June 22, 2010

When California’s four largest health insurers file proposed medical insurance premium increases with the California Department of Insurance (CDI), those increases will now get another layer of review by an actuary independent of the CDI.

“The difference now is that in addition to our internal actuarial review by staff, rate filings from any of the big four will be referred out to an independent actuary,” said Darrel Ng, Press spokesperson for CDI.

Blue Shield of California in San Francisco; Anthem Blue Cross of Oxnard, CA, a subsidiary of WellPoint Inc.; Aetna Inc. (NYSE: AET) of Hartford, CT. and Health Net Inc. (NYSE: HNI) of Woodland Hills, control about 90 percent of the market for individual health insurance in the state, Ng said.

Two of the four have filed proposed rate increases with CDI and the Department is using an independent company, Axene Health Partners LLC, based in Winchester, CA, to do the outside actuary review. Ng expects that to be completed by mid July.

CDI hired Axene when the Department’s internal actuary staff could not come to agreement with actuaries at Anthem Blue Cross over rate increases Anthem was proposing earlier this year. Axene discovered many mistakes that resulted in a rate increase that was 50 percent more than state law allows, CDI reported.

CDI chose Axeme to do its future independent actuary reviews because of Axeme’s past performance record, Ng said.

“Axeme Health Partners, through their work on the Anthem Blue Cross health filing, have shown their ability to closely scrutinize the filings and ultimately to find mistakes,” Ng said. “The last time they did one of these reviews the insurer decided to withdraw their rate hike after the numerous mistakes were exposed,” Ng said.

Health insurance companies do not have to get state approval of rate changes, but they do have to spend 70 cents of every dollar they collect in health insurance premiums on medical benefits.

Aetna has submitted a rate filing for an average 18.7 percent rate increase for individuals, which would amount to about $50 more per month on average, said Cynthia Michener, an Aetna spokesperson.

“We have worked collaboratively with the California Department of Insurance and Axene throughout this process,” Michener said. “We will continue to support the independent review of our rate renewal filing and work closely with Axene Partners to provide them with whatever information they need,” she said.

Insurance premiums are based on the cost of services in a particular geographical area, she said. She attributed the increasing rates to the increasing prices and usage of hospital care, prescription drugs, doctor’s visits and other services.

Ng agreed that Aetna has been cooperating.

“Aetna has been responsive to our requests for information, he said.

Blue Shield of California also has filed a rate change with the CDI. It is proposing an average 18 percent increase for 240,000 individual and family plan members, said Johnny Wong, a Blue Shield spokesman.

June 18, 2010

Redwood City-based OncoMed Pharmaceuticals Inc. has formed an alliance, which includes $40 million in upfront cash, with Bayer Schering Pharma AG of Germany to develop cancer-fighting stem cell therapies.

OncoMed claims to be the first to discover cancer stem cells or “tumor-initiating cells.” They were first discovered in breast cancer and later in other solid tumor cancers like cancer of the head and neck, lung, prostate, pancreas and glioblastoma. These cancer stem cells seem to be resistant to standard chemotherapy and radiotherapy and appear to play a large part in the initiation of tumors and in metastasis and recurrence of cancer.

“The development of anti-cancer stem cell therapeutics together with OncoMed is a highly innovative approach with the potential to perfectly complement our oncology portfolio,” said Professor Andreas Busch, Head of Global Drug Discovery and a member of the board of management at Bayer Schering Pharma, in a press release. “Anti-cancer stem cell research could turn out as one of the missing pieces in today’s cancer therapy,” he said.

Beyond the $40 million in upfront cash, OncoMed could earn from Bayer as much as $387.5 million on each of up to five potential drug compounds. But that’s once they get through the final Phase III clinical trials, approval from the U.S. Food and Drug Administration and are generating sales.

At any time up until Phase I clinical tests are completed Bayer has the right to exclusively license any of the five antibody and protein therapeutic candidates from OncoMed.

OncoMed’s most promising therapeutic candidate is scheduled to start clinical trials in 2011. Plans are to enroll up to 30 patients at up to four centers. For details go to ClinicalTrials.gov.

“Our alliance with Bayer represents a major opportunity to discover and develop an entirely new class of anti-cancer stem cell therapeutics with one of the leading pharmaceutical companies in the world,” said Paul Hastings, President and CEO of OncoMed, in a press release.

The company was founded in August of 2004 based on research by Drs. Michael F. Clarke and Max Wicha. OncoMed’s website describes them as pioneers in the discovery of cancer stem cells in solid tumors.

To date OncoMed has had funding from US Venture Partners, Latterell Venture Partners, The Vertical Group, Morgenthaler Ventures, Nomura Phase4 Ventures, Delphi Ventures, Adams Street Partners, De Novo Ventures and Bay Partners.