Media Decoder Blog: Robert Thomson to Be Chief of News Corporation's New Publishing Company

Robert Thomson, the top editor at The Wall Street Journal and Dow Jones and a confidante of News Corporation’s chairman and chief executive, Rupert Murdoch, is expected to be named chief executive of the media conglomerate’s newly spun-off publishing company.

Mr. Thomson will run the separate, publicly traded company, which will include The Journal, The New York Post, HarperCollins and a suite of lucrative television assets in Australia. The announcement is expected as early as Monday, according to a person briefed on the company’s decision-making.

Mr. Thomson took over at The Journal in 2008, soon after News Corporation completed its $5.6 billion acquisition of Dow Jones. He serves as managing editor of The Journal and editor in chief of Dow Jones, which also publishes Barron’s and the Dow Jones Newswires.

Gerard Baker, a deputy managing editor at the Journal, will take over for Mr. Thomson at The Journal, said the person briefed on the decisions, who could not discuss private conversations publicly.

At The Journal, Mr. Baker has overseen Washington and political coverage, among other topics. He previously wrote a neoconservative column for The Times of London, also owned by News Corporation, and served as Washington bureau chief at The Financial Times, where Mr. Thomson was the top editor of the United States edition.

Mr. Thomson began his career at News Corporation in 1979 as a reporter at The Herald in Melbourne, Australia. He and Mr. Murdoch are both Australian, and have taken family vacations together. Mr. Murdoch is often seen in Mr. Thomson’s office in the Journal newsroom.

In his tenure at The Journal, Mr. Thomson increased circulation by broadening the newspaper’s focus beyond business to include more general-interest and lifestyle news. He oversaw an expansion of the newsroom budget, added photographs to go along with the paper’s signature dot drawings and introduced a local New York section.

Mr. Murdoch will serve as chairman of the publishing company and remain chief executive of the entertainment company, which will include News Corporation’s movie studio, Fox Broadcasting and cable channels like FX and Fox News.

News Corporation plans to complete its split, which was announced in June, in mid-2013. Additional announcements about the publishing company’s board and cash structure are expected before the end of the year.

A News Corporation spokeswoman declined to comment on the expected appointments, which were first reported in The Journal.

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Israel Moves to Expand Settlements in East Jerusalem


Rina Castelnuovo for The New York Times


From his home in East Jerusalem last year, Haj Ibrahim Ahmad Hawa looked at the separation barrier surrounding Jerusalem with the Israeli settlement of Maale Adumim in the background. More Photos »







JERUSALEM — As the United Nations General Assembly voted overwhelmingly to upgrade the Palestinians’ status Thursday night, Israel took steps toward building housing in a controversial area of East Jerusalem known as E1, where Jewish settlements have long been seen as the death knell for a two-state solution to the Israeli-Palestinian conflict.




A senior Israeli official, speaking on the condition of anonymity, said on Friday that the decision was made late Thursday night to move forward on “preliminary zoning and planning preparations” for housing units in E1, which would connect the large settlement of Maale Adumim to Jerusalem and therefore make it impossible to connect the Palestinian cities of Ramallah and Bethlehem to Palestinian neighborhoods of East Jerusalem. Israel also authorized the construction of 3,000 housing units in other parts of East Jerusalem and the West Bank, the official said.


The prime minister’s office refused to comment on whether the settlement expansion — first reported on Twitter by a reporter for the Israeli daily Haaretz — was punishment for the Palestinians’ success in upgrading its status from nonmember observer entity to nonmember observer state at the United Nations, but it was widely seen as such. The United States, one of only eight countries that stood with Israel in voting against the Palestinians’ upgrade, has for two decades vigorously opposed construction in E1, a 3,000-acre expanse of hilly parkland where a police station was opened in 2008.


In Washington, a State Department official criticized the move. “We reiterate our longstanding opposition to settlements and East Jerusalem construction,” he said. “We believe it is counterproductive and makes it harder to resume direct negotiations and achieve a two-state outcome.”


Hagit Ofran, who runs the Settlement Watch project of Peace Now, called E1 a “deal breaker for the two-state solution” and denounced the decision as “disastrous.”


“Instead of punishing the Palestinians, they are actually punishing Israel,” Ms. Ofran, who is Israeli, said in an interview. “Instead of taking advantage of this bid in the U.N. and calling for negotiations to get to a two-state solution, this government is choosing to take actions that might prevent the possibility of a two-state solution.”


But Dani Dayan, leader of Israel’s settler movement, welcomed the news, saying it was “a very important Israeli interest to develop E1.”


He described the two-state solution as “an existential threat to Israel” and said the E1 development was “beneficial for peace because a two-state solution is a prologue for another bloody confrontation.”


“The fear to develop the communities is not rational,” Mr. Dayan said. “The opposition to the settlements has become a kind of religious dogma for the West.”


Even Mr. Dayan, however, said he did not like the idea of expanding settlements “as a sort of retaliatory or punitive step.”


“Under the circumstances that we understand the government operates, I think it’s O.K.,” Mr. Dayan added. “We have a legal and a political and a moral right to build. It’s strategic for Jerusalem; to strengthen Jerusalem is the only horizon. We don’t see it as an obstacle to peace.”


Michael R. Gordon contributed reporting from Washington.



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Barnes & Noble Posts a Profit, but Sales of Digital Content Slows





Barnes & Noble reported a modest profit for its fiscal second quarter on Thursday, but growth in its digital content sales slowed as it faced increased competition from rivals like Amazon and Google.




The company, the largest conventional bookseller, has invested heavily in its Nook e-business as consumers increasingly shop online and read e-books. Barnes & Noble said revenue from its Nook business grew, but revenue from devices fell because of lower average selling prices. Digital content revenue grew 38 percent, but that was down from a 46 percent increase in the fiscal first quarter.


Investors were hoping for higher growth, and shares of Barnes & Noble fell $1.79, or 11 percent, to $14.26.


Barnes & Noble reported net income of $2.2 million for the three months that ended Oct. 27. That translates to a loss of 4 cents a share, however, after the impact of preferred stock dividends. That matched analysts’ expectations, according to FactSet. The results compare with a loss in the same quarter last year of $6.6 million, or 17 cents a share.


Revenue was nearly flat at $1.88 billion. Analysts expected revenue of $1.91 billion.


Revenue from the company’s Nook division rose 6 percent to $160 million. Barnes & Noble introduced two new Nook e-readers, a 7-inch Nook HD and 9-inch Nook HD Plus, during the quarter, and began shipping them just after the quarter closed.


In a call with analysts, William Lynch, the chief executive of Barnes & Noble, said the company expected digital content buying to pick up after the holiday season, when Nooks are expected to be popular gifts.


The company said Nook unit sales doubled over the busy four-day shopping weekend around Thanksgiving as the company increased markdowns at retailers like Target and Wal-Mart Stores.


But the Nook faces tough competition from other new devices this holiday season, including Apple’s iPad Mini, new Amazon Kindles and Google’s Nexus tablet.


“They’re maintaining their market share by way of promoting and discounting,” said Peter Wahlstrom, an analyst at Morningstar. “But it’s a more competitive marketplace.”


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Hockey Coaches Defy Doctors on Concussions, Study Finds





Despite several years of intensive research, coverage and discussion about the dangers of concussions, the idea of playing through head injuries is so deeply rooted in hockey culture that two university teams kept concussed players on the ice even though they were taking part in a major concussion study.




The study, which will be published Friday in a series of articles in the journal Neurosurgical Focus, was conducted during the 2011-12 hockey season by researchers from the University of Western Ontario, the University of Montreal, Harvard and other institutions.


“This culture is entrenched at all levels of hockey, from peewee to university,” said Dr. Paul S. Echlin, a concussion specialist and researcher in Burlington, Ontario, and the lead author of the study. “Concussion is a significant public health issue that requires a generational shift. As with smoking or seat belts, it doesn’t just happen overnight — it takes a massive effort and collective movement.”


The study is believed to be among the most comprehensive analyses of concussions in hockey, which has a rate of head trauma approaching that of football. Researchers followed two Canadian university teams — a men’s team and a women’s team — and scanned every player’s brain before and after the season. Players who sustained head injuries also received scans at three intervals after the injuries, with researchers using advanced magnetic resonance imaging techniques.


The teams were not named in the study, in which an independent specialist physician was present at each game and was empowered to pull any player off the ice for examination if a potential concussion was observed.


The men’s team, with 25 players and an average age of 22, played a 28-game regular season and a 3-game postseason. The women’s team, with 20 players and an average age of 20, played 24 regular-season games and no playoff games. Over the course of the season, there were five observed or self-reported concussions on the men’s team and six on the women’s team.


Researchers noted several instances of coaches, trainers and players avoiding examinations, ignoring medical advice or otherwise obstructing the study, even though the players had signed consent forms to participate and university ethics officials had given institutional consent.


“Unless something is broken, I want them out playing,” one coach said, according to the study.


In one incident, a neurologist observing the men’s team pulled a defenseman during the first period of a game after the player took two hits and was skating slowly. During the intermission the player reported dizziness and was advised to sit out, but the coach suggested he play the second period and “skate it off.” The defenseman stumbled through the rest of the game.


“At the end of the third period, I spoke with the player and the trainer and said that he should not play until he was formally evaluated and underwent the formal return-to-play protocol,” the neurologist said, as reported in the study. “I was dismayed to see that he played the next evening.”


After the team returned from its trip, the neurologist questioned the trainer about overruling his advice and placing the defenseman at risk.


“The trainer responded that he and the player did not understand the decision and that most of the team did not trust the neurologist,” according to the study. “He requested that the physician no longer be used to cover any more games.”


In another episode, a physician observer assessed a minor concussion in a female player and recommended that she miss the next night’s game. Even though the coach’s own playing career had ended because of concussions, she overrode the medical advice and inserted the player the next evening.


According to the report, the coach refused to speak to another physician observer on the second evening. The trainer was reluctant to press the issue with the coach because, the trainer said, the coach did not want the study to interfere with the team.


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Hockey Coaches Defy Doctors on Concussions, Study Finds





Despite several years of intensive research, coverage and discussion about the dangers of concussions, the idea of playing through head injuries is so deeply rooted in hockey culture that two university teams kept concussed players on the ice even though they were taking part in a major concussion study.




The study, which will be published Friday in a series of articles in the journal Neurosurgical Focus, was conducted during the 2011-12 hockey season by researchers from the University of Western Ontario, the University of Montreal, Harvard and other institutions.


“This culture is entrenched at all levels of hockey, from peewee to university,” said Dr. Paul S. Echlin, a concussion specialist and researcher in Burlington, Ontario, and the lead author of the study. “Concussion is a significant public health issue that requires a generational shift. As with smoking or seat belts, it doesn’t just happen overnight — it takes a massive effort and collective movement.”


The study is believed to be among the most comprehensive analyses of concussions in hockey, which has a rate of head trauma approaching that of football. Researchers followed two Canadian university teams — a men’s team and a women’s team — and scanned every player’s brain before and after the season. Players who sustained head injuries also received scans at three intervals after the injuries, with researchers using advanced magnetic resonance imaging techniques.


The teams were not named in the study, in which an independent specialist physician was present at each game and was empowered to pull any player off the ice for examination if a potential concussion was observed.


The men’s team, with 25 players and an average age of 22, played a 28-game regular season and a 3-game postseason. The women’s team, with 20 players and an average age of 20, played 24 regular-season games and no playoff games. Over the course of the season, there were five observed or self-reported concussions on the men’s team and six on the women’s team.


Researchers noted several instances of coaches, trainers and players avoiding examinations, ignoring medical advice or otherwise obstructing the study, even though the players had signed consent forms to participate and university ethics officials had given institutional consent.


“Unless something is broken, I want them out playing,” one coach said, according to the study.


In one incident, a neurologist observing the men’s team pulled a defenseman during the first period of a game after the player took two hits and was skating slowly. During the intermission the player reported dizziness and was advised to sit out, but the coach suggested he play the second period and “skate it off.” The defenseman stumbled through the rest of the game.


“At the end of the third period, I spoke with the player and the trainer and said that he should not play until he was formally evaluated and underwent the formal return-to-play protocol,” the neurologist said, as reported in the study. “I was dismayed to see that he played the next evening.”


After the team returned from its trip, the neurologist questioned the trainer about overruling his advice and placing the defenseman at risk.


“The trainer responded that he and the player did not understand the decision and that most of the team did not trust the neurologist,” according to the study. “He requested that the physician no longer be used to cover any more games.”


In another episode, a physician observer assessed a minor concussion in a female player and recommended that she miss the next night’s game. Even though the coach’s own playing career had ended because of concussions, she overrode the medical advice and inserted the player the next evening.


According to the report, the coach refused to speak to another physician observer on the second evening. The trainer was reluctant to press the issue with the coach because, the trainer said, the coach did not want the study to interfere with the team.


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Senate Judiciary Committee Approves Overhaul of Electronic Communications Privacy Act






J. Scott Applewhite/Associated Press

Patrick Leahy, chairman of the Senate Judiciary Committee, is leading an e-mail privacy effort.







The bill is not expected to make it through Congress this year and will be the subject of negotiations next year with the Republican-led House. But the Senate panel’s approval was a first step toward an overhaul of a 1986 law that governs e-mail access and that is widely seen as outdated.


Senator Patrick Leahy, the Vermont Democrat who is chairman of the committee, was an architect of the 1986 law and is leading the effort to remake it. He said at the meeting on Thursday that e-mails stored by third parties should receive the same protection as papers stored in a filing cabinet in an individual’s house.


“Like many Americans, I am concerned about the growing and unwelcome intrusions into our private lives in cyberspace,” Mr. Leahy said. “I also understand that we must update our digital privacy laws to keep pace with the rapid advances in technology.”


Mr. Leahy held a hearing about two years ago on whether and how to update the 1986 law, called the Electronic Communications Privacy Act. But the effort has moved slowly, in part because some law enforcement officials have opposed restricting an investigative tool now used increasingly.


Under the law, authorities need to obtain a search warrant from a judge — requiring them to meet the high standard of showing that there is probable cause to believe that a subject is engaged in wrongdoing — only when they want to read e-mails that have not yet been opened by their recipient and that are fewer than 180 days old.


But the law gives less protection to messages that a recipient has read and left in his or her account. In some cases, officials may obtain a court order for such material merely by presenting a judge with facts suggesting the messages are relevant to an investigation; in other cases, prosecutors can issue a subpoena demanding the materials without any court involvement.


Senator Leahy’s bill would generally require prosecutors to obtain a search warrant from a judge, under the stricter probable-cause standard, to compel a provider to turn over all categories of e-mails and other private documents.


The Center for Democracy and Technology, a nonprofit organization that advocates for electronic privacy rights, hailed the committee vote as “historic.”


In a statement, Gregory T. Nojeim, director of the center’s program on security and technology, said it “sets the stage for updating the law to reflect the reality of how people use technology in their daily lives. It keeps the government from turning cloud providers into a one-stop convenience store for government investigators and requires government investigators to do for online communications what they already do in the offline world: get a warrant before reading postal letters or searching our homes.“


Still, the ranking Republican on the committee, Senator Charles Grassley of Iowa, argued that the bill does not strike the proper balance between privacy and public safety. He expressed concerns that changing the standard of proof for obtaining e-mails would inhibit certain investigations, such as child pornography or child abduction cases.


Mr. Leahy argued that the bill does not alter criminal and antiterrorism laws related to search warrants, including exceptions in emergencies where time is of the essence. But he also said the bill was a starting point and he was open to further negotiations. The panel approved it by a voice vote.


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U.S. Is Weighing Stronger Action in Syrian Conflict


Francisco Leong/Agence France-Presse — Getty Images


Rebels in northern Syria celebrated on Wednesday next to what was reported to be a government fighter jet.







WASHINGTON — The Obama administration, hoping that the conflict in Syria has reached a turning point, is considering deeper intervention to help push President Bashar al-Assad from power, according to government officials involved in the discussions.




While no decisions have been made, the administration is considering several alternatives, including directly providing arms to some opposition fighters.


The most urgent decision, likely to come next week, is whether NATO should deploy surface-to-air missiles in Turkey, ostensibly to protect that country from Syrian missiles that could carry chemical weapons. The State Department spokeswoman, Victoria Nuland, said Wednesday that the Patriot missile system would not be “for use beyond the Turkish border.”


But some strategists and administration officials believe that Syrian Air Force pilots might fear how else the missile batteries could be used. If so, they could be intimidated from bombing the northern Syrian border towns where the rebels control considerable territory. A NATO survey team is in Turkey, examining possible sites for the batteries.


Other, more distant options include directly providing arms to opposition fighters rather than only continuing to use other countries, especially Qatar, to do so. A riskier course would be to insert C.I.A. officers or allied intelligence services on the ground in Syria, to work more closely with opposition fighters in areas that they now largely control.


Administration officials discussed all of these steps before the presidential election. But the combination of President Obama’s re-election, which has made the White House more willing to take risks, and a series of recent tactical successes by rebel forces, one senior administration official said, “has given this debate a new urgency, and a new focus.”


The outcome of the broader debate about how heavily America should intervene in another Middle Eastern conflict remains uncertain. Mr. Obama’s record in intervening in the Arab Spring has been cautious: While he joined in what began as a humanitarian effort in Libya, he refused to put American military forces on the ground and, with the exception of a C.I.A. and diplomatic presence, ended the American role as soon as Col. Muammar el-Qaddafi was toppled.


In the case of Syria, a far more complex conflict than Libya’s, some officials continue to worry that the risks of intervention — both in American lives and in setting off a broader conflict, potentially involving Turkey — are too great to justify action. Others argue that more aggressive steps are justified in Syria by the loss in life there, the risks that its chemical weapons could get loose, and the opportunity to deal a blow to Iran’s only ally in the region. The debate now coursing through the White House, the Pentagon, the State Department and the C.I.A. resembles a similar one among America’s main allies.


“Look, let’s be frank, what we’ve done over the last 18 months hasn’t been enough,” Britain’s prime minister, David Cameron, said three weeks ago after visiting a Syrian refugee camp in Jordan. “The slaughter continues, the bloodshed is appalling, the bad effects it’s having on the region, the radicalization, but also the humanitarian crisis that is engulfing Syria. So let’s work together on really pushing what more we can do.” Mr. Cameron has discussed those options directly with Mr. Obama, White House officials say.


France and Britain have recognized a newly formed coalition of opposition groups, which the United States helped piece together. So far, Washington has not done so.


American officials and independent specialists on Syria said that the administration was reviewing its Syria policy in part to gain credibility and sway with opposition fighters, who have seized key Syrian military bases in recent weeks.


“The administration has figured out that if they don’t start doing something, the war will be over and they won’t have any influence over the combat forces on the ground,” said Jeffrey White, a former Defense Intelligence Agency intelligence officer and specialist on the Syria military. “They may have some influence with various political groups and factions, but they won’t have influence with the fighters, and the fighters will control the territory.”


Jessica Brandt contributed reporting from Cambridge, Mass.



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Peter Swire Named Mediator in Internet ‘Do Not Track’ Effort





Over the last few months, an international effort to give consumers more control over the collection of their online data has devolved into acrimonious discussions, name-calling and witch hunts.







Andrew Spear for The New York Times

Peter Swire, a law professor at Ohio State, was named as a mediator by the World Wide Web Consortium. The international group is trying to come up with standards that would allow Internet users to keep their online activities private from advertisers.







The idea was to work out a global standard for “Do Not Track,” a computer browser setting that would allow Internet users to signal Web sites, advertising networks and data brokers that they did not want their browsing activities tracked for marketing purposes.


But some industry executives involved in the negotiations have questioned the agenda of privacy advocates, saying their efforts threaten to undermine an advertising ecosystem that fuels free online products and services. At the same time, some technology experts and privacy advocates have accused industry executives of stalling and acting in bad faith.


Into this rancorous battle steps a new mediator, Peter Swire, a professor of law at Ohio State University and a former White House privacy official during the Clinton administration. On Wednesday, the World Wide Web Consortium, or W3C, the international consortium that has been trying to develop technical Do Not Track standards, said that Mr. Swire would take over as co-chairman of its Tracking Protection Working Group.


While parties on both sides welcomed the move, many said they were doubtful that Mr. Swire could bring opponents to agreement, especially at a time when some industry groups are questioning whether the W3C is an appropriate forum.


On one hand, industry executives have an interest in protecting “behavioral” ads, marketing pitches that use data about an individual’s online activities to tailor ads to that person. On the other hand, consumer advocates argue that Internet users should be able to limit that kind of online surveillance.


Mr. Swire, a former chief counselor for privacy at the Office of Management and Budget, said he hoped to strike a balance that was palatable to both sides. He said he viewed a Do Not Track system as a kind of digital equivalent to the Do Not Call list, a national registry in the United States through which consumers may opt out of phone solicitations.


“People can choose not to have telemarketers call them during dinner. The simple idea is that users should have a choice over how their Internet browsing works as well,” Mr. Swire said in a phone interview. But he added: “The overarching theme is how to give users choice about their Internet experience while also funding a useful Internet.”


Still, Mr. Swire may not be able to overcome the bitterness that remains among the negotiating parties after months of public accusations, personal attacks and recriminations.


Earlier this year at an event at the White House, industry representatives publicly committed to incorporating and honoring a browser-based Do Not Track system under certain conditions. The conditions included a requirement that individual users would actively choose to turn on a don’t-track-me setting. Industry groups also said any system should still permit companies to collect information about users’ browsing activities for market research and product development purposes.


But after months of wrangling with consumer advocates, industry representatives now say the W3C is not an appropriate forum for them to work out policy details, arguing that the group’s expertise is more technical than practical.


In an online discussion forum for the working group, for example, senior industry executives have suggested that respected technology experts are out of touch with commercial reality.


“The advocacy side of the group tends to lean toward absolutist terms and solutions,” Shane Wiley, the vice president for privacy and data governance at Yahoo, wrote in a message in September to Ed Felten, a professor of computer science and public affairs at Princeton University. “The real world isn’t that easy even if it feels that way in a classroom or a small lab.”


Then there are the technologists who say industry executives are playing down the privacy risks of online data-mining.


“For want of a better metaphor: you are the climate change skeptic of computer privacy,” Jonathan Mayer, a graduate student in computer science and law at Stanford University, wrote last month to Yahoo’s Mr. Wiley. “Unlike some of the more patient members of the group, I long ago ceased pretending you’re negotiating in good faith.”


Now the industry has begun an effort to distance itself from the W3C process and promote its own self-regulatory program that allows consumers to decline targeted advertising by installing opt-out buttons from dozens of member companies.


“We’ve seen the W3C falter,” said Mike Zaneis, the general counsel for the Interactive Advertising Bureau, an industry trade group. “So industry is redoubling its efforts to come up with a meaningful standard for browser controls.”


As the debate rages on, newer iterations of popular browsers like Microsoft’s Internet Explorer and Google’s Chrome have already installed Do Not Track settings for their users. But in the absence of accepted global standards for these systems, ad networks and data brokers are not yet honoring the don’t-track-me browser flags. Even Microsoft’s and Google’s own ad services don’t respond to such signals coming from their own browsers.


Although Mr. Swire said he hoped to spur progress, for the moment Do Not Track browser settings have no more significance than emoticons.


“Do Not Track is a work in progress,” Mr. Swire said. “So is the Internet.”


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Cost of Brand-Name Prescription Medicines Soaring





The price of brand-name prescription medicines is rising far faster than the inflation rate, while the price of generic drugs has plummeted, creating the largest gap so far between the two, according to a report published Wednesday by the pharmacy benefits manager Express Scripts.




The report tracked an index of commonly used drugs and found that the price of brand-name medicines increased more than 13 percent from September 2011 to this September, which it said was more than six times the overall price inflation of consumer goods. Generic drug prices dipped by nearly 22 percent.


The drop in the price of generics “represents low-hanging fruit for the country to save money on health care,” said Dr. Steve Miller, the chief medical officer of Express Scripts, which manages the drug benefits for employers and insurers and also runs a mail-order pharmacy.


The report was based on a random sample of six million Express Scripts members with prescription drug coverage.


The Pharmaceutical Research and Manufacturers of America, the trade group representing brand-name manufacturers, criticized the report, saying it was skewed by a handful of high-priced specialty drugs that are used by a small number of patients and overlooked the crucial role of major drug makers.


“Without the development of new medicines by innovator companies, there would be neither the new treatments essential to progress against diseases nor generic copies,” Josephine Martin, executive vice president of the group, said in a statement.


The report cited the growth of specialty drugs, which treat diseases like cancer and multiple sclerosis, as a major reason for the increase in spending on branded drugs. Spending on specialty medicines increased nearly 23 percent during the first three quarters of 2012, compared with the same period in 2011. All but one of the new medicines approved in the third quarter of this year were specialty drugs, the report found, and many of them were approved to treat advanced cancers only when other drugs had failed.


Stephen W. Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota, said the potential benefits of many new drugs did not always match the lofty price tags. “Increasingly it’s going to be difficult for drug-benefit programs to make decisions about coverage and payment and which drugs to include,” said Mr. Schondelmeyer, who conducts a similar price report for AARP. He also helps manage the drug benefit program for the University of Minnesota.


“We’re going to be faced with the issue that any drug at any price will not be sustainable.”


Spending on traditional medicines — which treat common ailments like high cholesterol and blood pressure — actually declined by 0.6 percent during the period, the report found. That decline was mainly because of the patent expiration of several blockbuster drugs, like Lipitor and Plavix, which opened the market for generic competitors. But even as the entry of generic alternatives pushed down spending, drug companies continued to raise prices on their branded products, in part to squeeze as much revenue as possible out of an ever-shrinking portfolio, Dr. Miller said.


Drug makers are also being pushed by companies like Express Scripts and health insurers, which are increasingly looking for ways to cut costs, said C. Anthony Butler, a pharmaceuticals analyst at Barclays. “I think they’re pricing where they can but what they keep telling me is they’re under significant pressure” to keep prices low, he said.


Express Scripts earns higher profits from greater use of generic medicines than brand name drugs sold through their mail-order pharmacy, Mr. Butler said. “There’s no question that they would love for everybody to be on a generic,” he said.


Dr. Miller acknowledged that was true but said that ultimately, everyone wins. “When we save people money, that’s when we make money,” he said. “We don’t shy away from that.”


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Cost of Brand-Name Prescription Medicines Soaring





The price of brand-name prescription medicines is rising far faster than the inflation rate, while the price of generic drugs has plummeted, creating the largest gap so far between the two, according to a report published Wednesday by the pharmacy benefits manager Express Scripts.




The report tracked an index of commonly used drugs and found that the price of brand-name medicines increased more than 13 percent from September 2011 to this September, which it said was more than six times the overall price inflation of consumer goods. Generic drug prices dipped by nearly 22 percent.


The drop in the price of generics “represents low-hanging fruit for the country to save money on health care,” said Dr. Steve Miller, the chief medical officer of Express Scripts, which manages the drug benefits for employers and insurers and also runs a mail-order pharmacy.


The report was based on a random sample of six million Express Scripts members with prescription drug coverage.


The Pharmaceutical Research and Manufacturers of America, the trade group representing brand-name manufacturers, criticized the report, saying it was skewed by a handful of high-priced specialty drugs that are used by a small number of patients and overlooked the crucial role of major drug makers.


“Without the development of new medicines by innovator companies, there would be neither the new treatments essential to progress against diseases nor generic copies,” Josephine Martin, executive vice president of the group, said in a statement.


The report cited the growth of specialty drugs, which treat diseases like cancer and multiple sclerosis, as a major reason for the increase in spending on branded drugs. Spending on specialty medicines increased nearly 23 percent during the first three quarters of 2012, compared with the same period in 2011. All but one of the new medicines approved in the third quarter of this year were specialty drugs, the report found, and many of them were approved to treat advanced cancers only when other drugs had failed.


Stephen W. Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota, said the potential benefits of many new drugs did not always match the lofty price tags. “Increasingly it’s going to be difficult for drug-benefit programs to make decisions about coverage and payment and which drugs to include,” said Mr. Schondelmeyer, who conducts a similar price report for AARP. He also helps manage the drug benefit program for the University of Minnesota.


“We’re going to be faced with the issue that any drug at any price will not be sustainable.”


Spending on traditional medicines — which treat common ailments like high cholesterol and blood pressure — actually declined by 0.6 percent during the period, the report found. That decline was mainly because of the patent expiration of several blockbuster drugs, like Lipitor and Plavix, which opened the market for generic competitors. But even as the entry of generic alternatives pushed down spending, drug companies continued to raise prices on their branded products, in part to squeeze as much revenue as possible out of an ever-shrinking portfolio, Dr. Miller said.


Drug makers are also being pushed by companies like Express Scripts and health insurers, which are increasingly looking for ways to cut costs, said C. Anthony Butler, a pharmaceuticals analyst at Barclays. “I think they’re pricing where they can but what they keep telling me is they’re under significant pressure” to keep prices low, he said.


Express Scripts earns higher profits from greater use of generic medicines than brand name drugs sold through their mail-order pharmacy, Mr. Butler said. “There’s no question that they would love for everybody to be on a generic,” he said.


Dr. Miller acknowledged that was true but said that ultimately, everyone wins. “When we save people money, that’s when we make money,” he said. “We don’t shy away from that.”


Read More..