Pandemic flu shows need for pharma incentives -WHO

* Health threats such as H1N1 require new drugs, jabs -WHO

* Ideal H1N1 vaccine would include seasonal, other viruses

GENEVA, - Pharmaceutical firms need incentives, including lucrative patents, to keep creating drugs and vaccines against emergent threats such as the H1N1 influenza pandemic, the World Health Organisation's head said on Tuesday.

"Progress in public health depends on innovation. Some of the greatest strides forward for health have followed the development and introduction of new medicines and vaccines," said WHO Director-General Margaret Chan said.

Chan, who last month declared a full pandemic underway from the H1N1 virus, said that patents can help ensure that companies develop medicines to "stay ahead of the development of drug resistance" in diseases like malaria and tuberculosis.

The discovery of isolated H1N1 infections that resist the anti-viral Tamiflu, made by Roche (ROG.VX) and Gilead (GILD.O), and the global scramble to secure flu vaccines have shown the importance of robust research and development, Chan said.

"Innovation is needed to keep pace with the emergence of new diseases, including pandemic influenza caused by the new H1N1 virus," she told a meeting on intellectual property and health, a contentious issue that has divided rich and poor nations.

In the speech, Chan said most drug access problems faced by developing countries could be remedied by tinkering with the existing patent system, which "operates as a stimulus for research and development for new products."

In May, at the WHO's annual assembly, rich and poor nations failed to reach consensus on how they should share virus samples of H1N1 and other flu strains with companies that use the biological material to make vaccines.

Indonesia has been especially vocal against this, arguing that developing countries would not be able to afford patented jabs made from their specimens.

PROBLEMS WITH PATENTS

Chan said those talks on "one of the most difficult, and divisive, issues ever negotiated by WHO" had identified problems with patents but said that the existing intellectual property regime did not need to be fully dismantled in pursuit of equity.

"R&D can indeed be needs-driven as well as profit driven," the former Hong Kong health director said. "International agreements that govern the global trading system can indeed be shaped in ways that favour health needs of the poor."

Chan described the global vaccine making capacity as "finite and woefully inadequate for a world of 6.8 billion people, nearly all of whom are susceptible to infection by this entirely new and highly contagious virus."

While acknowledging that "the lion's share of these limited vaccines will go to wealthy countries," she said the shortfall was "the result of limited global manufacturing capacity. It is not, in essence, a result of intellectual property issues."

The WHO has recommended that health workers, pregnant women and children should get priority access to H1N1 vaccines, and noted that every country worldwide will need them. [ID:nLD54719]

Chan said the ideal H1N1 shot would protect against seasonal strains as well as a range of candidate pandemic viruses.

"This innovation has not come about yet," she said. "This would be the best and most rational insurance policy for increasing supplies and encouraging more equitable access."

Top flu vaccine makers include Sanofi-Aventis (SASY.PA), Novartis (NOVN.VX), Baxter (BAX.N), Schering Plough's (SGP.N) Nobilon, GlaxoSmithKline (GSK.L), Solvay (SOLB.BR) and AstraZeneca's (AZN.L) MedImmune.

State scores victories against pharmaceutical companies in new settlements

The state of Alabama has scored another round of significant victories in its ongoing war with major pharmaceutical companies which allegedly bilked the state Medicaid agency out of an estimated $1 billion in drug overcharges. Attorney General Troy King says that six more drug companies have settled with the state for $89 million.

The latest settlements, announced by King on Friday, bring to nearly $124 million the amount the state has won through negotiated settlements with drug manufacturers. The state has also won more than $352 million in jury verdicts against pharmaceutical companies what would not settle and instead chose to go to trial. Those verdicts are being appealed by the drug makers, so those funds have yet to be recovered by the state.

When King first took action in January 2005, more than 70 drug firms were named in suits alleging $1 billion in fraudulent drug overcharges. Today, about 45 defendants remain.

"I (took) legal action against these drug companies simply to right a wrong, and to recover public funds that had been illegally taken from our state," King said. "My intent was then - and is now - to make Alabama's taxpayers whole."

The latest settlements were reached with Abbott Laboratories, Aventis Pharmaceutical L.P., TEVA Pharmaceuticals USA, Shering-Plough/Warrick Companies, Forest Laboratories and Baxter International. King would not disclose the exact amount each defendant agreed to pay the state, saying the individual amounts were being kept confidential as part of the settlements.

Previous settlements were reached with seven other major pharmaceutical manufacturers totaling $34.75 million. That, plus the $89 million in settlements announced Friday brings to $123,750,000 the amount of money the state has and will realize from 13 of the more than 70 defendants.

"As we deposit these monies back into the General Fund, it is my hope that they can be used to offset some of the massive budget shortfalls within the Alabama Department of Corrections, and, perhaps, even be used to provide relief to those Alabama families who acted in good faith, saving and investing in the Alabama Prepaid College Tuition program," King said.

The state initially filed suit against 72 pharmaceutical companies. The first case went to trial in Montgomery in February 2008. A jury awarded the state $215 million against AstraZeneca PLC. Montgomery County Circuit Court Judge Charles Price later reduced the verdict to $160 million.

The second case went to trial in Montgomery last July, with another $114 million verdict in favor of the state. The jury awarded Alabama $81 million against GlaxoSmithKline PLC and $33 million against Novartis AG. Two smaller drug companies, Takeda Pharmaceuticals North America Inc. and Dey LP settled before trial last July for about $7 million.

In February of this year, a Montgomery County Circuit Court jury awarded the state $78.4 million against Sandoz, Inc.

King originally hired the Hand Arendall law firm of Mobile to handle the cases for the state. Hand Arendall then associated the Montgomery law firm of Beasley Allen. Roger Bates of Hand Arendall and Jere Beasley of Beasley Allen lead the team of attorneys representing the state in the courtroom and in settlement negotiations.

The firms will receive about 14 percent of the verdicts and settlements, plus expenses.

Beasley said Friday's announced settlements show the state's cases against the drug makers are well-founded. "No group would pay $89 million if they had any idea we had been wrong in bringing the lawsuit," he said.

The next trial, against Watson Pharmaceuticals, Inc. is scheduled for June 22. Then, on September 21, Mylan Pharmaceuticals, Inc is scheduled for trial. Both cases will be heard in Montgomery County Circuit Court.

China Biotech in Review: Deals and Earnings

Earnings reports were still rolling in last week in the world of China life science, but the pace slowed down from the previous week’s avalanche. Last week, the news about the everyday business of the sector, the announcements that speak of growth – new facilities, deals, etc. – moved back into the forefront.

Innovation was a theme as we profiled GeneHarbor (Hong Kong) Technologies, a company dedicated to the discovery of novel enzymes (see story). “Our major product is enzymes, but we are different from most other enzyme companies because we are primarily an R&D company, not a manufacturing company. We discover new enzymes for new applications,” said Jun Wang, PhD, Chairman and CEO of the company, in an exclusive interview with ChinaBio Today.

CROs also made their share of news. The Hamner Institutes for Health Sciences, a US-headquartered non-profit research organization positioned between industry and academia, formed a US-China biopharma bridge. By signing on with China Medical City, the biopharma park in Taizhou, Hamner established the Hamner-China Medical City Institute for International Drug Development (see story). Newsummit Biopharma, a partner in China Medical City, will take up residence in the Hamner’s Bioscience accelerator in North Carolina. Newsummit combines the features of a CRO with those of a technology development company.

Kleiner Perkins Caufield & Byers will invest $15 million of venture capital into Jinsite Science and Technology (Nanjing) Co Ltd, a CRO that is the China subsidiary of a US-based CRO, GenScript Corporation (see story). Founded in 2004, Jinsite offers outsourced biological and pharmaceutical research. Like its parent GenScript, the company says it is a one-stop shop for all outsourcing tasks, from gene discovery to target identification and validation.

XenoBiotic Laboratories (XBL), a CRO headquartered in New Jersey, announced it will open its new China laboratory this summer, the company’s first facility in China (see story). XenoBiotic focuses on metabolism and bioanalytical services. The new lab, located in Nanjing and called XBL-China, is a 36,000 square foot facility that includes a 12,000 square foot vivarium. A formal open house will be held in October.

Deals in other segments of China biopharma also made news last week. Simcere Pharmaceutical Group (NYSE: SCR) will acquire 35% of Shanghai Celgen Bio-Pharmaceutical Co., Ltd. for 140 million RMB ($20.6 million), a company that focuses on research and production of therapeutic antibodies (see story). At the same time, the company released a disappointing Q1 financial report: revenues were $64.8 million, a 12% increase from the year earlier, but $5 million less than the average analyst forecast. Net income was $7.1 million, a 57% decrease from 2008.

China Sky One Medical (NSDQ: CSKI) has begun a $10 million cooperative effort with Taiwan Golden Biotechnology Corporation to develop a novel cancer drug, Antroquinonol (see story). The drug is a stronger version of a TCM used in Taiwan; it will be tested as a treatment for liver and lung cancer. The two companies will develop the drug jointly, though China Sky One will have exclusive sales rights for mainland China.

Baxter International (NYSE: BAX) unveiled a plan to spend 1 billion RMB ($147 million) over the next three years to upgrade factories in Guangzhou, Suzhou, Tianjin and Shanghai (see story). The company positioned the investment as a response to China’s demand for high-quality medical instruments.

In earnings news, BMP Sunstone Corporation (NSDQ: BJGP) said revenues more than doubled in Q1, rising to $39.3 million (see story). The company closed its acquisition of Sunstone Pharma in mid-February last year, helping the comparison. Profits have traditionally been a problem for BMP. In Q1, the company reported $3 million in non-GAAP net income, but a GAAP loss of $2 million.

China Shenghuo Pharmaceutical Holdings (NYSE Amex Equities: KUN) reported revenues rose 23% in to $6.8 million (see story). The numbers raised cash flow to $890,000, but the company reported a net operating loss of $2.9 million, much higher than the $850,000 loss incurred in the same period in 2008.

China Aoxing Pharmaceutical (CAXG.OB) announced revenues increased 85% to $1.6 million in the most recent quarter, largely because of an acquisition (see story). China Aoxing said its operating loss in Q3 was $700,000 in Q3, about half that of the year-earlier period.

Drug Makers To Pay $89 Million To Settle Alabama Medicaid Price Suits

Pharmaceutical companies agreed to pay an additional $89 million to Alabama in settlement of litigation against 72 companies accused of defrauding the state's Medicaid system by overcharging for drugs.

The state already reached settlements totaling $34.8 million and won jury verdicts of more than $352.4 million against defendants in the case.

The latest settlements resolves suits against drug manufacturers, including Abbott Laboratories (ABT), Aventis Pharma Ltd. (500674.BY), TEVA Pharmaceutical Industries Ltd. (TEVA), Ivax Diagnostics Inc. (IVD), Barr Laboratories Inc., Schering-Plough Corp. (SGP), Forest Laboratories Inc. (FRX) and Baxter International Inc. (BAX).

The litigation was filed in 2005 and alleged massive reporting of false prices to Alabama's Medicaid agency from 2001 to 2005.

Lawsuits are pending against 45 defendants in Alabama. The next trial is scheduled against Watson Pharmaceuticals Inc. (WPI) on June 22. A trial involving Mylan Inc. (MYL) is set for trial Sept. 21.

Twenty-two other states have similar suits pending.

Ala. settles suits with 6 drug firms for $89M

MONTGOMERY, Ala. — Six prescription drug manufacturers have settled Medicaid drug pricing lawsuits with the state of Alabama for $89 million.

Attorney General Troy King announced Friday that the settlements were reached with Abbott Laboratories, Aventis Pharmaceutical L.P., TEVA Pharmaceuticals USA, Shering-Plough/Warrick Companies, Forest Laboratories and Baxter International.

King only released the total amount of the settlements and did not say how much each company agreed to pay. Part of the agreement was that the state would not release the individual amounts.

The companies were among the more than 70 that King sued in 2005, charging them with manipulating the price that the state's Medicaid program pays for prescription drugs.

The state had previously settled with 10 companies for almost $35 million. The state's lawsuits against four companies have gone to trial, with the state winning judgments against each totaling $352.4 million.

King said Friday the bulk of the money from the latest settlement will go into the state's cash-strapped General Fund Budget. That's the budget that funds Medicaid, state troopers, prisons and other non-education state services.

Trial of the state's lawsuits against Abbott and Forest had been scheduled to begin June 22. A lawsuit against Watson Pharmaceuticals is still expected to begin on that date in Montgomery County Circuit Court.