Hospitals battle Genentech over cancer drug distribution policy

The maelstrom that has erupted since Genentech switched three top-selling cancer medications to specialty distributors is not expected to die down anytime soon.

Paul AbramowitzLate last week, Ascension Health, which operates 1,900 hospitals and clinics around the United States, banned Genentech representatives from visiting its facilities. Several other hospitals and clinics are considering the same move, according to The Wall Street Journal.

In addition, the American Society of Health-System Pharmacists (ASHP) is urging Genentech to immediately change its policy.

The flap came about after Genentech said that bevacizumab, trastuzumab, and rituximab would only be distributed through authorized specialized distributors, which hospitals say, will result in tens of millions of dollars of additional drug costs annually.

“We respectfully ask that you place a moratorium on this change and meet with interested stakeholders to discuss the implications for patient care and the pharmaceutical supply chain,” Paul Abramowitz, CEO of ASHP, wrote in a letter to Ian T. Clark, CEO of San Francisco, Calif.-based Genentech.

“We have heard from many of our members, who believe that the current supply chain to their institutions effectively addresses patient care needs while providing for financial and human resource efficiencies. This change by Genentech will potentially disrupt that,” Abramowitz wrote.

For example, the switch is expected to cost hospital customers of group purchasing organization Novation $50 million annually, Jody Hatcher, CEO of Novation, said on a media conference call this week, The Wall Street Journal reported.  The change is “a shockwave to pharmacy directors and purchasing managers,” Hatcher said.

Genentech’s move restricts the number of distribution centers from 80 to around five, which allows for tight inventory control and tracking that is especially helpful when there are drug shortages, according to Genentech.

Plus, the new system is expected to improve patient safety. “Genentech 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 our medicines when they need them,” the company said in a statement.

Even though several hospitals have expressed concerns, Genentech does not plan to reverse its policy. “We believe this is the right distribution model for all our infused cancer medicines that best serves patient access and safety,” Charlotte Arnold, associate director of corporate relations for Genentech, told Drug Topics.

At the same time, Genentech’s “relationships with our customers are extremely important to us,” Arnold said. “We will continue to work with our authorized specialty distributors to educate hospitals about this change.”