September 19, 2014—Hospitals across America will begin paying more for the world’s three top-selling cancer drugs starting Oct. 1 due to manufacturer Genentech’s decision to move them into the specialty distribution channel, according to multiple hospital stakeholders. [ms-protect-content id=”2799″] 340B hospitals and health systems, in particular, are concerned that the shift will punch a hole in their budgets.
Genentech’s Sept. 16 announcement about Rituxan, Avastin, and Herceptin—its entire portfolio of infused cancer medicines—applies to all hospitals regardless of their 340B status. 340B hospitals say they are particularly vulnerable to such price disruptions because their average operating margins are thin or even negative. America’s Essential Hospitals, virtually all of whose members participate in 340B, recently reported that its members’ aggregate operating margin was -0.4 percent in fiscal 2012.
According to the FiercePharma news service, Rituxan, Avastin, and Herceptin were, respectively, the No. 1, 2, and 3 top-selling cancer drugs globally in 2013 and the No. 6, 7, and 8 top-selling drugs among all drug types. Rituxan had $3 billion in global sales in 2012, Avastin posted $2.6 billion, and Herceptin had $1.6 billion.
Until now, hospitals and clinics have been able to purchase Avastin and Herceptin through regular wholesale channels and Rituxin through a combination of regular and specialty distributors. Rituxan has been marketed in the United States since 1997, Herceptin since 1998, and Avastin since 2004.
In its letter to hospital pharmacy directors and purchasing managers about the distribution change, Genentech said it “is committed to patient safety, to protecting the integrity of our medicines as they move through the supply chain, and to ensuring patients and healthcare professionals are able to access its medicines when they need them.”
“As part of this commitment, Genentech regularly assesses its distribution models and works with its authorized distributors to ensure we utilize the most appropriate distribution model for each of its medicines based on its unique characteristics.”
Apexus, the 340B Prime Vendor, wrote on its website yesterday it has told Genentech that 340B hospitals and clinics “will be challenged in meeting the new financial burdens indirectly created from Genetech’s distribution decision and will ultimately require the diversion of scarce resources from other critical safety-net programs offered to the community.”
Apexus said one of its hospital customers reported Genentech’s decision “will result in a $520K annual increase in their system’s pharmacy budget.”
Last year, Safety Net Hospitals for Pharmaceutical Access, the group that represents hospitals in the 340B drug discount program, protested Amgen’s decision to require that all 340B purchases of the company’s drug Neulasta be made exclusively through specialty distribution channels. The Health Resources and Services Administration ultimately supported Amgen’s decision.
SNHPA had argued that Amgen’s new requirement would force 340B hospitals to pay more for Neulasta because wholesalers normally sell the drug at a lower price than specialty distributors. The policy would also cause shipments to take longer, increase staff costs, and raise the risk of program noncompliance due to the need to enter data manually that can no longer be handled by hospitals’ split-billing software programs, SNHPA added. [/ms-protect-content]