North Korea orders artillery to be combat ready, targeting U.S. bases

SEOUL (Reuters) - North Korea said on Tuesday its strategic rocket and long-range artillery units have been ordered to be combat ready, targeting U.S. military bases on Guam, Hawaii and mainland America after U.S. bombers flew sorties threatening the North.

The order, issued in a statement from the North's military "supreme command", marks the latest fiery rhetoric from Pyongyang since the start of joint military drills by U.S. and South Korean forces early this month.

South Korea's defense ministry said it saw no sign of imminent military action by North Korea.

"From this moment, the Supreme Command of the Korean People's Army will be putting into combat duty posture No. 1 all field artillery units, including long-range artillery units and strategic rocket units, that will target all enemy objects in U.S. invasionary bases on its mainland, Hawaii and Guam," the North's KCNA news agency said.

The North previously threatened nuclear attack on the United States and South Korea, although it is not believed to have the capability to hit the continental United States with an atomic weapon. But the U.S. military's bases in the Pacific area are in range of its medium-range missiles.

South Korea's defense ministry said it had detected no signs of unusual activity by the North's military but will monitor the situation. The South and the U.S. military are conducting drills until the end of April, which they have stressed are strictly defensive in nature.

The North has previously threatened to strike back at the U.S. military accusing Washington of war preparations by using B-52 bombers which have flown over the Korean peninsula as part of the drills.

North Korea has said it has abrogated an armistice that ended the 1950-53 Korean War and threatened a nuclear attack on the United States.

(Reporting by Jack Kim and Ju-min Park; Editing by Neil Fullick)

Storm blasts East with snow, cold; warmer Tuesday

Associated Press/Seth Wenig - New York Aquarium employees, including Cristina Mendoca, right, feed and train sea lions as snow falls at the aquarium in New York, Monday, March 25, 2013. A wide-ranging storm is hitting the East Coast after blanketing the Midwest and burying thoughts of springtime weather under a blanket of heavy wet snow and slush, though less snow was predicted to fall as the storm moves eastward. (AP Photo/Seth Wenig)

With the Capitol in the background, a person walks through the fallen snow across the National Mall in Washington, Monday March, 25, 2013. A wide-ranging storm hit the East Coast after blanketing the Midwest and burying thoughts of springtime weather under a blanket of heavy wet snow and slush, though less snow was predicted to fall as the storm moved eastward. (AP Photo/Jose Luis Magana)HAMBURG, Pa. (AP) — The calendar says it's spring, but the weather hardly feels like it.

HAMBURG, Pa. (AP) — The calendar says it's spring, but the weather hardly feels like it.

A large storm system that deposited snow, sleet and cold rain on much of the East Coast was finally expected to taper off overnight Tuesday, to be replaced by partly sunny skies and temperatures in the 40s by late Tuesday morning or early afternoon.

Monday's storm forced many East Coastschools to open late or close early, and hundreds of flights were canceled. But it was mainly an annoyance — especially to anyone longing for balmy weather.

In Hamburg, Pa., which has seen three here-and-gone snowfalls in little more than a week, carpet installer Seth Hanna said he loves to snowboard. But even he's ready for some warm spring temperatures.

"We got these warm days a few weeks ago, and everybody got their hopes up. March is supposed to be out like a lamb but it's not doing it," said Hanna, 30.

The wide-ranging storm buried parts of the Midwest under more than a foot of snow, weakening as it moved east but still carpeting lawns and fields in a fresh layer of white. In New York City, pedestrians braved a stiff wind that drove an unpleasant mixture of sleet and rain. At the U.S. Supreme Court inWashington, people waiting in line for tickets to this week's arguments on gay marriage held umbrellas or put tarps over their belongings as the snow fell.

Fortunately, the spring snow was not expected to affect Washington's famous cherry blossoms. National Park Service spokeswoman Carol Johnson said the flowering trees are still expected to reach peak bloom between April 3 and April 6.

Mitchell Gaines, a meteorologist with the National Weather Service in Mount Holly, N.J., said colder-than-normal temperatures the past few weeks had created conditions ripe for snow.

"It's fairly late in March to see a system like this," he said.

The cold temperatures and miserable mixture of snow and rain had people longing for more agreeable weather.

"I'm ready for flip flops," said Jessica Cunitz, 24, of Westchester County, N.Y., who stopped at a gas station along Interstate 78 in Pennsylvania to fill her overheating car with antifreeze. "It's supposed to be spring."

In Maryland, Michael Pugh donned a wool coat, knit cap, waterproof pants and heavy boots to trudge more than a mile through four inches of wet snow to his bank in downtown Hagerstown, about 70 miles west of Baltimore. He pronounced the weather "dreadful."

By this time of year, "I was hoping it'd be sunny and the weather breaking," said Pugh, a warehouse worker who turned 38 Monday. "Every day I think I can pack up the winter coat, and break out the spring clothes, and I can't."

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Associated Press writers David Dishneau in Hagerstown, Md., and Jessica Gresko in Washington contributed to this story.

High court weighs drug companies' generics policy

FILE - In a Jan. 7, 2008, file photo then-Attorney Donald Verrilli talks to media outside the Supreme Court. Now President Barack Obama's top Supreme Court lawyer, Solicitor General Verilli will argue before the Supreme Court this week whether it is legal for patent-holding pharmaceutical companies to pay rivals, who make generic drugs, to temporarily keep those cheaper versions of their brand-name drugs off the market. The Obama administration is taking the position that the agreements are illegal if they’re based solely on keeping the generic drug out of consumer's hands. (AP Photo/Evan Vucci, File)

WASHINGTON (AP) — The Supreme Court struggled Monday with whether it should allow federal officials to challenge deals between pharmaceutical corporations and their generic drug competitors that the government says could keep cheaper forms of medicine off the American market for longer periods of time.

Justices heard arguments from the Justice Department against what they call "pay-for-delay" deals or "reverse settlements."

Such deals arise when generic companies file a challenge at the Food and Drug Administration to the patents that give brand-name drugs a 20-year monopoly. The generic drugmakers aim to prove the patent is flawed or otherwise invalid, so they can launch a generic version well before the patent ends.

Brand-name drugmakers then usually sue the generic companies, which sets up what could be years of expensive litigation. When the two sides aren't certain who will win, they often reach a compromise deal that allows the generic company to sell its cheaper copycat drug in a few years — but years before the drug's patent would expire. Often, that settlement comes with a sizable payment from the brand-name company to the generic drugmaker.

Numerous brand-name and generic drugmakers and their respective trade groups say the settlements protect their interests but also benefit consumers by bringing inexpensive copycat medicines to market years earlier than they would arrive in any case generic drugmakers took to trial and lost. But federal officials counter that such deals add billions to the drug bills of American patients and taxpayers, compared with what would happen if the generic companies won the lawsuits and could begin marketing right away.

The Obama administration, backed by consumer groups and the American Medical Association, says these so-called "pay for delay" deals profit the drug companies but harm consumers by adding $3.5 billion annually to their drug bills.

"What the brand name is attempting to purchase is protection from the possibility that it will have its patent invalidated, and it will suffer a large competitive advantage," Justice Department lawyer Malcolm L. Stewart told the justices.

But it could also just be good business, Justice Antonin Scalia said. Drug companies are saying that "instead of giving them a license to compete, you know, we'll short-circuit the whole thing," Scalia said. "Here's the money. Go away."

"But the point here is that the money is being given as a substitute for earning profits in a competitive marketplace," Stewart said.

What if a brand-name drug company is making $100 million, and a generic drug company says its product will reduce that to $10 million, so both companies agree that the brand name company would give the generic company $25 million to stay off the market, said Justice Elena Kagan.

"It's clear what's going on here is that they're splitting monopoly profits and the person who's going to be injured are all the consumers out there," Kagan said.

Generic drugs account for about 80 percent of all American prescriptions for medicines and vaccines, but a far smaller percentage of the $325 billion spent by U.S. consumers on drugs each year. Generics saved American patients, taxpayers and the healthcare system an estimated $193 billion in 2011 alone, according to health data firm IMS Health.

Justice Sonia Sotomayor said the government seems to be arguing that the generic vs. brand name drug fight should be settled by the generic paying a royalty or negotiating an early release date for the generic drug instead of by the two companies agreeing to share profits. "What's so bad about that?" she said.

Actavis lawyer Jeffrey L. Weinberger said most cases aren't settled like that, and in case of a strong brand-name drug patent, generic drugmakers wouldn't have an incentive to settle with brand name companies.

They would say, "'Why would I drop this lawsuit to get an entry date in 2025 or 2028? That doesn't meet my business needs, I have shareholders, I have investors, I have to run a business, and I'm going to keep on litigating unless you give me something of value,'" Weinburger said. "So that's what these agreements are about."

Justice Ruth Bader Ginsburg pointed out that by settling with a reverse payment, the generic drug maker gets more than it would if it won against the brand-name drugmaker at trial.

"That was my concern, too," said Justice Anthony Kennedy. "What the brand company can lose is much greater than what the generic can make. So why don't you just put a cap on what the generic can make and then we won't have a real concern with the restraint of trade, or we'll have a lesser concern."

The court shouldn't let the government interfere with the ways companies have decided to resolve these disputes, Weinberger said.

Congress wanted to encourage generic drugs, he said. And if the court starts interfering with the ways drug companies settle these patent disputes, "that is going to mean that fewer generics are going to challenge these patents," Weinberger said.

In the case before the court, Brussels, Belgium-based Solvay — now part of a new company called AbbVie Inc. — reached a deal with generic drugmaker Watson Pharmaceuticals allowing it to launch a cheaper version of Solvay's male hormone drug AndroGel in August 2015. The patent runs until August 2020.

AndroGel, which brought in $1.2 billion last year for AbbVie, is a gel applied to the skin daily to treat low testosterone in men. Low testosterone can affect sex drive, energy level, mood, muscle mass and bone strength.

Solvay agreed to pay Watson, now called Actavis Inc., an estimated $19 million-$30 million annually, which Actavis says was for help in selling AndroGel, a licensing agreement over Solvay's Androgel patents and compensation for using its sales force to promote AndroGel to doctors.

The FTC called the deal anticompetitive and sued Actavis.

"We believe the FTC's position, if upheld by the court, would harm American consumers ... and impede patient access to generic drugs and the billions of dollars that generic drugs save," Actavis CEO Paul Bisaro said after the arguments.

Eight justices will decide this case later this year. Justice Samuel Alito did not take part in considering whether to take this case and is not expected to take part in arguments but has not disclosed the reason.

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The case is Federal Trade Commission vs. Actavis, Inc., 12-416.

AP Business Writer Linda A. Johnson in Trenton, N.J., contributed to this report.

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Follow Jesse J. Holland on Twitter at http://www.twitter.com/jessejholland

Follow Linda A. Johnson on Twitter at http://twitter.com/LindaJ_onPharma

Cyprus banks remain closed to avert run on deposits

By Michele Kambas and Karolina Tagaris

NICOSIA (Reuters) - Banks in Cyprus will remain closed until Thursday, and even then subject to capital controls to prevent a run on deposits, after a European Union bailout that the country's president assured his people was in their best interests.

After returning from fraught negotiations in Brussels, President Nicos Anastasiades said late on Monday the 10-billion euro ($13 billion) rescue plan agreed there in the early hours of the morning was "painful" but essential to avoid economic meltdown.

He agreed to close down the second-largest bank, Cyprus Popular, and inflict heavy losses on big depositors, many of them Russian, after Cyprus's outsize financial sector ran into trouble when its investments in neighboring Greece went sour.

European leaders said a chaotic national bankruptcy that might have forced Cyprus from the euro and upset Europe's economy was averted - though investors in other European banks are alarmed by the precedent of losses for depositors in Cyprus.

"The agreement we reached is difficult but, under the circumstances, the best that we could achieve," Anastasiades said in a televised address to the nation on Monday evening.

"We leave behind the uncertainty and anxiety that we all lived through over the last few months and we look forward now to the future with optimism," he told compatriots who face an immediate, deep recession and years of hardship unlikely to be milder than those experienced by Irish, Greeks and Portuguese.

Many Cypriots say they felt anything but reassured by the bailout deal, however, and are expected to besiege banks as soon as they reopen after a shutdown that began over a week ago.

Reversing a previous decision to start reopening at least some banks on Tuesday, the central bank said late on Monday that they would all now stay shut until Thursday to ensure the "smooth functioning of the whole banking system".

Little is known about the restrictions on transactions that Anastasiades said the central bank would impose, but he told Cypriots: "I want to assure you that this will be a very temporary measure that will gradually be relaxed."

Capital controls, preventing people moving funds out of the country, are at odds with the European Union's ideals of a common market but the government may fear an ebb tide of panic that would cause even more disruption to the local economy.

Without an agreement by the end of Monday, Cyprus had faced certain banking collapse and risked becoming the first country to be pushed out of the European single currency - a fate that Germany and other northern creditors seemed willing to inflict on a nation that accounts for just a tiny fraction of the euro economy and whose banks they felt had overreached themselves.

Backed by euro zone finance ministers, the plan will wind down the largely state-owned Cyprus Popular Bank, known as Laiki, and shift deposits under 100,000 euros to the Bank of Cyprus to create a "good bank", leaving problems behind in, effectively, a "bad bank".

Deposits above 100,000 euros in both banks, which are not guaranteed by the state under EU law, will be frozen and used to resolve Laiki's debts and recapitalize the Bank of Cyprus, the island's biggest, through a deposit/equity conversion.

PRECEDENT SET

The raid on uninsured Laiki depositors is expected to raise 4.2 billion euros of the 5.8 billion euros the EU and IMF had told Cyprus to raise as a contribution to the bailout, Dutch Finance Minister Jeroen Dijsselbloem said.

Cyprus government spokesman Christos Stylianides said losses for uninsured depositors would be "under or around 30 percent".

Laiki will effectively be shuttered, with thousands of job losses. Officials said senior bondholders in Laiki would be wiped out and those in Bank of Cyprus would have to make a contribution - setting a precedent for the euro zone.

Comments by Dijsselbloem on the need for lenders to banks to accept the potential risks of their failure had a knock-on effect in the euro zone, raising the cost of insuring holdings of bonds issued by other banks, notably in Italy and Spain.

Global equity markets and the euro retreated on his comment that the Cyprus bailout could be a template for solving other problems, by shifting more risk to depositors and stakeholders:

"What we've done last night is what I call pushing back the risks," Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, told Reuters and the Financial Times.

A first attempt at a deal 10 days ago had collapsed when the Cypriot parliament rejected a proposed levy on all deposits, large and small. That proposal outraged ordinary Cypriots, leading to queues at bank cash machines.

The central bank has imposed a 100-euro daily limit on withdrawals from ATMs at the two biggest banks to avert a run.

PUBLIC SCEPTICAL

Russia signaled it would back the bailout even though it would impose big losses on Russian depositors, who by some estimates may hold a third of all deposits in Cypriot banks.

President Vladimir Putin ordered officials to restructure a loan Moscow granted to Cyprus in 2011 - having rejected Nicosia's request for easier terms in crisis talks last week.

Among Cypriots sipping coffee in warm sunshine, there was a mood of wariness about the deal: "How long will it last?" asked Georgia Xenophontos, 23, a hotel receptionist in Nicosia.

"Why should anyone believe anything this government says?"

In the morning, a public holiday, residents of the capital lined the streets to watch a parade by soldiers and students to mark Greek Independence Day, waving the Greek and Cypriot flags.

"On this day I'm proud to be Greek, but at the same time I feel humiliated," said Marios Charalambous, 56, a print-shop owner. "I'm worried what will happen when the banks reopen."

Cyprus' tottering banks held 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros - enormous sums for an nation of 860,000 people that could never sustain such a big financial system on its own.

The U.S. Treasury, noting the importance to the United States of financial stability in Europe, its largest trading partner, said it was now up to Cypriots to rebuild their economy: "It is critical to lay the foundation for a return to financial stability and growth in Cyprus," the Treasury said.

(Additional reporting by Luke Baker, John O'Donnell, Robin Emmott, Philip Blenkinsop and Rex Merrifield in Brussels, Costas Pitas in Nicosia and Lionel Laurent in Paris; Writing by Giles Elgood and Matt Robinson; Editing by Alastair Macdonald)

Taliban suicide bombers kill five Afghan police as Kerry visits Kabul

JALALABAD, Afghanistan (Reuters) - Taliban suicide bomberskilled at least five policemen in Afghanistan's restive east on Tuesday, officials said, in a three-hour attack that coincided with a visit to the country by U.S. Secretary of State John Kerry.

The pre-dawn attack on a police compound in Jalalabad, eastern Afghanistan's largest city, came as the country braces for the beginning of the spring fighting season in the 11th year of the war.

One attacker detonated an explosive-laden car at the entrance of the Afghan National Police compound in a bid to let other attackers inside, provincial police chief Amin Sharif said.

"Three suicide bombers triggered their explosive vests and five were shot dead," he told Reuters, adding that five policemen were killed and four wounded.

Amin said the attackers were armed with rocket-propelled grenades and light machineguns, sparking a three-hour battle with Afghan security forces. Six civilians were wounded.

Kerry was in Kabul to discuss transfer of security to the Afghan forces, as most U.S.-led NATO combat troops prepare to leave by the end of next year.

Taliban spokesman Zabihullah Mujahid claimed responsibility for the attack in a text message.

(Reporting by Mohammad Rafiq; Writing by Hamid Shalizi and Dylan Welch; Editing by Nick Macfie)