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Wednesday, September 30, 2020

DOJ Opens Ventilator Antitrust Probe Focused on Medtronic

The Justice Department is investigating whether acquisitions by Medtronic PLC limited competition in ventilator manufacturing, according to people familiar with the matter, an antitrust probe that emerged from complaints about device shortages during the coronavirus pandemic.

Medtronic has received a civil subpoena from the Justice Department formally requesting more information, the people said.

The probe is centered on two related acquisitions that date to 2012, when Covidien PLC, a device maker that sold ventilators, bought Newport Medical Instruments, a small California-based manufacturer of ventilator systems, for $108 million.

Newport had secured a contract with the federal government in 2010 to develop and supply low-cost ventilators, but the project stalled after Covidien bought Newport, and the two sides eventually agreed to end the contract before any ventilators were delivered.

Nearly three years after Covidien bought Newport, Medtronic bought Covidien in a roughly $50 billion deal, inheriting Newport in the process. Both deals received antitrust clearance from the Federal Trade Commission.

"Medtronic is cooperating fully with DOJ's review of the 2012 Covidien-Newport transaction," Medtronic spokesman Ben Petok said, adding that the deal was appropriately assessed and approved by the FTC.

Mr. Petok said the ventilator market remains competitive, "with at least 10 major players in which the top five account for approximately 50% market share. Indeed, Covidien purchased Newport to expand its ventilator portfolio in a highly competitive and fractured market, and, rather than discontinue the Newport family of ventilators, Medtronic continues to market Newport ventilators today."

A Justice Department spokeswoman didn't respond to requests for comment.

Fears of a ventilator shortage in the spring sent states and hospitals scrambling for whatever supplies they could secure to treat patients suffering the most severe symptoms of Covid-19. The demand also threatened to exhaust a federal stockpile of the lifesaving machines, spurring the Trump administration to sign contracts with manufacturers, including Medtronic, to ramp up supplies quickly. Some of the new ventilators came from nontraditional sources such as auto makers Ford Motor Co. and General Motors Co., which shifted some of their manufacturing capabilities to ventilators in the spring.

Medtronic boosted production of new ventilators in response to a surge in demand from the pandemic, including a partnership to produce some at a Foxconn Technology Group plant in Wisconsin. Medtronic said sales of its ventilators more than doubled in the quarter ended July 31 to meet higher global demand. 

The ventilator scramble generated criticism that industry consolidation was partly to blame for a supply squeeze -- and an example of federal antitrust enforcers not doing enough to protect competition. Much of that criticism focused on the Covidien-Newport transaction.

The FTC shares antitrust enforcement authority with the Justice Department, and the agencies divide the review of proposed mergers for potential antitrust problems.

Democrats on a House antitrust subcommittee sent a letter to FTC Chairman Joseph Simons in April questioning whether the Newport deal was partly to blame for ventilator scarcity and requesting more information from the commission.

"Covidien's purchase of a potentially market-disrupting competitor that threatened to drive prices down has all the hallmarks of a killer acquisition, where an incumbent firm acquires and then shuts down a key rival," the lawmakers said.

An FTC spokeswoman said the commission responded to the congressional inquiry, but she declined to comment on the substance of that response.

Medtronic earlier this year said that Covidien, after acquiring Newport, found gaps between what Newport promised the federal government and its capability to deliver in terms of the cost, features and performance of ventilators the government was seeking. 

https://www.marketscreener.com/quote/stock/MEDTRONIC-PLC-20661655/news/Medtronic-Justice-Department-Opens-Ventilator-Antitrust-Probe-Focused-on-Medtronic-31423637/


 



 

As Covid-19 Cases Rise, Insurers Reduce Coverage for Virtual Doctor Visits

Insurers are rolling back the terms of telehealth coverage they launched this spring, with some UnitedHealth Group Inc. and Anthem Inc. customers set to face out-of-pocket charges on certain virtual visits starting October 1.

Major insurers are taking different approaches to covering remote care, which is typically done by phone or video. The companies are offering an array of deadlines, reimbursement strategies and charges, depending on factors like the type of plan or the purpose of the medical visit.

Doctors and hospital officials say the complex rules are leading to confusion -- and the cost-sharing charges create concern that patients, faced with an increased financial burden for telehealth, might delay or avoid visits.

"It's really very complicated," said Ted Okon, executive director of the Community Oncology Alliance. "It should be simplified and unified so that you don't have to constantly go back to this grid."

The new Anthem and UnitedHealth changes, for instance, only apply to certain plans and don't include virtual visits related to Covid-19, which will generally continue to be free for patients. Some other insurers had ended cost-sharing waivers for telehealth visits earlier in the year.

"Shifting the copayment back to patients now presents a risk that patients will cancel telehealth appointments or in-person visits that heighten the threat of infections," said Thomas Owens, senior vice president of Duke University Health System. Though many people with insurance would be charged only a flat copay for virtual visits, others might owe the full cost or a share of it, depending on their plan.

Telemedicine grew rapidly this spring and summer as the coronavirus pandemic shut down swaths of the U.S. health-care system. Doctors and hospitals around the country canceled much of their routine, in-person care and patients stayed home, nervous about the risk of infection.

Insurers and the federal Medicare program rushed out expanded coverage for virtual visits, often including reimbursement for doctors on-par with what they previously received for seeing patients in their offices.

Consumer surveys by the Deloitte Center for Health Solutions, a research unit of Deloitte LLP, found 28% of respondents this April said they had used a virtual visit in 2020. At the start of the year, just 19% said they had had one in the previous 12 months.

For Karen Smith, a family physician in Raeford, N.C., about a third of her patient visits in a typical week is now virtual, she said. The expanded coverage provided a financial lifeline to her practice and enabled her to stay in touch with patients who were afraid to come to the office because they feared viral infection, she said.

Patients might be less likely to use the remote visits if there is a charge, Dr. Smith said: "If they do have to pay, our patients are not going to accept the service."

Indeed, Linda Robertson, 71, who is Dr. Smith's patient, says that despite the convenience of telemedicine, a charge for digital visits would mean she and her husband would do fewer of them. Ms. Robertson, a retired teacher from Shannon, N.C. who has diabetes and rheumatoid arthritis, is nervous about the risk of infection with the coronavirus. With her current coverage, it is unlikely that Ms. Robertson would owe copays for doctor visits, either virtual or in-person.

"I can't afford to be paying copays every time I go to the hospital," Ms. Robertson said. "I don't pay the copays, and if I did, I would probably miss most of those meetings, I just couldn't afford it."

Doctors and hospitals say they are also struggling with uncertainty about future coverage of telehealth, since many insurers have said their current policies are guaranteed only until the end of the year.

Christi Siedlecki, chief executive of Grants Pass Clinic, which provides primary care in Grants Pass, Ore., said she is worried that the clinic will lose telehealth payments when the federal public-health emergency tied to the pandemic lapses, currently set to happen in late October. "It's not certain what the future holds," she said. "Everything right now is based on the state of emergency."

UnitedHealth is tweaking its cost-sharing policy as "the health-care system is returning to normal levels," a spokesman said. The Oct. 1 change affects in-network non-Covid-19 visits for people with Medicare Advantage and fully-insured employer and individual plans, the company said.

Anthem said that starting Oct. 1, patients enrolled in fully-insured employer and individual plans will generally face cost-sharing for non-Covid-19 virtual video visits with network providers. But telephone visits -- with no video -- will remain free of charge at least until the end of the year. The insurer's Medicare Advantage enrollees will also have no cost-sharing on video or phone visits at least until next year.

"As offices have been able to reopen, we have aligned our cost-sharing for telehealth and in-person care for non-Covid cases," an Anthem spokesman said.

Other major national insurers are taking varying approaches. CVS Health Corp.'s Aetna said it is waiving cost-sharing for virtual doctor visits, both specialists and primary care, in its Medicare plans at least through the end of the year. For those enrolled in fully-insured employer plans, there are no out-of-pocket charges for virtual visits for Covid-19 or behavioral and mental-health counseling. However, in early June, the insurer restored cost-sharing for other types of telehealth visits for those plans.

Cigna Corp. said it has waived cost-sharing for virtual visits related to Covid-19 through the end of October for its commercial plans. Out-of-pocket charges apply for telehealth not related to Covid-19, the insurer said. Cost-sharing is still waived for virtual visits by Medicare Advantage members, including those not for Covid-19. 

https://www.marketscreener.com/quote/stock/UNITEDHEALTH-GROUP-14750/news/UnitedHealth-As-Covid-19-Cases-Rise-Insurers-Reduce-Coverage-for-Virtual-Doctors-Visits-31423241/

FDA widens U.S. safety inquiry into AstraZeneca coronavirus vaccine

The U.S. Food and Drug Administration has broadened its investigation of a serious illness in AstraZeneca Plc's COVID-19 vaccine study and will look at data from earlier trials of similar vaccines developed by the same scientists, three sources familiar with the details told Reuters.

AstraZeneca's large, late-stage U.S. trial has remained on hold since Sept. 6, after a study participant in Britain fell ill with what was believed to be a rare spinal inflammatory disorder called transverse myelitis.

The widened scope of the FDA probe raises the likelihood of additional delays for what has been one of the most advanced COVID-19 vaccine candidates in development. The requested data was expected to arrive this week, after which the FDA would need time to analyze it, two of the sources said.

Effective vaccines are seen as essential to help end a pandemic that has killed more than one million people worldwide.

The administration of President Donald Trump has pledged $1.2 billion to support development of the AstraZeneca vaccine and secure 300 million doses for the United States. Other leading companies in the U.S. vaccine race include Pfizer Inc , Moderna Inc and Johnson & Johnson.

Regulators in the UK, Brazil, India and South Africa have allowed AstraZeneca to resume its clinical trials there.

The FDA, however, wants to determine whether similar side effects emerged in trials of other vaccines designed by AstraZeneca's coronavirus vaccine partner, researchers at Oxford University, the sources said. That does not mean the agency believes there were safety issues associated with any of these vaccines, they added.

"It just shows that the FDA is being thorough," said one of the sources.

Further complicating the situation is that the data requested by FDA is in a different format than what the U.S. regulator requires, two of the sources said.

The FDA declined to comment on discussions involving an experimental product. Oxford did not respond to requests for comment. AstraZeneca, in a statement, said: "We are continuing to work with the FDA to facilitate review of the information needed to make a decision regarding resumption of the US trial."

VIRAL VECTOR

All of the vaccines it wants to review use a modified adenovirus as vectors to safely deliver genetic material from the target illnesses - flu, Middle East Respiratory Syndrome, and other diseases - into the body to stimulate an immune system response to fight future infection.

While other vaccine developers have used human adenoviruses for such vaccines, the Oxford researchers chose an adenovirus found in chimpanzees. They felt this would reduce the likelihood that an individual's immune system would attack the vector virus due to prior exposure rather than the intended target.

Reuters reviewed six research papers that detailed safety data of vaccines using the engineered chimpanzee adenovirus called ChAdOx1 for diseases including tuberculosis, prostate cancer and influenza.

In one of those trials, one serious adverse event cited by researchers was deemed unrelated to the vaccine.

The type of review being conducted by the FDA is generally intended to scrutinize raw data for other side effects, the sources said.

The U.S. government's effort to speed development of a COVID-19 vaccine - and promises by Trump that one could be available prior to the Nov. 3 presidential election - has led to concerns of political interference in the regulatory process at the expense of safety. The FDA has denied this.

AstraZeneca's vaccine development could also be slowed by a change to its clinical trial protocols to show that it has met pre-determined safety and efficacy standards.

Independent safety monitors will conduct their first review of the vaccine's safety and effectiveness after 75 trial subjects become infected with COVID-19, up from the original initial review plan after about 40 infections, according to a Reuters review of protocol documents issued in July and amended in mid-September.

The safety monitors could decide to stop the trial if the vaccine proves either highly effective, and therefore should be considered for public use before the trial concludes, or if serious safety problems appear.

"Safety is likely to have been a major reason" for the change, said Thomas Lumley, chair of biostatistics at the University of Auckland who was not involved with the study.

AstraZeneca would not say why it had made the change to its protocol.

https://www.marketscreener.com/quote/stock/ASTRAZENECA-PLC-4000930/news/AstraZeneca-FDA-widens-U-S-safety-inquiry-into-AstraZeneca-coronavirus-vaccine-sources-31424146/

CTI BioPharma sees price targets rising on FDA accelerated approval pathway

In Sep. 29 trading session, CTI BioPharma (CTIC +87.6%) trading was halted pending news; currently stock has surged 88% in a single day trading.

Maintaining its Outperform and Buy rating, JMP Securities (to $4 from $3) and Needham (to $6 from $3.50), respectively, raised price targets on CTI BioPharma.

JMP analyst Reni Benjamin and Needham analyst Chad Messer note that CTI Biopharma announced that the FDA agreed to an accelerated approval pathway for pacritinib in myelofibrosis patients with severe thrombocytopenia, and said it expects to complete a rolling NDA submission by Q1 2021.

More than 1.2K patients have been dosed with pacritinib. Quick look at it's development program:

With a rolling NDA for pacritinib in MF patients with severe thrombocytopenia expected to complete submission in Q1 2021; an ongoing study in hospitalized patients with COVID-19; an IST with results expected in Q4 for GvHD, and a cash position of $61M, Benjamin continues to recommend CTIC.

As per the company's latest investor presentation, top-line primary analysis data is expected in 2022.

https://seekingalpha.com/news/3618558-cti-biopharma-sees-analysts-price-targets-rising-on-fda-accelerated-approval-pathway

McConnell: Sides still 'far apart' in COVID relief talks

Update: 3:14 p.m. ET Steve Mnuchin says there's still no agreement on a stimulus deal.

Senate Majority Leader Mitch McConnell says both sides are "far apart" on a fiscal stimulus deal, denting earlier hopes negotiations were progressing.

The broader market immediately pared gains after the news, with the S&P falling 0.7%.

This morning Treasury Secretary Steve Mnuchin said he should know if the administration has an "overall understanding" with Democrats on a new fiscal stimulus package by Thursday, adding he was "hopeful".

Mnuchin's comments added some juice to a modestly higher market, leading to a broad-based rally as cash moved to stimulus-sensitive sectors like Consumer Discretionary (NYSEARCA:XLY) and Industrials (NYSEARCA:XLI).

Now, defensive sectors Consumer Staples (NYSEARCA:XLP) and Health Care (NYSEARCA:XLV) are in the lead and Industrials have turned negative.

The S&P had been trading at its highs of the day just before McConnell spoke.

https://seekingalpha.com/news/3618560-mcconnell-says-sides-still-far-apart-in-covid-relief-talks-stocks-pare-gains

Raymond James sees 62% upside for Acadia Healthcare

Acadia Healthcare (ACHC +4.5%) has received Strong Buy rating from Raymond James, up from Outperform with a price target of $48, up from $40.

The analyst believes after the divestiture of its U.K. portfolio, investors will be able to re-focus on the underlying value of the U.S. business, led by the "sleeper" CTC business, which the analyst estimate accounts for ~20% of US EBITDA at a 13x estimated base case EBITDA multiple.

Recently, Acadia notified potential buyers, that it will relaunch a formal sale process.

https://seekingalpha.com/news/3618567-raymond-james-sees-62-upside-for-acadia-healthcare

Ionis gets Orphan Drug tag for rare neurodegenerative disease

The FDA has designated Orphan Drug status to Ionis Pharmaceuticals's (NASDAQ:IONS) ION373 for the treatment of Alexander disease, a rare neurodegenerative disease, characterized by the destruction of the myelin sheath (fatty covering that protects the nerve fiber and supports signal conduction).

Alexander disease is caused by a mutation in a protein resulting in overproduction of glial fibrillary acidic protein (GFAP) in the brain, and ION373 is antisense medicine designed to stop the mutated gene from producing excess GFAP.

https://seekingalpha.com/news/3618591-ioniss-ion373-orphan-drug-in-u-s-for-rare-neurodegenerative-disease