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California-based Exelixis, a specialty manufacturer with two high-priced drug products on the market, announced it is further restricting contract pharmacy access to 340B hospitals in a May 31 letter published on 340B ESP. 

News Alert

Exelixis, Maker of Expensive Cancer Drugs, Is Latest Manufacturer to Impose 340B Contract Pharmacy Conditions

Biopharmaceutical manufacturer Exelixis yesterday became the 17th drug maker to impose conditions on 340B pricing when hospitals use contract pharmacies.

The company, a specialty manufacturer with two high-priced drug products on the market, announced its policy in email notices to covered entities late yesterday afternoon. Grantee covered entities are exempt “until further notice,” Exelixis said.

“The extraordinary expansion of the 340B program, coupled with the program’s lack of transparency and a complex contract pharmacy system never contemplated by the original drafters of the 340B legislation, have dramatically increased the risk of duplicate rebate claims,” Exelixis said in the June 7 email message. “Submission of claims-level data will help to improve transparency, with the goal of bolstering the integrity and sustainability of the 340B program.”

Exelixis makes two related drugs—Cometriq for advanced thyroid cancer and Cabometyx for advanced kidney, liver, or thyroid cancer. According to price disclosures to the state of Vermont, Cabometyx has an average wholesale price of $24,181.73 for a one-month supply and Cometriq an AWP of $21,167.18 (the same for 60 mg / 84 count, 100 mg / 56 count, 140 mg / 112 count). Since the drugs are sole-sourced, discounts are not available, according to drug pricing analysts that 340B Report conferred with.

Exelixis makes a third related drug, Cotellic for melanoma, that is sold by Genentech. Cotellic is not covered under Exelixis’ new 340B pricing restrictions.

Hospital groups are expected to condemn the company’s move and ask the federal government to order Exelixis to resume unrestricted 340B pricing.

Federal appeals courts in Chicago, Philadelphia, and Washington, D.C., are hearing cases over the legality of similar drug manufacturer policies.

In 2020, Exelixis limited distribution of Cometriq and Cabometyx to small networks of specialty pharmacies and distributors to “facilitate patient care.” Both are taken orally, neither have Risk Evaluation and Mitigation Strategies, and neither require special storage or handling.

Because Cometriq and Cabometyx have orphan designations, 340B pricing on both already was unavailable to critical access hospitals, rural referral centers, sole community hospitals, and free-standing cancer hospitals. Congress extended 340B eligibility to these hospitals in 2010 but denied them 340B pricing on orphan products.

Due to the 340B orphan drug exclusion and Exelixis’ policy exemption for grantee entities, its conditions on 340B pricing fall on just two hospital types—disproportionate share (DSH) and children’s hospitals.

Under the policy Exelixis announced yesterday, DSH and children’s hospitals can keep accessing 340B pricing on Cometriq and Cabometyx for shipment to multiple contract pharmacies if they provide specified claims-level data to drug industry contractor Second Sight Solution’s 340B ESP platform.

An FAQ document that came with the email message said affected entities had to begin uploading the required claims data to 340B ESP by July 6 to be eligible for ship to / bill to orders for more than one contract pharmacy.

Exelixis said affected entities lacking an in-house pharmacy can designate a single contract pharmacy for Cometriq and Cabometyx shipments from among the specialty pharmacies in Exelixis’ limited distribution networks for the products.

Exelixis said “until further notice” it “will not require covered entities to provide claims data for product dispensed by contract pharmacies that are wholly-owned by, or under common ownership with, the covered entity and that dispenses products only to patients of the covered entity.” 

Exelixis said it reserved the right to modify its policy in the future.

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