(Reuters) – European regulators have approved the first in a new class of diabetes medicines that work independently of insulin to control blood sugar, the drug’s developers Bristol-Myers Squibb Co and AstraZeneca Plc said on Wednesday.
The approval of Forxiga by the European Commission stands in stark contrast to the rejection of the drug in January by U.S. regulators, who cited concerns about the risk of cancer and liver injury and asked for more clinical data on the once-daily tablets.
The European Medicines Agency in April said it was satisfied those issues had been addressed in the drug’s product label and via a risk management plan for the medicine. But many industry analysts believe the drug’s dim prospects in the larger U.S. market will sharply curtail its potential sales.
The European Commission on Wednesday approved Forxiga, which works by blocking a protein called SGLT2, or sodium-glucose cotransporter 2. It is meant to be used in combination with other treatments for type 2 diabetes, including insulin, or as a standalone treatment for patients who cannot tolerate the widely used oral treatment metformin.
Bristol-Myers and AstraZeneca said Forxiga in clinical trials was associated with a low risk of hypoglycemia, a side effect of many diabetes drugs in which blood sugar drops to levels that cause fainting and other dangerous complications.
Use of the drug in clinical trials was also associated with weight loss and declines in systolic blood pressure.
Johnson & Johnson is awaiting approval of its own SGLT2 inhibitor, canagliflozin. Like Forxiga, it blocks reabsorption of glucose by the kidney and increases glucose excretion in the urine to lower blood sugar, and is also associated with drops in body weight and blood pressure.
Shares of Bristol-Myers slipped 0.8 percent to $ 31.60, while AstraZeneca fell 0.6 percent, both on the New York Stock Exchange, amid similar declines for the broad stock market.
(Reporting By Ransdell Pierson; Editing by Tim Dobbyn)
Kmart, the discounting pioneer owned by Sears Holdings (SHLD), is in the throes of a mass shutdown of stores. After a bad 2011 Christmas, Sears Holdings said it would close up to 120 Sears and Kmart locations; as of January, there were just over 1,300 Kmarts in the U.S. and territories, 800 fewer than a decade earlier, when Kmart slid into bankruptcy as an independent company. In February, the parent posted its biggest quarterly loss in at least nine years. It lost $ 132 million in the July quarter, and analysts expect another loss, on a 10 percent drop in sales, when the company reports on Thursday.
Today, as Amazon (AMZN) wallops all of retail, discounting’s old Big Three has been duopolized down to Wal-Mart (WMT) vs. Target (TGT). According to Bloomberg Industries, department stores now make up less than half the share of the retail industry’s core “general merchandise, apparel and accessories, furniture and other” sales than they did 20 years ago. As for the subject of 30 years ago, that’s when Kmart’s rights to Charlie’s Angel Jaclyn Smith’s clothing line (it still exists) might have been worth something.
It must be asked: Are Black Fridays numbered for the Blue Light Specialist?
“If you’re Kmart, there’s no reason for being,” says Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking shop in Manhattan. “Are they building stores? No. Are they improving anything for the customer? No. Sears Holdings as a company is in liquidation.”
Not that the stock and debt of the parent company exactly scream liquidation. Sears Holdings, the brainchild of hedge fund owner Eddie Lampert, has soared this year as the company has raised cash, bought back stock, and shuttered and divested stores and subsidiaries. But this comes amid the retailer’s fifth straight year of declining revenue; in the latest quarter, Kmart’s comparable store sales were down 4.7 percent.
Sears Holdings was recently kicked out of the Standard & Poor’s 500-stock index. It was removed from the Dow Jones industrial average in 1999.
Lampert, in his letters to shareholders, has chafed at the idea that Sears Holdings has to spend more on marketing and store upkeep at Kmart and Sears.
“Despite what some believed, increased marketing spend and increased inventory dollars do not automatically generate higher sales or higher profit,” he wrote in February. “More marketing and inventory dollars are not required to generate higher sales or profits, especially in a company that already spends over $ 1.5 billion in marketing and has over $ 8 billion invested in inventory on a consolidated basis. In fact, if you were to compare the amount of space and inventory we invest in our Sears apparel and home fashions businesses to other significant softlines retailers, you would agree that it should be possible to more than double sales and generate significantly higher profits without any additional investment in inventory, marketing or physical space. To do this, however, requires changes in our thinking and our processes, some of which are currently under way.”
To wit: Sears Holdings is subdividing existing, operational store space so it can be subleased to grocery stores, health clubs, and a Forever 21 fashion apparel store. The company openly lists its available square footage.
“I think Eddie is trapped in a no-win situation,” says Steven Platt, director of the Platt Retail Institute, a Hinsdale (Ill.) consultancy that publishes the Journal of Retail Analytics. “He can’t turn around the stores and he can’t sell the chain. He can dump assets to generate cash. But Sears Holdings is a retail dinosaur.” Last year, Platt put out a note titled “Sears acknowledges that it is in the real estate liquidation business (sort of),” where he said he was vindicated in his suspicion that Lampert was chiefly interested in “milking” the venerable, but moribund, retailers for cash.
Survival for Kmart, says Platt, “is a matter of degree. The store is irrelevant and its customer base is hurting. But with some 1,300 or so stores and $ 15 billion in revenue, they are not likely to go away quickly.”
Enter Kmart’s central paradox: While the store might have no compelling reason for being, it can’t just be shut down overnight, says Davidowitz. There are, he says, too many moving parts for Sears Holdings’ creditors; too many bank agreements and countless square footage that would suddenly inundate a weak market. He cites the parent company’s recent sale of top locations to General Growth Properties (GGP) as the kind of “orderly liquidation” Lampert can use to preserve its otherwise atrophying value as a retailer. “But can Kmart compete with anyone?” asks Davidowitz. “The answer is no.”
Shannelle Armstrong-Fowler, the Kmart spokeswoman at Sears Holdings, declined to comment, citing a quiet period ahead of the earnings release.
In January, Moody’s (MCO) analysts Scott Tuhy and Kendra Smith downgraded the company’s credit two levels and kept a negative outlook, citing “persistent negative trends in sales, which continue to significantly underperform peers” as the retailer doesn’t invest enough in its stores and service.
To be in discount retailing nowadays is to be bombarded by peer pressure. Witness the resurgence of layaway, which Kmart offers throughout the year and for which it could traditionally count on certain customers to pay a reliable $ 5 or $ 10 fee every few months. In September, though, Kmart moved to free layaway, ostensibly in response to aggressive layaway promotions from Wal-Mart and Toys “R” Us. Then there’s the ubiquitous onslaught of free shipping, as led by Amazon Prime.
All of which makes it ever harder for Kmart to cut to the brutal chase of competing on price. For example, in a Bloomberg Industries study of a basket of back-to-school items, Kmart was mildly cheaper than Staples (SPLS), after being significantly more expensive just three weeks earlier. But even as it managed to beat Staples on price, Kmart remained “significantly more expensive” than Target and Wal-Mart.
Starved for marketing and more expensive than your discount competition is, to paraphrase Dean Wormer, no way to go through life.
CAIRO (AP) — Egypt has recalled its ambassador to Israel after an Israeli airstrike killed the military commander of Gaza‘s ruling Hamas.
In a statement read on state TV late Wednesday, spokesman Yasser Ali said that President Mohammed Morsi recalled the ambassador and asked the Arab League‘s Secretary General to convene an emergency ministerial meeting in the wake of the Gaza violence.
Morsi also called for an immediate cease fire between Israel and Hamas, an offshoot of Morsi’s Muslim Brotherhood. Israel says it struck in response to rocket attacks from Gaza.
Hours earlier, Morsi’s Muslim Brotherhood group denounced the Israeli airstrike as a “crime that requires a quick Arab and international response to stem these massacres.”
Relations between Israel and Egypt have deteriorated since longtime President Hosni Mubarak was ousted last year.
Verizon and HTC unveiled a new device that the two hope will appeal to customers during the holiday season, while helping to reverse HTC’s floundering fortunes.
The phone, the Droid DNA, sports a 5-inch screen, putting it more in the “phablet” category with Samsung‘s Galaxy Note. It runs on Android 4.1.1 Jelly Bean and includes a boatload of powerful features, including a Super LCD 3 display with 440 pixels per inch, capable of playing 1080p HD video.
HTC noted the screen rivals traditional HDTVs, while the pixel density is among the highest available on any smartphone. The iPhone 5′s Retina display, for example, is 326 pixels per inch.
The device runs on a quad-core, 1.5Ghz Snapdragon processor from Qualcomm, with 4G LTE integrated on the same piece of silicon as the application processor. Having one chip instead of two improves battery life.
The phone is also capable of wireless charging and full HD video chat. The device has an 8-megapixel rear-facing camera and a 2.1-megapixel camera in the front. HTC noted its phone features HTC ImageSense and HTC ImageChip to create faster image processing and better quality photos, as well as a quick-launch camera option.
The Droid DNA also has Beats audio and two amplifiers, one for headphone and one for speaker. And it’s equipped with near-field communications technology to share music and other content by tapping other NFC-enabled devices.
Droid DNA goes on sale on November 21 for $ 199.99 with a two-year contract. Pre-sales begin today. The phone is available exclusively through Verizon.
The hefty specs should appeal to customers looking for alternatives to the latest gadgets from Samsung and Apple during the holiday season. For HTC, it’s pretty important that they do.
The Taiwanese handset maker really needs a hit phone. Previously the darling of the smartphone world, HTC has been having a tough time lately. Samsung and Apple are dominating the industry’s profits and market share, leaving little for HTC, Motorola, Nokia, and other handset vendors. HTC also has faced litigation, though it reached a settlement with Apple a few days ago.
The company has said it plans to go bolder with its messaging to consumers and the media, relying less on joint marketing campaigns with the carriers and standing more independently to tell the HTC story. It also has said it would try to generate buzz through social media and by seeing out influential celebrities and “superfans” for endorsements. So far, it’s unclear whether such steps are paying off.
LOS ANGELES (Reuters) – Comcast Corp‘s NBCUniversal entertainment unit is laying off about 500 employees at cable channels, Jay Leno‘s late-night TV show and the Universal Pictures movie studio, a person with knowledge of the matter said on Monday.
The cuts add up to about 1.5 percent of the company’s workforce of 30,000 employees, the source said.
A large portion of the layoffs occurred at the G4 cable channel, a network about video games and the gaming culture, the source said. Two of the network’s shows were recently canceled.
Other layoffs occurred about two months ago at “The Tonight Show with Jay Leno,” which cut about two dozen crew members.
The company’s movie studio, Universal Pictures, also eliminated about 20 jobs, including some at the home entertainment division. Home entertainment sales have suffered across the industry as traditional DVDs fall from favor with consumers.
Other job cuts are expected at NBC News group and the company’s cable channels, which include USA, Bravo and E!, the source said.
Comcast bought a 51 percent controlling stake in NBC Universal in January 2011.
(Reporting By Ronald Grover; Writing by Lisa Richwine; Editing by Peter Lauria and Paul Tait)
(Reuters) – A pill for rheumatoid arthritis being developed by Eli Lilly and Co and Incyte Corp maintained its effectiveness in reducing painful symptoms through 24 weeks of treatment in a midstage extension study, according to data presented at a medical meeting on Tuesday.
A sub-study of patients taking part in the trial of the drug, baricitinib, also showed that the two highest doses tested helped to reduce joint damage, based on Magnetic Resonance Imaging (MRI) tests.
The companies in June released positive data from the 301-subject Phase II study after 12 weeks of treatment in patients with mild to moderate RA who had an inadequate response to methotrexate. Data from the ongoing extension study, presented Tuesday at the American College of Rheumatology meeting in Washington, measured baricitinib treatment through 24 weeks.
After 24 weeks, 73 percent of patients who received 8 milligrams of the Lilly drug once daily achieved the ACR20 goal, or a 20 percent improvement in rheumatoid arthritis symptoms. That compared with 78 percent who hit ACR20 at 12 weeks.
For the 4 mg dose, 78 percent of patients hit ACR 20 at 24 weeks, up from 75 percent at week 12.
A 2 mg dose that failed to show statistical significance compared with a placebo at 12 weeks, had 63 percent of patients achieve ACR20 by week 24 of treatment, the data showed.
The study also measured ACR50 and ACR70 rates, or 50 percent and 70 percent improvement. All three doses showed improvement at 24 weeks from measurements taken at 12 weeks.
Baricitinib belongs to a hot new class of oral medicines called Jak inhibitors that aim to compete with the multibillion-dollar injected rheumatoid arthritis drugs that currently dominate the market. Pfizer Inc last week became the first company to bring one of the new drugs to market with the U.S. approval of tofacitinib, which will be sold under the brand name Xeljanz.
Jak inhibitors block enzymes believed to be involved in the inflammatory process.
In the sub-study of 154 patients who underwent MRI testing, there was a statistically significant improvement in measures of inflammation and joint damage at the 4 mg and 8 mg doses after 12 weeks compared with placebo, the companies said. The effects persisted through 24 weeks, they said.
In order to compete with the biologic blockbuster injected drugs, such as Abbott Laboratories’ $ 8 billion a year Humira, the Jak inhibitors must show that they can prevent or delay joint deterioration as well as alleviate symptoms.
(Reporting by Bill Berkrot in New York; editing by Matthew Lewis)
Energy Secretary Ed Davey: “Market abuse is always wrong”
Energy Secretary Ed Davey has promised tough action if allegations that firms manipulated the wholesale gas market turn out to be true.
The Financial Services Authority (FSA) and Ofgem are looking into the claims, which were made by a whistle-blower who was active in the market.
Mr Davey said he was “extremely concerned” and would apply the “full force of the law” if needed.
All of the UK’s big six energy suppliers have denied any involvement.
Mr Davey told MPs: “Market abuse is always wrong, but at a time when people and companies are struggling with high energy bills, the country would expect us to take firm action if these allegations prove true, and we will.”
The body that represents the companies, Energy UK, said its members would co-operate fully to rebuild trust.
Its chief executive, Angela Knight, said: “This is a very serious issue which must be investigated swiftly. The gas market is an international one with many overseas companies trading on it, as well as organisations that are not energy companies.
“Customers need to have confidence in markets and authorities need to have the powers to regulate well and take action if required.”
The wholesale gas market includes everything from the UK’s own North Sea gas supplies, to gas from Norway or elsewhere, or arriving in the UK by ship as LNG, liquefied natural gas.
Widespread
The alleged manipulation is said to have reduced the wholesale price.
The whistle-blower, Seth Freedman, worked at ICIS Heren, a financial information company that publishes energy price reports.
Whistle-blower Seth Freedman: “It would seem that if you are manipulating prices on key dates then certainly millions, if not more, are at stake on each contract”
His concerns are focused on one instance on 28 September this year.
But he told the BBC he thought that price-fixing was widespread: “Having spoken to traders and other market participants, it seems like manipulation is rife in the gas market.”
He said even though the alleged instance may have not added to customers’ bills, it was still damaging: “There’s certainly a link. They [the power companies] are telling you: ‘Look, in order to make our profits and cover our costs and so on, we have to give a price to retail customers which reflects the cost to us.’
“But if you can’t trust the market at a wholesale level, it becomes a crisis of confidence. People at retail level are just thinking, ‘I don’t trust these companies’ – and it needs to be scrutinised.”
Continue reading the main story
Analysis
Jonty BloomBusiness correspondent, BBC News
The allegation claims that dealers make unrealistic bids, at exactly the time when information is being gathered to set the gas price, in an attempt to get a more favourable rate and so make a larger profit.
All the major domestic gas suppliers say that they have not manipulated the market.
But with household energy bills increasing sharply and winter fast approaching, the allegation that the market is vulnerable to manipulation by other unscrupulous dealers is obviously being taken extremely seriously.
‘Less transparent’
Energy companies buy gas at the wholesale price and then sell it on to businesses and domestic users.
The allegation is that the market was rigged in a similar way to the fixing of Libor, the inter-bank lending rate.
It is claimed that on 28 September, dealers made unrealistic bids, at the time when information was being gathered to set the wholesale gas price, to suit their own trading position.
David Hunter, an analyst at M&C Energy Group, said that most wholesale trading is done directly between companies, rather than via an electronic trading system, and that this system is, in theory, easier to manipulate.
He told the BBC: “This sort of trading is less transparent than a fully-fledged market. Hypothetically, someone could seek to artificially lower the price by making small trades below the prevailing market price that may benefit them.”
The cost of wholesale gas makes up the majority of our energy bills – 45% of the average energy bill is made up of the cost of wholesale gas, supply costs and profit margins.
Continue reading the main story
Energy company responses
EDF Energy said it “does not participate in loss-leading trading activity and considers it to be against existing market regulation”.
“We make information likely to impact market price formation publicly available on our website.”
Npower said: “There is an explicit commitment in our code of conduct to comply with all laws and regulations.”
Scottish Power said that it had “never engaged in trying to fix wholesale gas trading markets”, adding: “Our trading division always acts with integrity and follows all rules in all of its engagements with the market.”
SSE said: “We are entirely confident that our energy portfolio management team operate in a fair and legitimate way.”
E.On said: “We are confident that all of our colleagues always act in the correct manner and as a company we fully abide by all appropriate regulations.”
Centrica, which owns British Gas, said it had “very robust governance and compliance policies” which were regularly reviewed. “Centrica’s traders are prohibited from providing price information to price reporting agencies,” it added.
‘Considering evidence’
The Guardian reported that investigations were taking place into “some of the big six” energy providers, but the brief statements released by both the FSA and Ofgem did not identify any companies.
The FSA said: “We can confirm that we have received information in relation to the physical gas market and will be analysing the information.”
Ofgem also said it had “received information” and added that it would “consider carefully any evidence of market abuse that is brought to our attention as well as scope for action under all our other powers”.
The government is currently increasing regulation of the energy market.
Its Enterprise and Regulatory Reform Bill is intended to improve the competition regime and the protection of consumers and is currently with the House of Lords.
It is also working with Ofgem on the implementation of the EU Remit (Regulation on Wholesale Energy Markets Integrity and Transparency) which may lead to giving Ofgem greater powers to act against market abuse.
‘Unusual’
Labour’s shadow energy secretary, Caroline Flint, said that if the reports proved to be true, they “suggest shocking behaviour in the energy market, that should be dealt with strongly”.
She said that gas and electricity companies should be forced to sell the energy they generate into a pool, in order to open up the market and ensure fairer consumer prices.
ICIS Heren said it had “detected some unusual trading activity on the British wholesale gas market on 28 September 2012, which it reported to energy regulator Ofgem in October”.
It added: “The cause of the trading pattern, which involved a series of deals done below the prevailing market trend, has not yet been established.
“If anyone was to benefit from this, it would have been derivatives traders.”
PERTH, Australia (AP) — In a new twist to the Gen. David Petraeus sex scandal, the Pentagon said Tuesday that the top American commander in Afghanistan, Gen. John Allen, is under investigation for alleged “inappropriate communications” with a woman who is said to have received threatening emails from Paula Broadwell, the woman with whom Petraeus had an extramarital affair.
Defense Secretary Leon Panetta said in a written statement issued to reporters aboard his aircraft, en route from Honolulu to Perth, Australia, that the FBI referred the matter to the Pentagon on Sunday.
Panetta said that he ordered a Pentagon investigation of Allen on Monday.
A senior defense official traveling with Panetta said Allen’s communications were with Jill Kelley, who has been described as an unpaid social liaison at MacDill Air Force Base, Fla., which is headquarters to the U.S. Central Command. She is not a U.S. government employee.
Kelley is said to have received threatening emails from Broadwell, who is Petraeus’ biographer and who had an extramarital affair with Petraeus that reportedly began after he became CIA director in September 2011.
Petraeus resigned as CIA director on Friday.
Allen, a four-star Marine general, succeeded Petraeus as the top American commander in Afghanistan in July 2011.
The senior official, who discussed the matter only on condition of anonymity because it is under investigation, said Panetta believed it was prudent to launch a Pentagon investigation, although the official would not explain the nature of Allen’s problematic communications.
The official said 20,000 to 30,000 pages of emails and other documents from Allen’s communications with Kelley between 2010 and 2012 are under review. He would not say whether they involved sexual matters or whether they are thought to include unauthorized disclosures of classified information. He said he did not know whether Petraeus is mentioned in the emails.
“Gen. Allen disputes that he has engaged in any wrongdoing in this matter,” the official said. He said Allen currently is in Washington.
Panetta said that while the matter is being investigated by the Defense Department Inspector General, Allen will remain in his post as commander of the International Security Assistance Force, based in Kabul. He praised Allen as having been instrumental in making progress in the war.
The FBI’s decision to refer the Allen matter to the Pentagon rather than keep it itself, combined with Panetta’s decision to allow Allen to continue as Afghanistan commander without a suspension, suggested strongly that officials viewed whatever happened as a possible infraction of military rules rather than a violation of federal criminal law.
Allen was Deputy Commander of Central Command, based in Tampa, prior to taking over in Afghanistan. He also is a veteran of the Iraq war.
In the meantime, Panetta said, Allen’s nomination to be the next commander of U.S. European Command and the commander of NATO forces in Europe has been put on hold “until the relevant facts are determined.” He had been expected to take that new post in early 2013, if confirmed by the Senate, as had been widely expected.
Panetta said President Barack Obama was consulted and agreed that Allen’s nomination should be put on hold. Allen was to testify at his confirmation hearing before the Senate Armed Services Committee on Thursday. Panetta said he asked committee leaders to delay that hearing.
NATO officials had no comment about the delay in Allen’s appointment.
“We have seen Secretary Panetta‘s statement,” NATO spokeswoman Carmen Romero said in Brussels. “It is a U.S. investigation.”
Panetta also said he wants the Senate Armed Services Committee to act promptly on Obama’s nomination of Gen. Joseph Dunford to succeed Allen as commander in Afghanistan. That nomination was made several weeks ago. Dunford’s hearing is also scheduled for Thursday.
___
Associated Press writer Slobodan Lekic in Kabul, Afghanistan, contributed to this report.
TORONTO (AP) — Research In Motion said Monday that it will hold an official launch event for its new BlackBerry 10 smartphones on Jan. 30. The new phones are seen as critical to RIM’s survival.
The Waterloo, Ontario-based company said Monday details on the much-delayed smartphones and their availability will be announced at the event.
The announcement comes as the company struggles in North America to hold onto customers who are abandoning BlackBerrys for flashier iPhones and Android phones.
RIM’s current software is still focused on email and messaging, and is less user-friendly, agile and robust than iPhone or Android. Its attempt at touch screens was a flop, and it lacks the apps that power other smartphones. RIM is hanging its hopes on the BlackBerry 10 software. It is thoroughly redesigned for the touchscreen, Internet browsing and apps experience that customers now expect. The Canadian company said the launch event will happen simultaneously in multiple countries.
Jefferies analyst Peter Misek called it a make-or-break product release and said the date of the launch event suggests a release date in mid- to late February or in March.
A full touchscreen device is expected to be released first followed shortly after by a physical keyboard version.
BGC Financial Partners analyst Colin Gillis said the new phones won’t be dead on arrival as some analysts have said because RIM hasn’t lost the corporate market completely.
“Is 10 going to be the solution to retain that marketplace? We’ll have to wait and see,” Gillis said. “It’s great they set a date, but the challenges are still formidable. It’s not an issue of initial demand. It’s an issue of sustained demand.”
Gillis noted that RIM’s launch of a tablet initially went OK but then demand fell sharply. RIM’s tablet, the Playbook, uses software on which the BlackBerry 10 will be based.
RIM said last month the new BlackBerrys are being tested by 50 wireless carriers around the world.
Thorsten Heins, who took over as CEO in January after the company lost tens of billions in market value, had vowed to do everything he could to release BlackBerry 10 this year but said in June that the timetable wasn’t realistic. Heins says he can turn things around with BlackBerry 10.
The new BlackBerrys will be released after the holiday shopping season and well after Apple’s launch of the iPhone 5, expected to be Apple’s biggest product introduction yet.
RIM’s platform transition is also happening under a new management team and as RIM lays off 5,000 employees as part of a bid to save $ 1 billion.
RIM was once Canada‘s most valuable company with a market value of more than $ 80 billion in 2008, but the stock has plummeted since, from over $ 140 per share to around $ 8. Its decline evokes memories of Nortel, another former Canadian tech giant, which declared bankruptcy in 2009.
Shares of RIM rose 20 cents, or 2.3 percent, to $ 8.74 in midday trading in New York after rising as high as $ 9.07 earlier.
LOS ANGELES (Reuters) – The cost of treating heart disease has become a key factor in decisions by U.S. cardiologists grappling with the nation’s No. 1 killer.
Record prices for drugs and devices, reduced reimbursement by insurance plans and the looming full implementation of the healthcare reform law are convincing doctors to consider not only novel treatments, but also how to get the most bang for the buck.
The trend was reflected at the annual scientific meeting of the American Heart Association, generally a forum for groundbreaking research on medications and devices to combat heart disease.
The conference for the first time last year featured an entire session on the economics of healthcare, including a study showing that eliminating drug co-payments for heart attack victims significantly reduced the chance that they would suffer another major cardiovascular problem.
The 2012 meeting, held last week in Los Angeles, included several dual presentations with companion studies on the economic impact of a drug or therapy as well as its safety and effectiveness.
“We have an unsustainable economic model in healthcare delivery in the U.S.,” said Dr. Elliott Antman, professor of medicine at Harvard Medical School and chairman of the AHA Scientific Sessions Committee. “We all have to be conscious of ways we can be more cost efficient, and that includes understanding what the big breakthroughs mean in terms of cost.”
Heart disease is the leading cause of death for both men and women in the United States, accounting for one of every four deaths, according to the Centers for Disease Control and Prevention.
It also is very expensive. AHA estimates that annual U.S. medical costs of cardiovascular disease will reach $ 800 billion by 2030 – nearly triple the $ 272 billion spent in 2010.
“Rising costs of medical care make it very pertinent for us to assess value,” said Dr. Mark Hlatky, director of the cardiovascular outcomes research center at Stanford University.
President Barack Obama’s Affordable Care Act, which has now survived a challenge in the Supreme Court and a presidential election, is structured to reward quality of care, not the traditional fee-for-service model that can result in unnecessary treatment.
But the equation is not always simple.
One study presented at the AHA meeting showed that diabetics with diseased arteries not only fared better if they underwent bypass surgery rather than a less expensive stent procedure, but the surgery was also more cost effective.
Researchers, funded by the National Institutes of Health, found that up-front costs for bypass surgery and hospitalization were about $ 8,600 higher than costs for stent patients. But more stent patients either died or needed repeat artery clearing, while those who had surgery lived longer, higher-quality lives, resulting in lower, long-term healthcare spending for them.
Another study found that angioplasty to clear blocked arteries costs more at hospitals not equipped for emergency heart surgery, due mainly to follow-up costs. Elective angioplasty is becoming increasingly common at hospitals that do not conduct more complicated heart procedures.
“Surprisingly, there was no difference in procedure cost,” said Dr. Eric Eisenstein, lead author of the study and assistant professor of medicine at Duke University Medical School in North Carolina. “We did find a difference in follow-up cost.”
New research paid for by Johnson & Johnson, one of the makers of the new anti-clotting drug Xarelto, showed that the costs of a heart attack, angina, or chest pain go well beyond actual hospital care.
The study, led by Robert Page, a clinical specialist in the division of cardiology at the University of Colorado School of Pharmacy in Aurora, Colorado, found that every short-term disability claim for acute coronary syndrome cost employers nearly $ 8,000, and each long-term claim carried a price tag of more than $ 52,000.
Annual healthcare costs for each worker, including out-of-pocket expenses, totaled nearly $ 8,200 during the four-year period studied.
About half of all patients with acute coronary syndrome – a term used to describe conditions in which the blood supply to the heart is blocked – are working adults under the age of 65, Page said. That means the burden for their care will more likely fall on employers and employee co-payments rather than on the Medicare system.
The AHA estimates the rate of coronary heart disease in the United States will increase by 16 percent between 2010 and 2030.
Xarelto is one of three new blood-thinning medicines that offer potential advantages over older drugs to prevent strokes and other dangerous conditions caused by blood clots. Another is Pradaxa, made by Germany’s Boehringer Ingelheim.
“These drugs are expensive. They cost more than warfarin which is relatively cheap to use,” said Dr. Stuart Connolly, director of the cardiology division at McMaster University in Ontario, Canada. “Cost-effectiveness studies have been favorable. The reason is that even though purchase of the drug is not cheap, there are savings from preventing ischemic strokes.”
Even so, physicians can face significant hurdles to secure insurance coverage for patients they think need to be on a new, more expensive drug.
“It is a cost firewall,” Antman said, explaining that it can take considerable time for him to talk to insurance telephone operators, claims supervisors and, eventually, medical directors to secure coverage for a patient.
(Additional reporting by Bill Berkrot; Editing by Martin Howell and Leslie Adler)
