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US plans to stop pharma gaming of Medicaid; China aims to expedite drug approval

Top news

* The Trump administration has taken action to try to stop drugmakers from gaming the Medicaid drug rebate program when they put new formulations of their products on the U.S. market.

* China is considering expedited approvals for 48 therapies as the country looks to speed up the introduction of needed drugs to its market, FiercePharma reported. Most of the drugs on the country's list are already approved by regulators in the U.S., EU and Japan but are not yet sold in China — including Roche Holding AG's cancer therapy Alecensa, Novartis AG's psoriasis drug Cosentyx and GlaxoSmithKline PLC's shingles vaccine Shingrix, among others.

* Canadian drugmaker Aralez Pharmaceuticals Inc. said it entered into purchase agreements to sell the majority of its assets in two separate transactions to be valued at an aggregate of $250 million. The agreements include a $110 million transaction with Nuvo Pharmaceuticals Inc. and $140 million deal with its lender, including certain funds managed by Deerfield Management Co. LP.

On the policy front

* The U.S. Centers for Medicare and Medicaid Services is looking to eliminate two tracks in the accountable care organization shared savings program that allows ACOs to assume zero or low upside risk. Accountable care organizations are groups of doctors, hospitals, and other healthcare providers that band together to coordinate services and avoid unnecessary treatment that can drive up spending for Medicare patients without increasing quality.

* The U.S. Food and Drug Administration said it updated the list of valsartan products being recalled, and those not being recalled, to include recalls of products with the compound made by Indian drugmaker Hetero Labs Ltd, labeled as Camber Pharmaceuticals Inc. Valsartan-containing products were recalled due to the presence of a potentially cancer-causing impurity found earlier in the products of China's Zhejiang Huahai Pharmaceutical Co. Ltd.

M&A and capital markets

* Activist investor Carl Icahn once again called on Cigna Corp. shareholders to vote against the planned acquisition of pharmacy benefit manager Express Scripts Holding Co., saying the transaction could become one of the "worst blunders" in corporate history. Icahn disputed the notion that Express Scripts earns very little from rebates, which he believes will be ultimately eliminated and deal a sharp blow to the pharmacy benefits management industry.

* The health insurer responded saying Icahn showed "no apparent interest in understanding the underlying logic" of the acquisition, the current healthcare regulatory environment or what it called the unsustainable hike in costs of drugs in the U.S. It claims that Icahn's "ill-informed" statements are "motivated by a desire to profit off of his short position in Express Scripts by leveraging his recently bought stake in Cigna."

* Meanwhile, Cigna shareholder Glenview Capital Management is backing the acquisition, saying that the combined entity will save customers "billions of incremental dollars annually" and lead to "better healthcare outcomes."

* Japanese drugmaker Astellas Pharma Inc. acquired U.K.-based gene therapy company Quethera Ltd. The transaction may be worth up to £85 million, including up-front payment and certain contingent payments to Quethera shareholders.

* Chinese internet giant Tencent Holdings Ltd. is merging its medical unit, Tencent Doctorwork with Shanghai-based startup Trusted Doctors to form a new private healthcare network, the South China Morning Post reported.

* San Diego-based Ligand Pharmaceuticals Inc. made an offer to acquire a biotechnology company in the U.K. engaged in the discovery of new drugs. Ligand is offering 6.2 pence per share for Vernalis plc, valuing the target company at £32.8 million.

* Rochester, N.Y.-based biotechnology company Vaccinex Inc. priced its IPO of 3,333,334 common shares at a public offering price of $12 per share.

* Chinese cancer drug developer Tot Biopharm Company Ltd said it completed a series B financing round and raised $102 million. The financing was led by several new and existing investors including private equity firm and a major shareholder of the company Vivo Capital LLC, among others.

Drug and product pipeline

* The U.S. FDA approved 60° Pharmaceuticals LLC's Arakoda, or tafenoquine, tablets to prevent malaria in patients 18 years and older. The acceptance is one of the first approvals for a new drug to prevent malaria in more than 18 years.

* Livonia, Mich.-based Gemphire Therapeutics Inc. stopped a phase 2a study of its liver disease drug gemcabene in children after an unanticipated problem. The midstage trial, initiated in early 2018, was investigating gemcabene in children with non-alcoholic fatty liver disease.

Operational activity

* Inc. is in internal discussions to open primary care clinics in its Seattle headquarters, CNBC reported. The preliminary plan is to hire a small number of doctors to start a pilot clinic later this year for a select group of workers and then expand it to more employees in early 2019.

* Pfizer Inc. settled its patent infringement claims against Canadian drugmaker Apotex Inc. and Actavis, regarding its over prostate cancer drug Xtandi, on terms not material to the New York-based drugmaker. Separately, the U.S. District Court for the District of Massachusetts ruled that Pfizer's biosimilar for Johnson & Johnson's cancer drug Remicade did not infringe the New Jersey-based pharmaceutical giant's patent.

Other features

* A study showed that doctors who were told about a patient's death from overdose deaths prescribed lower amount of opioids to their current patients, Stat reported, citing a paper published in the journal Science.

* German drugmaker Fresenius Kabi AG asked the court to block the U.S. state of Nebraska from using its drugs in the state's first execution in 21 years, The New York Times reported.

* Bloomberg News wrote that makers of generic drugs, such as Mylan N.V. and Perrigo Co. plc, are struggling to grow in the U.S. despite the Trump administration's push to drive down prices through approval of copycat versions of medicines.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng was down 0.84% to 28,366.62, and the Nikkei 225 declined 1.33% to 22,298.08.

In Europe, around midday, the FTSE 100 was down 0.76% to 7,682.32, and the Euronext 100 was down 1.10% to 1,066.65.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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