Genentech, the biotech giant leading the charge for drug manufacturer audits of 340B safety net health care providers, admitted yesterday that it overcharged those caregivers for a big chunk of its entire product line from the middle of 2008 through the middle of 2011. The California-based company’s Swiss owner, F. Hoffmann-La Roche AG, racked up 9.54 billion Swiss francs in profits in 2012, which translates to $10.25 billion in American dollars. That’s not exactly chump change.
Genentech’s overcharges cover some of the nation’s most used oncology medicines, including Rituxan (non-Hodgkin’s lymphoma and chronic lymphocytic leukemia), Avastin (brain, kidney, lung, and colon cancer) and Herceptin (breast cancer). IMS Health reports that in the second quarter of 2013 alone, Genetech sold $825 million worth of Rituxan in the United States, $667 million worth of Avastin, and $467 million worth of Herceptin.
To its credit, Genentech self-disclosed that it charged 340B providers too much for 19 of its products (representing 10 drugs in various formulations and unit sizes). For other drug manufacturers, this type of information too often comes out only after an insider blows the whistle and the Justice Department steps in.
No one seems to know for the record just how much Genentech owes 340B covered entities in refunds. And as things stand now, it’s possible no one outside of Genentech ever will.
In 2010, Congress passed legislation directing the Secretary of Health and Human Services (HHS) to establish procedures for manufacturers to issue refunds for overcharges to 340B covered entities. Those procedures are to include an explanation of why and how the overcharge occurred, how the refunds will be calculated, and to whom the refunds will be issued. They are also supposed to include HHS oversight “to ensure that the refunds are issued accurately and within a reasonable period of time, both in routine instances of retroactive adjustment to relevant pricing data and exceptional circumstances such as erroneous or intentional overcharging for covered outpatient drugs.”
It’s now three-plus years later and HHS still hasn’t implemented that provision of the law.
340B health care providers are also often not in a position to know whether manufacturers are charging them the correct prices, because they don’t have access to the 340B pricing list maintained by the government. The same 2010 law also required HRSA to make this list available to covered entities but HRSA has also yet to implement this requirement in the law.
The Health Resources and Services Administration (HRSA) has been very busy the past two years auditing 340B hospitals, health centers, and other providers for program compliance. It chooses some at random and others on the basis of factors suggesting a heightened risk of non-compliance.
HRSA still hasn’t audited a single drug manufacturer (even though it was required to begin doing so under that same 2010 law with the language about 340B refund procedures). It seems to us Genentech is not the only manufacturer that may have or continues to overcharge safety net providers. The time has come for HRSA to step up to the plate and begin a thorough review of drug industry compliance with the 340B law.