Indinavir (Crixivan«) Access and Distribution

Because Merck will have limited supplies of indinavir (Crixivan), its recently approved protease inhibitor, until new factories are running this fall -- and because this drug, once started, should not be interrupted, in order to avoid giving the virus opportunities to become resistant -- Merck has set up a complex temporary distribution system. The purpose of this system is to make sure that there is enough drug to provide refills to everyone who starts using it. There may be enough supply for everyone; but if there is not, Merck will have to put new people on a waiting list, to save enough drug to continue those who have already begun. (If supplies do run short, Merck plans to reserve enough drug for about 2,500 people with CD4 (T-cell) counts under 50.) Merck now has enough drug to supply about 30,000 persons in the U.S. for the next several months, until the new factories are ready. (This number is likely to change depending on international approvals and demand.)

Because of the need to track prescriptions, and because Merck does not have the inventory available to spare enough drug to fill the standard pharmaceutical distribution pipeline, Merck will temporarily sell indinavir only through one mail-order pharmacy, Stadtlanders (hotline for Crixivan, 800/238-1548) -- and by certain special arrangements otherwise. The rest of this article will outline how the distribution system is supposed to work, including how Merck plans to handle a number of special cases -- certain states, various HMOs, Medicaid, ADAP, Federal institutions, patients in hospitals, and persons now taking indinavir in SOME of Merck's clinical trials (who will be offered free drug for three to five years for a followup study, and therefore will not need to buy it).

* Patients who are already using Stadtlanders, or whose insurance allows them to use it, should have no problem. A simple form will be required to start a new prescription, but the paperwork is not difficult -- and Stadtlanders has a good reputation for customer service and followup.

Merck is encouraging physicians and patients to submit their initial forms by fax -- although prescriptions by mail and by phone will also be accepted. (In New York City, Stadtlanders has opened a pharmacy in order to qualify to do mail-order business in New York State under certain laws. But patients still must enroll through the main phone number. Our understanding is that the New York store will be used mainly for mailing prescriptions to New York State Medicaid recipients -- and for local people who may prefer to have their prescription mailed for them for pick up there, instead of to their home.)

The disadvantage for Stadtlanders' customers -- and for everyone else -- is the price; Stadtlanders has a monopoly for the next several months, and patients who pay out of pocket for their indinavir will have to pay $5820 per year -- a markup of more than 32% over the $4400 per year which Merck charges Stadtlanders. This is more than $1400 per year just for the filling of the prescription (plus associated user services, such as direct insurance billing, and calling customers to remind them when their prescription is about to expire). Stadtlanders told us that most of their customers will pay prices set by their health plan, not by Stadtlanders.

Stadtlanders also told us that their retail price has been set at average wholesale price plus 10%. But since there are no wholesalers in this case, with Stadtlanders buying the drug from Merck and selling it directly to the patient, it appears that the division between average wholesale price and retail markup is at whatever point Stadtlanders wishes to pick. (The "average wholesale price" is $15, which is a 25% markup over Merck's price to Stadtlanders -- an average wholesale price markup which we have been told is unusually high for the industry.)

Merck says that antitrust laws prevent it from negotiating a price with Stadtlanders, or from bringing any pressure on that company to lower its price. (We talked to one lawyer familiar with antitrust, who said that while Merck is correct that attempts at vertical price fixing are unlawful, an exclusive distributorship agreement may be unlawful if it decreases competition without some other procompetitive justification.)

* At least two other mail-order pharmacies -- Community Prescription Service (800/842-0502), and MedExpress (800/808-8060) have announced that they will accept orders for indinavir, and do the paperwork to get the drug through Stadtlanders. Others may follow, since otherwise they risk losing much of their business to Stadtlanders, as their clients who have to go there for indinavir may take their other prescriptions there too, to avoid having to deal with separate mail-order pharmacies.

* For persons in HMOs, Merck is negotiating with the HMOs and is finding that almost all of them are willing to work with Stadtlanders. Merck does not expect much access problem for persons in managed care. No HMOs so far have declined to provide indinavir -- although many have not yet made a
decision.

* For a few staff-run HMOs like Kaiser, Merck has agreed to supply the drug directly under certain conditions, not going through Stadtlanders. Kaiser has already received indinavir
at this time.

* For Medicaid patients, Stadtlanders is a licensed provider in 22 states and the District of Columbia -- accounting for over two thirds of all patients who would be placed on therapy. In the other states, Stadtlanders is working with The Medicine Shoppe to distribute the drug. Stadtlanders will still get the forms, monitor patients, and report to Merck, but will ship each patient's drug to The Medicine Shoppe, which will then re-ship it to the patient. As of April 1, 21 states currently plan to cover indinavir, and others are making their decisions.

* For ADAP, like Medicaid, Stadtlanders will work with the ADAP in states where Stadtlanders cannot provide the drug directly to determine an acceptable method of counting and
tracking patients.

* For long-term care institutions, Stadtlanders will again act like a wholesaler. The long term care provider will need to count and track patients and provide these numbers to Merck.

* Federal institutions -- the Veterans Administration, the military, the National Institutes of Health, the Public Health Service, and Federal prisons -- will get indinavir directly from Merck. The drug was added to the Federal supply schedule on April 1. These institutions will have the responsibility of tacking and counting their patients and reporting these numbers to Merck.

* Hospital inpatients will need to take their own indinavir into the hospital, where it will be dispensed by the hospital pharmacy. Large AIDS hospitals will also be allowed to buy one bottle for emergency use, for example when a patient forgets to bring the drug when being admitted.

Note: For all users of indinavir, Merck is now preparing a patient package insert to explain how to use the drug correctly. But this document needs approvals from within Merck, and then from the FDA, before it will be released.

Payment Assistance Program

Persons who have no other way to pay can apply to Merck's patient assistance program, called SUPPORT(TM), which will help to find payment sources the patient may have overlooked, help advocate with payers if necessary -- or as a last resort provide free drug to those who meet certain financial criteria, which Merck will not reveal.

But Merck has set a policy that if a state's ADAP program decides not to cover indinavir, then Merck will not let new patients in that state into its patient assistance program, no matter what their financial need. Merck is applying this policy to all insurance programs; if an HMO or insurance company declines to pay for indinavir, then Merck will not let any of that plan's patients start receiving the drug through its patient assistance program. The company is concerned that otherwise payers will refuse to pay for its drug, with the argument that Merck will pick up the people who could not possibly pay out of pocket.

But if someone is already on indinavir when their state or their plan announces that it will not pay, it would then be clearly unethical to cut them off, so Merck will continue them in the program in that case. (This means that if someone has already decided that they need indinavir -- and they might qualify for free drug under the patient assistance program because they have a low income -- they may be able to get into that program now, before their state or plan makes the decision, but not be able to get in later, if their plan should decide not to pay).

Persons in Indinavir Clinical Trials

In order to collect long-term data on indinavir use, Merck will offer free indinavir to persons who have been in most of its phase II and one of its phase III studies, by extending those studies for three to five years. The phase II trials are: protocols 004, 006, 010, 018, 019, 020, 021, 025, and 035; and the phase III trial is protocol 039. Volunteers in these studies can get free indinavir, so they will not need to buy it.

Those in other Merck trials (such as 033 and 037) will be "transitioned to commercial distribution" when these trials end as planned. This transition usually includes at least eight weeks of free open-label drug, giving people time to decide if they want to continue the treatment, and to make arrangements to do so. Those in Merck's "Advanced AIDS Program" (i.e., those who won the expanded-access lottery), are being transitioned starting April 1.

To ensure that there will be drug supply for patients who will be prescribed indinavir once they have completed their study, patients will receive a card (sent by Merck to their physician) with an 800 number on it. They must call the 800 number and give their name and social security number. The call from the patient is important to help Merck plan for their future drug refill needs. If a patient does not receive this card soon, they should contact their physician.

About 12,000 persons with advanced HIV disease who failed to win the lottery for Merck's expanded-access program are now being sent letters explaining the distribution and patient-assistance programs.

Comment

No one knows how well this complex distribution system will work. Clearly it has lots of potential to work badly. Fortunately it should be ended within a few months, allowing indinavir to be distributed through normal channels, with normal competition to reduce the distribution cost.

We received much of the above information on April 1, two days before going to press, so we have had no time to deal with many concerns, including ethical issues, which need larger public discussion. Is it OK for Stadtlanders to be given an absolute monopoly of a life-critical drug, be allowed to set whatever price it wants, and then to use this situation to set an unusually high markup? Is it OK for Merck to wash its hands in the antitrust laws?

And what about Merck's cutting off entry to its indigent-patient program, no matter what one's financial need, because one's insurance plan or state ADAP program refused to pay for indinavir? Everyone knows that the Federally funded state programs are going to run out of money. Persons with critical illnesses are being used as pawns in this payment dispute among large institutions, and are being forced to take the loss when the institutions choose not to reach agreement.

And Merck appears to be mistaken in its apparent belief that this cutoff policy will be necessary to get the drug paid for. Any refusal to pay for indinavir, either by private insurance or ADAP, will not only hurt the poor, but also be a serious hardship for many middle-class persons who would not qualify for free drug under the patient-assistance program in any case. Since the poor have the least political influence, their loss as advocates for indinavir coverage would be a disproportionately small loss of the total constituency for reimbursement.

Also, this distribution program is full of inefficient special arrangements which exist only to avoid crossing the letter of some law or rule -- rules instituted with or without good intentions, but in either case with no comprehension of how they would actually apply in this case. Is this bizarre and wasteful outcome just part of the price we pay for living under an organized society and rule of law? Or is some fix possible? Would it be different if there were the kind of widespread political support that would certainly exist if AIDS struck randomly at anybody?

The ultimate issue is the political failure of this country to create a workable healthcare system. No one knows how to transform more than half a trillion dollars of greed into something people can live with.