By Paul Goldberg
Cancer centers and other hospitals, reeling from the loss of discounts and rebates on three widely used cancer drugs, are seeking to persuade drug maker Genentech to reverse its decision to channel these medications through six specialty distributors.
Until Oct. 1, Avastin (bevacizumab), Herceptin (trastuzumab) and Rituxan (rituximab) could be ordered from wholesalers, which provided discounts and rebates on large purchases (The Cancer Letter, Oct. 3). Genentech is a unit of Roche.
The company’s switch to specialty distributors, in effect, eliminated these benefits.
In protest, Moffitt Cancer Center and Ascension, a Catholic health system that operates 1,900 sites of care nationwide, said separately that they would no longer allow Genentech sales reps to enter their facilities. At least two other cancer centers and one consortium of centers are in the process of instituting similar restrictions, The Cancer Letter has learned.
In another reaction, the National Comprehensive Cancer Network urged Genentech to reconsider the shift that eliminated discounts on nearly $8 billion worth of drugs a year almost overnight. Industry insiders estimate that the loss of rebates and discounts on these drugs could cost hospitals an estimated $300 million.
“On behalf of our 25 leading cancer centers, NCCN urges you to reconsider this unfortunate decision,” NCCN CEO Robert Carlson wrote to Genentech CEO Ian Clark. “Please continue to distribute bevacizumab, trastuzumab, and rituximab through the traditional distribution channels.”
According to the IMS Health National Sales Perspectives, U.S. sales of Rituxan topped $3.3 billion in 2013; Avastin amounted to $2.7 billion; and Herceptin made $1.9 billion. The prices are tracked on the wholesale level.
Genentech’s decision bypasses more than 80 full-line wholesale drug distribution centers, requiring hospitals to order from facilities operated by the specialty distributors, which usually means relying on express courier shipments. The change affects only hospital pharmacies. Office-based oncology practices have been purchasing drugs exclusively from specialty distributors for decades.
The company said its objective is to enhance efficiency and security of the supply chain for these widely used medications. Genentech spokeswoman Charlotte Arnold said the controversy hasn’t disrupted availability of the drugs in question.
“Patients are our primary concern, and we believe patients are still getting the medicines they need,” Arnold said to The Cancer Letter. “Our relationships with our customers are extremely important to us.”
The company’s distribution model remains unchanged, Arnold said. “We believe this distribution model best serves patient safety and access and will continue to work with hospitals on this change,” she said. “We believe it is important for us to engage with doctors to share information about our medicines. When doctors are better informed about the benefits, risks and appropriate uses of medicines, patients benefit from better care.”
Independently of this controversy, some institutions have imposed uniform restrictions on all pharma company access to their facilities. For example, a 2012 policy at Memorial Sloan Kettering Cancer Center restricts industry reps in the following manner:
“Industry representatives may be present at an MSKCC meeting only if invited by MSKCC staff. There must be a bona fide scientific, educational, or business purpose that serves MSKCC’s interests for the industry representative to be present. Examples of situations in which it is permissible for industry representatives to be on site include:
1. “Inservice for MSKCC Staff for training on a new drug, device or equipment.
2. “Evaluation of new devices or equipment.
3. “Attendance at grand rounds, as long as the representative is present only as an audience member.”
Genentech Reps Barred from Moffitt, Ascension
In a letter to Genentech, Gene Wetzstein, director of Pharmacy Services at Moffitt Cancer Center, said the company’s sales, marketing and corporate personnel would not be allowed on campus until the matter is resolved.
The text of Wetzstein’s letter follows:
I have discussed with MCC executive leadership and as an organization we are very displeased and discouraged with this decision and the negative impact that it will have on our organization and our patients.
As we discussed and as Genentech is well aware, this will result in a substantial negative financial impact that will exceed $1.2M to MCC alone. In addition, operationally, this will be a step backwards with respect to efficiency, timeliness, and analytics.
It is also important to reiterate that these products have been distributed through regular channels (primary wholesalers) for many years (Rituxan 1997; Herceptin 1998; Avastin 2004) without issue.
If Genentech’s concern is truly the safety and the integrity of their medicines as the letter states, then it would be a great opportunity for Genentech to partner with organizations like ours to provide this safety/integrity enhancement with no negative financial implications to our organization. It is unfortunate that at a time when we are working closely with manufacturers to assess how we can better partner with them, Genentech takes the above stance.
We have partnered with Genentech in clinical trials to bring these products to market. We certainly support patient safety and high quality. We also support efficient and affordable access to these medications for both patients and providers. Burdening providers of $300 million globally will make it even more difficult for all of us to meet our community and patient needs.
We fully support the position of other facilities and organizations (ADCC, HOPA, etc.) and strongly recommend Genentech reconsider this decision. With that said, effective immediately all Genentech sales/marketing/corporate personnel will no longer have access to Moffitt Cancer Center until the above issue is satisfactorily addressed. In addition, any potential partnership discussions between MCC and Genentech will be placed on hold.
We understand the economics are challenging for all stakeholders including Genentech and we are willing to work collaboratively with you to identify a mutually agreeable option that ensures safety, access, affordability and patient satisfaction.
The text of the letter from Roy Guharoy, vice president of clinical integration and chief pharmacy officer at Ascension Health, and Michael Gray, the health system’s vice president and chief strategy officer, follows:
Effective immediately all Genentech sales representatives are no longer allowed access to Ascension facilities. All Genentech sales representatives have been red lighted in our vendor credentialing system.
This move is based upon recent changes in Genentech business strategies that are not in the best interest of Ascension, our communities or the poor and vulnerable we serve. This action, combined with Genentech’s choice to not contract for cost relief on any of their products, reduces the dollars needed to provide the breadth of care important to our communities.
Genentech embarked on a business strategy to re-classify three of its oncology drugs as “specialty drugs.” As a result of the decision to change its distribution system, Genentech’s use of specialty distributors is resulting in unprecedented price hikes, the results of which will harm the patients we serve.
Medication costs are increasing, particularly those identified as “specialty drugs,” and this is only going to become more critical in the coming years. One estimate notes that by 2020, spending on specialty drugs will quadruple from $87 billion to more than $400 billion. In 1990, there were only 10 specialty drugs on the market.
In 2012 there were nearly 300 drugs that were classified as a specialty drug. Yet, there is no industry standard definition for what constitutes a specialty drug. Current definitions allow a drug to be classified as a specialty drug for a wide range of reasons including the following: treatment cost greater than $600 a month, treatment of a rare condition, requires special handling, use of limited distribution network, or requires ongoing clinical assessment. Thus, most all medications may be identified as “specialty” if desired by a manufacturer.
The end result is large price hikes—unaccounted for in our FY2015 budgets—and will mean that already scarce resources will need to be stretched with potential serious impact on the range and breadth of health services we currently provide to our patients and our communities.
The letter from the Hematology/Oncology Pharmacy Association (HOPA) to the Genentech CEO of North American Operations summarizes the negative impact Genentech’s decisions are having on the healthcare industry. Other national organizations are also mobilizing efforts to address the impact of these negative changes.
The text of NCCN CEO Robert Carlson’s letter to Genentech follows:
The National Comprehensive Cancer Network, an alliance of 25 of the world’s leading cancer centers, is extremely concerned regarding Genentech’s change to a specialty distributor system for bevacizumab, trastuzumab, and rituximab.
We are especially concerned because of the vital role that these three agents play in the treatment of patients with cancer, and the significant barriers and burdens that the new policy produces to providing optimal oncology care.
We appreciate Genentech’s stated goal of improving patient safety, integrity of the medicines, and ensuring access. The NCCN shares this philosophy and these goals and believe that the wholesaler model serves these goals exceptionally well. However, NCCN is concerned that this change will have a strongly negative impact on business processes, facility demands, patient access, and financial demands on patients.
The logistics of drug procurement using a specialty distributor-only model as opposed to wholesalers increase the probability of inadequate or untimely supply of medication at the point of care and the time of need. This will force the stocking of higher inventories and serve to drive up costs of inventory and ultimately higher costs to our patients.
NCCN pharmacists note that the entire specialty distributor model is substantially inferior (operationally, ecologically, and financially) to the wholesaler model from the standpoint of the cancer care provider. Every aspect of the specialty distributor model creates operational hurdles necessitating significantly more time, effort and expense to achieve the same goal.
Our members have voiced that the financial impact resulting from this change will have a deleterious effect. The loss of wholesaler rebates will transfer a significant financial burden directly to care providers, which ultimately will be passed on to patients.
On behalf of our 25 leading cancer centers, NCCN urges you to reconsider this unfortunate decision. Please continue to distribute bevacizumab, trastuzumab, and rituximab through the traditional distribution channels.
NCCN has always worked collaboratively with Genentech, and we value our relationship. Through our collaborations, we are pleased to have had a positive impact on the delivery of high quality oncology care in this country. On behalf of our Member Institutions, we would like to work together to find a resolution to this situation.
Please do not hesitate to contact me directly should you have any clarifying questions or comments. At your request, NCCN would welcome the opportunity to meet with Genentech colleagues to discuss the changes to the distribution system.