Hospitals up in arms over cancer drug distribution changes

Hospitals are in an uproar over Genetech's plan change its distribution channels for cancer drugs, fearing it will greatly increase their prices, Time magazine has reported.

Genentech informed hospitals in September that they will no longer be able to purchase Avastin, Herceptin and Rituxan through the wholesalers they normally use, and will have to turn to specialty distributors instead, according to Time. Genentech reaped about $13.6 billion in total sales among those drugs last year

"Our blunt estimate: It will cost $300 million more in the U.S. overnight in what folks are paying for these lifesaving drugs," Pete Allen, a senior vice president for Novation, a group purchaser that focuses on drug contracts, told Time. Allen estimated that the price increase would cost hospitals $50 million alone.

"We do believe this is the best distribution model for these medicines," Charlotte Arnold, Genentech's associate director of corporate relations, told Time. "We understand that there maybe is a business impact on hospitals." Arnold added that it distributed its newer cancer drugs in a similar manner.

Cancer drugs already are extremely pricey, and hospitals themselves have come under fire for some of their own pricing practices. However, the provider community has expressed concerns that the change in distributors could impact patient care.

"We have concerns that this decision could undermine patient care due to potential delays in therapy. With fewer distribution locations and medications no longer arriving via the dailywholesale order, the drug arrival time to providers will be slowed, forcing hospitals and other providers to stockpile additional supplies to avoid a shortage," the American Hospital Association, the Federation of American Hospitals and other hospital lobbies said in a letter sent to Genentech CEO Ian Clark.

"Medications ordered a day in advance may not arrive in time for appointments the next day. Also, a hospital may not be able to afford to keep a large supply of these drugs on hand and, thus, may not have the flexibility to provide treatment for new patients."

The letter asked Clark to reverse the decision.

Editor's Note: An earlier version of this article incorrectly stated that hospitals would no longer be able to purchase drugs from specialty distributors.

To learn more:
- read the Time article
- check out the group hospital letter (.pdf)