WASHINGTON (AP) – Politicians of both parties outdo each other vying for the approval of seniors, but their inability to compromise on the federal budget has put Medicare in the crosshairs again.
Unless Congress acts before Jan. 1, doctors face a 27 percent cut in their fees for treating Medicare patients. That could undermine health care for millions of elderly and disabled beneficiaries.
Last year around the holidays doctors were looking at a cut of about 20 percent. It’s become a recurring symbol of the government’s budget dysfunction.
The cuts are the consequence of a 1990s budget law that failed to control spending but never got repealed. Congress passes a temporary fix each time, only to grow the size of reductions required next time around. The supercommittee’s breakdown leaves the so-called “doc fix” unresolved with time running out.
A thousand miles away in Harlan, Iowa, Dr. Don Klitgaard is trying to contain his frustration.
“I don’t see how primary care doctors could take anywhere near like a 27 percent pay cut and continue to function,” said Klitgaard, a family physician at a local medical center. “I assume there’s going to be a temporary fix, because the health care system is going to implode without it.”
Medicare patients account for about 45 percent of the visits to his clinic. Klitgaard said the irony is that he and his colleagues have been making improvements, keeping closer tabs on those with chronic illnesses in the hopes of avoiding needless hospitalizations. While that can save money for Medicare, it requires considerable upfront investment from the medical practice.
“The threat of a huge cut makes it very difficult to continue down this road,” said Klitgaard, adding “it’s almost comical” lawmakers would let the situation get so far out of hand.
There’s nothing to laugh about, says a senior Washington lobbyist closely involved with the secretive supercommittee deliberations. The health care industry lobbyist, who spoke on condition of anonymity because he is not authorized to make public statements, said lawmakers of both parties wanted to deal with the cuts to doctors, but a fundamental partisan divide over tax increases blocked progress of any kind.
The main options now before Congress include a one-year or two-year fix.
The problem is the cost. Congress used to add it to the federal deficit, but lawmakers can’t get away with that in these fiscally austere times. Instead, they must find about $22 billion in offsets for the one-year option, $35 billion for the two-year version. A permanent fix would cost about $300 billion over 10 years, making it much less likely.
“It’s going to be a real challenge, and there’s not a lot of time to play ping-pong,” said the lobbyist. “It’s entirely possible given past performance that Congress misses the deadline.”
Congressional leaders of both parties have said that won’t happen. Senate Finance Committee Chairman Max Baucus, D-Mont., says the Medicare fix is too important not to get done before the end of the year. His House counterpart, Ways and Means Chairman Dave Camp, R-Mich., agrees. But how? The endgame for a complex negotiation also involving expiring tax cuts, unemployment benefits and dozens of lesser issues remains unclear.
“They have to come up with a solution, and they will have to appear to pay for that solution, and that will be contentious,” said economist Robert Reischauer, one of the public trustees who oversees Medicare and Social Security financing. One option: cut other parts of Medicare. Another: trim back spending under the health care overhaul law. Either of those approaches would mobilize opposition.
A nonpartisan panel advising lawmakers is recommending that doctors share the pain of a permanent fix with a 10-year freeze for primary care physicians and cuts followed by a freeze for specialists. Doctors aren’t buying that.
The Obama administration says seniors and their doctors have nothing to fear.
But doctors are becoming increasingly irritated about dealing with Medicare. Surveys have shown that many physicians would consider not taking new Medicare patients if the cuts go through. Some primary care doctors are going into “concierge medicine,” limiting their practice to patients able to pay a fee of about $1,500 a year, a trend that worries advocates for the elderly.
Ultimately, the solution is an overhaul of Medicare’s payment system so that doctors are rewarded for providing quality, cost-effective care, said Mark McClellan, an economist and medical doctor who served as Medicare administrator for President George W. Bush. That continues to elude policymakers.
Instead, the threat of payment cuts has become a holiday tradition, said McClellan. “It’s just not a very enjoyable one.”

Time – (WASHINGTON) — The weight of a Supreme Court decision isn’t likely to settle the contentious debate over health care in America, a nation disdainful of big government and historically unable to guarantee affordable basic coverage to all its citizens.
The court announced Monday it will take up the constitutional challenge to President Barack Obama’s landmark health care law, with a decision expected next summer in the thick of the presidential election. But even if the law is upheld, Republican congressional leaders say they’ll keep crusading for its repeal.
(See why the war against Obamacare has ramped up.)
Administration officials respond with a dose of hope and bravado. Publicly, they’re confident Obama’s plan for covering the uninsured will be upheld to the last comma.
But privately, there’s a Plan B: If the court strikes down the law’s unpopular linchpin — the so-called individual mandate requiring most Americans to carry health insurance — the administration would take whatever’s left and try to put that into in place.
“Either way it rules, the Supreme Court decision will not end the debate on health care,” said former Senate Majority Leader Tom Daschle, an influential Democratic adviser. “It is, and will largely remain, a debate on the role of government.”
That’s pretty much how Republican congressional leaders see it, too.
“Job-killing tax hikes on families and small businesses may well be constitutional — that doesn’t mean we would support them,” said Senate Republican Leader Mitch McConnell of Kentucky.
House Speaker John Boehner of Ohio remains committed to repealing the overhaul and replacing it with a Republican plan regardless of the Supreme Court ruling, his spokesman said.
The law’s coverage expansion to more than 30 million uninsured is still two years away, but the Supreme Court took the case after lower courts split and the administration, as well as its opponents, asked for a decisive ruling.
Of four federal appeals courts that have ruled, two upheld the law, one struck down only the insurance mandate, and one punted, saying it is premature to decide the merits until the law’s main coverage provisions take effect in 2014.
Appeals courts in the District of Columbia and Cincinnati that upheld the law found that requiring Americans to carry health insurance — even if intrusive — is within the power of Congress to regulate interstate commerce.
Starting with 2014 tax returns, the law imposes a penalty on those who do not have coverage through an employer or a government program, or through individual purchase. In passing that requirement, a Democratic-led Congress found that the health care system is a major part of the national economy and that insurance can’t work if people can postpone getting coverage until they become sick.
A federal appeals court in Atlanta saw things differently.
Ruling against the administration in a lawsuit by 26 states, that court found that Congress overstepped its constitutional authority by imposing the insurance mandate. The unprecedented requirement to carry health insurance would force average citizens to buy an expensive product from a private company from cradle to grave, the majority said.
While the biggest controversy is over the mandate, the law has other major provisions.
To make it affordable for the uninsured to obtain coverage, Congress expanded the Medicaid program for low-income people and set up a system of tax credits for middle-class people who purchase their own policies. It also barred insurers from turning away those in poor health or charging them more.
The Supreme Court’s decision will turn on legal precedents developed through the decades, as the federal government sought to extend its reach over economic affairs. But the immediate impact of a decision in 2012 is likely to be political.
Upholding the law will be seen as vindication for Obama’s approach to governing, said Robert Blendon, a Harvard public health professor who follows opinion trends on health care. “This is not only an issue of whether or not the bill is constitutional, or what is the best public policy,” said Blendon. “It’s an issue about the judgment of the president.”
At the other end of the spectrum, the Supreme Court could strike down the entire law, validation for Republicans who from the start called it government overreach. But no appeals court has gone that far.
A mixed verdict would create its own problems. The court could strike down only the insurance mandate, leaving the rest of the law in place. That includes a Medicaid expansion expected to help about 16 million uninsured people, the creation of new state health insurance markets, Medicare cuts and a slew of regulations.
While the Obama administration would still be left with pieces of a law to carry out, the demise of the insurance requirement would create a real crisis for the insurance industry. Insurers may be forced to accept patients who apply after getting sick, but at the same time deprived of a larger pool of insured people over which to spread their costs.
Administration lawyers maintain that if the insurance mandate is struck down, the requirement that insurers accept people in poor health should also be invalidated. But the justices don’t have to follow that advice.
Sooner or later, the whole muddle could wind up back in Congress.

Read more: http://www.time.com/time/politics/article/0,8599,2099505,00.html#ixzz1dnFDBTOL

TRENTON, N.J. (AP) — Johnson & Johnson said Thursday that its growing pharmaceutical business is in a very strong position compared to competitors, with plans to seek approval of 11 new drugs by 2015, generic competition softening and productivity up.

The company, based in New Brunswick, N.J., has had an impressive six new drugs approved since 2009 with two more awaiting approval by regulators. It expects new products and some key existing ones will produce two-thirds of pharmaceutical sales by 2015, according to Vice Chairman Sheri McCoy.

The company has been expanding marketing, research and manufacturing operations in China, India and other emerging markets, where 60 percent of future global sales growth is expected. But it’s still focused on marketing in developed economies, particularly Japan, McCoy told analysts during a daylong review of the health giant’s pharmaceutical business.

“We are returning to growth and we expect to outpace market growth,” she said. “We have a revitalized portfolio of differentiated medicines that will make a difference for patients.”

The company also makes products ranging from baby shampoo to hip and knee replacements. J&J derived $22.4 billion in sales last year from its pharmaceutical products, more than a third of its total revenue.

J&J is in the process of launching the six recently approved products, including prostate cancer drug Zytiga and Edurant, its third HIV drug, and seeking approval for products including the blood thinner rivaroxaban, a potential blockbuster.

The Food and Drug Administration approved Zytiga on April 29 and cleared Edurant on May 20, and Johnson & Johnson is waiting for regulatory decisions in the European Union.

Telaprevir, one of two groundbreaking new hepatitis C therapies, was approved Monday under the name Incivek by the Food and Drug Administration. J&J partner Vertex Pharmaceuticals Inc. owns the North American rights. Johnson & Johnson has the rights to the drug in Europe, where it has not yet been approved.

Among the potential big sellers in development are a Type 2 diabetes drug called canagliflozin and bapineuzumab, which could prove to be the first treatment to slow the deterioration of brain function in Alzheimer’s disease patients. Both disorders affect hundreds of millions of people worldwide, and those numbers are rising rapidly.

J&J also plans to seek approval of about 30 new uses for recently approved medicines and others awaiting approval or in late-stage testing. The company has found that strategy profitable. Its blockbuster immune disorder drug Remicade is approved for 15 uses, including rheumatoid arthritis and Crohn’s disease, and successor drug Simponi went on sale in 2009.

As a result, immunology drugs are now J&J’s best-selling category, up 18 percent to about $1.6 billion in the first quarter, and the company leads the U.S. market with one-third of sales.

Johnson & Johnson said it is trying to strengthen its business in Japan and plans to launch seven products there this year. Japan is the largest pharmaceutical market in the world after the U.S.

About a quarter of J&J’s revenue comes from its consumer products business. That has been battered by about 20 recalls since September 2009 and a year-old closure of one of the factories involved over problems ranging from nauseating odors to metal and glass shards in medicines such as Tylenol and Motrin.

J&J has also recalled some prescription drugs, as well as contact lenses and hip replacements made by its medical device business, which accounts for about 40 percent of total sales.

“Our consumer business is still working through challenges and we are confident we will get these resolved,” McCoy told the analysts.

Johnson & Johnson shares fell 69 cents to $65.60 in afternoon trading.

Bloomberg – Sanofi-Aventis SA and Genzyme Corp. are likely to approve a takeover of the U.S. biotechnology company today and are discussing a price of about $74 a share plus potential additional payments tied to the performance of a Genzyme drug, said four people with knowledge of the plan.

A so-called contingent value right, a tradeable contract tied to Genzyme’s experimental multiple sclerosis drug Lemtrada, may be valued at about $3 when it begins trading and have a higher nominal value, said three people, who declined to be identified because the process is confidential.

The companies’ boards are scheduled to vote on the deal today and may make an announcement on Feb. 7, said the people. Sanofi is still working on its review of Genzyme’s business, an agreement hasn’t been reached, and terms could still change, the people said.

“As we have previously said, we’ve signed a confidentiality agreement with Genzyme and are continuing to review non-public information,” Jean-Marc Podvin, a spokesman for Paris-based Sanofi, said in a telephone interview. “Those talks continue to progress. We have no further comment.”

Bo Piela, a spokesman for Cambridge, Massachusetts-based Genzyme, declined to comment.

Excluding the CVR, a deal may value Genzyme at about $19.2 billion. Genzyme rose 14 cents, or 0.2 percent, to $73.40 in Nasdaq Stock Market trading on Feb. 4. Sanofi gained 30 cents, or 0.6 percent, to 50.30 euros in Paris.

‘Good Deal’

Acquiring Genzyme, the world’s largest maker of medicines for rare genetic disorders, would help Sanofi Chief Executive Officer Chris Viehbacher offset revenue losses as some of Sanofi’s biggest-selling products face competition from generic versions. Sanofi would gain treatments for Fabry, Gaucher and Pompe diseases.

“Genzyme is a good deal for Sanofi,” Frederic Aubel, a sales trader at Global Equities in Paris, said in a telephone interview. “It seems as if they will be paying a good price, and the CVR will protect them from potential bad surprises.”

Genzyme has projected peak annual sales of as much as $3.5 billion for Lemtrada, known as Campath when used for blood cancer. Sanofi said in October that analysts’ estimates of about $700 million were a valuation “probably closer to the reality of the product.” Lemtrada is in the final stages of testing and Genzyme expects data from those trials this year.

Merck-Schering

The acquisition would be the biggest industry takeover since Merck & Co. bought rival Schering-Plough Corp. for about $47 billion in November 2009, according to Bloomberg data.

Viehbacher began pursuing Genzyme last year when the U.S. company was focused on fixing manufacturing snags that cut into sales of its biggest products after a virus contamination at a Boston-area factory. Shire Plc took market share from Genzyme, and Genzyme’s stock sank as much as 43 percent from a 2008 high, causing unrest among shareholders.

The Sanofi chief told Genzyme CEO Henri Termeer, 64, of his interest in acquiring Genzyme in a May 23 conversation, according to a filing with the Securities and Exchange Commission last year. Sanofi announced a $69-a-share, $18.5 billion cash bid on Aug. 29 after Termeer refused to negotiate. The French company went directly to shareholders with a hostile tender offer on Oct. 4 after Genzyme continued to spurn the offer as too low.

Starting Talks

Sanofi said the offer allowed Genzyme shareholders to cash out after “quite a lengthy period” when the stock underperformed. Genzyme fired back that the offer was “inadequate and opportunistic.” The company already had been targeted by activist investors Ralph Whitworth of Relational Investors LLC and Carl C. Icahn, who gained four of 13 board seats last year in compromises brokered with Genzyme to avoid a proxy battle.

The companies later began negotiations over the proposal and said Jan. 31 that they had started due diligence. Genzyme said it would provide data such as profit margins and customer lists, which Sanofi agreed not to divulge. The $69-a-share tender offer is set to expire Feb. 15.

Genzyme’s top-selling medicine, which garnered $722 million in sales in 2010, is Cerezyme, a mass-produced version of a human enzyme missing in patients with the inherited illness Gaucher disease. The medicine had sales of more than $1 billion in 2007 and 2008 before shortages caused by the plant contamination.

Genzyme’s Drugs

Fabrazyme, used to treat the genetic illness Fabry disease, and Myozyme and Lumizyme for Pompe disease, similarly provide patients with enzymes their bodies fail to make or produce adequately on their own.

Unlike the pills produced by traditional drug companies, Genzyme’s medicines are made using biological processes and can’t be readily copied by generic-drug makers. Genzyme garners premium prices from insurers and government payers because the therapies provide life-saving benefits.

Genzyme, founded in 1981, has about 10,000 employees and 12 manufacturing facilities worldwide, according to the company’s website. Its products are available in almost 100 countries.

Genzyme is being advised by Credit Suisse Group AG and Goldman Sachs Group Inc. Sanofi is advised by Evercore Partners Inc., JPMorgan Chase & Co. and Morgan Stanley.

To contact the reporters on this story: Albertina Torsoli in Paris at atorsoli@bloomberg.net; Jacqueline Simmons in Paris at jackiem@bloomberg.net; Meg Tirrell in New York at mtirrell@bloomberg.net.

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

The British drug maker, GlaxoSmithKline, announced Monday that it was setting aside $3.4 billion to pay for United States government investigations and for product liability cases over its marketing of the diabetes drug Avandia in the face of heart attack risks.

The one-time charge is expected to wipe out its fourth-quarter profits, by consensus analyst estimates. GlaxoSmithKline’s European shares fell about 2 percent on the news.

Avandia, once the world’s top-selling diabetes medicine, was severely restricted in September by the Food and Drug Administration and banned by the European Medicines Agency after safety reviews.

GlaxoSmithKline took a $2.36 billion charge last summer to settle what it called “the substantial majority” of Avandia product liability lawsuits, as well as Paxil product liability cases and a Puerto Rico manufacturing case.

But it has received “substantial” new claims since then, the company said in a statement Monday to the London Stock Exchange. The $3.4 billion charge will be used for those product liability claims as well as costs related to an ongoing investigation by a federal prosecutor, the company said in the statement.

“We recognize that this is a significant charge, but we believe the approach we are taking to resolve longstanding legal matters is in the company’s best interests,” P. D. Villarreal, Glaxo’s senior vice president for global litigation, said in a statement. “We have closed out a number of major cases over the last year and we remain determined to do all we can to reduce our litigation risk.”

Avandia has been controversial since a 2007 analysis by Dr. Steven Nissen of the Cleveland Clinic linked it with a 43 percent increase in the risk of heart attacks.

Avandia sales were once about $3 billion a year.

GlaxoSmithKline had previously disclosed in a Securities and Exchange Commission filing that the United States attorney in Colorado issued a subpoena for records about its off-label promotion and payments to doctors involving nine drugs from 1997 to 2004.

MarketWatch — Shares of pharmaceutical giant Merck & Co. fell more than 6% Thursday on news that the company is discontinuing a key clinical trial and modifying a second for its much-anticipated blood-thinner vorapaxar at the recommendation of the study’s monitoring board.

The drug, Vorapaxar, had been considered a major market opportunity for Merck, whose top-line has suffered in recent years through the loss of market exclusivity for several key products due to patent expirations and the recall of its popular pain reliever Vioxx.

In an effort to boost growth, Merck (MRK 34.72, -2.43, -6.54%) acquired rival Schering-Plough in a 2009 mega-merger valued at around $49 billion. Vorapaxar had been considered a valuable asset in Schering-Plough’s pipeline.

If approved, vorapaxar would likely compete in the lucrative blood-thinner market against such blockbusters as Plavix, one of the world’s best-selling drugs. Some analysts had projected that vorapaxar could eventually take in sales of up to $5 billion.

Shares of Merck lost $2.39, or 6.4%, to $34.76 in recent trading, setting the stage for the stock’s worst one-day performance since April 21, 2009, when it fell 6.7% after the company announced results and cut guidance.

In a statement issued early Thursday, Merck said that the combined Data and Safety Monitoring Board for both clinical trials recommended that patients in a study code-named TRACER cease taking vorapaxar and that the trial be closed down in a “timely and orderly fashion.”

The board also recommended that patients in a second study called TRA-2P be taken off vorapaxar if they experienced a stroke prior to or during the study. Patients who have peripheral artery disease or a previous heart attack, or about 75% of that study’s participants, will be allowed to continue on the drug, Merck said.

Merck did not disclose exactly why the monitoring board made the recommendations. It did state, however, that it would issue updated projections for vorapaxar once it has received more data from the studies and is able to determine the completion date for the TRA-2P study.

Monitoring boards generally recommend the discontinuation of a clinical trial if data shows the drug’s safety risks are outweighing its benefits, or if the drug is proving to be largely ineffective.

On rare occasion, monitors may recommend a trial be stopped early because a drug has been shown to be so effective that researchers believe it should be advanced to the next level of development as soon as possible.

The two vorapaxar studies differed in the types of cardiac patients enrolled and the dosing of the drug.

In the TRACER study, Merck was testing the drug on patients with acute coronary syndrome, or a sudden restriction of blood flow to the heart. The study called for patients to be administered a “loading” dose of 40mg of vorapaxar, followed by a daily 2.5 mg dose.

In the TRA-2P study, patients were give only the daily 2.5 mg dose. Patients enrolled in the study had already experienced a heart attack, an ischemic stroke, or been diagnosed with peripheral vascular disease.

Val Brickates Kennedy is a reporter for MarketWatch in Boston.

NY Times – A unit of Johnson & Johnson announced a nationwide recall on Thursday of all lots — more than 13 million packages — of the soft chewable versions of Rolaids, its popular antacid drug, after reports of consumers finding metal and wood particles in the products.

The unit, McNeil Consumer Healthcare, has been troubled by manufacturing deficiencies over the last year, which has led to a series of recalls of some of the country’s most popular over-the-counter brands. A recall in April alone involved about 136 million bottles of liquid children’s Tylenol and other pediatric products.

Although McNeil said early this year that it was instituting a comprehensive plan to improve its manufacturing and quality control systems — including the temporary closure of a plant in Pennsylvania for an upgrade — some manufacturing problems have continued.

The foreign particles found in the Rolaids were potentially introduced during production at a third-party manufacturer, McNeil said in a statement. McNeil declined to identify the manufacturer.

The recall involves all lots of Rolaids Extra Strength Softchews, all lots of Rolaids Extra Strength Plus Gas Softchews and Rolaids Multi-Symptom Plus Anti-Gas Softchews sold in the United States. While the risk of health problems is remote, McNeil said consumers should stop using the Rolaids involved.

Also on Thursday, Wells Fargo downgraded shares of Johnson & Johnson to market perform, citing risks associated with McNeil’s problems.

Last month, for example, the Food and Drug Administration posted a report on its Web site citing a McNeil plant in Puerto Rico that was inspected this fall for manufacturing problems. The report cited the facility for, among other issues, distributing products that failed quality requirements, failing to identify product defects during routine testing, failing to adequately investigate product problems and inadequate training of laboratory staff.

In an interview last month, Karen Riley, an F.D.A. spokeswoman, said the report indicated that McNeil “continues to have serious quality control issues at its plant and that it is not in compliance with current good manufacturing practices required by federal law.”

Earlier this year, the agency said its office of criminal investigations had opened an inquiry into the company’s conduct surrounding the recent recalls.

Separately, the House Committee on Oversight and Government Reform has held two hearings in which legislators questioned company executives and F.D.A. officials about their conduct in the recalls.

The Rolaids recall “reinforces the committee’s ongoing investigation surrounding the safety protocols in place at J.& J.’s facilities and how the F.D.A. is managing food and drug safety,” Kurt Bardella, a spokesman for the committee chairman-designate, Representative Darrell Issa, Republican of California, said. “The committee is in the process of and will continue to seek answers from J.& J. and the F.D.A.”

Johnson & Johnson executives estimated earlier that the recalls and closure of the Pennsylvania plant would reduce sales by about $600 million this year.

In a note to investors on Thursday, Larry Biegelsen, an analyst at Wells Fargo, estimated that there was a 25 to 50 percent chance that McNeil would close the plant in Puerto Rico because of the latest F.D.A. report.

“We believe there is risk to JNJ’s McNeil” over-the-counter business in 2011, he wrote, “and see few potential offsets and prefer to stay on the sidelines until there is some clarity.”

In September, Johnson & Johnson said that the executive in charge of the consumer business, including McNeil, would retire in March, a move analysts interpreted to mean that she was taking the blame for the problems.

In the latest recall, McNeil said it had suspended production of the Rolaids products and would not restart production until it had taken corrective actions.

Consumers who bought the products may call 1-888-222-6036 or go to www.rolaids.com for instructions about a refund, McNeil said.

Since the problems with Tylenol and other children’s liquid medicines this spring, the company has heightened its vigilance in recalling products that may not meet manufacturing standards.

Last month, for example, after a review identified manufacturing problems, McNeil recalled nine million bottles of liquid Tylenol Cold Multi-Symptom to update labels, 71,000 packages of soft chewable Rolaids because of an unusual texture caused by crystallized sugar, four million packages of Benadryl and 850,000 bottles of Motrin.

Unlike Thursday’s consumer recall, the November recalls were at the wholesale and retail levels. That meant stores stopped selling the products, but people could continue to use them, McNeil said.

Other Johnson & Johnson units have experienced problems this year. In August, for example, the DePuy Orthopaedics unit recalled two kinds of hip implants because many patients required a second replacement after the implants failed.

NEW YORK (Reuters) – Johnson & Johnson, which has been beset by product recalls, on Wednesday confirmed that it recalled nearly five times as many contact lenses as the 100,000 boxes it announced in August due to eye stinging.

J&J said that in late October the recall of its 1 Day Acuvue TruEye lenses, which took place primarily in Japan, was expanded to a total of about 492,000 boxes.

The New Jersey-based global healthcare conglomerate, which claims to be striving for greater transparency in the wake of a series of image-damaging recalls of over-the-counter medicines, said it announced the expanded recall by press release only in Japan, where some 75 percent of the affected product was sold, leaving J&J investors largely in the dark.

The company is already under criminal and congressional investigation in the United States over a series of massive recalls of such products as Children’s Tylenol, Motrin and Benadryl due to quality control lapses and other problems.

The contact lens recall did not affect products sold in the U.S. market.

The expanded recall came to light on Wednesday after details were posted on a UK healthcare regulatory agency website. Regulatory authorities in all countries with affected lots were notified of the expanded recall in late October, said Gary Esterow, a spokesman for J&J’s Vistakon vision care unit, leaving it up to the respective government agencies to notify consumers.

Some 25 nations in Europe were involved in the limited voluntary recall, including the UK, Sweden, Italy, Spain, Ireland, Switzerland and Germany. Acuvue lenses were also recalled in Canada, Australia, South Korea, Hong Kong, Malaysia, New Zealand and Singapore, the company said.

The nearly half a million recalled boxes represents less than 1 percent of all the contact lenses made by J&J worldwide, the company said.

The lens recalls were prompted by consumer complaints of stinging or pain upon inserting them in the eye.

A J&J review identified higher-than-expected levels of a type of acid used in manufacturing the lenses that had not been fully removed during the lens rinsing process. The review also turned up a small percentage of contact lenses that did not meet internal manufacturing requirements, Esterow said.

J&J shares were up 0.9 percent at $62.09 in afternoon trade on the New York Stock Exchange.

(Reporting by Bill Berkrot and Ransdell Pierson, editing by Dave Zimmerman)

Bloomberg – A presidential commission’s leaders proposed a $3.8 trillion deficit-cutting plan that would cut Social Security and Medicare, reduce income-tax rates and eliminate tax breaks including the mortgage-interest deduction.

The co-chairmen of the panel appointed by President Barack Obama suggested reducing Social Security spending by raising the retirement age to 68 in about 2050 and 69 in about 2075. The plan also would slow the rate at which benefits grow. The savings would come between 2012 and 2020.

“This country’s out of money and we better start thinking,” said co-chairman Erskine Bowles. Without “tough choices,” he said, “we’re on the most predictable path toward an economic crisis that I can imagine.”

Bowles, former President Bill Clinton’s chief of staff, and Republican former Senator Alan Simpson of Wyoming announced the proposal in Washington today, stressing that it was intended as a starting point for discussion.

None of the proposals would take effect next year to avoid disrupting the economic recovery. Bowles said income-tax rates would be reduced to three levels: 8 percent, 14 percent and 23 percent.

Wiping out all tax breaks, including the home mortgage deduction, while lowering rates would save $100 billion a year, Bowles said. Members of the panel could decide to keep some tax breaks by offering offsetting cuts, he said.

Bowles said about three-fourths of the savings would come from spending cuts with the remainder from tax increases.

‘Harpooned Every Whale’

“We have harpooned every whale in the ocean and some of the minnows,” Simpson said. “No one has done this before.”

The proposal would attempt to slow health-care costs by paying doctors participating in Medicare less, and it calls for “comprehensive” legislation to reduce medical malpractice costs.

Discretionary spending cuts in the plan include reducing congressional and White House budgets by 15 percent, freezing federal salaries and cutting the federal workforce by 10 percent. The discretionary reductions of $1.4 trillion would be split equally between defense and domestic programs, Bowles said.

“The cuts really will happen on both sides of that firewall,” he said.

The plan would cut the deficit to 2.2 percent of gross domestic product by 2015, from the current 9 percent, exceeding Obama’s goal. It would also reduce debt to 60 percent of GDP by 2024.

“This is Al’s and my proposal, nobody else’s,” Bowles said. “The president hasn’t seen this proposal.” Some members of Obama’s financial team have seen the plan and they liked some things and not others, he said.

To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net; Brian Faler in Washington at bfaler@bloomberg.net;

To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net

By ANJALI CORDEIRO

Procter & Gamble Co.’s fiscal first-quarter earnings dropped 6.8% as higher commodity costs hurt margins, although sales of such key brands as Pantene and Olay climbed globally.

The decline in earnings also reflected the sale of its pharmaceutical business last October.

The consumer-products giant is in the midst of a broad push to grab market share around the world. It has launched new products, marketed its offerings more aggressively and offered consumers more promotions. But sharply higher costs for materials such as paper pulp and plastic resins are affecting the bottom line. For instance, P&G is feeling the pinch of higher pulp costs with its Charmin toilet paper and Bounty paper towels.

A Romanian employee surveys a production line at a new Procter & Gamble plant in Urlati, a city 80km northeast from Bucharest, on September 29, 2010.

P&G didn’t break out the impact of different commodities on its earnings but it said gross margin fell to 51.8% from 52.6%.

Companies like P&G also use a variety of plastics and packaging for the shampoos and lotions they sell. In the three months ended June spot prices for plastic resin were up roughly 20% to 30% from a year earlier, Caris & Co. analyst Linda Bolton Weiser estimated. “We are now seeing those costs flow through,” she said.

P&G will push to offset commodity price pressures with cost savings rather than price increases, Chief Executive Bob McDonald said Wednesday. In cases, where price increases are necessary the company will choose to do so through the launch of innovative new products, he said.

Other manufacturers are being hurt by higher raw material costs, whether for pizza or packaging or coffee beans. Kimberly-Clark Corp. which makes Kleenex tissues and Scott paper towels, earlier this week reported third-quarter earnings fell 19%, hurt by rising commodities costs. Kimberly-Clark lowered its 2010 earnings guidance this week, partly because of higher costs for raw materials.

Commodities aren’t the only challenge these companies face. While developing markets continue to grow fast, consumer-goods sales in the U.S. and other developed markets remain sluggish.

Mr. McDonald said consumer demand is still “dampened” in the U.S.

For the quarter ended Sept. 30, P&G’s earnings fell to $3.08 billion, or $1.02 a share, from $3.31 billion, or $1.06 a share, a year ago.

On a continuing-operations basis earnings rose to $1.02 a share from 97 cents a share.

Revenue rose 1.6% to $20.12 billion.

Organic sales—which exclude acquisitions and foreign exchange impacts—increased 4% as volume jumped 8%. Foreign-exchange fluctuations hurt sales growth by three percentage points.

P&G projected second-quarter earnings of $1.05 to $1.11 a share, with revenue up 2% to 4% and organic sales rising 3% to 5%.

Write to Anjali Cordeiro at anjali.cordeiro@dowjones.com