Contracting With Specialty Pharmacies (SPs) At Your Own Peril

How a company works with and contracts with SPs will have to be rethought as a result of the initial Department of Justice (DoJ) settlement with BioScrip and ongoing investigation ofContracting With Specialty Pharmacies (SPs) At Your Own Peril Novartis in their marketing practices.

When Novartis launched Exjade, it created a limited distribution network, including BioScrip and two other specialty pharmacies selected by Novartis, to fill most prescriptions of the drug in the U.S. – a common tactic.

  • Novartis controlled which pharmacies filled many of the prescriptions for Exjade through this small network. The government alleged that Novartis used its control of Exjade prescriptions as well as various rebates and discounts to pay kickbacks to BioScrip.
  • The government alleges the kickback scheme began in 2007, when Novartis became concerned that patients were discontinuing use of Exjade because of side effects
  • The government’s investigation alleges the kickbacks were provided to induce BioScrip to try to keep patients on the drug as long as possible. The investigation revealed BioScrip employees made thousands of phone calls to Exjade patients and downplayed the serious side effects of the drug.

Manufacturers represent the deep dollar pockets attractive to the Department of Justice and SPs as a point of entry to reach those dollars.

SPs seeking to grow revenues for their own survival, including participation in a limited network, create unintended market risks that create multiple perils for manufacturers.

In addition, these types of avoidable exposures during a time of market change do not help build positive reputations nor market share of specialty products.