Case 1:18-cv-00924-CFC Document 309 Filed 07/19/19 Page 1 of 96 PageID #: 23601
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`C.A. No. 18-924-GMS
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`GENENTECH, INC. and CITY OF HOPE,
`Plaintiffs,
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`v.
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`AMGEN INC.,
`Defendant.
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`DECLARATION OF ANUPAM B. JENA, M.D., PH.D. IN SUPPORT OF
`PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
`
`
`July 10, 2019
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`PUBLIC VERSION FILED:
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`July 19, 2019
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`Case 1:18-cv-00924-CFC Document 309 Filed 07/19/19 Page 2 of 96 PageID #: 23602
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`TABLE OF CONTENTS
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`V.
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`ASSIGNMENT AND SUMMARY OF KEY OPINIONS ...............................................1
`I.
`II. QUALIFICATIONS ...........................................................................................................5
`III. BACKGROUND ON BIOLOGIC AND BIOSIMILAR MARKETPLACE ................7
`A. Biologics and biosimilars ............................................................................................ 7
`B. Nature of competition in the biopharmaceutical industry ........................................... 9
`IV. BACKGROUND ON PARTIES AND PRODUCTS AT ISSUE ..................................13
`A. Parties ........................................................................................................................ 13
` Genentech ........................................................................................................... 13
` Amgen ................................................................................................................ 14
`B. Relevant products ...................................................................................................... 15
` Genentech’s Herceptin (trastuzumab) ................................................................ 15
` Amgen’s potential trastuzumab biosimilar, Kanjinti .......................................... 18
` Other Genentech products used to treat HER2-positive breast cancer ............... 19
`ECONOMIC ANALYSIS OF AMGEN’S UNLAWFUL ENTRY ...............................23
`A. Amgen’s launch will cause Genentech harm ............................................................. 23
`B. The full extent of the harm to Genentech from Amgen’s launch cannot be quantified
`
`27
` The full extent of Genentech’s market share loss and price erosion caused by
`Amgen’s launch cannot be measured at the time of trial ................................... 28
` The entry by other biosimilar trastuzumab products prior to the withdrawal of
`Kanjinti from the market will make it even more difficult to quantify the harm
`caused by any one competitor ............................................................................ 30
` will prompt pricing pressure from payers ............... 31
`
` The impact of Amgen’s launch on Kadcyla, Perjeta, and Herceptin Hylecta will
`be irreparable ...................................................................................................... 33
` Amgen’s launch will affect Genentech’s non-HER2 oncological products,
`Avastin and Rituxan ........................................................................................... 39
`C. Amgen’s launch will cause lingering, irreparable harm that will continue post-trial 40
`VI. THE ASSERTED DOSING PATENTS ARE A DRIVER OF DEMAND FOR
`HERCEPTIN .....................................................................................................................43
`VII. GENENTECH WILL BE HARMED MORE FROM AN IMPROPER DENIAL OF
`AN INJUNCTION THAN AMGEN WOULD BE FROM AN IMPROPER GRANT
`OF AN INJUNCTION ......................................................................................................45
`VIII. THE PUBLIC INTEREST WOULD, ON BALANCE, BE SERVED BY THE
`ISSUANCE OF AN INJUNCTION .................................................................................45
`A. Cancer patients could be harmed as a result of the impairment to other Genentech
`products ...................................................................................................................... 45
`B. Protecting innovation incentives through upholding patent protection benefits the
`public ......................................................................................................................... 47
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`C. Entry of biosimilar trastuzumab will not result in a significant increase in patient
`access to Herceptin/trastuzumab ................................................................................ 50
`IX. CONCLUSION .................................................................................................................51
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`I. ASSIGNMENT AND SUMMARY OF KEY OPINIONS
`I, Anupam Jena, submit this declaration on behalf of Genentech Inc. (“Genentech”) in the
`1.
`above captioned case. I have been asked to provide an analysis of whether Genentech will
`be harmed if Amgen is allowed to launch Kanjinti, its biosimilar trastuzumab product, and
`whether it would be possible to fully and reliably quantify and remediate that harm if Kanjinti
`is subsequently found to infringe certain Genentech patents, U.S. Patent Nos. 6,627,196 (the
`“’196 patent”), 7,371,379 (the “’379 patent”), and 10,160,811 (the “’811 patent”) (together
`the “dosing patents”). I have also been asked to address, based on my experience and training
`in economics and medicine, whether the dosing patents asserted by Genentech are key
`drivers of the demand for Herceptin by patients and providers, the balance of hardships
`between Genentech and Amgen related to the issuance of an injunction, and whether an
`injunction would serve the public interest.
`
`I was asked to assess whether Amgen’s launch of Kanjinti will irreparably harm Genentech
`if Kanjinti is subsequently found to infringe Genentech’s patents. I was asked to assume that
`the dosing patents are valid, and that Amgen’s conduct infringes one or more claims of the
`dosing patents. From an economic perspective, determining whether harm is irreparable
`requires answering two questions: (1) At the time of the patent trial, will Genentech have
`incurred harm between the time of the Kanjinti launch and trial that can be reliably measured
`and compensated with monetary damages? and (2) Can any harm that is expected to persist
`after trial be fully and accurately estimated at the time of trial? I have concluded that the
`answer to both questions is no.
`
`
`If Amgen is allowed to sell Kanjinti pending trial,
`, and would affect both the marketplace for
`Herceptin and the marketplace for other oncological therapeutic agents in ways that will be
`difficult to document with precision and that cannot be reversed even following entry of a
`permanent injunction. Pharmaceutical markets are dynamic and are affected by many
`variables, including the reputation, pricing practices, and market strategies of specific
`incumbent sellers and entrants. Based on my review and analysis, I find that if Amgen is
`allowed to launch Kanjinti, the market will change irreversibly to Genentech’s detriment. In
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`2.
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`3.
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`addition, it will be impossible to quantify to a reasonable degree of precision the full
`magnitude of that harm.
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`4.
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`There are currently no biosimilar versions of trastuzumab on the market,
`
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` Thus, if Amgen were to launch before
`trial, it would fundamentally alter the marketplace for Herceptin, as well as for several of
`Genentech’s other oncological biologic products. There are currently no biosimilar versions
`of trastuzumab products on the market. Amgen’s entry as the first biosimilar would
`fundamentally change that market. Amgen’s stature as a large manufacturer with biologics
`experience and an extensive portfolio of current and anticipated biologic and biosimilar
`medications would magnify these impacts. Kanjinti is likely to be accepted and adopted into
`the marketplace more quickly because of Amgen’s reputation and Amgen has the ability to
`engage in unique pricing strategies that make Genentech’s harm different from and likely
`greater than the harm it might face from a different biosimilar entrant.
`
`5. Amgen launching first would also likely change the market in a persistent way: Even if
`Kanjinti were removed from the market after trial, the effects of the launch would persist.
`The pharmaceutical distribution chain is complex and it is unrealistic to expect Genentech to
`be able to reverse policies it adopted to counteract Amgen’s infringing competition. Nor will
`it be possible to reverse the extent to which Amgen’s launch accelerated the pressure payers
`put on Genentech to offer pricing concessions, or any concessions Genentech provided in
`response to that pressure,
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`6.
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`These market dynamics become even more complex in view of additional future entrants.
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` It will be difficult, if not impossible,
`to reliably disentangle the effects of Kanjinti’s market entry from that of another biosimilar
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`once both are on the market, or from any other biosimilars that enter. For example, it would
`be difficult to determine whether a sale of Kanjinti would have gone to Herceptin or the other
`biosimilar had Kanjinti not been launched. Genentech may therefore be unable to attribute
`damages to a particular competitor in a way that fully compensates it for calculable losses.
`This also holds true with respect to disentangling price effects that may result from market
`pressures from additional competitors, as well as other market dynamics.
`
`
`
` Those price effects would be expected to last
`even if Kanjinti were then removed from the market. And the launch of Kanjinti could prime
`the marketplace for future entrants and accelerate their adoption in ways that are likewise
`difficult both to predict and to quantify.
`
`7. A further complicating factor in reliably measuring the economic harm to Genentech is the
`associated adverse impact on other Genentech products related to human epidermal growth
`factor receptor 2 (HER2) positive cancer. Kanjinti’s entry will not only harm Herceptin but
`other innovative Genentech products in the HER2 franchise. These products include three
`HER2-related therapies: Perjeta (a novel drug that is prescribed in combination with
`Herceptin and reduces resistance to Herceptin), Kadcyla (a novel drug that combines the
`Herceptin antibody with an attached chemotherapy agent that can be targeted directly to
`attack any malignant cells), and Herceptin Hylecta (a novel form of Herceptin that allows
`for more convenient administration). All three products are at critical points in their
`respective life-cycles and Amgen’s entry could disrupt efforts to promote those products to
`the detriment of Genentech and potentially patients as well.
`
`If Amgen launches Kanjinti, Amgen will try to focus physician attention on prescribing
`Kanjinti instead of Herceptin. Genentech will have to respond to Amgen’s marketing efforts,
`leaving less time to discuss why Perjeta and Kadcyla offer important benefits to patients and,
`in particular, why physicians should consider prescribing Kadcyla instead of Herceptin.
`Physicians have limited time and attention, and diverting physician attention to Kanjinti will
`make it harder to focus their attention on these other Genentech products, resulting in lost
`sales of those other products. Those impacts will be magnified by a significant price disparity
`between Kanjinti and the other three products, which could also create downward pricing
`3
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`8.
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`pressure on them. That downward pricing pressure could persist even if Kanjinti were
`withdrawn from the market. It will be very difficult, if not impossible, to determine how
`these products would have fared without the blunting effect of Amgen’s launch
`
`, and thus calculate the harm to Genentech attributable from that launch.
`
`9. Kanjinti’s entry will also upset market dynamics for biosimilar entry in other product lines:
`Genentech is facing the threat of biosimilar competition to both Avastin and Rituxan, two
`other notable oncology biologics. The biosimilar marketplace is new and undeveloped,
`particularly for oncology products, and the first biosimilar product in this space will prompt
`a range of changes in the market, including in how payers manage biosimilar products. Many
`of those changes only need to happen once, and are likely to affect Genentech’s other
`oncology products, like Avastin and Rituxan, in ways that are likewise impossible to quantify
`with precision.
`
`10. Any effort to redress the harms discussed above will result in lingering, irreparable harm to
`Genentech post-trial. For example, a post-trial injunction withdrawing Kanjinti from the
`market could cause a backlash from physicians, health insurance providers, and patients,
`particularly with respect to physicians and patients who are already using Kanjinti and would
`not want to be forced to switch away from it. Furthermore, as seen with numerous other
`biopharmaceutical products, any attempt by Genentech to return Herceptin prices to pre-
`biosimilar-entry levels will likely be met with resistance and even anger. It is not possible to
`quantify the harm attributable to this loss of goodwill in a reliable manner. Nor would these
`efforts be expected to be wholly successful. For example, the effects of a Kanjinti launch
`priming the market for other entrants and thus increasing their market share, as well as
`changing the price at which those entrants entered, could persist even after Kanjinti itself
`were withdrawn from the market.
`
`11. From a clinical perspective, the dosing patents asserted by Genentech in this matter are
`important drivers of the demand by patients and doctors for Herceptin. Therefore, there is a
`strong nexus between infringement of the asserted patents and the harms enumerated above.
`Specifically, the asserted patents relate to a method of administration for Herceptin
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`12.
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`. The method of administration is used
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`to treat a vast majority of patients using Herceptin.
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`I also conclude that Genentech would suffer more harm from Kanjinti’s unlawful entry than
`Amgen would suffer should an injunction be issued. This is because Genentech is likely to
`suffer irreparable harm from a variety of sources, including lost sales, lost market share, and
`lost profits not only on Herceptin but also on its other products. Amgen’s primary harm will
`consist of lost sales and profits during the period of time that entry of Kanjinti was delayed.
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`.
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`13. Finally, I also conclude that a preliminary injunction is, on balance, in the public interest for
`the following reasons:
`
` Genentech will face challenges in focusing physician, payer, and patient attention on the
`important new clinical data for Perjeta and Kadcyla. This will potentially reduce sales
`and thus also reduce the likelihood that patients who could benefit from these treatments
`will receive them. These patients would miss out on the benefits of these products.
`
` Depriving Genentech of the full value of its patent protection will negatively impact its
`ability to make further investments in research and development, with potential negative
`impacts on future product development that could harm both Genentech and future
`generations of patients and that are impossible to quantify.
`
` A Kanjinti launch is unlikely to meaningfully increase patient access to trastuzumab
`because Genentech ensures patient access to Herceptin regardless of ability to pay.
`
`II. QUALIFICATIONS
`I am the Ruth L. Newhouse Associate Professor of Health Care Policy and Medicine at
`14.
`Harvard Medical School and a physician in the Department of Medicine at Massachusetts
`General Hospital, the largest affiliated teaching hospital of Harvard Medical School. I am a
`physician and an economist. As a physician, I work as an Internal Medicine Specialist
`treating patients in the hospital. I treat a wide variety of general medical conditions, and the
`patients that I care for frequently have various types of cancer, including breast and gastric
`cancer. In my clinical practice, I prescribe a broad range of pharmacologic and other
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`therapies and am familiar with how clinical decisions are made regarding treatment. In
`particular, I have treated patients with breast and gastric cancer, including patients with
`human epidermal growth factor receptor 2 (HER2) positive cancer who have been treated
`with Herceptin (trastuzumab).
`
`15. As an economist, I specialize in the economics of medical innovation, the assessment of
`economic value to patients arising from new medical technologies, the economics of
`physician behavior, and the economics of health care productivity. I am also a faculty
`research fellow at the National Bureau of Economic Research, the nation’s leading nonprofit
`economic research organization. I have published nearly 150 peer-reviewed articles in
`leading medical and economics journals, including the New England Journal of Medicine,
`Journal of the American Medical Association, British Medical Journal, Journal of Health
`Economics, Journal of Public Economics, and Journal of Economic Perspectives. Several of
`my publications specifically deal with economics issues related to cancer and how
`economists should assess the value to society that new medical technologies bring.
`
`16.
`
`I earned my M.D. and Ph.D. in Economics from the University of Chicago and my Bachelors
`in Biology and Economics from the Massachusetts Institute of Technology.
`
`17. From 2014 to 2015, I served on the Institute of Medicine (IOM) Committee on Diagnostic
`Errors in Health Care, which was tasked with preparing a follow-on report to the previous
`highly influential IOM reports, To Err is Human and Crossing the Quality Chasm, with the
`current report focusing on the epidemiology, causes, and policy solutions for diagnostic
`errors in medicine. In 2016 and 2018, I served on the Centers for Medicare and Medicaid
`Services (CMS) Technical Expert Panel for episode-based resource use measures, which
`provided advice to CMS on how to design pay-for-performance measures for individual
`physicians based on their costs of care when treating patients. I am currently serving on the
`National Academy of Medicine Advisory Committee on Emerging, Science, Technology,
`and Innovation. In addition to my academic research, I have consulted for the government,
`the insurance industry, and pharmaceutical firms on issues related to the economics of
`biopharmaceutical innovation.
`
`18.
`
`In 2007, I was awarded the Eugene Garfield Award by Research America for my work
`demonstrating the economic value of medical innovation in HIV/AIDS. In 2013, I received
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`Case 1:18-cv-00924-CFC Document 309 Filed 07/19/19 Page 10 of 96 PageID #: 23610
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`the National Institutes of Health Director’s Early Independence Award to fund research on
`the physician determinants of health care spending, quality, and patient outcomes. In 2015,
`I was awarded the International Society for Pharmacoeconomics and Outcomes Research
`(ISPOR) New Investigator Award. I have lectured internationally and was named one of the
`60 Most Powerful People in Health Care in 2016 and one of the 100 great leaders in health
`care in 2018 by Becker’s Hospital Review. My research and scholarly opinions have been
`published regularly in the New York Times, Washington Post, Wall Street Journal, Harvard
`Business Review, and other places. My curriculum vitae is attached as Appendix A.
`
`19.
`
`I am being compensated in this matter at a rate of $875 per hour. I also receive compensation
`based on the professional fees of Analysis Group, Inc. My compensation in this matter is not
`contingent on the outcome of this case. Some of the analyses underlying my opinion were
`performed by staff at Analysis Group, Inc., all under my direction.
`
`20. This declaration is based on information available to me as of the date of this declaration. I
`reserve the right to supplement my analysis and opinions should any further information be
`provided to me subsequent to the filing of this declaration.
`
`21. The rest of my declaration is organized as follows. In Section III, I provide the background
`on the key parties, industry, products, patents, and therapeutic area. In Section IV, I include
`an economic analysis of the impact of Amgen being permitted to market a biosimilar of
`Herceptin. In Section V, I examine the role of the asserted patents in driving Herceptin
`demand. In Section VI, I assess the balance of harms. In Section VII, I analyze whether an
`injunction would serve the public interest. Section VIII offers a brief conclusion.
`
`III. BACKGROUND ON BIOLOGIC AND BIOSIMILAR MARKETPLACE
`A. Biologics and biosimilars
`22. Biologics. These complex, large-molecule drugs are produced through living systems as
`opposed to traditional pharmaceuticals that are produced through a chemical, manufacturing
`process. According to the FDA, biologics encompass a wide range of products including
`vaccines, blood components, allergenics, somatic cells, gene therapy, tissues, and
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`recombinant therapeutic proteins.1 To create biologics, manufacturers adapt the metabolic
`processes of micro-organisms, e.g., bacteria, yeast, or mammalian cells to engineer/grow
`living cells with certain proteins. The metabolic processes of these micro-organisms are
`extremely sensitive to their manufacturing process, including the physical environment in
`which they are produced. Even minor variations in the production process, e.g., room
`temperature or the amount of light, can yield significant variations to the biologic.
`
`23. Biosimilars. Biosimilar competition is new to the U.S. Unlike generic drugs, which are
`chemically identical to their brand name counterparts,2 biosimilars are only similar to the
`existing biologic (“reference”) product that they aim to replace; they are not identical in
`composition to the reference biologic.3 Biologic products come from living cells and have
`natural variability; therefore, biologic reference products and biosimilars are not necessarily
`therapeutically interchangeable.4 Producing a biosimilar product is more complex than
`replicating a small-molecule generic drug manufactured during a chemical synthesis, and
`requires a more in-depth understanding of the reference product.5 Development of a
`biosimilar drug can take up to nine years and cost over $100 million — much more than a
`generic small-molecule drug (~$1 to $2 million), but much less than a new biologic (more
`than $1 billion in some instances).6 Only seven biosimilars are currently commercially
`available in the United States, as seen in Appendix B.
`
`2
`
`3
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`
`1
`Ex. 78, “What Are ‘Biologics’ Questions and Answers.” U.S. Food & Drug Administration. Citations to
`Exhibit numbers herein are references to exhibits to the Declaration of Nora Passamaneck, submitted
`herewith.
`Ex. 79, “Biosimilar and Interchangeable Products,” U.S. Food & Drug Administration, available at
`www.fda.gov/drugs/biosimilars/biosimilar-and-interchangeable-products#diffbiochange (hereafter,
`“Biosimilar and Interchangeable Products”).
`Ex. 80, Grabowski, et al., “Implementation of the Biosimilar Pathway: Economic and Policy Issues,” Seton
`Hall Law Review, Vol. 41, No. 511, April 19, 2011; Ex. 81, Christl, Leah, “FDA’s Overview of the
`Regulatory Guidance for the Development and Approval of Biosimilar Products in the U.S.,” U.S. Food &
`Drug Administration, 2014, available at www.fda.gov/files/drugs/published/FDA’s-Overview-of-the-
`Regulatory-Guidance-for-the-Development-and-Approval-of-Biosimilar-Products-in-the-US.pdf.
`Ex. 79, Biosimilar and Interchangeable Products.
`Ex. 82, Smeeding, James, et al., “Biosimilars: Considerations for Payers,” Pharmacy & Therapeutics, Vol.
`44, No. 2, January/February 2019, pp. 54-63, at p. 56.
`Ex. 83, “Biosimilar Development,” Pfizer, available at www.pfizerbiosimilars.com/biosimilars-development.
`
`4
`5
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`6
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`24. Biosimilarity and interchangeability. From a clinical perspective, the notion of biosimilar
`interchangeability as opposed to biosimilarity for therapeutic oncology products is
`particularly complex and difficult to determine. Specifically, biosimilar approval does not
`require the same level of evidence as the reference biologic product; the FDA approval of
`biosimilars for all reference biologic product indications is largely based on extrapolation.
`Given this, even if a product is approved as a biosimilar, physicians, pharmacists, and
`patients may want to understand the specific characteristics of a particular biosimilar in
`making a treatment decision, including resolving concerns about adverse responses.7
`
`B. Nature of competition in the biopharmaceutical industry
`25. The economics of biopharmaceuticals are different than those of typical goods due to the
`complex nature of competition in the biopharmaceutical industry. Specifically, the market
`for biopharmaceutical products is characterized by a large number of decision makers and
`payers involved in the supply chain. In addition, the manufacturers rely on an array of
`complex pricing and discounting strategies that are often not transparent. The following
`section outlines some of the key concepts needed to understand and analyze competition
`between biologics and biosimilars.
`
`26. Distribution. Herceptin, like many biologics, is administered by healthcare providers to
`patients in a hospital or physician’s office (e.g., typically through injection or infusion).
`Healthcare providers are then reimbursed for the product they administer by entities who are
`responsible for paying for treatment.
`
`27. Pricing. Manufacturers, such as Genentech, set the initial price of the drug, which is derived
`from assessing expected demand, competition, and marketing costs, to establish the
`wholesale acquisition cost (“WAC”).8 The WAC, or “list price,” does not reflect any price
`concessions such as discounts and rebates that the manufacturer may offer. Discount and
`rebate terms are confidential and non-public, which makes drug cost comparisons based on
`
`7
`
`8
`
`Ex. 84, Lyman, Gary, et al., “American Society of Clinical Oncology Statement: Biosimilars in Oncology,”
`Journal of Clinical Oncology, April 20, 2018, Vol. 36, No. 12, 1260-1265; Ex. 85, Dolan, Carina,
`“Opportunities and Challenges in Biosimilar Uptake in Oncology,” The American Journal of Managed Care,
`Vol. 24, No. 11, pp. S237-S243 (hereafter, “Dolan (2018)”).
`Ex. 86, “Follow The Pill: Understanding the U.S. Commercial Pharmaceutical Supply Chain,” The Health
`Strategies Consultancy, March 2005, at p. 1.
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`WAC inadequate for estimating the true cost of the drug to various agents. The net price (or
`manufacturer’s realized price), calculated as the WAC minus other manufacturer costs such
`as discounts and rebates, wholesaler fees, and additional price concessions, provides a more
`accurate representation of a drug’s true price.
`
`28. Because Herceptin is administered by healthcare providers, two key groups of decision
`makers who have the potential to impact the price of the product are i) “providers” and ii)
`“payers.”
`
`29. Providers. Providers (e.g., physicians via hospitals and oncology clinics) interact directly
`with patients to diagnose illnesses/diseases and prescribe biopharmaceutical products for
`treatment. Providers purchase Herceptin from specialty pharmacies and other distributors
`that buy Herceptin from Genentech.9 Providers then administer Herceptin directly to patients
`and typically seek reimbursement from payers like insurance companies and the
`government.10 This is sometimes referred to as the “buy and bill” model.11 Providers fall in
`to a number of different segments, with oncology clinics and hospitals as the two primary
`groups that purchase Herceptin.
`
`• Oncology clinics usually purchase Herceptin directly from specialty distributors.12
`For some oncology clinics, the purchase price, including any pricing concessions, is
`governed by contracts with group purchasing organizations (“GPOs”) or physician
`buying groups (“PBGs”),13 which are large networks of physician practices, clinics,
`
`9
`Ex. 87, “Herceptin Distribution: Authorized Distributors and Specialty Pharmacies,” Herceptin, available at
`www.genentech-access.com/hcp/brands/herceptin/learn-about-our-services/product-distribution.html.
`Ex. 87, “Herceptin Distribution: Authorized Distributors and Specialty Pharmacies,” Herceptin, available at
`www.genentech-access.com/hcp/brands/herceptin/learn-about-our-services/product-distribution.html.
`Ex. 88, “Follow the Vial: The Buy-and-Bill System for Distribution and Reimbursement of Provider-
`Administered Outpatient Drugs,” Drug Channels, available at www.drugchannels.net/2016/10/follow-vial-
`buy-and-bill-system-for.html.
`Ex. 87, “Herceptin Distribution: Authorized Distributors and Specialty Pharmacies,” Herceptin, available at
`www.genentech-access.com/hcp/brands/herceptin/learn-about-our-services/product-distribution.html.
`GPOs and PBGs share similarities in the biopharmaceutical distribution chain but can be distinguished based
`on legal eligibility for receiving administrative fees from manufacturers. Specifically, I understand that the
`legal definition of a GPO is “an entity authorized to act as a purchasing agent for a group of individuals or
`entities who are furnishing services for which payment may be made in whole or in part under Medicare,
`Medicaid or other Federal health care programs, and who are neither wholly-owned by the GPO nor
`subsidiaries of a parent corporation that wholly owns the GPO (either directly or through another wholly-
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`10
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`11
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`12
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`13
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`or other entities that purchase and administer biopharmaceutical products.14
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` A benefit that individual physicians gain from GPOs and PBGs is
`their ability to leverage large membership bases and centralize large orders. This
`increase in buying power allows these organizations to negotiate more aggressively
`with manufacturers, and potentially secure larger price discounts.15
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`• Hospitals are the other primary segment that purchases Herceptin. The hospital
`segment of purchasers is normally divided between hospitals who provide Herceptin
`to patients under the U.S. government’s 340B Drug Pricing Program and those who
`do not.
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`owned entity).” Ex. 89, 42 C.F.R. § 1001.952 (j), available at www.gpo.gov/fdsys/pkg/CFR-2011-title42-
`vol5/pdf/CFR-2011-title42-vol5-sec1001-952.pdf.
`Ex. 90, “PBGs vs. GPOs: What’s the Difference?” National Purchasing Group, available at
`www.nationalpurchasinggroup.com/pbg-vs-gpo/.
`Ex. 91, “Group Purchasing Organizations: Funding Structure Has Potential Implications for Medicare Costs,”
`United States Government Accountability Office, October 2014, at p. 4.
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`14
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`15
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`Ex. 94, “340B Drug Pricing Program,” Health Resources & Services Administration, available at
`www.hrsa.gov/opa/faqs/index.html.
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`30. Payers. Third-party payers (e.g., health plan sponsors, insurance companies) assume the risk
`of paying for treatment of patients who are health plan members. Payers manage which
`treatments are available to a patient through formularies (lists of covered drugs available to
`patients). These formularies can include preferential treatment for some therapies, for
`example either exclus