Daiichi-Sankyo

Taurel said trials indicate that a blood thinner to prevent heart attacks, being developed with Japanese pharmaceutical maker Daiichi-Sankyo Co. (4568.TO), will be more effective than rival drug Plavix, as well as its generic version.

Plavix, the second-biggest selling drug in the world last year, generated global sales of about $5.9 billion.

The two companies have been jointly studying a compound called prasugrel since 2000. They're in the midst of a late-stage trial to determine whether prasugrel is more effective than Plavix in treating certain heart patients. The trial should be completed in 2007, with a submission for regulatory approval by the end of the year.

"We have a lot of data in early development which shows that prasugrel is superior to Plavix," he said. "We are very optimistic that we will have a better product."

Other pharmaceutical companies such as AstraZeneca PLC (AZN) and Medicines Co. (MDCO) are also studying so-called anti-platelet medications as potential rivals to Plavix, which is co-marketed by Sanofi-Aventis (SNY) and Bristol-Myers Squibb Co. (BMY). The experimental drugs, which like Plavix are designed to prevent heart attacks and strokes in at-risk patients, are still a couple of years from reaching the market.

Apotex Inc., a Canadian generic-drug maker, began selling a copycat version of Plavix Aug. 8 amid a patent-infringement dispute with Sanofi of France and New York-based Bristol. If generic Plavix remains on the market, its price could fall substantially below that of branded Plavix, hurting the overall value of the anti-platelet market.

A hearing in federal court in New York could help determine whether generic Plavix stays on the market. A two-day hearing on an injunction request by Sanofi and Bristol ended last week.

Taurel said the legal situation on generic Plavix is unclear, but that prasugrel still ought to be able to compete well because of its apparent higher effectiveness.

"The bar has definitely been raised (by prasugrel) because you need to show real superiority when you compare with a lower priced product - generics come at much lower price. But we are optimistic that the data will enable us to compete very effectively against generic," Taurel said.

However, Prudential analyst Tim Anderson wrote in a recent note to clients that he would probably cut by half his forecast of 2010 prasugrel sales of $2 billion if generic Plavix stays on the market. That could hurt Lilly's earnings growth in 2008 and beyond.

The chief executive also said that the company will mainly stick to its strategy of organic growth and partnering with other drug firms in developing new medications. However, he said that the company is always on the lookout for promising small and mid-cap companies to acquire, especially those specializing in diabetes care, cancer, neuroscience and osteoporosis.

Taurel is on a four day trip to Japan to meet with corporate partners, regulatory officials and lawmakers.

A member of a U.S. trade advisory panel, the President's Export Council, Taurel also gave a speech Thursday to business executives on a possible U.S.-Japan free trade agreement and discussed the issue with Japanese officials including, trade minister Toshihiro Nikai and Foreign Minister Taro Aso.

Pfizer's Celebrex May Slow, Prevent Colon Cancer

People at high risk for colon cancer may slow or prevent development of the disease by taking the painkiller Celebrex, two large studies suggest. But some doctors caution an increased risk of heart attacks and strokes from the medicine overshadows its potential benefits for cancer prevention.

Two studies published in the New England Journal of Medicine this week show that Pfizer Inc.'s Celebrex, most commonly taken to relieve arthritis pain, reduced the recurrence of polyps, small growths in the colon that can become cancerous over time.

In one study, 61% of patients on placebo developed new polyps over three years compared with 43% on 200 milligrams of Celebrex twice a day. For people taking 400 milligrams of Celebrex twice a day, the incidence of new polyps was 38%. All the patients had polyps of the colon removed previously, a risk factor for colon cancer. But patients taking the placebo had an incidence of 1% for serious cardiovascular events, such as heart attack, compared with 2.6% for the lower dose of Celebrex and 3.4% for the higher dose.

A second study found that 34% of people taking 400 milligrams of Celebrex once a day developed new polyps over three years compared with 49% of patients taking a placebo. Some 2.5% of patients taking Celebrex experienced serious cardiovascular trouble compared with 1.9% in the placebo group. A common dose of the drug for arthritis pain is 200 milligrams a day.

Despite the intriguing results, an editorial accompanying the two studies concluded that due mainly to the cardiovascular risks Celebrex, or celecoxib generically, has "no role" in preventing cancer in the general population or people who don't have profound hereditary risks for colon cancer. If polyps are found early by colonoscopy, they can be removed, preventing cancer.

Still, the inhibition of polyps "was proof of principle" that a medicine could make a difference in the course of the disease, said John Saltzman, a researcher on one of the trials, called APC, and director of endoscopy at Brigham and Women's Hospital, Boston. While the APC investigators also concluded that Celebrex isn't appropriate for widespread use to prevent colon cancer, Dr. Saltzman said he would consider Celebrex for patients with a very high risk for polyps and a low risk of cardiovascular disease.

Michael Osborne, president of the Strang Cancer Prevention Center in New York, said the next step is to better characterize the risk factors to identify patients who might benefit without undue danger.

Simon Lowry, a medical director for Celebrex at Pfizer, described the cancer results as "encouraging" but said, "We do not recommend Celebrex in treating and preventing cancer." But for arthritis sufferers, Dr. Lowry added, the drug is "an important treatment option."

The first study was funded by the federal National Cancer Institute and Pfizer. The study was stopped in December 2004 after a safety review found an increase in serious cardiovascular problems in the group of patients taking Celebrex compared with the placebo group. The second study was financed by Pfizer and was halted after the safety findings in the first study.

An in-depth review of safety data in the first, or APC, trial was done after a similar trial of Merck & Co.'s Vioxx for cancer prevention revealed an increased cardiovascular risk that led the company to take the drug off the market.

More about Celebrex current clinical trials at Drug Pipeline Database

Genzyme Launches $380 Million Bid For AnorMED

Genzyme Corp., sparking a potential bidding war for a promising transplant drug, launched a $380 million hostile offer to buy AnorMED Inc., a Canadian pharmaceutical company.

AnorMED rejected the overture but said Genzyme, one of the biggest biotechnology firms, intended to take its bid directly to shareholders. Genzyme, Cambridge, Mass., wouldn't comment on its next move.

Investors, however, clearly expected AnorMED to entertain even higher offers. Its shares almost doubled, to $9.90, in 4 p.m. composite trading on the American Stock Exchange yesterday. That price was well above Genzyme's offer of $8.55 a share.

The bid reflected strong interest in AnorMED's leading product, Mozobil, an infusion said to improve the success of stem-cell transplants for cancer patients. Mozobil is in the late stages of clinical trials, and AnorMED plans to seek marketing approval from the Food and Drug Administration by the end of 2007.

Kenneth Galbraith, AnorMED's chairman and interim chief executive, said the company had been in takeover negotiations with Genzyme and several other bidders beginning in October. Those discussions fell apart this spring, when dissident shareholders succeeded in replacing AnorMED's board.

Mr. Galbraith said the new board rejected an identical Genzyme bid in April. "They thought it was not appropriate to take the first offer from the first company," he said, adding that AnorMED expects to receive competitive bids.

AnorMED said in June that it would have to raise additional cash to complete development of Mozobil. The company posted a net loss of $41.5 million last fiscal year, which ended March 31.

Genzyme said it was best positioned to develop and market Mozobil, which would be its second major transplant drug. The other is Thymoglobulin, for kidney transplants, with about $150 million in annual sales, according to a spokesman.

Genzyme's shares fell 39 cents to $66.28 in 4 p.m. Nasdaq Stock Market composite trading yesterday.

ViroPharma Up On Data For Hepatitis C Drug

ViroPharma Inc. (VPHM) shares jumped 13% Tuesday after the drug company reported what it called positive data from small, early-stage studies of an experimental treatment for hepatitis C.

The Exton, Pa., company is developing HCV-796 with pharmaceutical giant Wyeth (WYE) of Madison, N.J. HCV-796 is a potential treatment for hepatitis C, a liver disease caused by a virus. Drug Pipeline

ViroPharma late Monday reported preliminary data from a Phase 1b study of HCV-796 in combination with a medication called pegylated interferon in people with hepatitis C infection who hadn't been previously treated. Pegylated interferon is a standard treatment for hepatitis C and is sold under the brands Pegasys by Roche Holding AG (RHHBY) and Peg-Intron by Schering-Plough Corp. (SGP).

ViroPharma said the combination therapy was superior to pegylated interferon alone in reducing the virus. After 14 days of treatment, the combination therapy had a mean viral reduction of between 3.3 and 3.5 log10, equivalent to a reduction of 99.95% to 99.97%. In comparison, pegylated interferon alone had a viral reduction of 1.7 log10, ViroPharma said.

There was no evidence during the treatment period of "viral rebound" with the combination therapy, compared with pegylated interferon alone, ViroPharma said. No dose-limiting toxicities were seen and tolerability was consistent with that expected from pegylated interferon. ViroPharma remains blinded to the safety data pending completion of the trial.

"These data are clearly very promising as HCV-796 in combination with pegylated interferon appears highly potent with substantial antiviral activity across all doses tested," Colin Broom, ViroPharma's chief scientific officer, said in a press release.

ViroPharma will release complete data on the Phase 1b study at an upcoming medical meeting, Chief Executive Michel de Rosen said on a conference call with analysts Tuesday.

The company plans to begin dosing in Phase 2 clinical trials of HCV-796 in the fourth quarter.

ViroPharma said separately Tuesday that it was presenting new data on HCV-796 at a hepatitis C conference in Australia.

ViroPharma shares rose $1.44 to $12.61 on Tuesday, on volume of 14.2 million, well above the daily average of 1.8 million. Wyeth shares rose 40 cents, or 0.8%, to $48.70.

It was the second big boost for ViroPharma shares in less than a week. The stock rose 8% Thursday after a Cowen analyst upgraded his rating, saying sales of the company's only current product, the Vancocin antibiotic, may not be hurt by generic competition as early as investors previously feared. Still, the stock is down about 33% year-to-date largely on the generic threat for Vancocin.

If ViroPharma and Wyeth can successfully bring HCV-796 to market, it would reduce ViroPharma's dependence on Vancocin. ViroPharma also is developing an antiviral compound called Maribavir.

Novartis Gets EU Approval For Promising Exjade

Swiss pharmaceutical company Novartis AG (NVS) Wednesday said it received European Union approval to sell Exjade, a treatment for people with excess iron in their bloodstream.

Novartis, based in Basel, Switzerland, expects the medicine to eventually become a cornerstone therapy for the removal of excess iron, a condition that often arises in patients who require frequent blood transfusions to treat some types of anemia. Analysts' view on the drug's potential are divided, but some expect it to become a blockbuster with more than $1 billion in annual sales.

The U.S. Food and Drug Administration approved the drug last November. ( drug pipeline database )

Exjade, a tablet that is dissolved in a glass of juice or water, provides similar benefits to patients as Desferal, another Novartis drug that is today's standard therapy, but which has the drawback of requiring lengthy infusions.

Analysts expect Exjade not only to replace Desferal, but also to be much more widely used because it's so much easier to take.

Desferal is pumped slowly into the bloodstream over the course of eight to 12 hours a day, for five to seven days a week. Patients usually wear a pump at night while they sleep to receive the treatment, known as iron chelation therapy. Both Desferal and Exjade contain agents that bind to the excess iron and remove it from the system, a process that is called iron chelation.

"The approval of Exjade is fantastic news for people like me who need regular blood transfusions," Anand Ghattaura, who lives in London, said in a statement. "I've always found chelation with a pump and needle difficult to keep up with. I often used to worry all day about my infusion in the evening. Now I can take Exjade in the morning with a glass of juice and can forget about it until the next day."

Novartis said in July that in the U.S., sales of Exjade in the few months that it's been on the market were already twice as high as those of Desferal during its best year.

"The approval is good news for Novartis because around 80% of sales are likely to come from Europe, where diseases like Thalassemia, which requires lengthy blood transfusions, are more widespread than in the U.S," said Karl-Heinz Koch, analyst in Zurich with private bank Lombard Odier Darier Hentsch, who has a buy rating on the stock.

At 0705 GMT, Novartis was up CHF0.25, or 0.4%, at CHF70.75, in line with the broader market.

Following regulatory approval, Novartis will now start negotiations with E.U. member countries on the price of Exjade.

In the U.S., Exjade costs around $32,000 a year to treat conditions other than sickle cell anaemia, for which treatment costs are roughly a third lower. Costs vary by weight of the patient, as well as dosing. Most analysts expect Exjade to generate revenue from $500 million to $700 million in its best year, but some say it has the potential to achieve more than $1 billion if it will be much more widely used than Desferal.

Schering-Plough Settles US Fraud Allegations

Schering-Plough Corp. agreed to pay $435 million and a unit pleaded guilty to criminal charges to settle federal allegations of fraudulent drug marketing and pricing.

The settlement is one of the largest in a crackdown that has forced Schering-Plough and other big drug marketers to return billions of dollars the government says were illegally extracted from Medicare and Medicaid. Schering-Plough, of Kenilworth, N.J., will pay $255 million to settle related civil accusations. Its Schering Sales unit will pay a $180 million criminal fine.

The government accused the company of illegally inducing doctors to prescribe a number of drugs, including the cancer medications Temodar and Intron A and several hepatitis treatments, by, among other things, paying doctors up to $500 for each patient started on therapy, placing Schering-Plough-funded physician assistants in doctor's offices or paying doctors to attend Schering-Plough events.

According to prosecutors, Schering-Plough hid favorable prices it had negotiated with some health plans for two of its drugs, Claritin Redi-Tabs and K-Dur, overcharging Medicaid as a result. Drug makers are required to give Medicaid the lowest price paid by any other buyer.

Schering Sales agreed to plead guilty to one count of criminal conspiracy for making false statements regarding its price for Claritin as negotiated with a health plan and for lying to the Food and Drug Administration about its promotion of Temodar and Intron A. Except for that plea, Schering-Plough neither admitted or denied other wrongdoing alleged in the settlement.

"We will not tolerate corporate attempts to profit at the expense of the ill and needy in our society," said Michael Sullivan, the U.S. attorney in Boston, whose office brought the case.

The settlement, subject to court approval, resolves the biggest remaining liability Schering-Plough Chief Executive Fred Hassan inherited from previous management. Mr. Hassan took the helm in 2003 with a mandate to turn around the drug maker after it was crippled by a series of problems, ranging from shoddy manufacturing to federal investigations.

"With this agreement, we are putting issues from the past behind us," Brent Saunders, senior vice president of global compliance and business practices, said in a statement.

A company's criminal conviction or guilty plea can often be fatal. But in its health-care cases, the government has repeatedly reached settlements that exact a guilty plea while avoiding the direst consequences.

The guilty plea from Schering Sales means it can no longer sell drugs to the government, but its marketing functions have been taken over by other parts of the company, which are permitted to continue doing business with Medicaid and Medicare.

Schering Sales "is an entity whose sole purpose is to plead guilty in these matters," said Mr. Saunders. "Schering-Plough takes responsibility for the actions of the past while not putting patients in a position where they can't get important medications," he said.

According to the government's complaint, Schering-Plough realized approximately $124 million in before-tax profits from its off-label marketing of Intron A and Temodar. In the case of Claritin, the company failed to pay the government program more than $4 million in rebates, the complaint said.

The settlement follows a similar agreement two years ago with the U.S. attorney in Philadelphia. Under that deal, Schering-Plough pleaded guilty and paid $345.5 million to settle charges that it defrauded Medicare by overcharging the agency for allergy drug Claritin.

Mr. Sullivan said his office's investigation of Schering-Plough was continuing, and he wouldn't rule out future criminal charges.

In July 2005 the company said it had added $250 million to its litigation reserves, for a total of $500 million, relating to the investigation.

Source: Bulresearch

Novartis Wins Swiss Approval For Eye Drug

Swiss pharmaceutical company Novartis AG (NVS) Tuesday said it has received regulatory approval in Switzerland for its eye drug Lucentis for the treatment of age-related macular degeneration.

Novartis, based in Basel, said this marks the first European approval of the drug. Novartis owns the right to sell the drug in Europe. In the U.S., Lucentis is sold by Genentech Inc. (DNA), which developed the medicine.

Approval in the European Union is expected for the first half of 2007.

"The E.U. approval is much more important," said Denise Anderson, analyst in Zurich with Kepler Equities, who has a reduce rating on Novartis. Once Novartis has received permission to sell the drug, the roll-out of the drug in all member states could take another year, she said.

Anderson estimates that the drug will generate revenue of $575 million in 2009.

However, Swiss approval is important because many countries that don't have their own regulatory approval process for new medicines allow a drug to be sold once it has received approval from the country where the company is based.

Lucentis received Food and Drug Administration approval on June 30. The drug is similar to Genentech's cancer drug Avastin in that it blocks a protein that makes blood vessels grow.

However, Lucentis was developed specifically for use in the eye and demand for the drug has been pent up because it was shown to improve vision in patients with age-related macular degeneration, or AMD, in clinical trials. AMD is a leading cause for blindness in people over the age of 50.

Analysts said they expect the drug to eventually become a blockbuster, with annual sales of at least $1 billion, for each company.

More recent approvals

Mylan To Buy Controlling Stake In India's Matrix

MUMBAI -- Mylan Laboratories Inc. said it will buy a controlling stake in Matrix Laboratories Ltd., marking the latest investment in India's pharmaceutical sector by a global drug maker.

Mylan, of Canonsburg, Pa., said it offered to buy a 51.5% stake in Matrix for 306 rupees ($6.59) a share, nearly a 15% premium to Matrix's average price of the past 30 days. Mylan said it will offer to buy an additional 20% stake in Matrix in an offer to the remaining holders, in line with Indian regulations, bringing the value of the deal to $736 million.

Matrix won't delist its shares after the acquisition, said an investment-banking manager who advised the company. Yesterday, Matrix rose 0.1% to 277.55 rupees on the Bombay Stock Exchange. Mylan was down 1.6%, or 32 cents, to $20.28 in New York Stock Exchange composite trading.

"Such deals would help local companies compete in the global business more effectively, as we expect, going forward, Mylan will do a lot of formulation work out of India," said Sunil Mehra, director for the health-care sector at DSP Merrill Lynch, which advised Matrix on the deal.

Matrix is India's sixth-largest drug maker by annualized revenue. In the year ended March 31, its net profit rose 53% year to year to 1.99 billion rupees on an 82% rise in sales to 11.59 billion rupees. Analysts said Western generic-drug makers are turning to Indian manufacturers as they seek cheaper manufacturing bases. Rivals such as Israel's Teva Pharmaceutical Industries Ltd. and Watson Pharmaceuticals Inc., of Corona, Calif., already have such agreements with Indian manufacturers.

FDA Questions Adeza Proposed Preterm-Labor Drug

The Food and Drug Administration questioned whether a proposed drug designed to prevent preterm labor was effective at stopping the earliest labors that are most linked to death and serious health problems.

The proposed drug, Gestiva, by Adeza Biomedical Corp. of Sunnyvale, Calif., is a long-acting form of a naturally occurring progesterone and is designed to prevent preterm labor.

There is currently no approved drug for preterm labor on the U.S. market, although some drugs are used off-label to prevent uterine contractions.

Gestiva is set to be considered today by an outside panel of medical experts that advises the FDA on reproductive drug approvals.

The FDA, which posted its review of the drug on its Web site yesterday, said that while Gestiva appears to reduce births before the 37th week, considered the cutoff point for a newborn to be considered premature, study results didn't show a big difference at stopping labor before either week 35 or week 32 of pregnancy. A full-term pregnancy is considered 40 weeks.

The FDA also expressed concern about an increase in the miscarriage rate among some women receiving Gestiva compared to those receiving a placebo, "and a suggestion of an increase in stillbirth rate." The FDA said it would ask the panel for advice on whether more follow-up studies are needed.

The drug is designed to be injected weekly, starting between 16 and 20 weeks of pregnancy through week 37, or birth.

Adeza said it expects the FDA to make a decision on whether to approve Gestiva by about Oct. 20.

In documents also posted on the FDA's Web site, Adeza said, "The benefits of postponing pregnancy by even one week are considerable." Both the company and the FDA noted that the number of preterm births in the U.S. has been on the rise.

Shares of Adeza were down 45 cents, or 2.9%, to $15.30 in 4 p.m. composite trading on the Nasdaq Stock Market.

Barr's Plan B Approved But Battle Still Seen

The U.S. Food and Drug Administration said Thursday that adults can get the emergency contraceptive Plan B - also known as the morning-after pill - without a prescription, resolving a lingering political debate that had caused divisions inside and outside the agency.

Plan B effectively functions like a high dose of birth-control pills. When taken within 72 hours following unprotected sex, the product reduces the risk of pregnancy by as much as 89%. Scientists believe the resulting surge of hormones interferes with ovulation and fertilization or may prevent implantation of a brand-new embryo in the uterus. The medical community generally doesn't consider this to be abortion, but some anti-abortion groups do. Plan B isn't the same as mifepristone, sometimes called RU-486, a pill that chemically induces an abortion.

The letter to Barr Pharmaceuticals Inc. (BRL), maker of the drug, was signed by Steven Galson, the head of the FDA's drug center and not a political appointee. For an approval letter to be signed by such a high-ranking official is unusual, but it reflects the unusual history of the Plan B application.

For the FDA, the decision will resolve a long-running question that has created tension within the agency, already under close congressional scrutiny over other issues. The original Plan B application had requested over-the-counter status for the drug, regardless of age. An FDA advisory committee voted in December 2003 to support that request. Memos that later leaked out showed the head of the agency's own office of new drugs, as well as other reviewers, agreed. But in May 2004, the FDA rejected the change, citing the lack of data about the youngest teens.

Barr, which had by then purchased rights to the drug from its original sponsor, then reapplied, requesting that women 16 and older be allowed to buy Plan B without a prescription. Last August, the FDA's then-commissioner, Lester Crawford, postponed a decision, saying the agency might need new regulations to enforce an age restriction. The agency's assistant commissioner for women's health, Susan Wood, resigned after that announcement, complaining that the FDA's handling of the drug hadn't been based on science.

But on July 31, the day before Dr. von Eschenbach was supposed to have a Senate confirmation hearing on his nomination, the FDA announced that it didn't need to craft a new regulation. In a memo, Dr. von Eschenbach said he concluded that 18 was the best cutoff age because it is a familiar one for states and pharmacies, which already enforce 18-and-older rules for products including nicotine patches. Dr. Galson said in his own memo that he now concurred with Dr. von Eschenbach that 18 was the appropriate dividing line.

The drug will be available only at licensed pharmacies and clinics, not gasoline service stations or convenience stores where no health-care professionals work. People who want to obtain it will have to show identification proving they are at least 18 years old. For those younger than 18, the drug will still require a prescription.

Barr also committed to a number of efforts to try to check that the age split is being enforced, including surveying health-care professionals and sending "anonymous shoppers" to test whether pharmacies are adhering to the rules. The company is also supposed to sponsor education efforts for health-care providers and consumers, and will provide a booklet to be distributed with the drug that will explain how it works and its proper use.

The new availability of Plan B is expected to sharply increase use of the product, which currently produces about $30 million a year in revenue for Barr. In France, after the introduction in 1999 of an emergency contraceptive pill available without a prescription, there was a 72% increase in its use over five years. In British Columbia, use of such medications increased by 102% after the Canadian province began allowing pharmacists to dispense them without a doctor's script.

The FDA's decision on the application, first filed in April 2003, may free up the stalled nomination of the agency's acting commissioner, Andrew von Eschenbach, to become the FDA's formal head. Two Democratic senators, Hillary Rodham Clinton of New York and Patty Murray of Washington, had placed a hold on the nomination until the agency resolved the long-delayed bid to offer Plan B over the counter.

Still, it is possible that other lawmakers could place holds for other reasons - including Dr. von Eschenbach's decision to allow Plan B to move to prescription-free status. And the FDA's decision, endorsed by President Bush in his press conference this week, will draw criticism and political heat from anti-abortion groups that have opposed more widespread availability of the drug. On the other side, reproductive rights groups will argue against the age restriction. Coming on the verge of an election, the issue could become far more politically prominent.

Other drugs in the pipeline at Drug Pipeline

Study Indicates Embryos Survive Cell Extraction

BIOTECHNOLOGY researchers said they have developed a new way of producing stem cells that ultimately may not require the destruction of human embryos.

The announcement met with a cacophony of reaction from scientists and ethicists on both sides of the debate over stem-cell research. Several admired the science but said it was unlikely to quell the heated controversy over the morality of the research.

While many experts see stem cells as a potential source of treatments for degenerative or otherwise incurable conditions, many religious and ethical authorities object to stem-cell extraction as devaluing nascent human life. Since 2001, the U.S. has refused to fund any research involving other than a handful of already-existing stem-cell lines, many of them of limited usefulness to scientists.

The research team that said it has developed this new way of producing stem cells is from Advanced Cell Technology Inc., a biotechnology company in Alameda, Calif.

The team conducted its experiments with single cells extracted from tiny human embryos, each consisting of eight to 10 cells. By culturing those extracted cells in just the right way, the scientists were able to nudge some of them into developing as stem cells, the primordial building blocks capable of producing nerves, organs and every other type of tissue.

Until now, deriving new lines of stem cells has required researchers to suck out clumps of cells from five-day-old embryos -- typically unneeded ones, frozen during in-vitro fertilization procedures, that may otherwise face destruction. The process destroys the embryos.

Advanced Cell officials say their new technique offers the prospect of deriving new lines by simply extracting a single cell from an early-stage embryo. That process is already used in IVF clinics that scan for genetic flaws in newly fertilized embryos in order to determine which ones are most likely to grow into children. Extracting a cell or two generally doesn't appear to interfere with later fetal or childhood development, although the procedure can risk damaging the embryo

"You'd have a cell line and put the embryo at no increased jeopardy at all," says Robert Lanza, the Advanced Cell researcher who led the team. "On top of that, not only is there not a risk, but a benefit," he says, because the derived stem-cell line would be genetically matched to a child born from the same embryo, making it a theoretically convenient and safe source of cells for later medical treatment.

The Advanced Cell research, however, didn't focus specifically on the task of producing stem-cell lines by extracting a single cell without harming an embryo. As reported in their study published in today's edition of the journal Nature, the researchers experimented on 16 embryos and extracted a total of 91 individual cells for culturing. That procedure destroyed many of the embryos in question, Dr. Lanza said.

"It looks like they took the embryos apart and tried to create stem-cell lines from each of those cells" said Arnold Kriegstein, head of the stem-cell biology program at the University of California at San Francisco. But the work showed that single cells could be coaxed into becoming stem cells, which Dr. Kriegstein called "a significant achievement."

Extrapolating the results to single-cell extractions that don't harm viable embryos should be a straightforward task, says Dr. Lanza. Extrapolating the results to single-cell extractions that don't harm viable embryos, he says, should be a straightforward task.

"In terms of the actual biopsy and subsequent procedures, it's the same," he said. "It's just semantics." Dr. Lanza said that in some cases the team only took one or two cells from an embryo, and he added that some of the embryos experimented on continued to grow normally for another few days until they were again frozen.

The Advanced Cell team managed to produce two seemingly viable stem-cell lines from the 91 extracted cells and showed that the stem cells could give rise to a variety of tissue types. It remains unclear whether the newly produced lines, which derive from earlier-stage embryos than most existing stem cells, differ from other cell lines in any significant way. The results will also need to be confirmed in other laboratories.

Advanced Cell officials say they hope the results will mark a turning point for stem-cell research. Scientists working without federal funding are so far mostly focused on unraveling the mysteries of how the cells produce different tissue types. Commercially, the field is populated largely by tiny companies like Advanced Cell, which has plans to move ahead with early-stage clinical trials involving the cells in the next year or so.

Stem-cell related treatments, however, are likely at least a decade or more away. Among the hurdles are a lack of basic understanding of what makes the cells grow and repair damaged tissue and exactly how to use them as transplants without provoking immune-system reactions and other side effects.

Larger pharmaceutical and biotechnology companies have mostly steered clear of the field, in part because of the ethical controversy and the lack of federal research support. Advanced Cell Chief Executive William Caldwell, however, said he believes an embryo-safe method of deriving stem cells may help spark large-company interest in the area.

"I think this is going to help address the problem and the issues they have" with stem-cell derivation, Mr. Caldwell said. Advanced Cell, which is currently raising new funds in a private offering to bolster its meager cash reserves, hopes to sign a development partnership with a larger company by the end of the year.

Success or failure in that regard may depend on the extent to which the new technique succeeds in defusing moral qualms over the research. Several scientists and ethicists doubted any placating would happen. William Hurlbut, a Stanford University professor who serves on the White House bioethics council, worries that even single-cell biopsy may pose an unacceptable risk to embryos.

Others note that no one knows whether a single cell extracted from an early-stage embryo might also have the capability of developing into an individual human being. If the cell does have that potential, then destroying it to make a stem-cell line would still be morally problematic. "This thing is supposed to solve an ethical problem, but the ethical problem is not solved," says Davor Solter, the director of developmental-biology research at Germany's Max-Planck Institute of Immunobiology.

Dr. Lanza said there is no evidence to suggest that a single cell from such embryos can develop into an individual.

Drugs in development at Drug Pipeline

Merck's Vioxx Successor Draws Mixed Results

Merck & Co. released preliminary results of a large-scale study that suggested that an arthritis medicine it hopes will replace Vioxx on pharmacy shelves may not carry any more heart risks than an older, widely prescribed drug.

But the company's statement, which didn't include some basic information about the study, also flagged some potential worries for the drug, including higher rates of hypertension and other conditions that caused some patients who were taking it to drop out of the trial. And some scientists raised questions about the study's design.

The painkiller, Arcoxia, is sold in Europe and Latin America but hasn't been approved for sale in the U.S. In October 2004, the Food and Drug Administration responded to Merck's application for approval by asking for more information - Merck drug pipeline at Drug Pipeline Database. Merck executives yesterday said they plan to submit the study as part of their response to the agency.

The preliminary results released by the Whitehouse Station, N.J., drug maker are part of a study known as Medal, a 34,700-patient arthritis-drug study that is the first to primarily examine the cardiovascular effect of Arcoxia and diclofenac, an older arthritis treatment. Both belong to the class of drugs known as non-steroidal anti-inflammatory drugs (Nsaids). Arcoxia is a so-called Cox-2 inhibitor, as are Vioxx and Celebrex, made by Pfizer Inc., and which are meant to be safer on the stomach than aspirin and other painkillers.

Merck withdrew Vioxx from the market in September 2004 after a study linked it to an increased risk of heart attacks and strokes. In February 2005, an FDA advisory panel recommended cardiovascular warnings on all prescription Nsaids. Merck now faces roughly 14,200 lawsuits over Vioxx.

If Merck gets the green light to sell Arcoxia in the U.S., the drug could replenish lost Vioxx sales -- though its overseas sales in the first half of this year were only $126 million. Merck's preliminary findings suggested that there is no significant difference in the cardiovascular risks of Arcoxia and diclofenac. But Merck also said that greater numbers of certain Arcoxia patients had to discontinue treatment due to problems related to high blood pressure, edema and congestive heart failure. The drug's European label carries a warning about these conditions.

Steven E. Nissen, chairman of cardiovascular medicine at the Cleveland Clinic, and a critic of how Merck released data on Vioxx's heart risks, said the company's Arcoxia announcement "is a very limited amount of data" and doesn't provide a complete picture of the drug's risks and benefits. Among other things, the company didn't say how many people suffered heart attacks, he noted.

Merck said it plans to release the full results of the study once they are published in a peer-reviewed journal.

Critics also questioned the study's design, especially the use of diclofenac as the comparison treatment. Diclofenac, Dr. Nissen said, acts in the body more like Cox-2 inhibitors than painkillers such as naproxen. Thus, he suggested, it is possible that Arcoxia would look safer from the standpoint of heart risk against diclofenac than against naproxen. "To really know whether [Arcoxia] is neutral or increases cardiovascular event rates, we would need to see a comparison to an agent like naproxen," he said.

"Most people didn't expect a difference" between Arcoxia and diclofenac," said Curt D. Furberg, a Wake University public-health professor. While Dr. Furberg lauded the size of the study, he said, "the take-home message is stay away from diclofenac. The Cox-2 drugs have harmful effects and this study documented that diclofenac is no safer."

Roche Files Avastin For Use In Lung Cancer In EU

Swiss drugmaker Roche Holding AG (RHHBY) said Tuesday it has filed its top-selling drug Avastin to Europe's medical regulator, for approval for use as a treatment for the most common form of lung cancer.

After colorectal and breast cancer, lung cancer is the third type of disease in which Avastin has demonstrated an ability to extend patient's lives, Roche said.

Analysts expect the drug to eventually generate sales of up to CHF8 billion, should it gain regulatory approval for use in all these cancers, which are among the most widely-spread forms of the disease.

In Europe, Avastin was approved early in 2005, a year later than in the U.S., for the treatment of patients with metastatic colorectal cancer in combination with chemotherapy. Avastin would also be used in combination with chemotherapy as lung cancer treatment.

Roche, based in Basel, Switzerland, has also recently filed Avastin for the treatment of women with advanced breast cancer in the E.U. and the U.S.

Avastin ranked fifth by sales among Roche's medicines and is one of its fastest growing products. In 2005, Avastin contributed sales of CHF1.67 billion to the CHF27.27 billion in total sales of prescription drugs.

Roche sells Avastin in Europe. Genentech Inc. (DNA), of which Roche owns a majority and which developed the drug, sells it in the U.S.

Roche closed at CHF215.90 on Monday.

All world submitions at Drug Pipeline

The Drug Industry A Victim Of The Endless Search For A Lunch

Some of America's most inventive companies have been presented with dire necessity to invent in new ways. Their industry is extremely competitive, with companies large and small struggling to come up with new products to meet almost insatiable consumer demand. Those products have a relatively short life, as some competitors bring similar products to market and others simply manufacture imitations.

This industry is not entertainment or fashion or publishing or software, although it has characteristics in common with them. It is the pharmaceutical industry, and its members must invent more than just drugs. They have to invent legal and business strategies to cope with a plague of regulators.

The U.S. Food and Drug Administration ranks as one of the more important and ineffectual federal regulatory agencies. Not that any are as important as they think or as effective as they might be, but the FDA really does handle matters of life and death -- and does it capriciously yet slowly.

The U.S. Patent and Trademark Office is devoted to legal minutiae and overwhelmed with more minutely inventive applications than its enormous staff can handle. Patents are granted without adequate review, on theories that ought to be questioned before they get to court rather than invented at trial or appeal.

Combining the two agencies' flaws begins to explain the tangled mess that is the pharmaceutical industry of the United States, in which patents on drugs are endlessly open to challenge, in which promising drugs are held up for excessive regulatory review, in which profit must be made quickly.

But there's more: Congress has a natural interest in the drug industry, arising from constituents' desire to get more medicine and pay less for it. Since the federal Medicare and Medicaid programs pay for a lot of those constituents' medications, Congress also has a budgetary interest. So far, Congress has resisted the temptation to follow the rest of the industrialized world and impose overt price controls. Instead, it has created a morass of incentives and disincentives and marketing restrictions.

And still more: Collusion and market manipulation are natural responses of any industry to over-regulation; the Federal Trade Commission is ever-vigilant but only occasionally effective at detecting and challenging restraints of trade.

Rules of the Game

The segment of the pharmaceutical industry that concentrates on drugs with patent protection was once known as the ethical drugs industry, but ethics is just too far out of fashion these days. Now it's called the brand-name drugs industry, which distinguishes it from the generic-drugs industry.

Brand-name, bad. Generic, good. It's as simple as that for some people, because brand-name drugs are expensive and generic drugs are cheaper. Such people are especially abundant on Capitol Hill, where Congress has spent more than 20 years passing laws to promote generic drugs.

The first and greatest milestone of generic-drug promotion was the Hatch-Waxman Act of 1984, by which Congress told the FDA to accept abbreviated new drug applications for generic drugs that are chemically identical to brand-name drugs, rather than forcing makers to go through the same testing that preceded approval of the original inventor's drug. (Patented-drug makers were given a longer patent term, partly to offset the harm that generics would do their products and profits.)

Among the results: lower prices for consumers of certain older drugs, an increase in generic market share, wild competition among generics to be the first in the market for each drug and a scandal at the FDA as officials took bribes to expedite some generic approvals and slow down others.

Another feature of Hatch-Waxman that was not widely appreciated at the time allowed generic-drug companies to go to court to overturn patents without actually having to put their own imitation into the marketplace first. The usual process for challenging a patent is for the imitator to enter the market and then be sued by the patent holder. This poses risk of triple damages for the imitator that loses, and the patent holder controls the pace of the process. Under the changed law, successful challengers also win the race to be the first generic in the market, for which the prize is a six-month marketing head-start ahead of all other generics -- a lucrative temporary monopoly created by destroying the original patent.

Endless Battles

The result, of course, was a large increase in the number of patent challenges.

In 2002, the Federal Trade Commission reported that three out of four challenges to patents protecting brand-name drugs were successful if litigated to a final verdict. This may have something to do with the competence of the Patent Office examiners. Or it may reflect the willingness of brand-name manufacturers to drag out their losing cases as long as possible, because not even a year's worth of huge legal fees can overshadow a year's worth of huge profits on patented drugs. Generic challengers, on the other hand, have a financial incentive not to throw good money after bad. A patent challenge can take five years and cost $10 million. They settle weak cases and move on.

The FTC, however, charges that often there is a different reason: an illegal restraint of trade.

In dozens of recent cases, the patent holder and the patent challenger have reached settlements in which they agree that the challenger's generic will be allowed into the market before the patent expires.

To the FTC and other critics, such authorized generics are against consumers' interests, because they are sold at a smaller discount than "real" no-holds-barred generics.

In some such cases, the patent-holders have even paid the patent challengers to gain a settlement to their advantage. These the FTC terms "abusive," and it has sued to block several such deals. Last year, however, two federal appeals court panels ruled in favor of the companies making deals, on the grounds that parties contesting a case have the right to make peace on terms that satisfy them. The FTC, which believes the terms should satisfy consumers, is asking the Supreme Court to take up the cases and it's continuing to bring cases in other appellate court districts. Bristol-Myers Squibb headquarters recently was raided by FBI agents seeking documents for such a case.

Meanwhile, Sen. Charles E. Schumer, D-N.Y., and some colleagues have introduced a bill to limit authorized generics. Schumer said they are "wolves in sheep's clothing," because they push out generics that might be cheaper.

Unexpected Consequences

The pursuit of lower prices by any means available is an old game played by sheep in wolves' clothing. People who make no contribution to the advancement of technology nevertheless claim a right to have the fruits of invention at a price of their choosing.

Results of this hunger for a free lunch:

All U.S. patents are less reliable. The FTC's opposition to authorized generics effectively presumes that patents are invalid and that regular generics should always be allowed to move in. Authorized generics come into the market years sooner than the patent expiration, which would be good for consumers' short-term cash flow unless the patent would otherwise be found invalid.

Prices of patented drugs have risen far faster than inflation. Now that a patent is no guarantee of monopoly rights for a certain term, companies that invent drugs face a new incentive to hike prices to make as much as they can as quickly as possible.

Prices of drugs in general, both patented and generic, are wildly unpredictable and unstable. For their biggest customers, manufacturers discount heavily.

The United States is nominally the last free market for pharmaceuticals because it does not have price controls. With a legal and regulatory regime like this, it doesn't need them.

Recent drug approvals at Drug Pipeline

Despite Merck's Leg Up, Glaxo Sees Cancer Vaccine Success

Don't call GlaxoSmithKline PLC's (GSK) experimental cervical-cancer vaccine a "me, too" product, say executives with the British drug giant.

Glaxo's Cervarix probably won't reach the U.S. market until sometime in 2007, assuming it is approved by regulators, while the first cervical-cancer vaccine, Merck & Co.'s (MRK) Gardasil, went on sale in the U.S. in June. A government advisory committee has recommended Gardasil for girls and women ages 11 to 26, and analysts expect sales to top $1 billion within a few years. More drugs in development at Drug Pipeline

Despite Merck's head start, Glaxo executives said in interviews this week that they like Cervarix's prospects because they think it will be more effective in preventing cervical cancer, and will carry a simpler marketing message than Gardasil's.

"I just think we flat out have a superior product," David Pernock, senior vice president of pharmaceuticals, said in an interview Tuesday in his office at Glaxo's North American headquarters in Philadelphia.

Of course, such claims must be backed by science. To that end, Glaxo expects to receive data from a large-scale, Phase III trial of Cervarix by the end of this month, Pernock said. The company plans to submit the data to the U.S. Food and Drug Administration by the end of the year. An FDA decision on whether to approve Cervarix is expected no later than 10 months after application.

Both Gardasil and Cervarix target two strains of the sexually transmitted human papillomavirus, or HPV, that are associated with about 70% of cervical cancer cases. The vaccines haven't been compared head-to-head in clinical trials.

But Glaxo executives highlight several differences. Cervarix includes a proprietary additive, known as an adjuvant, while Gardasil uses a more conventional aluminum-based adjuvant. Glaxo says its proprietary adjuvant produces a more enhanced immune response to the virus than a conventional adjuvant.

David Stout, president of Glaxo's pharmaceutical operations, said in a separate interview Tuesday that Cervarix may provide "cross-protection" against additional cancer-causing strains of HPV, which could bring the protection rate up to 80% of cervical cancer cases. Stout also hopes Cervarix will offer longer-lasting protection against HPV, potentially reducing the frequency of booster shots.

Mark Feinberg, vice president of policy, public health and medical affairs with Merck's vaccines unit, counters that while adjuvants are important, the clinical benefits are what matters, and Gardasil's are solid. Also, he said, Gardasil and Cervarix target the same strains of HPV, so any cross-protection found in Cervarix would likely be seen in Gardasil, too. He said Merck is studying Gardasil's cross-protection potential.

"The data from studies of Gardasil are very clear in terms of not only the magnitude of the benefit and breadth of the benefit, but also we have data demonstrating the duration of the benefit out to five years with a very persistent high level of immune response," Feinberg said in an interview Wednesday. He called Glaxo's clinical data for Cervarix "limited."

In large Phase III studies, Merck's Gardasil was 100% effective in preventing precursors to cervical cancer and noninvasive cervical cancers associated with two of the HPV strains targeted by the vaccine. Merck's data suggest the protection lasts for at least five years.

Smaller, earlier-stage studies of Cervarix have shown it to be 100% effective in preventing precancerous lesions associated with the same two cancer-causing strains of HPV. Glaxo said the protection was sustained for four-and-a-half years.

Another difference between the vaccines is that Gardasil protects against two additional HPV strains associated with genital warts, a less serious but painful condition. Cervarix targets only the two strains associated with cervical cancer, and Glaxo has suggested this could make its marketing message more focused.

"We'll focus on preventing cervical cancer," Pernock said.

But Feinberg says the HPV strains associated with genital warts also can lead to abnormal results in Pap tests, which are used to screen for cervical cancer. By protecting against these two additional strains, Gardasil may reduce abnormal Pap test results and unnecessary follow-up care. In addition, a vaccine that protects against genital warts may appeal to boys and men, who can get these warts. If males were to take the vaccine, that could help reduce the spread of HPV, thus reducing the incidence of cervical cancer in women. Gardasil hasn't yet been approved for use in males, however.

The Glaxo executives said Merck's head start doesn't guarantee Gardasil will outperform Cervarix in the long run, pointing to other examples of first-in-class products being outsold by later competitors. "Lipitor was not the first statin," Stout said, referring to Pfizer Inc.'s (PFE) cholesterol-lowering pill, which is now the best-selling drug in the world.

Stout noted that Merck, with its "Tell Someone" advertising campaign, is now doing the heavy lifting of educating consumers about HPV and vaccines, which could make Glaxo's job easier once Cervarix is launched. Feinberg says Merck's marketing campaign is "addressing a number of issues about vaccine implementation...In our mind, those are essential things to do."

Ironically, Glaxo will profit directly from Gardasil - Merck is paying it royalties under terms of a February 2005 settlement of the companies' competing patent claims for their respective vaccines. Under the settlement and license agreement, Merck was to make an up-front payment to Glaxo and pay ongoing royalties on Gardasil's sales.

Merck, of Whitehouse Station, N.J., disclosed last month it will have to pay royalties on Gardasil totaling about 24% to 26% of sales, including payments to Glaxo. The royalties also include payments to CSL Ltd. (CSL.AU) of Australia. Merck didn't break out the portion of the royalties going to Glaxo.

Pernock said Glaxo's royalties for Cervarix won't be as high, but he declined to specify the percentage.

Glaxo might try to speed up the launch of Cervarix by a few months. Stout said Glaxo may try to convince the FDA to give Cervarix priority-review status, which would shorten the review period to six months from the standard 10 months. The FDA typically grants priority-review status only to products that have evidence of being more effective than what is already available on the market, and Gardasil received such status. "We must demonstrate ours is not just similar but significantly better," Stout said. "We hope to do this."

Bristol-Myers And Sanofi Brace For Generic Plavix

Bristol-Myers Squibb Co. and Sanofi-Aventis SA braced for possible generic competition to their best-selling drug, Plavix, after one of the leading pharmacy-benefit managers said it expected a copycat version of the blood thinner to hit U.S. pharmacy shelves as early as this month.

The news weighed on the shares of New York-based Bristol-Myers and Paris-based Sanofi. As of 4 p.m. in composite trading Friday on the New York Stock Exchange, Bristol-Myers shares were at $22.75, off $1.04, or 4.4%. The American depositary receipts of Sanofi-Aventis were at $45.15, off $1.77, or 3.8%, also on the Big Board.

The availability of a less costly generic version of Plavix, the world's No. 2 drug in terms of sales, would quickly take a bite out of the revenue of Sanofi, the drug's developer, and Bristol-Myers, which holds the rights to it in the U.S. market. Plavix's U.S. sales were $3.8 billion last year, and its global sales were $5.9 billion.

Medco Health Solutions Inc.'s chief executive, David Snow, dropped the bombshell in a conference call with analysts when he said the company was raising its earnings guidance in part on the assumption that a generic version of Plavix would become available this year. Medco's chief financial officer, JoAnn Reed, later added on the call that generic Plavix could hit the market as early as this month. As of 4 p.m. in composite trading on the New York Stock Exchange, Medco shares were at $60.65, up $1.55, or 2.6%.

The launch of a generic version of such a widely used drug as Plavix would be a financial boon for Medco and other pharmacy-benefit managers because they make higher profit margins on generic drugs than they do on pricier brand-name drugs.

Bristol-Myers and Sanofi reached a deal with Canada's Apotex Inc. in March to prevent Apotex from launching a generic version of Plavix. But that deal, which had been struck to settle patent litigation between the two camps, came apart last week when the state attorneys general rejected it and the Justice Department opened a criminal probe into the conduct of Bristol-Myers and Sanofi.

Sanofi said earlier this past week it expected the patent litigation against Apotex to resume. In the lawsuit, Apotex has contested the validity of the patent protecting Plavix, which expires in late 2011.

Before the failed settlement, Apotex had threatened to launch a generic version of Plavix while the lawsuit was still pending. Such a move is known as an "at risk" launch because the generic maker can later be compelled to pay substantial damages to the branded-drug companies if their patent is upheld in court.

Medco's comments suggest the pharmacy-benefit manager expects Apotex to follow through on the threat. Asked what Medco was basing its prediction on, a Medco spokeswoman queried after the conference call cited "increasing market chatter" that the launch of a generic Plavix was imminent. A spokesman for Apotex declined to comment. A spokesman for Bristol-Myers said: "We're looking into the news. We believe the Plavix patent is valid and that it has been infringed. Together with our partner Sanofi-Aventis, we intend to defend our intellectual-property rights." A spokesman for Sanofi couldn't be reached for comment.

Jami Rubin, an analyst for Morgan Stanley, said in a research note, "Medco is a credible company and they wouldn't be saying this (and raising guidance) if it wasn't true or based just on pure speculation."

Medco made its comments about Plavix when discussing its second-quarter earnings, which rose 24% on sales growth, the Medicare prescription-drug benefit and patients' greater use of generic drugs. Medco, the nation's largest PBM based on its revenue last year, had second-quarter net income of $170.9 million, or 56 cents a share, compared with $137.4 million, or 48 cents a share, a year earlier. Revenue rose to $10.59 billion from $8.9 billion.

Source: Drug Pipeline Database

Business Europe: Fighting Fakes

Around the world, counterfeit drugs -- both prescription medicines and over-the-counter products -- are a significant and growing problem. Analysts forecast that sales of fake prescription medicines will reach $75 billion by the end of the decade. That would nearly double current levels and would outstrip the annual growth of legitimate pharmaceutical sales. This trend threatens public health as well as drug makers' bottom lines.

The World Health Organization estimates that up to 10% of the world's pharmaceuticals may be counterfeit. In parts of Eastern Europe, Africa and Asia, this figure is believed to be greater than 50%. The Council of Europe recently revealed that EU member states reported 96 fake-medicine cases in 2004, up from just one or two per year during the 1990s. In America, 58 cases were reported in 2004, up from nine in 1997. But given the difficulties in detecting counterfeits, these figures are believed to be just the tip of the iceberg.

At their most benign, counterfeits are identical (i.e., therapeutically correct) copies that are illegally manufactured and then sold to an unsuspecting public, either on the Internet or by being illegally introduced into the supply chain. More often, however, the active ingredient in the phony drug is either diluted or wholly absent. Users might as well swallow flavored chalk.

Some impostors are hard to spot because they occur insidiously: They simply fail to deliver the supposed health benefit, rather than causing a new malady. Still, the health risk to the consumer from forgeries can be serious, even fatal. In 2001, 66 deaths in the U.S. were attributed to the counterfeiting of the generic antibiotic Gentamicin.

Pharmaceutical fraud can be indirectly harmful, too. In some parts of Asia, up to 50% of the packs of antimalarial drug Artesunate don't contain enough active ingredients. This helps to spread the disease as it builds resistance to the treatment. Growing evidence suggests that highly organized criminal enterprise is behind this trade, in some cases with connections to terrorism.

Current security devices, such as holograms or color-change inks, are easy and quick to copy. Laboratory techniques for identifying fake products are only useful after the fact and once the alarm has been raised -- they do not prevent the bogus drug from reaching patients when the forged packets and pills are of high quality and thus unsuspicious. Detection is laborious, and questionable products must be sent to a lab for forensic testing.

Drug makers and regulators have common goals: to ensure the integrity of the supply chain, to prevent counterfeiting and to respond rapidly to cases of forgery -- e.g., recalling a product from the market. For now, though, there is no common approach.

Government is trying to help, but legislation can prove problematic. The U.S. Congress in 2003 passed a law creating a "drug pedigree" for products considered at risk. It works by stipulating that a document must follow products as they move through the supply chain. The date for implementation is the end of this year, but many drug companies believe that's unrealistic.

Pedigrees are not foolproof. Like drugs, they may be falsified. The U.S. Food and Drug Administration would like to see electronic pedigrees implemented. Software makers already offer "track and trace" products that connect between two points in the supply chain. In time, these programs might make an end-to-end "e-pedigree" possible. But there will still be a major sticking point: Who will oversee the supply chain, which no one person or firm owns from end to end?

There are other technology solutions. These include tamper-proof sealants for packaging, new color-change inks and radio frequency identification, or RFID. The FDA is touting RFID, believing it offers significant security benefits. However, the technology is costly and not yet fully reliable or readily usable with certain kinds of bulk packaging.

Both the FDA and the European Pharmaceutical Industry Manufacturers' Association are encouraging industry to adopt an approach known as mass serialization. Mass serialization is a method of adding unique, machine-readable codes containing a serial number to each pallet, case or packet of medicines. But there is much debate about how to implement serialization. Should the number be in the form of a bar code or RFID? Should it be stamped on the pallet the medicine is shipped on, or on individual bottles or packets of drugs, or both?

As the FDA has noted, there is no single magic answer to counterfeiting. The solution will require a mix of technologies and approaches.

Though companies are still thinking through their preferred approach, the Italian and Belgian governments have introduced mandatory item-level serialization using simple barcodes for prescription medicines in their markets. The rationale was to address reimbursement fraud. But once in place, mass serialization can also enhance patient safety and product security. For example, Belgian pharmacists already have begun using mass serialization to verify products online.

Despite the availability of a range of solutions and the tangible need, the health-care industry will find it difficult to implement a global solution on its own without government and regulator guidance. In the meantime, drug companies are pursuing a variety of disparate measures, all well intended but significantly short of a unified response.

In today's environment, adopting a multilayered security strategy is the most effective approach. Technology has advanced sufficiently that all pharmaceutical products supplied could be supported by a level of anticounterfeit protection. Realistically, however, some products are more at risk than others, requiring companies to prioritize. Regulators such as the FDA are providing guidance, which is welcome in the short term. But it can only be viewed as a temporary palliative until standards are agreed across markets. More information about counterfeit drugs at business intelligence portal

Novo Nordisk Sues Pfizer Over Patents, Exubera

Novo Nordisk (NVO) on Wednesday said it filed a lawsuit against No. 1 drug maker Pfizer Inc. (PFE), charging that Pfizer's Exubera infringes on patents on inhaled insulin and diabetes treatments owned by the Danish company.

Novo Nordisk, in filing suit in U.S. district court in New York, said that Pfizer "willfully infringed" on the patents and that it's seeking compensatory damages.

Novo Nordisk also said it plans to file a motion for preliminary injunction to prohibit Pfizer from "continuing its unlawful conduct" while the lawsuit's in progress.

Pfizer didn't immediately return a call seeking comment.

Earlier this year, the Food and Drug Administration approved Exubera, co-developed by Pfizer and Nektar Therapeutics (NKTR), as the first inhaled insulin product for the U.S. market.

For its part, Novo Nordisk has an inhaled insulin product in Phase III development called AERx. The development program is expected to be complete in 2009.

"Intellectual property in our industry is key to making advances," John Shehan, Novo Nordisk's general counsel, told MarketWatch. "If we don't have protection we couldn't develop breakthrough properties."

Separately, Novo Nordisk reported a 20% jump in sales for the first half of 2006, as sales of insulin analogs rose 59%.

The company's six-month sales in North America rose 31%, while international sales jumped 41%. Net profit was flat at $486 million, the company said.

Novo also raised its forecast for the year, saying it now expects 13% to 15% sales growth, up from a range of 11% to 13% growth previously. Operating profit's expected to grow by about 13%, up from the previous expectation of slightly more than 10%.

U.S.-listed shares of Novo Nordisk were up 6.8% at $67.02 in midday trading, while blue chip Pfizer slipped 1.5% to $25.61.

More new drugs at Drug Pipeline

Sanofi-Aventis 2Q Beats Forecasts;Raises Outlook

French pharmaceutical company Sanofi-Aventis S.A. (SNY) Wednesday reported second-quarter earnings ahead of estimates and raised its full-year guidance - despite the impact of generics and the increased costs required to launch new drugs.

The world's second largest prescription drugmaker by prescription sales said it now expects adjusted earnings per share in 2006 to grow around 12%, compared with a previous forecast of around 10%.

In the second quarter of 2006, Sanofi-Aventis reported adjusted earnings per share of EUR1.33, up 14.7% from EUR1.16 in the same period in 2005, on sales rising 5.9% to EUR7.081 billion.

Net profit in the quarter rose 15% to EUR1.79 billion from EUR1.55 billion a year earlier.

Sales in the second quarter were hit by cheaper generic versions of allergy drug Allegra, which were introduced in the U.S. in September 2005, and the effects of the healthcare system reforms in France and Germany.

Net sales of Sanofi-Aventis' top 15 drugs, which contributed to almost 70% of pharmaceutical sales, rose 5.9% to EUR4.382 billion. Main drivers were best-selling blood-thinners Plavix and Lovenox, insomnia drug Ambien and cancer treatment Taxotere, which advanced its share of a tough market in the U.S.

The vaccines business grew 60% to EUR568 million, helped by sales of seasonal influenza vaccines and also by the inclusion of $150 million from a contract to supply the U.S. government with a vaccine targeting H5N1, the virus that causes bird flu.

Sanofi-Aventis shares closed in Paris at EUR73.45 Tuesday.

Marketing data on Sanofi is available at: therapeutic marketing information

Business Europe: Fighting Fakes

Around the world, counterfeit drugs -- both prescription medicines and over-the-counter products -- are a significant and growing problem. Analysts forecast that sales of fake prescription medicines will reach $75 billion by the end of the decade. That would nearly double current levels and would outstrip the annual growth of legitimate pharmaceutical sales. This trend threatens public health as well as drug makers' bottom lines.

The World Health Organization estimates that up to 10% of the world's pharmaceuticals may be counterfeit. In parts of Eastern Europe, Africa and Asia, this figure is believed to be greater than 50%. The Council of Europe recently revealed that EU member states reported 96 fake-medicine cases in 2004, up from just one or two per year during the 1990s. In America, 58 cases were reported in 2004, up from nine in 1997. But given the difficulties in detecting counterfeits, these figures are believed to be just the tip of the iceberg.

At their most benign, counterfeits are identical (i.e., therapeutically correct) copies that are illegally manufactured and then sold to an unsuspecting public, either on the Internet or by being illegally introduced into the supply chain. More often, however, the active ingredient in the phony drug is either diluted or wholly absent. Users might as well swallow flavored chalk.

Some impostors are hard to spot because they occur insidiously: They simply fail to deliver the supposed health benefit, rather than causing a new malady. Still, the health risk to the consumer from forgeries can be serious, even fatal. In 2001, 66 deaths in the U.S. were attributed to the counterfeiting of the generic antibiotic Gentamicin.

Pharmaceutical fraud can be indirectly harmful, too. In some parts of Asia, up to 50% of the packs of antimalarial drug Artesunate don't contain enough active ingredients. This helps to spread the disease as it builds resistance to the treatment. Growing evidence suggests that highly organized criminal enterprise is behind this trade, in some cases with connections to terrorism.

Current security devices, such as holograms or color-change inks, are easy and quick to copy. Laboratory techniques for identifying fake products are only useful after the fact and once the alarm has been raised -- they do not prevent the bogus drug from reaching patients when the forged packets and pills are of high quality and thus unsuspicious. Detection is laborious, and questionable products must be sent to a lab for forensic testing.

Drug makers and regulators have common goals: to ensure the integrity of the supply chain, to prevent counterfeiting and to respond rapidly to cases of forgery -- e.g., recalling a product from the market. For now, though, there is no common approach.

Government is trying to help, but legislation can prove problematic. The U.S. Congress in 2003 passed a law creating a "drug pedigree" for products considered at risk. It works by stipulating that a document must follow products as they move through the supply chain. The date for implementation is the end of this year, but many drug companies believe that's unrealistic.

Pedigrees are not foolproof. Like drugs, they may be falsified. The U.S. Food and Drug Administration would like to see electronic pedigrees implemented. Software makers already offer "track and trace" products that connect between two points in the supply chain. In time, these programs might make an end-to-end "e-pedigree" possible. But there will still be a major sticking point: Who will oversee the supply chain, which no one person or firm owns from end to end?

There are other technology solutions. These include tamper-proof sealants for packaging, new color-change inks and radio frequency identification, or RFID. The FDA is touting RFID, believing it offers significant security benefits. However, the technology is costly and not yet fully reliable or readily usable with certain kinds of bulk packaging.

Both the FDA and the European Pharmaceutical Industry Manufacturers' Association are encouraging industry to adopt an approach known as mass serialization. Mass serialization is a method of adding unique, machine-readable codes containing a serial number to each pallet, case or packet of medicines. But there is much debate about how to implement serialization. Should the number be in the form of a bar code or RFID? Should it be stamped on the pallet the medicine is shipped on, or on individual bottles or packets of drugs, or both?

As the FDA has noted, there is no single magic answer to counterfeiting. The solution will require a mix of technologies and approaches.

Though companies are still thinking through their preferred approach, the Italian and Belgian governments have introduced mandatory item-level serialization using simple barcodes for prescription medicines in their markets. The rationale was to address reimbursement fraud. But once in place, mass serialization can also enhance patient safety and product security. For example, Belgian pharmacists already have begun using mass serialization to verify products online.

Despite the availability of a range of solutions and the tangible need, the health-care industry will find it difficult to implement a global solution on its own without government and regulator guidance. In the meantime, drug companies are pursuing a variety of disparate measures, all well intended but significantly short of a unified response.

In today's environment, adopting a multilayered security strategy is the most effective approach. Technology has advanced sufficiently that all pharmaceutical products supplied could be supported by a level of anticounterfeit protection. Realistically, however, some products are more at risk than others, requiring companies to prioritize. Regulators such as the FDA are providing guidance, which is welcome in the short term. But it can only be viewed as a temporary palliative until standards are agreed across markets.

More about fake drugs at www.chartsbank.com

FDA Over-the-Counter Plan B Sales OK Near

The Food and Drug Administration moved toward allowing adult women to buy the emergency contraceptive Plan B without a prescription, a step that would resolve a politically charged issue that sparked intense debate inside and outside the agency.

Yesterday's announcement, in a letter to Plan B manufacturer Barr Pharmaceuticals Inc., came just a day before the agency's acting commissioner, Andrew von Eschenbach, was set to appear at a Senate confirmation hearing on his nomination to become the FDA's formal leader. The FDA's handling of the application to offer Plan B without a prescription, which was first filed in March 2002, has become a major stumbling block in efforts to confirm a commissioner.

Two Democratic members of the Senate committee that oversees the FDA, Hillary Rodham Clinton of New York and Patty Murray of Washington, said that they hadn't changed their plan to block Dr. von Eschenbach's nomination from proceeding, because the FDA has still not taken final action on Plan B. Sen. Murray said the agency had issued a "nondecision," and Sen. Clinton said the delay was a "dangerous precedent."

The FDA said it is "committed to working diligently through" the remaining issues with the application and it hopes the process can be wrapped up "in a matter of weeks." A spokeswoman said Dr. von Eschenbach "wanted to provide a thoughtful approach to resolving what has been one of the most divisive issues the agency has faced, specifically so he can focus on his broad and ambitious vision for" the FDA.

In the letter, the agency said it believed that "the appropriate age" for over-the-counter access to Plan B is 18 and older because of "enforcement considerations" and Barr would need to amend its latest application, which was for females 16 and older, to focus on adult women. Barr will also have to change its proposed packaging, the agency said. The company and the FDA spokeswoman said they expected that Barr would meet with FDA officials in the next week to discuss the issues. The letter also said that if Barr can't prove to the FDA that its program would prevent young girls from getting the drug, the agency might still leave the contraceptive available only with a prescription.

Bruce Downey, Barr's chief executive, said he was pleased but "the proof will be in the outcome." He said he believes the Woodcliff Lake, N.J., company's proposed program "provides adequate safeguards." He said he still believes the drug should be available to women of all ages, as the original Plan B over-the-counter application requested.

The letter was signed by Dr. von Eschenbach himself, a mark of the unusual nature of the agency's handling of Plan B. The FDA said last year that reviewers at its drug center had found that it would be safe to offer the pills without a prescription to patients 17 and older.

Former Commissioner Lester Crawford last August announced that the Plan B application needed further review because of regulatory challenges tied to the age split, and the FDA requested public comment. The agency's assistant commissioner for women's health, Susan Wood, resigned after that announcement, complaining that the FDA's handling of the drug hadn't been based on science.

The agency said yesterday that most of those who filed comments felt it didn't need to do a formal rule making, a regulatory process that often takes years. Plan B has been a political lightning rod for broader debates over abortion, teenage sexual activity and the role of politics in science. Antiabortion groups have lobbied against allowing easy access to Plan B, saying it could encourage teenage promiscuity and higher rates of sexually transmitted diseases.

Barr pharmaceutical pipeline and competitive drugs in development are at www.chartsbank.com/PipelineList.aspx

Turning Around Drug Co Schering-Plough Takes Time

FRED HASSAN is known in the pharmaceutical industry as a turnaround specialist. But the chief executive of Schering-Plough Corp. is uncomfortable with that reputation. "I'm not by nature a hit-and-run kind of person," he says, alluding to the slash-and-burn tactics often associated with corporate turnarounds. "I like to build things."

At Schering-Plough, Mr. Hassan has employed a methodical, eye-on-the-long-term approach to reviving the Kenilworth, N.J., drug maker. When he took the company's helm three years ago, he said his turnaround plan would take six to eight years to complete -- an eternity by the standards of today's fickle shareholders.

The jury is still out on whether Mr. Hassan's go-it-slow strategy is what's best for the company, but there are some encouraging signs: Schering-Plough has posted a profit in five of the past six quarters. Last week, it reported second-quarter net income of $259 million, compared with a $48 million loss last year, sending its shares up more than 6%. A closer look at Schering-Plough under Mr. Hassan shows the complexities of breathing new life into a troubled pharmaceutical company.

Schering-Plough was a mess when its board recruited Mr. Hassan from Pharmacia Corp. in April 2003. The company's blockbuster allergy pill Claritin had just lost patent protection, and the drug's $3 billion in annual sales were fast evaporating. The Food and Drug Administration was forcing the company to revamp its factories under a consent degree. The company was under an investigation (later settled) by the U.S. Securities and Exchange Commission over meetings former CEO Richard Jay Kogan held with selected investors. And to top it all off, the government was investigating Schering-Plough for allegedly defrauding Medicaid. (It subsequently pleaded guilty, agreeing to pay $346 million in fines and damages.)

As Claritin sales plummeted, Mr. Hassan faced an impending cash crunch. Rather than cut research and development spending and lay off scientists, he says he went against the advice of his executives and cut the dividend. The move violated something of a taboo: In the cash-rich drug industry, shareholders had come to expect sizable quarterly payouts. Schering-Plough had raised its dividend 18 times since 1986.

In another unusual move, Mr. Hassan changed the way the company's salesmen were paid. Under the old compensation system, Schering-Plough's small army of drug representatives earned 40% of their annual income in bonus and 60% in salary -- about the industry norm. Mr. Hassan reduced the bonus portion to a maximum of 25%, effectively limiting how much money drug reps could earn. Unhappy with the change, many reps defected to competitors.

At the sales force's annual meeting, Mr. Hassan surprised those who remained by telling them, "If you ever have to choose between doing what's right and making a sale, walk away from the sale." The audience stood up and applauded, Mr. Hassan and others who attended the meeting say.

A former industry executive who used to manage drug representatives at a big European pharmaceutical company says Mr. Hassan's approach is Utopian. "I think he's going to get a lot of people who are going to stay in their pajamas until noon."

Mr. Hassan is unmoved by such criticism. "We've lost a few salespeople who might be much better off selling computers than medicine to doctors," he says, "and, frankly, good luck to them."

Mr. Hassan, who is 60 years old, was born in Pakistan. His father was the country's first ambassador to India following the 1971 war between the two nations. After attending university in London and working for a fertilizer plant in Pakistan, the younger Mr. Hassan went to Harvard Business School. Upon graduating in 1972, he joined Swiss drug maker Sandoz Pharmaceuticals, now part of Novartis AG, and has worked in the industry since.

As a top executive at Wyeth in the 1990s and later as CEO of Pharmacia, he acquired a reputation as a turnaround specialist. He relocated Pharmacia, the product of a bungled 1995 merger between a U.S. company and a Swedish company, to New Jersey and engineered Pharmacia's merger with Monsanto Co. to gain control of the blockbuster arthritis drug Celebrex. He later spun off Monsanto's agricultural business and sold Pharmacia to Pfizer Inc.

Although Mr. Hassan's approach at Schering-Plough has been notably unhurried, he hasn't hesitated to take decisive action to cut costs. Not long after his arrival, he sold two of the company's four corporate jets, closed down the executive dining room, scrapped bonuses for all managers, including himself, and suspended the company's profit-sharing program for the first time in 47 years.

He also eliminated 3,100 jobs, many through early retirements, and replaced the company's top six executives. Aligning his financial interests with those of shareholders, he invested $4.7 million of his own money in Schering-Plough shares.

After a loss of nearly $1 billion in 2004, Schering-Plough is on track to report its second consecutive year of profits. However, Mr. Hassan still has major issues to address. Some industry analysts think he should have made deeper cuts. "The company never adjusted its expenses to reflect the loss of prescription Claritin," says Michael Krensavage, an analyst with Raymond James & Associates. "Expenses need to come down."

Moreover, Schering-Plough has to share the profit from its two best-selling products, cholesterol drugs Zetia and Vytorin, with Merck & Co. The relationship between the two companies has been strained since Merck disclosed in December that it is developing two compounds to raise HDL, or good cholesterol, that are likely to compete with Zetia and Vytorin if they make it to market.

The cholesterol joint venture also makes Schering-Plough an unattractive takeover target for other pharmaceutical companies because its terms include a clause giving Merck the right to buy Schering-Plough out of the venture if Schering-Plough gets acquired.

Most worrisome is Schering-Plough's weak research pipeline (extensive Drug Pipeline database at www.chartsbank.com/PipelineList.aspx ) Like other pharmaceutical companies, it has struggled to come up with new drugs to replace big sellers like Claritin that have come off patent.

Mr. Hassan has partially made up for that with deft marketing. After Schering-Plough scientists improved the unpleasant scent and sensations of an eight-year-old allergy spray called Nasonex, Mr. Hassan launched a promotional blitz for the product that has paid off handsomely. Sales of Nasonex rose 21% to $242 million in the second quarter.

In his annual letter to shareholders in March, Mr. Hassan boasted of a "strong early development pipeline," citing promising compounds for hepatitis C, AIDS and coronary disease. But such early-stage compounds often fail in later stages of human testing.

In a recent interview, Mr. Hassan acknowledged that Schering-Plough's pipeline lacked compounds in late-stage human testing. "It's fair to say we have a late-stage pipeline gap," he said.

To plug that gap, Schering-Plough could acquire a smaller pharmaceutical or biotech company or enter into licensing arrangements with partners. But, true to form, Mr. Hassan says, "We don't want to rush into something. We're going to take our time."