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Executive Summary

Sen. Metzenbaum (D-Ohio) has scheduled an oversight hearing for February to monitor Sandoz and its commitment to allow other forms of distribution of its antischizophrenia drug Clozaril. The delay in the hearing will give Metzenbaum the opportunity to pressure Sandoz if it does not make good on its promise to open distribution of Clozaril to other monitoring sytems. The company announced Dec. 6 that it would begin to open Clozaril distribution beyond its Clozaril Patient Management System, administered by Caremark. Sandoz said it "hopes to begin a phase-in of new systems in February 1991" while the current system remains "an active program." Metzenbaum previously had scheduled a Dec. 11 hearing before his Senate Judiciary/Antitrust Subcommittee to consider the restraint of trade implications of Sandoz' Clozaril Patient Management System ("The Pink Sheet" Dec. 3, p. 8). The decision to postpone the hearing appears unrelated to the Sandoz announcement, which had been expected. Metzenbaum wrote Sandoz Dec. 5 to notify the company that the hearing would be postponed "due to scheduling conflicts." The Ohio senator is leaving the Dec. 11 date open to conduct a hearing in New York City on the Daily News strike. In the Dec. 6 news release, Sandoz said it "has begun meeting with federal and state officials and health care providers to discuss potential changes" in distribution. The company added that opening distribution is intended to "increase patient access" to the drug and to lower the price "significantly." However, Sandoz cautioned, although the manufacturer will make "every effort" to maximize patient safety, "it would be unrealistic to assume that any new system would maintain the current high level of patient safety standards" established by the Clozaril Patient Management System of distribution. Sandoz said its decision followed a Nov. 21 meeting with FDA "to review proposed modifications to the current monitoring system that could affect patient safety" ("The Pink Sheet" Dec. 3, p. 8). After the FDA meeting, the firm "began contacting a number of state officials representing Medicaid, state mental health organizations, the Veterans Administration, and other health care agencies to begin talks" on possible distribution alternatives. In his letter to Sandoz, Metzenbaum asked that his subcommittee staff be kept "informed of the company's efforts to increase the availability of this important drug as we prepare for the upcoming hearing." The letter explains that the Antitrust Subcommittee is concerned that the Sandoz exclusive distribution arrangement with Caremark and Roche Labs "may amount to an illegal tying arrangement in violation of the antitrust laws." Metzenbaum noted that Sandoz previously "has refused requests of the Veterans [Affairs Department], state Medicaid agencies and other interested parties to use existing facilities other than those available through Caremark for blood monitoring." Those excluded from the closed distribution scheme "are concerned about the high cost of the combined drug/blood monitoring service and the limited availability of the drug," the letter continues. "They believe that they could provide blood monitoring at a lower cost to the patient. The weekly drug treatment currently costs about $172, or approximately $9,000 per year, for each patient." Sandoz is not disclosing the new price of the drug or whether any proposals are near acceptance. The Veterans Affairs Department commented only that it has agreed to resume talks with Sandoz to allow the department to purchase the drug separately and monitor its own patients. The American Pharmaceutical Association, in a Dec. 7 statement, said it is "encouraged" by the stated willingness of Sandoz to open distribution channels. However, the pharmacy association remains cautious. "Our initial reaction to the proposed change is very positive," APhA Executive VP John Gans said, but "we are awaiting further details."

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