A group of hospitals that participate in the federal 340B drug-discount program have joined the debate about Genentech's decision to distribute three of its most expensive and commonly used cancer drugs through specialty distributors rather than standard wholesalers.
In an Oct. 16 letter to Genentech CEO Ian Clark, the Safety Net Hospitals for Pharmaceutical Access said the change in distribution methods will increase costs for safety net healthcare providers.
“When safety net providers buy medications from wholesalers, they receive rebates based on purchase volume,” wrote SNHPA general counsel Maureen Testoni. “They do not get these rebates when they buy drugs from wholesalers' specialty divisions, however.”
Hospitals and group purchasing organizations have said Genentech's decision to sell Avastin, Herceptin, and Rituxan through six specialty distributors will increase distribution costs and may cause delays in patient care. Novation, an Irving, Texas-based GPO, estimates the distribution change could cost its member hospitals $50 million a year in lost discounts and ancillary costs.
The decision has also prompted Ascension Health, the nation's largest operator of not-for-profit hospitals, to ban Genentech sales representatives from Ascension hospitals.
A spokeswoman for San Francisco-based Genentech said the company is not aware of receiving a letter from SNHPA but continues to stand by its new distribution model.
“We believe the specialty distribution model best serves patient safety and access to our infused cancer medicines, which are complex medicines that have lengthy manufacturing processes,” she said in an email.
Follow Jaimy Lee on Twitter: @MHjlee
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