Genentech May Owe Refunds to Some Healthcare Providers Over 340B Price Violations
May 12, 2016
By Alex Keown, BioSpace.com Breaking News Staff
SOUTH SAN FRANCISCO – Genentech may owe some health care providers reimbursements after the company recalculated its prices for certain drugs under the federal pricing program, 340B, Bloomberg reported this morning.
In a filing with the federal government, Genentech listed several drugs that have undergone price changes, including Cellcept used for organ transplants, osteoporosis drug Boniva, HIV drugs Invirase and Fuzeon, human growth hormone drug Nutropin, hepatitis C drug Pegasys, cancer drug Xeloda, weight loss drug Xenical, as well as seizure drug Klonopin.
In its notice to the government, California-based Genentech said it will issue refunds to the health care providers where company data “indicates a difference between the original and recalculated 340B ceiling price for direct and indirect purchases.” How much the drugs were overcharged for was not specified in Genentech’s filing with the government.
The 340B program is a federal drug discount program that requires drug manufacturers to provide drugs to eligible health care organizations at significantly reduced prices. The ceiling price is the maximum price a manufacturer can charge for a drug in the program. The 340B program is administered by the Health Resources and Services Administration, which is a division of the U.S. Department of Health and Human Services.
Bloomberg noted there is a history of criticism of the 340B prices between drug companies and health care providers. In its report, Bloomberg Intelligence analyst Brian Rye said pharmaceutical companies “have concerns about loose interpretations of eligibility requirements for entities and patients, while hospitals and other providers are concerned that they aren't always receiving the appropriate discounts from drugmakers.”
This isn’t the first time Genentech has issued a notice of overcharging the program, Randy Barrett, director of communications for the 340B program told Bloomberg. Barrett said Genentech issued a similar notice in 2013. One criticism Barrett raised with the program is hospitals and other health care providers do not have a way to verify if the pries they are charged under the program are the ones they should be charged under the law. In his interview with Bloomberg, Barrett cited a 2006 HHS report on the 340B program, which found that 14 percent of drugs in the 340B program in 2005 and 2006 exceeded the ceiling prices, resulting in overcharges.
While Genentech is looking to reimburse health care providers for overcharges in the 340B program, the company is facing a lawsuit filed by nine cancer care centers for shipping less than labeled amounts of its breast cancer drug Herceptin. The lawsuits claim that freeze-dried packages of Herceptin failed to produce the correct concentration of the drug when it was added to the Genentech-provided liquid it mixes with. As a result, the cancer centers were required to purchase more Herceptin, the Times reported. The cancer centers said they should have been able to combine 20.952 milliliters of fluid solution, however, the cancer centers said the mixture only yielded 20.2 milliliters.
This is not the first time there have been questions about Herceptin delivery. In March 2015 survey, released by health care services company Novation, raised questions about the distribution of the drug after Genentech switched its distribution methods. About 81 percent of survey participants said Genentech’s move from a broader network of distributors to a handful of specialty distributors for its medications had a significant impact on expenses.