Top Stories in Business & Health for September 3, 2017 

Gilead Sciences agrees to buy Kite Pharma for $11.9 billion

Gilead Sciences announced last Monday that it had signed a definitive agreement to acquire Santa Monica, Calif.-based biopharmaceutical firm Kite Pharma for $180 per share in cash. The estimated value of the transaction is $11.9 billion. The board of directors of both companies unanimously approved the deal, which is expected to close in the fourth quarter, pending regulatory approval and other customary closing conditions. 

Kite Pharma develops individualized cell-based cancer therapies that express either a chimeric antigen receptor (CAR) or an engineered T cell receptor (TCR). The company’s most advanced candidate is axicabtagene ciloleucel (axi-cel), a CAR T therapy under priority review by the Food and Drug Administration as a treatment for refractory aggressive non-Hodgkin lymphoma. The FDA’s decision on axi-cel is anticipated by Nov. 29. The firm is testing other candidates for hematologic cancers and solid tumors. 

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UnitedHealth’s Optum to purchase Advisory Board’s health care business for $1.3 billion

Last Tuesday, UnitedHealth Group’s Optum subsidiary announced that it had agreed to buy The Advisory Board Co.’s health care business for $1.3 billion, including debt. Advisory Board combines research, technology and consulting services to improve the performance of health care organizations. Optum manages drug benefits and provides health care data analytics services. Advisory Board’s board of directors unanimously approved the merger, which is expected to close later this year or in early 2018, provided Advisory Board shareholders also approve it and certain closing conditions are met. One of those closing conditions is the proposed sale of Advisory Board’s education business to Vista Equity Partners for $1.55 billion. According to Optum’s press statement, Advisory Board CEO Robert Musslewhite will continue to lead the health care advisory business after it becomes a wholly owned subsidiary of Optum. 

Carolinas HealthCare System, UNC Health Care sign LOI

Charlotte, N.C.-based Carolinas HealthCare System and UNC Health Care of Chapel Hill announced last Thursday that they signed a letter of intent to join their clinical, medical education and research resources, creating a joint operating company. A statement by the two organizations said the resulting nonprofit corporation would improve access to care in underserved and rural areas of North Carolina, address behavioral health needs, design new models of care, further develop virtual care platforms and expand medical education. Gene Woods, who is CEO of Carolinas HealthCare System, would be CEO of the new entity, and Dr. William Roper, CEO of UNC Health Care, would be the executive chair. While the new system would function as a single economic entity, with one management team and one budget, both parties would retain their respective boards and ownership of assets, The Charlotte Observer reported, noting that the new entity would run more than 50 hospitals and employ an estimated 90,000 people. 

Tenet CEO to step down; company ‘refreshes’ board, adopts poison pill

Tenet Healthcare, based in Dallas, announced Thursday that Trevor Fetter, CEO and chairman, would step down by mid-March and possibly sooner, if a successor is appointed, and that Ronald Rittenmeyer, who was independent lead director, has been named the company’s executive chairman. In the news release, Tenet also said it has begun a process to “refresh” the composition of its board. In addition, the board approved a short-term shareholder rights plan, or so-called poison pill, to protect approximately $1.7 billion in net operating loss carryforwards and ensure that shareholders’ interests are protected during the changes in leadership. The plan is scheduled to expire after the annual meeting of Tenet’s stockholders in 2018. 

Medicare shared-savings ACOs reduced spending by nearly $1 billion over three years, OIG reports

Accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) “show promise in reducing spending and improving quality,” a report by the HHS’ Office of Inspector General (OIG) states. Using CMS payment and quality data for the first three years of the MSSP (2013-2015), analysts found that participating ACOs achieved almost $1 billion in net cost savings during that period and were able to improve the quality of care more quickly than fee-for-service (FFS) providers did. Specifically, two-thirds (282) of the 428 ACOs analyzed reduced spending in at least one year, for a total reduction in spending of $3.4 billion over the three-year review period; 36 ACOs generated $1.7 billion of those savings. However, the remaining 146 ACOs collectively exceeded their benchmark spending levels by $2.4 billion during the three years; 38 ACOs were responsible for approximately half of that amount. The OIG analysts also found that ACOs with more experience in the program achieved considerably higher savings as compared with newer ACOs, suggesting that with time the ACOs are learning how to save more. Performance improved in 82 percent of 33 quality measures, and the ACOs outperformed FFS providers in 81 percent of the measures.  

Novartis’ novel CAR T therapy gains FDA approval

Much earlier than anticipated, the FDA approved Novartis’ Kymriah (tisagenlecleucel-T) CAR T-cell therapy last week, making it the first such therapy to be approved in the U.S. The treatment is approved for patients aged 3 to 25 years who have relapsed or refractory acute lymphoblastic leukemia. The individualized cell-based gene therapy involves engineering a patient’s own T cells to kill leukemia cells that have a specific antigen on their surface. In a clinical trial of 63 patients, the overall remission rate within three months of treatment was 83 percent. The immunocellular therapy was approved with a boxed warning for potentially life-threatening cytokine release syndrome and neurologic events, as well as an accompanying risk evaluation and mitigation strategy.  Novartis is launching the one-time treatment at a price of $475,000, for this indication only—future indications will be priced separately—and the price does not include hospital expenses for collecting the patient’s T cells or infusing the therapy. The company is working with the Centers for Medicare and Medicaid Services (CMS) on an outcomes-based pricing arrangement in which Novartis will receive payment only if patients respond to treatment within the first month.

Anti-inflammatory drug reduces CV risk in high-risk patients

In what is being touted as a medical milestone, Novartis’ anti-inflammatory drug Ilaris (canakinumab) has been shown to reduce the risk of recurrent major cardiovascular (CV) events—without any effect on cholesterol. In the CANTOS trial, which Novartis funded, high-risk patients who received Ilaris at a dose of 150 mg every three months had a 15 percent lower risk for the composite primary endpoint of nonfatal myocardial infarction (MI), nonfatal stroke and CV death as compared with patients who received placebo, during a median follow-up of 3.7 years. The study results suggest that targeting inflammation, rather than high cholesterol, could be an effective method of treating heart disease; about half of patients who experience MI do not have high cholesterol. Unexpectedly, the 300 mg dose of Ilaris reduced the incidence of lung cancer by 67 percent and fatal lung cancer by 77 percent. Those findings are exploratory and need further study. The CANTOS data were presented at the European Society of Cardiology last week in Barcelona and were published on Aug. 27 by The Lancet and The New England Journal of Medicine. Currently approved to treat rare autoimmune diseases such as juvenile rheumatoid arthritis, the drug costs approximately $200,000 per year.