54.7 F
Laguna Hills
Tuesday, Mar 19, 2024
-Advertisement-

Medicare Reforms Set to Play Out; Another Year of Rising Premiums

Medicare Reforms Set to Play Out; Another Year of Rising Premiums

By VITA REED

Medicare reform takes effect in 2004, and it’s expected to give a kick to several healthcare companies.

Cypress-based PacifiCare Health Systems Inc., whose Secure Horizons Medicare plan counts some 680,000 members, could lower co-payments for hospital and doctor visits, thanks to added federal funding. PacifiCare and other Medicare health maintenance organization operators are set to get an added $1.3 billion in the next three years.

Not every sector is set for a Medicare windfall. The law cuts payment on some respiratory drugs that home healthcare providers such as Apria Healthcare Group Inc. of Lake Forest and others provide (see story below).

Orange County is likely to lose one of its bigger healthcare companies next year. Shareholders of Irvine drug maker Sicor Inc. are set to vote in mid-January on a $3.4 billion buyout offer from Teva Pharmaceutical Industries Ltd. of Israel.

The deal stands to cap a long-running comeback for Sicor, which once was one of San Diego’s biotechnology darlings before suffering a setback that led it to retool and move to OC in 1997. Since then, Sicor has made itself into a generic and brand-name player in the cancer and anesthesiology markets. It’s geared up for when biotech drugs come off of patent and become generics later in the decade.

When it comes to Medicare reform and a prescription drug benefit, analysts say that generic drug makers are expected to be big winners.

Allergan Inc., the Irvine-based specialty drug maker, expects 2004 to be a busy year. The company is looking to expanded European approval of Vistabel,Botox Cosmetic’s European name,and Food and Drug Administration OK of Botox to treat excessive underarm sweat.

Allergan also is looking to get the FDA’s nod for oral tazarotene pills for psoriasis later in the year.

On the research side, second-phase clinical trials for Botox to treat migraines are set for the second half of 2004. Third-phase trials for Posurdex, a biodegradable implant that carries back-of-the-eye disease medication, should start in the first half of this year.

Unlike last year, Valeant Pharmaceuticals International doesn’t enter 2004 with a morass of unfinished business. Instead, Costa Mesa-based Valeant, formerly ICN Pharmaceuticals Inc., plans to make its first acquisition under its new name early in the year.

Irvine’s Edwards Lifesciences Inc., which plans to focus on developing its heart valve and catheter technology, starts the year with a new acquisition meant to position itself in the emerging market for heart valves that don’t require major surgery.

Edwards plans to spend $125 million to buy Percutaneous Valve Technologies, a privately held company out of Fort Lee, N.J. Percutaneous is a developer of heart valves that can be inserted with a catheter,a coming trend in the heart valve industry.

On the benefits front, employers are gearing up again to spend more money for health insurance for workers in the coming year. Benefits consultants and insurance brokers are predicting price hikes of at least 14% in 2004. Smaller companies that don’t have the ability to spread costs among a large worker pool are expected to be smacked with increases of 20% or higher.

“Considering that a fourth of employers experienced cost increases of 20% or more in 2003, cost-shifting is likely to continue in 2004,” said Tim Upson, a consultant in the Newport Beach office of William M. Mercer Inc.

Person to Watch: Lawrence Higby

Apria Healthcare Group Inc.’s chief executive enters 2004 with a changing Medicare landscape. But he says he’s not worried.

The Medicare Prescription Drug, Improvement and Modernization Act, which becomes law next month, cuts reimbursement on some respiratory drugs that Apria and its rivals provide for their Medicare patients.

Medicare reimbursement accounts for about 28% of Apria’s revenue, which was $1.2 billion last year. Respiratory drugs make up about 6% of that. The Lake Forest-based home healthcare company gets most of its revenue from patients in private managed care plans.

Apria’s shares fell about 17% as Congress worked out details of the law during a six-day period in November. Apria’s stock since has retraced its steps near to where it was before.

Apria also is expected to keep up its acquisition strategy in 2004, thanks to Medicare reform, according to Higby.

,Vita Reed

COMPANY to watch: 3F THERAPEUTICS

3F Therapeutics Inc., a Lake Forest-based heart valve startup, starts 2004 flush with cash.

Last month, it snapped up $14.2 million in venture funding, led by Boston Scientific Corp. The cash infusion, the first phase of a fourth round, brought 3F’s total raised to $32.3 million since its 1998 start.

3F plans to spend the year working on its Aortic Bioprosthesis heart valve, which is designed for implementation with a catheter.

The device maker also is planning to raise up to $10 million in another funding round with help from Stifel, Nicolaus & Co., a St. Louis-based investment bank.

3F plans to use the cash to fund the completion of clinical studies for Aortic Bioprosthesis and hopes to release the heart valve in Europe in 2004.

The company, a possible acquisition target by big-name valve makers, still is a few years away from releasing the valve in the U.S.

,Vita Reed

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-
-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-