Pakistani Army Denies Sharing U.S. Report With Bomb Makers

The army called the assertions of collusion with militants “totally false and malicious.”

American officials said in early June that they had shared satellite information with Pakistan about two militant bomb-making factories. Within 24 hours, they said, they watched the militants clear out the sites, raising suspicions that the Pakistanis had shared the information.

In a carefully worded, two-paragraph statement on Friday, the Pakistani Army does not say that the United States had shared intelligence on the sites in question. But the statement said the army’s attempts to destroy four militant bomb-making factories only partly succeeded because intelligence on two of the sites was wrong.

The statement did not say where the sites were or when the raids occurred. But it is likely to further add to tensions between the United States and Pakistan, whose relations have been strained since the United States killed Osama bin Laden last month without notifying officials here ahead of time.

Various news media accounts said the factories were in the Waziristan stretch of Pakistan’s tribal belt, where militant fighters with Al Qaeda and the Taliban have long proliferated. The intelligence sharing was part of a United States attempt to improve the relationship with Pakistan.

Bin Laden’s presence in Pakistan only added to American suspicions that elements within Pakistan’s powerful security establishment were playing a double game by colluding with some militants while going after others.

Pakistani leaders have denied knowing that Bin Laden was in Abbottabad, and American officials have said they have seen no evidence that the upper ranks of the Pakistani military or civilian leadership helped hide him. In another sign of tensions, the Foreign Ministry lodged a protest on Friday with the American Embassy over an attack on a Pakistani military post.

In a statement, the ministry said it had told the United States of its “serious concern” about an incursion by NATO aircraft a mile and a half inside the Mohmand tribal area, in which the ministry said a Pakistani military post was attacked.

A ministry spokeswoman, Tehmina Janjua, said that the attack occurred around 9 a.m. on Friday, but that there were no casualties.

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Drug Makers’ Feared Enemy Switches Sides, as Their Lawyer

He racked up numerous convictions and mega-settlements in nearly a quarter-century, using whistle-blowers and secret grand juries to pressure major pharmaceutical and health companies into ending illegal practices like kickbacks to doctors and misuse of blockbuster drugs.

Once described as a cross between a firebrand preacher and a charismatic litigator, Mr. Loucks burnished a reputation aptly captured in a Fortune magazine headline: “Why Do Drug Companies Fear This Man? Maybe because he’s declared all-out war on cheats in the drug industry.”

But a year and a half ago, Mr. Loucks, a Republican, left the United States attorney’s office in Boston after he was passed over for the top post and President Obama appointed a Democrat. Instead, Mr. Loucks joined Skadden, Arps last July, and has startled former allies by emerging in recent months as zealous a corporate defender as he was a prosecutor, complete with proposals seeking more lenient treatment for the medical companies he once vilified.

In a six-page memo last month to clients in his portfolio, which may include some of the very same corporations he prosecuted repeatedly, Mr. Loucks bemoaned strategies he had embraced.

“The government and the whistle-blower have an advantage,” he wrote, complaining that federal investigators were now using the law unfairly. “While prosecutors often assert the company has engaged in ‘serious’ misconduct, they keep the company in the dark, often for years, as to the specific allegations.”

Those who have known him are quick to recall that his crowning achievement was a $2.3 billion settlement against Pfizer that capped a four-year secret investigation.

“We’re all disappointed that he’s gone over to the dark side because it seemed that he was a good prosecutor,” said Shelley R. Slade, a whistle-blowers’ lawyer in Washington and a former senior counsel for health care fraud at the Justice Department.

“I looked upon it with sadness,” Patrick Burns, spokesman for the whistle-blower advocacy group Taxpayers Against Fraud, said of Mr. Loucks’ change. “He’s a good and honorable person. He did great work in the Boston office. He’s a good lawyer. It’s just too bad.”

Federal ethics rules prohibited Mr. Loucks from any dealings with the United States attorney’s office in Boston for a year after his resignation, and he can never be involved in cases he investigated directly. But he is not barred from representing clients he once prosecuted on other matters, and his law firm’s roster includes some of the biggest companies he once investigated, including Pfizer, Merck, Schering-Plough, Bristol-Myers Squibb and Medtronic.

He defends his newfound friendship with former foes, and notes that he’s still wearing cowboy boots native to his Oklahoma childhood even though he’s now working in the white-collar division of a prestigious law firm.

“While everyone calls it ‘the other side,’ I’m doing the same thing I’ve always done, which is zealously representing my clients,” he said.

And while he used to call some of those people’s actions “evil,” today he argues that drug and medical device companies are making strides in complying with federal billing, fraud and kickback laws. “They make products that have huge benefits to a number of people,” he said. Skadden, a 2,000-lawyer firm, has made several hires in recent years to amplify its health care practice.

In interviews and a lengthy e-mail exchange, Mr. Loucks said his views on the whistle-blower law had evolved.

The False Claims Act, with its triple damages, has been the government’s most powerful weapon against health care fraud since Congress in 1986 increased the rewards for whistle-blowers. Since then, taxpayers have recovered an estimated $28 billion from medical companies.

As a federal prosecutor in Boston, Mr. Loucks created a health care fraud unit and used the law, as well as the tools of secrecy and surprise, to reap major awards. The unit’s victories are renowned, starting with an $875 million payment in 2001 by TAP Pharmaceuticals. Whistle-blowers shared $95 million in that case, alerting companies and informants to the stakes involved.

For years, Mr. Loucks has argued that whistle-blowers are paid far much in health care fraud cases — bounties up to 30 percent, totaling $650 million in just the last two years, he said. These people would blow the whistle for less, he argued both inside the prosecutor’s office and more recently in a paper titled “the Great American Giveaway.” While that hostility toward what he considers the greed of some whistle-blowers is old news, Mr. Loucks’ views on unsealing their complaints are new.

In his May 12 memo to clients, Mr. Loucks urged some companies to press judges to unseal complaints more quickly. That way, he says, they can learn the scope of complaints sooner, identify witnesses and fight back harder.

“If Mike was still with the Justice Department, he could give you 10 reasons why this is a bad idea,” said Suzanne E. Durrell, a whistle-blowers’ lawyer in Boston who worked with Mr. Loucks when she was chief of the civil division for the United States attorney in Massachusetts.

Mr. Loucks says more openness would let companies clean up their own acts, even if it meant adverse publicity.

He points to new statistics that he says support his argument. The Justice Department reported to Congress that 885 False Claims Act cases involving health care fraud were pending under seal at the beginning of this year, with only about 200 prosecutors to juggle them. On average, a case was sealed for more than a year, and some much longer.

“That the government doesn’t have adequate resources to handle the cases is not a good cause to keep them under seal,” Mr. Loucks said in an interview, comparing it to a sports game where only one team is allowed to try to score. In these cases, that would now be his former team.

“I knew what I was doing on behalf of the government,” he said. “I don’t know if lawyers on the other side felt they were not able to adequately represent their clients while the case was under seal.”

Nicholas C. Theodorou, chairman of Foley Hoag’s business crimes defense group in Boston, said Mr. Loucks’ argument made sense from a corporate defense standpoint, and possibly would sit well with some federal judges who have questioned why cases remain under seal so long.

For his part, Mr. Loucks uses a baseball reference. Johnny Damon left his beloved Boston Red Sox in late 2005 to sign with “the evil empire, the New York Yankees,” Mr. Loucks said. Both teams won World Series with help from Mr. Damon.

Asked whether the “evil empire” analogy fit the Justice Department or Skadden, Mr. Loucks said, “One man’s evil empire is another’s home team.”

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Hip Makers Told to Study More Data

Under the order, producers of “metal-on-metal” hips will have to conduct studies of patients who received the device to determine, among other things, whether the implants are shedding high levels of metallic debris. Some patients have encountered that problem, including soft tissue damage that has disabled them.

In a telephone interview on Tuesday, Dr. William H. Maisel, the deputy director for science at the F.D.A.’s Center for Devices and Radiological Health, said the order marks the broadest use of the agency’s authority to conduct studies of devices after approval for sale. He also said that the F.D.A. wanted information about the entire category of implants, not any single manufacturer’s device.

“Our concern is the product, not about a manufacturer,” said Dr. Maisel.

The F.D.A. told about 20 manufacturers in a letter issued Friday that it was invoking a rule requiring postmarket studies in cases where an implant’s failure could have serious consequences.

The agency’s action could also prompt increased scrutiny of regulatory policies that allow implants like metal-on-metal hips to be approved for sale with little, if any, clinical testing in patients. In addition, the F.D.A.’s oversight of hip implants has lagged that in other countries where registries follow the failure rate of orthopedic implants in patients.

Metal-on-metal hips, in which the ball-and-socket components are made from metals like cobalt and chromium, accounted until relatively recently for about one-third of the estimated 250,000 hip replacement procedures preformed annually in the United States.

But over the last two years, the use of the implants has fallen off in part amid reports that they were prone to early failure and that some patients had developed serious health problems related to particles of metallic debris that are shed by the devices as they wear.

In March, for example, the British Orthopaedic Association, a professional medical group, reported that one model of all-metal hip made by a unit of Johnson & Johnson was projected to fail in one-half of the patients who received it within six years after implant. The company no longer sells the device, which was known as the ASR.

The British medical group also estimated, based on hospital data, that the early failure rate for all-metal hips made by other manufacturers was higher than expected, ranging from 12 to 15 percent within five years after implant. Artificial hips are designed to last for 15 years or more.

The British group said that the problems in the troubled devices were related to how certain components were joined.

Dr. Maisel, the F.D.A. official, said that the agency believed that all-metal hips provided benefits to patients. However, he added that there were significant enough medical concerns to warrant a broad review.

Dr. Maisel said that it was up to each manufacturer to determine how to conduct its studies. Under the agency rule, producers have 30 days to file a proposed plan with the F.D.A. He also said companies would be expected to collect information from patients who received the devices, including taking blood samples to determine the levels of metallic ion in their systems.

The companies are also being asked to determined how frequently the devices are failing.

“This is the largest group of studies that we have asked for,” for an approved class of devices, said Dr. Maisel.

Along with the DePuy division of Johnson & Johnson, other major producers of hip implants include Zimmer, Stryker, Biomet and Wright Medical.

 

A Web Edge for Makers of Real Stuff

Like, actual stuff.

This can be risky territory, since making a physical product often requires a big upfront investment, and the smallest setback can wipe out profits. But inventors are getting around the hurdles — in part by using the Web to find backers and buyers.

They are also thinking small, as in smaller products and accessories that require less capital and are relatively easy to make and distribute.

Dave Petrillo and David Jackson, for example, friends and mechanical engineers from Pennington, N.J., had an idea for bean-shaped steel shells that go into a cup of coffee and quickly cool it to a drinkable temperature, then keep it warm longer. The shells contain a heat-absorbing gel.

The two men spent nine months fine-tuning the design for the beans, which they called Coffee Joulies. Then they scraped together $3,000 and built 100 prototypes by hand in Mr. Petrillo’s parents’ basement.

Making the first batch “was harder than we originally thought,” Mr. Petrillo said, so they began hunting for a way to speed the process. They found one in an unlikely place: a video clip on YouTube featuring a silverware factory in upstate New York. Making the handles of knives turned out to be similar to making Joulies.

Then, like a growing number of other inventors and designers in need of capital, the men turned to Kickstarter, a start-up in New York that lets people present a sales pitch for a creative project and ask others to put cash behind it. This allowed them to gauge the appeal of the project before sinking a lot of time and money into it.

“We thought about investors and design competitions, but when we saw Kickstarter we decided to go for it,” Mr. Petrillo said. They created a three-minute video to demonstrate their product and said that anyone who gave them $40 would get five Coffee Joulies. They hoped to raise $9,500, but within a few weeks they have raised $177,000, and the total is still rising.

Yancey Strickler, one of the founders of Kickstarter, said the company originally thought the site would attract more one-time projects and experiments, like plans to record an album or make a documentary film. But he said Kickstarter had been pleasantly surprised to see homespun gadgets and inventions bubble up in popularity.

“We didn’t realize we would move in this direction, but these projects are ingenious and clever and we want all of them to work,” he said.

Mr. Strickler pointed to one of the first gadget-focused projects on Kickstarter to gain significant momentum, the TikTok, which turns an iPod Nano into a wristwatch. Its creators raised nearly $1 million.

“I think people really value having a good story to tell about how they got that watch,” he said.

Tom Gerhardt and Dan Provost, designers living in New York, came up with an accessory for the iPhone 4 called the Glif, which acts as a kind of kickstand or mount for the phone. The project was so successful on Kickstarter — more than 5,000 people placed an order — that the two decided to form a company and use the site to start a second project, the Cosmonaut, a marker-shaped stylus for the iPad. That project has attracted more than 3,000 backers.

“We didn’t have any experience with bringing a commercial product to market,” Mr. Provost said. “But we are approaching a new method of product development.”

Technology specialists say the interest in projects like these is part of a cultural shift, in which shoppers are increasingly looking for a more intimate connection to the creators and the sources of the things they buy, reflected in the surging interest in farmers’ markets and local clothing designers.

“People are becoming more cognizant about where their things are made and are starting to expect the same information transparency about where everything they buy is from,” said Rachel Botsman, co-author of the book “What’s Mine Is Yours: The Rise of Collaborative Consumption.”

“They are looking for smaller suppliers they trust,” she added.

The makers of the Coffee Joulies and the Cosmonaut had another selling point: they could boast that their products were made in the United States. They found recession-battered American factories that were willing to work with newer producers and make products in smaller runs.

The Coffee Joulies are made at Sherrill Manufacturing in Sherrill, N.Y., whose work force has dwindled to 15 from a peak of 160 in the 1990s, according to its president, Matthew Roberts. It stopped making silverware last summer and now rents space to small industrial businesses.

Mr. Roberts said his company had agreed to cover half the cost — about $10,000 — of the custom stamping tools to produce the Joulies, with the understanding that the product’s creators would pay the money back once their company was off the ground.

“We haven’t had a lot of experience with things like this,” he said. “But we’re looking for business. We’re fighting to turn around.”

This article has been revised to reflect the following correction:

Correction: April 23, 2011

An article on Thursday about entrepreneurs who make physical products misstated the location of Peel, a start-up company that makes an iPhone accessory. It is in Santa Clara, Calif., not San Diego.

 

A Web Edge for Makers of Real Stuff

Like, actual stuff.

This can be risky territory, since making a physical product often requires a big upfront investment, and the smallest setback can wipe out profits. But inventors are getting around the hurdles — in part by using the Web to find backers and buyers.

They are also thinking small, as in smaller products and accessories that require less capital and are relatively easy to make and distribute.

Dave Petrillo and David Jackson, for example, friends and mechanical engineers from Pennington, N.J., had an idea for bean-shaped steel shells that go into a cup of coffee and quickly cool it to a drinkable temperature, then keep it warm longer. The shells contain a heat-absorbing gel.

The two men spent nine months fine-tuning the design for the beans, which they called Coffee Joulies. Then they scraped together $3,000 and built 100 prototypes by hand in Mr. Petrillo’s parents’ basement.

Making the first batch “was harder than we originally thought,” Mr. Petrillo said, so they began hunting for a way to speed the process. They found one in an unlikely place: a video clip on YouTube featuring a silverware factory in upstate New York. Making the handles of knives turned out to be similar to making Joulies.

Then, like a growing number of other inventors and designers in need of capital, the men turned to Kickstarter, a start-up in New York that lets people present a sales pitch for a creative project and ask others to put cash behind it. This allowed them to gauge the appeal of the project before sinking a lot of time and money into it.

“We thought about investors and design competitions, but when we saw Kickstarter we decided to go for it,” Mr. Petrillo said. They created a three-minute video to demonstrate their product and said that anyone who gave them $40 would get five Coffee Joulies. They hoped to raise $9,500, but within a few weeks they have raised $177,000, and the total is still rising.

Yancey Strickler, one of the founders of Kickstarter, said the company originally thought the site would attract more one-time projects and experiments, like plans to record an album or make a documentary film. But he said Kickstarter had been pleasantly surprised to see homespun gadgets and inventions bubble up in popularity.

“We didn’t realize we would move in this direction, but these projects are ingenious and clever and we want all of them to work,” he said.

Mr. Strickler pointed to one of the first gadget-focused projects on Kickstarter to gain significant momentum, the TikTok, which turns an iPod Nano into a wristwatch. Its creators raised nearly $1 million.

“I think people really value having a good story to tell about how they got that watch,” he said.

Tom Gerhardt and Dan Provost, designers living in New York, came up with an accessory for the iPhone 4 called the Glif, which acts as a kind of kickstand or mount for the phone. The project was so successful on Kickstarter — more than 5,000 people placed an order — that the two decided to form a company and use the site to start a second project, the Cosmonaut, a marker-shaped stylus for the iPad. That project has attracted more than 3,000 backers.

“We didn’t have any experience with bringing a commercial product to market,” Mr. Provost said. “But we are approaching a new method of product development.”

Technology specialists say the interest in projects like these is part of a cultural shift, in which shoppers are increasingly looking for a more intimate connection to the creators and the sources of the things they buy, reflected in the surging interest in farmers’ markets and local clothing designers.

“People are becoming more cognizant about where their things are made and are starting to expect the same information transparency about where everything they buy is from,” said Rachel Botsman, co-author of the book “What’s Mine Is Yours: The Rise of Collaborative Consumption.”

“They are looking for smaller suppliers they trust,” she added.

The makers of the Coffee Joulies and the Cosmonaut had another selling point: they could boast that their products were made in the United States. They found recession-battered American factories that were willing to work with newer producers and make products in smaller runs.

The Coffee Joulies are made at Sherrill Manufacturing in Sherrill, N.Y., whose work force has dwindled to 15 from a peak of 160 in the 1990s, according to its president, Matthew Roberts. It stopped making silverware last summer and now rents space to small industrial businesses.

Mr. Roberts said his company had agreed to cover half the cost — about $10,000 — of the custom stamping tools to produce the Joulies, with the understanding that the product’s creators would pay the money back once their company was off the ground.

“We haven’t had a lot of experience with things like this,” he said. “But we’re looking for business. We’re fighting to turn around.”

 

As Generics Near, Makers Tweak Erectile Drugs

Levitra, another erectile dysfunction drug, is now sold as a dissolvable tablet in nine European countries and may come to American pharmacies as soon as this month under the name Staxyn. That new form of the drug, which fizzes and dissolves in seconds, is marketed in a pocket-size, midnight-black box for men who prefer to take it discreetly, without water.

The third drug for erectile dysfunction to reach the market, Cialis, now eight years old, is racing ahead of the others because of two ideas that have proven extremely popular: an everyday pill and a 36-hour “weekender.” Cialis is projected to become the top-selling of the three drugs in the world this year, passing Viagra.

The market for drugs to correct erectile dysfunction has passed $5 billion a year from sales to tens of millions of men. And it is increasingly being driven by novel applications to compete with the lower-priced generics on the horizon.

“?‘Gimmick’ is a strong word, but all of this is designed to create new brand identities,” Dr. Joseph P. Alukal, an assistant professor and director of reproductive health at the New York University School of Medicine, said. “A newer product, less expensive, and a new form of taking it — all that might convince more people to try it.”

Research is also under way in Brazil on a faster-acting form of the drugs, which increase blood flow by relaxing smooth muscle cells. While the existing pills enter the bloodstream indirectly by way of the stomach, intestines and liver, this form would enter more directly, dissolving in a capillary-rich space under the tongue and increasing the blood flow within 10 or 15 minutes. The research in Brazil involves generic Viagra, but Pfizer says it is not sponsoring the work.

The Mexican experiment with Viagra Jet will show whether the chewable form of the drug has promise in other countries, particularly developing markets, Susan O’Connor, Pfizer’s vice president of global commercial development, said in an interview. Studies showed most Mexican men who used Viagra ground it up to make it easier to swallow or in the belief it would start acting faster.

In explaining why the drug is being test-marketed in Mexico, Ms. O’Connor cited “patient preference, found in market research.” Mexico is the biggest market for Viagra in the developing world, with about $55 million in sales last year. At this point, Pfizer does not have plans to bring Viagra Jet to the United States, she said.

In America, Pfizer is battling to keep low-price generic competition off the shelves a year from now, when the drug’s patent expires. The generic pills would cost only a fraction of the $10 or more that each pill now costs.

Bayer, meanwhile, has introduced the dissolvable form of its Levitra drug in Austria, France, Hungary, Germany, Spain, Poland, Sweden, Denmark and Britain, where it went on sale in late March. The drug is called Levitra ODT, for orodispersible tablets. It comes in a thin black package the size of a half-dozen stacked credit cards, with four pills on a card that slides out.

“It’s pocket-friendly, discreet and gives the product a playful edge over its competitors,” Thomas Proske, global brand manager for Levitra at Bayer Healthcare, said in a statement.

The same pill was approved in the United States last June under the brand name Staxyn.

It will be available in pharmacies this month, according to Jess Macnaught, marketing executive with Burgopak Design and Packaging, the London company that designed the new black package. GlaxoSmithKline and Merck have licensed American rights from Bayer, but they declined to reveal when the drug would be introduced. Last year, they said Staxyn would reach the market in late 2010.

Worldwide sales of erectile dysfunction drugs grew 6.9 percent in 2010, to about $5 billion, and 4.7 percent in 2009, according to the industry data firm IMS Health.

Dr. Alukal of New York University said he thought Staxyn could be sold for a much lower price than what Levitra and other pills now cost, in part to compete with a generic Viagra. No price has been revealed.

“I guess it could be easier to ingest, so it could expand its market somewhat, but in the end the bigger issue would be cost,” Dr. Alukal said. He said the companies, for whom he does not consult, had talked about lower pricing, perhaps to under $10 a pill.

But for now, Pfizer, the company that started it all, is focusing its attention on protecting the pricing power and brand integrity of Viagra.

Patrick Ford, a former F.B.I. agent who leads the company’s security operations in the Americas, says Viagra is the most counterfeited product in the world. His agents pose as buyers, collect evidence and bring fraud cases to prosecutors, and he says fake Viagra may be unsafe. Pfizer and other pharmaceutical companies are working with Victoria Angelica Espinel, the government’s intellectual property enforcement coordinator, a position President Obama appointed her to in 2009.

Pfizer is also using its legal firepower against would-be generic competitors. Pfizer has two patents for Viagra, one for its chemical, expiring in 2012, and the other for its use against impotence, expiring in 2019. Pfizer sued Teva Pharmaceutical Industries, the biggest generic-drug company, in March 2010 under the “use” patent. The suit is pending in a Virginia federal court.

MacKay Jimeson, a Pfizer spokesman, said the company was confident it would keep the 2019 patent protection, but industry analysts disagree.

“?‘Use’ patents are not highly probable of being upheld in court,” said C. Anthony Butler, a Barclays Capital pharmaceuticals analyst. “Most if not all analysts assume the expiry of the drug upon expiry of the composition of matter patent.”

The chemical patent expires on March 27, 2012. Pfizer may be able to extend it another six months, to September 2012, under a federal law called the Best Pharmaceuticals for Children Act. The law is meant to encourage drug companies to study children’s uses, often a difficult and unprofitable area.

In this case, what would be studied is not Viagra for children, but Revatio, a formulation of the same chemical, sildenafil, which is approved for pulmonary arterial hypertension, a rare and dangerous condition affecting hundreds of children in the United States. Mr. Jimeson said the company was working closely with the Food and Drug Administration to discuss the pediatric studies of Revatio and the potential for an extension on the chemical patent, which would also protect Viagra and its prices.

Many men, though, have waited years for a lower-priced Viagra and their wish may come true next year.

Other researchers are testing new uses for Viagra that Pfizer says it is not financing. Boston University is studying it with testosterone gel in men 40 to 70. Laboratório Teuto Brasileiro, in Brazil, where the patent expired last year, has filed a notice of intent to test it in a tablet that dissolves under the tongue and has an effect in 10 minutes or so. Pfizer owns 40 percent of the lab but says that it did not initiate the study.

Eli Lilly, meanwhile, says it has no plans to try chewable or dissolvable or any other forms of its Cialis tablets, and why should it? Cialis sales have steadily increased since it was introduced in 2003, to $1.7 billion last year, close to Viagra’s $1.9 billion. The health care investment house Leerink Swann estimates that Cialis sales will edge past Viagra in 2011 and far surpass the iconic blue pill in 2012.

Shawn Heffern, Lilly’s United States marketing director for Cialis, says, “I couldn’t be more happy.”