Bayer Letter - Regarding the Yasmin®
Limited Distribution System
September
30, 2008
J
Jimmy Mitchell, R.Ph., M.P.H., M.S.
Director
Office of Pharmacy Affairs
Health Resources and Services Administration
Department of Health and Human Services
5600 Fishers Lane, Parklawn Building,
Mail Stop 10C-03
Rockville, Maryland 20857
Open
Letter to HRSA Office of Pharmacy Affairs
Regarding the Yasmin® Limited Distribution
System
Dear
Mr. Mitchell:
Bayer
HealthCare Pharmaceuticals Inc. ("Bayer")
distributes Yasmin®, an oral contraceptive
product used by millions of women in the
United States.
Beginning
with the fourth quarter of 2008, we anticipate
that we will be unable to meet demand
for Yasmin®. Based on our past experience,
we anticipate increased ordering activity
resulting from operation of the 340B program's
"penny price" policy which will
make the 340B ceiling price for Yasmin®
$0.01 per cycle as a result of the new
CMS regulation requiring brand manufacturers
to include the best price of an authorized
generic in the Best Price of the branded
product. Therefore, in an effort to ensure
that all of our customers have an equal
opportunity to meet their future needs
for Yasmin®, we are instituting a
limited distribution system for Yasmin®
beginning in the fourth quarter of 2008.
This system will apply to all orders for
Yasmin® received on or after October
1, 2008 and will limit the amount of Yasmin®
any customer (340B, commercial or other)
may purchase to that customer’s
historical average quarterly ordering
volume on a percentage basis applied to
the then current quarter’s available
supply. We anticipate that the system
will remain in place for the foreseeable
future.
As
we discussed with you earlier this week,
this system will impact all customers,
including 340B covered entities, in a
fair and consistent fashion. Based on
our review of the guidance received from
the Office of Pharmacy Affairs ("OPA"),
the system complies with the relevant
340B program guidance. Additionally, this
system is substantially similar to the
system we put in place for Yasmin®
in the second quarter of 2007 when faced
with similar circumstances. Please feel
free to share this information with 340B
covered entities and other interested
parties as you think appropriate.
Limited
Distribution System
Under
Bayer’s limited distribution system,
Bayer will limit the number of Yasmin®
cycles each US customer may purchase beginning
with the fourth quarter of 2008 to an
amount equal to that customer's average
quarterly purchase volume between October
1, 2007 and September 30, 2008 (i.e.,
based on the most recent 12 months) on
a percentage basis applied to the then
current quarter’s available supply.
A percentage-based allocation will provide
Bayer with more flexibility to adjust
customers' maximum order quantities in
response to changes in product availability,
as they may occur, while maintaining equity
among all customers. We will fill all
orders for all customers on a first-in,
first-out ("FIFO") basis until
a customer reaches its determined limit
for the quarter. Once a customer reaches
its limit for a particular quarter, the
customer will be able to place additional
orders for Yasmin® at the beginning
of the following quarter (subject to that
quarter’s limit). Importantly, neither
a customer’s 340B participation
status nor the price it pays for Yasmin®
will affect its quarterly allotment of
Yasmin®. Bayer will not require minimum
purchase amounts per transaction.
Bayer
has calculated the average quarterly purchase
volume of Yasmin® for each customer
who has purchased Yasmin® during the
period from October 1, 2007 through September
30, 2008. We believe this twelve-month
period is an appropriate time frame upon
which to base maximum customer order quantities
given recent changes in the competitive
landscape for this product and the resulting
changes in customer purchasing patterns,
following the introduction of a generic
product. For customers with no historical
purchases of Yasmin®, Bayer will establish
a maximum purchase level based on the
overall average quarterly purchase volume
of customers in that purchaser's class
of trade. We will apply this average equally
to all such customers.
Under
our system, all customers will be permitted
to order Yasmin® through their normal
distribution pathway (either direct from
Bayer or through a wholesaler). Bayer
will advise wholesalers of their purchase
limits and will ask each wholesaler to
limit sales of Yasmin® to all of their
customers within those limits. Bayer will
notify existing direct customers of the
distribution system immediately.
Conclusion
Bayer
is committed to making our products available
through the 340B program at appropriately
discounted prices. However, based on our
past experience with 340B orders when
Yasmin® was last subject to the penny
price policy, and given current supply
forecasts, Bayer anticipates being faced
with a distribution problem which threatens
to affect the ability of millions of women
to obtain Yasmin® from their customary
health care provider. Without equitable
and non-discriminatory restrictions on
Yasmin® purchasing beginning with
the fourth quarter of 2008, 340B covered
entities, as well as the Medicaid program,
the Department of Veteran Affairs and
Federal Supply Schedule entities, could
be precluded from being able to purchase
Yasmin®. We are implementing this
limited distribution system in order to
best ensure that all patients of all providers
have equal access to Yasmin® during
the time period in which the 340B penny
price policy is in effect.
Bayer
appreciates your office's cooperation
during this period.
Very
truly yours,
BAYER
HEALTHCARE PHARMACEUTICALS INC.
/John
A. Calvo/
Senior Counsel
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