- In response to Genetech's change in how it ships three high profile cancer drugs to hospitals, at least one health system has responded by kicking Genentech reps off the premises. Many hospitals worry the new process will grossly inflate their already high costs,
- Catholic-based hospital operator Ascension Health, which runs more than 130 acute-care hospitals, issued a memo saying that contact sales reps are no longer allowed on Ascension Hospital properties, and that moreover, all Genentech sales reps have been "red-lighted" by its vendor credentialing system.
- Ascension took action in the wake of a letter Genentech sent to hospitals and health systems last month, stating that as of October 1, the pricey and widely used cancer drugs Avastin, Herceptin and Rituxan would be shipped only by six authorized specialty distributors instead of wholesalers.
While Ascension's move is largely symbolic—it will still buy the popular cancer drugs—it illustrates the extent to which hospitals and health systems are worried about this change by Genentech. The impact will be significant. Hospitals and pharmacists will lose rebates from wholesalers, incurring higher costs to match their drug distribution process. For example, at the University of Wisconsin Hospital and Clinics in Madison, the new distribution model for Avastin, Herceptin and Rituxan is likely to add more than $500,000 in supply chain costs, the hospital told Modern Healthcare.
Equally worrying is the fact that Genentech's changing distribution looks like an attempt to redefine specialty drugs, which will affect nearly everyone in its supply chain. In other words, hospitals worry that not only Genentech will reclassify some drugs a specialty drugs, but that other pharmas might choose to follow Genetech's lead in the attempt to transform distribution for these drugs. If the current fracas is any indication, such a decision by other pharmas could be extremely controversial.