Yet another health care provider is accusing Genentech of fudging the amount of the Herceptin medicine that the company provides in each vial, causing the facility and many other hospitals to overpay for the pricey treatment.
In the latest instance, the Comanche County Memorial Hospital filed a lawsuit alleging that Genentech, which is a unit of Roche (RHHBY), shortchanges hospitals by placing less of the breast cancer medication in vials, or alternatively, misrepresenting the amount of the drug that must be mixed in a solution. Under either scenario, the lawsuit contends providers would unnecessarily be forced to purchase additional vials.
Given that the drug has a limited shelf life, this can have an even greater financial impact on smaller hospitals or clinics that do not treat a large number of cancer patients, according to the lawsuit, which the Oklahoma hospital filed last week in federal court in San Francisco. Herceptin costs about $70,000 for a full year of weekly infusions, the hospital noted.
At least a dozen such lawsuits have been filed over the past year by hospitals and physician practices around the country. Each one noted that Genentech maintains that its medicine comes in vials as a freeze-dried powder, which must be mixed with a liquid. But the hospitals and health care providers contend that the resulting solution yields less than the amount claimed by the drug maker. An email filed as an exhibit in one of the lawsuits supports this contention, according to Robert Glass, who represents several of the health care providers.
We asked Genentech for comment and will update you accordingly. [UPDATE: The company sent us this a statement saying that “decisions on how we manufacture and package our medicines are taken very seriously and all of our medicines, including Herceptin, are packaged to meet FDA regulations and specifications.]
The lawsuits come amid furious national debate over the cost of medicines, an issue that is playing out in various ways. Some hospitals have been pushing back against drug makers. In one notable instance, several hospitals forwarded information to help the US Special Senate Committee on Aging with its investigation of outsized price hikes that Valeant Pharmaceuticals took on a pair of heart drugs.
At the same time, the Obama administration has proposed overhauling Medicare Part B, which covers injected and infused medicines. The plan, which faces widespread opposition from physicians, is designed to emphasize greater use of lower-cost generics by lowering the amount of reimbursements that doctors would receive for more expensive, brand-name treatments.
The allegations against Genentech also arrive as attention is focused on the amount of expensive cancer medicines that are contained in vials. A recent analysis estimated that $2.8 billion is wasted each year by government and private insurers for these treatments that will ultimately be thrown away because the drugs are distributed only in vials that contain more than most patients need. Some argue, though, that the potential savings from increasing the number of available vial sizes is overstated.
To what extent the lawsuits will have an impact remains to be seen. But the growing number of claims suggest that a new front is opening up in the battle between health care providers and drug makers as pharmaceutical prices continue to rise.
Genentech, by the way, has also irritated many hospitals by shifting distribution for Herceptin and other medications to specialty wholesalers in late 2014. At the time, the drug maker claimed the move was designed to save money, but hospitals have complained bitterly that the distribution change deprived them of standard discounts, an issue that Comanche also raises in its lawsuit.