Exclusive Rx Distribution Deals Will Limit Medicare Patient Access, Firms Say

Exclusive drug distribution arrangements will threaten Medicare beneficiaries' access to products, firms involved in assembling distribution networks under both Part B and Part D are telling the Centers for Medicare & Medicaid Services.

Under the Part B drug competitive acquisition program, "clearly there's places where there's access blocked" because of exclusive distribution deals, "so it's going to be an issue," NationsHealth CEO Glenn Parker told CMS during a CAP vendor information session teleconference July 8.

"When our organization takes a look at all of the products on the list for the CAP vendors to bid on, some of those...drugs we see there are semi-exclusive or exclusive deals with distributors," Parker said.

"How are the CAP vendors supposed to manage that? Are we going to be able to not provide those, or are manufacturers going to have to provide the CAP vendors with those medications?"

CMS recently issued its interim final rule for CAP; it included a list of 181 drugs that the five winning vendors would need to provide to participating physicians (¹ , p. 16).

Among the drugs on the CAP list that are subject to exclusive or semi-exclusive distribution are Biogen's multiple sclerosis therapy Avonex (interferon beta-1a), Genentech/Novartis' allergic asthma drug Xolair (omalizumab) and Novartis' Visudyne (verteporfin) for age-related macular degeneration.

CMS Ambulatory Services Division Director Amy Bassano noted that vendors "have the option of subcontracting with other providers who would have access to those products" available only through an exclusive agreement. She emphasized that "the vendor is required to provide all of the products."

CMS was previously unaware of the difficulty some vendors might have in offering the full range of drugs. Bassano asked drug distributors to tell CMS which drugs are subject to exclusivity agreements "just so we know, because this is the first we're hearing of it." She noted that no one had informed the agency of the issue in their comments on the proposed CAP rule.

Insurers planning to offer a Part D prescription drug plan are also concerned about the impact of exclusive distribution deals on their patients. Companies that bid to offer a Medicare drug plan were required to set up retail pharmacy networks meeting minimum access standards.

"I don't know if pharma considers regularly the network as a part of their influence. But it is an area of concern, especially with the biotechs and limited distribution," Blue Care Network Manager-Clinical & Quality Programs Richard Cook told the Strategic Research Institute Medicare Part D conference June 27 in Washington, D.C.

"We need members to have access," he said. "CMS does not like limited access networks for pharmacies. They want access to be achieved for the members."

Cook cited a number of products with exclusive distribution deals that he believes cause patients inconvenience, including Avonex, the 40 mg dose of Merck's Fosamax (alendronate) for Paget's disease and Talecris Biotherapeutics' Prolastin (alpha1-proteinase inhibitor [human]) for congenital alpha1-antitrypsin deficiency.

Avonex is available only through the specialty distributor Accredo, which is being acquired by Medco. CVS PharmaCare is the exclusive distributor for Fosamax 40 mg (² (Also see "Merck Fosamax 40 mg Distribution Plan Leaves Room For Once-Weekly Agent" - Pink Sheet, 4 Sep, 2000.), p. 8). Prolastin is available exclusively from Express Scripts (³ , p. 23).

"A specialty vendor automatically limits the patients because they can only go there," Cook observed. "They may not be in my network, so I can't pay for it, so the member has to pay cash out of pocket and they have to do a direct member reimbursement. Member satisfaction is a big issue with us; think about it."

"I need a full network, and when you use a specialty [distributor], you put my full network and my members' satisfaction at risk," he added. When that happens, "there might be finger pointing."

"The measure of this program as far as quality goes with Part D is going to be member satisfaction. If they don't like it, it's going to die," Cook warned.