November 24, 2014—A leading hospital group purchasing organization and 16 prominent health care institutions asked Genentech in an open letter in The New York Times yesterday to reverse its “ill-advised decision” to move its top-selling cancer drugs Avastin, Herceptin, and Rituxan into the more expensive specialty distribution channel. [ms-protect-content id=”2799″]
The letter, published as a full-page ad in the nation’s highest circulation Sunday newspaper, is the latest in a string of high-profile appeals to Genentech to restore the costly cancer drugs to normal wholesale distribution. Leading academic medical centers also have asked Congress to investigate.
“The shift in distribution to a restrictive model will result in a loss of more than $50 million in unreimbursed expenses for our member organizations,” the open letter states. “We estimate the financial impact to the entire industry to be more than $250 million.” Noting that U.S. hospitals provide around $46 billion in uncompensated annually, it adds: “The introduction of additional unreimbursed expense will serve only to dilute capabilities to provide quality care.”
“While this distribution shift may improve Genentech’s model, it does so at the expense of the efficiencies, qualify, and safety within U.S. hospitals and clinics,” the letter continues. “In addition, this decision does nothing to address the increasing concern from providers and the public about the ever-accelerating expense of pharmaceuticals. Instead of working with the health care community to find innovative ways to characterize the patient benefit of new therapies and increase their accessibility, Genentech has instead chosen to create an additional and unnecessary obstacle to quality care.”
Novation, which negotiates prices on behalf of more than 2,000 hospitals, was the letter’s lead signatory. The other signers were:
- Alliance of Dedicated Cancer Centers (comprised of 11 nationally recognized cancer centers)
- Children’s Hospitals and Clinics of Minnesota
- Cleveland Clinic (Ohio)
- Greenville Health System (S.C.)
- Hallmark Health System (Mass.)
- Lancaster General Health (Pa.)
- Mayo Clinic (Minn.)
- MedStar Health (D.C. and Md.)
- Memorial Sloan Kettering Cancer Center (N.Y.)
- Premier Health Partners (Ohio)
- Providence Health & Services (Alaska, Calif., Mont., Ore., and Wash.)
- Roswell Park Cancer Institute (N.Y.)
- UAB Health System (Ala.)
- University of Colorado Health
- UW Medicine (Wash.)
- Yale New Haven Health (Conn.)
Genentech has not issued a press release or made a formal statement about the distribution change or the reaction to it. Earlier this month, it defended its decision in a letter to Safety Net Hospitals for Pharmaceutical Access. SNHPA, which represents more than 1,000 hospitals in the 340B drug discount program, has asked the company to reverse the switch.
By using specialty distributors, Genentech told SNHPA, “we are better able to manage and track our supply.” Genentech said it understands “the concerns you have expressed regarding the financial implications your members are experiencing due to this model change.” But, it continued, “with that said, I hope you can appreciate that we are not, and cannot be, privy to the specific terms between covered entities and their authorized distributors.” [/ms-protect-content]